When seeking to green your credentials with degrees and advanced education, be on the alert to avoid scholarship scams.  Hundreds of thousands of students are defrauded by scholarships scams each year, losing more than $100 million annually.
What are The Signs That a Scholarship is a Scam?

  • Beware of Official Sounding Names – One of the ways scam operators lure in their victims is by working to appear as if they are authentic scholarship matching services, foundations, education lenders, or government agencies.  Their company or program names have words like “Federal,” “Administration,” “National,” or “Foundation.”
  • Avoid Scholarships with Application Fees – Stay away for scholarships that have an application fee. Many of these organizations will encourage you send you the application fee and never actually provide a scholarship, knowing that the vast majority of applicants will simply assume that they did not win the scholarship.  Others use a small portion of the money collected from application to fund the actual “scholarship.”  In these instances your odds of winning are remote. Legitimate scholarship foundations do not charge application fees.
  • Never Pay a Disbursement or Redemption Fee – Some scams notify you that that you have won a scholarship, but require that before you can receive the money, you must pay a “redemption” fee, taxes, or a “disbursement.”
  • A Guarantee Offer Is Usually a Scam – Be wary of scholarship matching services that guarantee success. Nobody can guarantee that you’ll win a scholarship.  If they do, something is up.
  • Some Financial Aid Seminars are Not What They Appear to Be – Some scams offer financial aid seminars to lure you in to listen to a “sales pitch” for some product or service.  If a financial aid “seminar” is held in a local college classroom or meeting facility, don’t assume that it is university sanctioned.   Scholarship scammers sometimes rent a room on a college or university campus to “borrow” the schools legitimacy.  Call the school’s financial aid office to find out whether it is a university approved or sponsored event.
  • A Scholarship That Has NO Scholarship Criteria is a Warning Sign – Pretty much every scholarship has candidate criteria, so avoid scholarships that claim “everyone is eligible.”
  • Never Let Anyone “Apply on Your Behalf – Walk, don’t run from services that say they will apply on your behalf or claiming to have influence over the sponsors.
  • Be Wary of Scholarships Asking for Unusual Personal Information – If the application seeks unusual levels of personal information to “confirm your eligibility, it is likely a scam.  E.g. bank account numbers, credit card numbers or social security numbers. They can use this information, in conjunction with your date of birth and the names of your parents, to commit identity theft and apply for new credit cards in your name. They can also use the numbers on the bottom of your checks (the bank routing number and the account number) to withdraw money from your bank account using a “demand draft”. A demand draft works very much like a check, but does not require your signature.
  • Get Their Phone Number – Don’t apply for any scholarship that does not provide a company phone number on their application.
    Be Wary of Endorsement and Membership Claims – Be wary of claims of endorsement and membership, especially if the recommendation is made by an organization with a name similar to that of a well-known private or government group. The federal government, US Department of Education and the US Chamber of Commerce do not endorse or recommend private businesses.
  • Pay Attention To Information About Past Winners – If the organization sponsoring the scholarship can’t prove that its scholarships are actually awarded and disbursed, be on the alert.  Many scholarship programs publish information about past recipients on their web sites and in their program literature.  If that information is not available, then something is up.
  • Don’t Respond to Unsolicited Offers –  If you receive an unsolicited offer for a scholarship, inquire about how they found you.  Most unsolicited offers are scams.

For Additional Information
For additional information about scholarship scams, check out the following resources from the Federal Trade Commission and The Department of Education: