(Getty Images)
Many students are still searching and applying for grants and scholarships to fund their college education. For students struggling to pay tuition, a sudden offer of a grant or scholarship can look like a dream come true. But it could be bait for a scam.
Scholarship scammers trick victims with the promise of money, but upfront “fees” never actually materialize into those much-needed funds. In a recent twist, these scammers claim to help with student loan forgiveness.
BBB recommends caution when dealing with companies that help find financial aid opportunities. Students and their families should be wary of websites, seminars, or other schemes that promise to find scholarships, grants, or financial aid packages for a fee.
How the scams work:
Scammers typically claim to represent the government, a university, or a nonprofit organization. The details vary, but the con is the same. The scammer will pose as a financial aid representative using words like “National” and “Federal” to sound more official. They claim you have won a scholarship or a grant (without ever applying) and ask for payment of a one-time "processing fee."
In a recent BBB Scam Tracker report, a student reported, "The website claimed to be a database of grants and scholarships for graduating high school seniors and anyone interested in attending a post secondary school or interested in research. The applications weren’t easily accessible and when I tried to cancel the membership because of it, I thought it had gone through but I have been charged twice more since then without any sort of email or letter mail." This student lost $100 to this scam.
In another version, the scammer pressures you into applying for a “guaranteed” scholarship or grant. However, there is a fee to apply. Time goes by once the fee is paid, and the money is never sent. When attempting to contact a representative, it is quickly discovered that the company has set so many conditions that it is almost impossible to receive a refund.
Another variation of the scam involves a check arriving for the scholarship, and instructions are included to send back payment for taxes or fees. The check turns out to be a fake, and you’re out whatever money was sent.
A consumer recently reported their experience with a scholarship scam to BBB Scam Tracker: “The website advertises to offer a 100% scholarship for students who can’t afford the cost of their courses…I was approved, however, I was told I’d still have to pay a $99 shipping fee for a card from the DOL and there is no option to take the course without paying for that. This is very misleading and appears to be false advertising.”
Legitimate companies are helping students find aid with some results. However, students and parents can usually find the same awards and others on their own by searching online. Prospective college financial aid offices can also help, especially if it is a college the student is seriously considering attending.
How to avoid scholarship scams:
- Beware of unsolicited offers. Typically, winning a scholarship or grant that wasn't applied for is impossible. Ask how the organization got your name and contact information, and then verify it with the source outside of the email, phone number, or website they used to contact you.
- Remember, it is generally free to apply for scholarships. If you’re required to pay a fee to apply for financial aid, take that as a red flag for a scam. If you’re looking into working with a company that offers professional financial aid search, ask about any fees, and get the information in writing.
- Take your time. Start your scholarship search early so you are aware of upcoming deadlines and are not rushed into finding financial aid opportunities. If you’re rushed, you may be more likely to fall for a scam that seems too good to be true.
- Ask lots of questions. Be cautious if an organization that is offering financial aid is reluctant to answer questions about the scholarship or the process of applying for it. If you can’t get your questions answered, walk away. The same goes for any companies helping to find financial aid opportunities – ask questions and walk away if the representative is being evasive.
- Rely on your guidance counselor or a college financial aid office. These professionals will have connections to legitimate scholarships and financial aid opportunities that you can apply for. If you’re questioning a financial aid opportunity that was presented to you, ask these counselors if they are familiar with the scholarship or company offering it.
- Be aware that a check can bounce even after the bank allows cash withdrawal from the deposit. Check processing is a confusing business, as is the terminology. Even if a bank representative says that a check has “cleared,” it is not sure that it won’t be detected as a fake weeks later. One thing the account holder can be sure of is that they will be responsible for any funds drawn against the amount.
For more information
In the U.S., more information on different financial aid options is available at studentaid.gov. If you don’t think you qualify for financial aid, review the Federal Student Aid website options, as many colleges and universities use it for non-need-based awards.
In Canada, visit the Government of Canada student aid resources to learn about the financial aid programs available. Each province has its support organization and opportunities for financial aid. The relevant support organization and applicants will review each application and match you with loans, bursaries, and grants you appear eligible for.
Find more resources on education and more for younger adults here.
To report a scam, go to BBB Scam Tracker.
To learn how to protect yourself, go to “10 Steps to Avoid Scams.”
