Beware of Scholarship Scams: Protect Yourself and Your Peers. Share These Tips with Every Student You Know.

Education is expensive, and scholarships can significantly ease the financial burden for students. Many students hope to secure scholarships to help cover college costs, leading them to apply to numerous opportunities. Unfortunately, some individuals exploit this vulnerability. As high school, college, graduate students and their parents navigate the scholarship application process, they must be vigilant about potential scams. Many scholarships lack regulation, enabling scammers to offer illegitimate opportunities.

Scammers employ various tactics to swindle students out of their money instead of providing financial aid.  A scholarship scam typically involves a promise to help students find and secure scholarships, but instead, the scammer takes money upfront for "application costs" or collects personal and financial information to commit identity theft. Other financial aid scams include offers to refinance student loans, modify repayment plans, postpone payments, or qualify for loan forgiveness.

Scammers often initiate contact through social media, email, or mail, presenting seemingly personalized invitations for scholarships or financial aid packages. These messages may include a callback number or details about an in-person workshop, which turn out to be high-pressure sales pitches demanding immediate payment for their fraudulent services.

To avoid falling victim to these schemes, be cautious and skeptical of unsolicited offers and always verify the legitimacy of any scholarship or financial aid program before engaging.

Did you know?

• Over 1.7 million scholarships are awarded annually in the U.S.
• Only 7% of college students will receive a scholarship.
• On average, first-time undergraduates who receive government grants and scholarships at a 4-year college receive about $14,890 annually.
• There are more than 175,000 victims of scholarship fraud in the U.S. today.

Sources: parentingforcollage.com and communityforce.com

Common Scholarship Scams

Scholarships with Application Fees

One common scam involves so-called "scholarships for profit," which charge an application fee, often around $30, to apply for financial aid. These scams might seem legitimate, but they're more like lotteries than genuine scholarship programs. Thousands of students apply, bringing in substantial sums for the scammers. According to FinAid, these schemes can earn $300,000 by attracting 10,000 applicants each. The odds of actually receiving a scholarship from such programs are extremely low, much lower than winning a lottery. These scams can persist for years because most applicants assume they didn't win rather than realizing they were scammed.

Scholarship Prize Scams

Another variation involves scammers notifying victims that they have "won" a scholarship but must pay an upfront fee or taxes to claim the prize. Often, these scams are pitched to students whose contact information was obtained from mailing lists. Sometimes, scammers send fake checks along with the prize announcement and then ask the recipient to wire back money to cover fees. The victim wires the money only to discover the check was a fake, losing the amount they sent.

Unsolicited Scholarship Offers

Receiving a scholarship offer out of the blue, especially when you haven't applied for one, should raise immediate red flags. Legitimate scholarships require an application process, and you can't win money without participating. Offers of free money with no effort are almost certainly scams. Genuine scholarship programs will never contact you unsolicited and offer money without any application or effort on your part.

Scholarship Search Services

Some scammers pose as consultants or specialist search services, offering to find scholarships for a fee. While some legitimate firms do offer scholarship search services, a major warning sign of a scam is a guarantee to find you a scholarship or your money back. No one can make such a promise, and when the scholarships don't materialize, neither does the refund. Victims often lose several hundred dollars and may have also given away credit card information, risking further financial harm through identity theft.

"Legal" Schemes

Sometimes, scammers lure students into attending seemingly legitimate seminars or interviews for financial aid advice. These events often turn out to be sales pitches for insurance policies, annuities, or other financial products. While these seminars might provide some useful information, they are often cleverly disguised sales tactics for overpriced services and products. Victims might end up paying for financial aid consulting services, scholarship matching services, or expensive student loans that offer little value.

Nonexistent Scholarships

Many scams encourage you to send money upfront for a scholarship that never materializes. Victims might pay fees and receive little or nothing in return. Often, they write off the expense, thinking they just didn't win, rather than recognizing they were scammed. These schemes can be particularly insidious, as they prey on students' hopes and financial desperation in seeking aid.

Related: Imposter Scams On The Rise: How to Protect Yourself

Warning Signs of a Scholarship Scam

1. Guarantees. If someone guarantees that you will win scholarship money, it's a scam. Legitimate scholarship providers cannot guarantee a win. Such scammers usually aim to steal your personal information.

2. Unsolicited Scholarship Offers. Be cautious if you receive a scholarship offer via phone, mail, or email that you didn't request. Real scholarships require an application process and are not awarded randomly. Always verify the legitimacy of unsolicited offers.

3. Fees. Legitimate scholarships never charge application fees. If you're asked to pay even a small amount, like $5, it's likely a scam. Scammers use these fees to get your bank or credit card information.

4. Limited Time Offers. True scholarships have clear deadlines, but don't pressure you with limited-time offers. Scammers create urgency to trick you into quick decisions. If you feel rushed, it's probably a scam.

5. Requests for Personal Information. During the application process, scholarship providers should not be asking for private information, like your bank account, credit card details, or social security number. Legitimate applications will request contact information and details about your school plans.

6. Eligibility Criteria. Genuine scholarships have specific eligibility requirements. Be wary of opportunities that seem too broad or don't specify requirements. If testimonials on their site seem fake, it's likely a scam.

7. Lack of Contact Information. Real scholarship providers offer clear contact information. Scammers often have fake websites without addresses or phone numbers. Verify any contact details provided, and be cautious if you can't find them.

8. Too Good to Be True. If an offer seems too good to be true, it probably is. Use reputable resources to check scholarship listings and familiarize yourself with common offerings.

9. Listings Not Found Anywhere Else. Legitimate scholarships are listed on multiple reputable websites. If a program can only be found on its own site, be cautious. It's a sign that the scholarship might be a scam.

10. False Endorsements. Some scams claim to be approved by reputable organizations or government agencies like the U.S. Department of Education. Remember, the federal government doesn't endorse private businesses.

Related: Phishing Scams: How to Identify and Avoid Them

How to Avoid a Scholarship Scam

Be Wary of Fees. Never pay upfront application fees without thorough research. Legitimate scholarships don't charge for applications.

Question Unsolicited Wins. If you're told you've won a scholarship or prize without applying, it's a scam. Only respond to offers you've actively sought out.

Verify Sources. Ask how the organization got your contact details if you receive an unsolicited offer. If you've never heard of them or applied, it's likely a scam.

Get Everything in Writing. Don't rely on phone calls. Request written details and read all terms carefully before making any decisions.

Avoid Pressure Tactics. If someone pressures you to make an immediate decision, it's a red flag. Take your time to research and verify any offers you receive.

Check scholarship offerings and messages with Scamio, our AI-powered scam detection tool. Send any texts, messages, links, Q.R. codes, or images to it, and it will analyze them to determine if they are part of a scam. Scamio is free and available on Facebook Messenger, WhatsApp, and your web browser. You can also help others stay safe by sharing Scamio with them in France, Germany, Spain, Italy, Romania, Australia, and the U.K.

Related: Make It Hard for Scammers to Get You! Use These Seven Vital Tips

Protect yourself from identity theft while applying for scholarships

Becoming a victim of a scholarship scam can lead to identity theft, which occurs when scammers use your personal information to commit crimes such as opening new accounts, filing fake tax returns, or making fraudulent property transactions. As a student, having your identity stolen can have long-term consequences, such as making it difficult to find a job after graduation or preventing you from renting an apartment. It can turn your post-college plans into a nightmare rather than a dream.

The best protection against identity theft is staying informed and vigilant. Regularly check your credit score for any suspicious activity, such as unfamiliar accounts or collection notices. Monitor your accounts frequently and act quickly by contacting the appropriate parties if you notice any unauthorized activity. When applying for financial aid, consult your school's office for a list of trusted lenders.

Bitdefender's Digital Identity Protection can also help you protect your personal information from identity theft. This tool monitors the web for your personal data and alerts you to potential threats. It provides comprehensive coverage by tracking your digital footprint, checking for breaches, and alerting you to any misuse of your identity.

If you become a victim of identity theft, there are steps you can take to repair your credit score and financial history. First, inform your financial institutions about the identity theft and request that any fraudulent accounts opened in your name be closed. Next, get a credit report to assess the damage. Contact one of the three credit reporting agencies to monitor your financial activity for the next 90 days, with the option to extend monitoring for up to seven years.

Lastly, file a police report and notify the Federal Trade Commission. These actions will help you document that you've been a victim and are working to rectify the situation.

FAQs

What To Do If You're Looking for Financial Aid or a Scholarship

When searching for financial aid or scholarships, start by contacting your school's financial aid office. They can provide a list of trusted lenders and scholarship opportunities. Use reputable websites and databases to find scholarships that match your qualifications. Always apply directly through official channels and avoid any programs that require an upfront fee. Be cautious of unsolicited offers and verify their legitimacy by researching the organizations behind them. Taking these steps can help you find genuine financial aid without falling victim to scams.

What To Do If You Paid a Scammer

If you realize you've paid a scammer, act quickly. First, contact your bank or credit card company to stop any further payments and report the fraud. Change your passwords and secure your accounts. Next, file a report with your local police department to document the scam. Then, report the fraud to the Federal Trade Commission (FTC) at IdentityTheft.gov and the Better Business Bureau (BBB). These reports can help protect others from falling victim to the same scam and assist you in recovering your funds.

How to Report a Scholarship Scam

To report a scholarship scam:

1. Start by gathering all relevant information, such as emails, receipts, and any communication you had with the scammer.
2. File a report with the Federal Trade Commission (FTC) through their website at FTC.gov.
3. Report the scam to your state's consumer protection office and the Better Business Bureau (BBB).
4. Inform your school's financial aid office so they can warn other students.

Take these steps to help authorities track down scammers and prevent others from becoming victims.