Edited By Arlene Ward
Review & Contribution By Jake Wilson
Online graduate studies can be expensive. However, you may qualify for a scholarship, grant, or financial aid if you meet eligibility requirements. Scholarships may be awarded based on various criteria: Academic accomplishment, the applicant’s race, veteran status, church affiliation, membership in an organization, or a field of study. Unfortunately, just as there are thousands of opportunities to receive these gifts, an equal number of con artists want to appropriate your money and provide nothing in return. We created this guide to spread awareness about how these con artists run their scholarship scams and hoaxes.
There are a lot of scammers in the business of fake scholarships. It is essential to understand how they operate. For this, it is necessary to understand how scholarships work and how they use them to lure students. Scholarships are a type of financial aid based on several factors. They are free money that you can use to pay for all or part of your educational costs. Read more about Financial Aid and Scholarships for Online Graduate Students, where we cover the following topics:
- Financing an Online Master’s Program: Getting Started with FAFSA®
- What are the Different Types of Financial Aid for an Online Master’s Program?
- Examples of Financial Aid Opportunities for Online Master’s Programs.
- Resources for Finding Financial Aid and Scholarships for Grad School.
Fake Scholarships are a fraud where the scammer promises to provide guaranteed college scholarships. Most scholarship scams seek to get students and their families to pay the scammer upfront, but some scams also involve identity theft.
According to the Federal Trade Commission (FTC)[1], the nation’s consumer protection agency, unscrupulous companies guarantee or promise scholarships, grants, or fantastic financial aid packages. Many use high-pressure sales tactics to get you to pay upfront or risk losing out on the scholarship. It is probably a scam if you have to pay money to get money. Never pay to get information about scholarships or to apply for a scholarship.
Table Of Contents
Scholarship Scams: How to Know if a Scholarship is Fake
Fake Scholarships are increasingly becoming problematic, and con artists are improving their methods. But here are some of the most common phrases used in scholarship scams:
“We’ll do all the work for you”
No company can do all the work on your behalf. All they can give you is a list of potential scholarship options, which you are then required to apply for by filling out the application and submitting it.
“We only charge a small fee”
Most scholarship scams charge some kind of fee. The fee may seem small and reasonable, such as an application fee, processing fee, or taxes, but legitimate scholarships do not charge any fees.
“We need your financial information for confirmation purposes”
Beware of scholarships that ask for your credit card or social security number. Scholarships do not need your credit card number to verify your identity or hold the scholarship. Scholarship providers are not required to report scholarships to the IRS unless the scholarship is a service fee.
“You won a scholarship”
One scholarship scam deceived many students by sending them a letter congratulating them on winning a scholarship but asking them to pay the application fee. But when you haven’t applied for the scholarship yet, you receive an email or letter stating that you have been selected for a scholarship, then it is definitely a scam. It’s a warning sign that says you are dealing with a scammer. These companies generally want to collect all your financial and personal information.
“We are a foundation or tax-exempt charity”
Check whether the organization is a foundation using the Exempt Organizations Select Check tool, formerly IRS Publication 78.
“We offer a guarantee”
Nobody can guarantee that you’ll win a scholarship!
“We have exclusive access to scholarships”
Some paid scholarship matching services claim you can’t get this information anywhere else. That is never the case. All the information regarding the scholarship is freely available and easy to access through the Internet. If anyone states that they have exclusive access to information for an exchange of money, it’s a scam.
“We have a high success rate”
Paid scholarship matching services sometimes say that many of their clients win scholarships. However, only 1 in 8 students win private scholarships; the average amount received is less than $4,000 (unverified).
“Millions (or billions) of scholarship dollars went unclaimed last year”
The unclaimed aid myth has been around for decades. It is just as false now as it was 40 years ago. Most scholarships have more applicants than money. The few unclaimed scholarships cannot be claimed because they have very restrictive criteria.
“You must act now”
Although scholarships have deadlines, they aren’t awarded on a first-come, first-served basis. There is no need to act unless you submit your scholarship application by the deadline. You don’t need to act to get a scholarship. If you are selected for a specific scholarship, then it’s yours.
“We are approved by a reputable organization”
Some scams falsely claim to be affiliated with the U.S. Department of Education (USDE)[2] or another government agency. The federal government is prohibited from endorsing private businesses!
“We’ll send you a check”
This is the most devious scam. The check they send you is more than the value of the scholarship. The scammer will claim that the check was issued in error but cannot be canceled. They instruct you to deposit the check and send them your check for the excess that they “overpaid” you. The scholarship check may look legitimate, but it is a forgery and will bounce after you deposit it. Your bank will probably charge you for the bounced check. And the check you send them will be deducted from your account.
Too Good to Be True
Some scammers guarantee that they can deliver scholarships on behalf of students or award scholarships in exchange for an advanced fee. Others may only provide a list of readily available scholarship sources. Still, others tell students they’ve been selected as “finalists” for awards that require an up-front fee. Sometimes, these companies ask for a student’s financial information to confirm identity and then debit the account without the student’s knowledge. Other companies only require a small fee and then provide nothing of value.
However, some legitimate scholarship search engines charge an advanced fee to compare a student’s profile with a database of scholarship opportunities and provide a list of awards for which a student may qualify. However, there are usually free sources of the same information. Always remember that legitimate companies never guarantee or promise scholarships or grants.
Seminars
Watch out for scams offering free seminars or one-on-one interviews. Both are nothing more than a high-pressure sales pitch for their “scholarship services.” Don’t be rushed into paying at the seminar. Avoid high-pressure sales pitches that require you to buy now or risk losing the scholarship opportunity. Be wary of “success stories” or testimonials of extraordinary success – the seminar operation may have paid “shills” to give glowing stories.
These scholarship seminars are sessions where the representative will pressure you to buy their products, such as scholarship search services or résumé formatting services, which you don’t need. However, they will still force you into it.
If it is a Scholarship Scam…
If you encounter a scholarship scam, report it to law enforcement authorities. By reporting a scholarship scam promptly, you may help save other students from becoming victims of scholarship scams.
Report the scam to the National Fraud Information Center (NFIC)[3] at 1-800-654-7060. The NFIC shares information with the Federal Trade Commission (FTC)[4] and state attorney general.
You can also report the scam directly to the FTC by filing a complaint form or calling 1-877-FTC-HELP (1-877-382-4357). The FTC published an article about scholarship and financial aid scams[1] and an annual report to Congress about scholarship scams.
The U.S. Postal Inspection Service[5] investigates mail fraud, which includes scams sent by postal mail. Report such scams using the Postal Crime Online Complaint Form[6] or by calling 1-877-876-2455 (say “fraud”) or 1-800-654-8896.
To report fraud involving federal student aid funds, such as FAFSA fraud rings, contact the Office of the Inspector General at the U.S. Department of Education by calling 1-800-MIS-USED (1-800-647-8733) or filing a report using the OIG Hotline[7].
The College Scholarship Fraud Prevention Act of 2000[8] (P.L. 106-420) created enhanced penalties for scholarship fraud to encourage law enforcement to prosecute scholarship scams.
Where to Find Legit Scholarships
Here is a list of websites that provide information about legit scholarships available for students.
Scholarships.com is a substantial database comprising over 3.7 million college scholarships and grants. Scholarships.com has more than two decades of expertise in providing students with all the information about various scholarships available. Students can quickly register on this site and create a profile for the types of scholarships they are interested in.
Fast Web is one of the leading resources many students use to get information about various scholarships. Fast Web has provided scholarship information for over 15 years and offers more than 1.5 million scholarship details. According to their website, they have over $3 billion in student funding.
Chegg is a popular textbook store for renting and buying textbooks online for affordable prices. Many students use Chegg.com for textbooks, but Chegg also provides information about more than 25,000 scholarships. Chegg created an online tool for users to browse through various available scholarships.
College Express is another service that provides a search tool for users to search for scholarships based on the search keyword. They also offer featured scholarships that can be applied online.
Petersons have been in the education field for a long time, and they also provide a scholarship search tool that provides information about $10 billion in scholarship awards from 4000 scholarship providers. Peterson’s online search tool is user-friendly and offers various search categories for scholarships, grants, prizes, etc.
Cappex is a great website that provides information about various colleges and scholarships. Their website also provides tools for students to see their chances of getting admitted to any college. They also host a massive database of scholarships, about $11 billion in scholarship amounts that students search can for by creating an online account and profile.
Unigo has an extensive database of over 3.6 million scholarships. Users can create an account and profile and enter scholarship entries. Based on all this, Unigo will provide personalized results, which will also be updated every month. Users can also browse through various types of scholarships based on categories.
College Board is one of the oldest educational organizations in the nation. College Board provides a lot of information to students about examinations, dates, prep tests, etc. They also offer a massive scholarship database with information about 2,200 scholarships with nearly $6 billion in scholarship amounts. Their online search tool is flexible and can be used to search for scholarships based on personal information, academic information, types of awards, etc.
Sallie Mae is famous for its student loans and provides information about scholarships in various categories. They provide scholarship information, not just for undergraduate students but also for graduate schools. Users can register online, create a profile, search for scholarships that fit them, and use other resources like the college-planning calculator tool to determine the cost of education.
Frequently Asked Questions About Scholarship Scams
Frequently Asked Questions
How do I spot a scholarship scam?
There are signs that you can look for:
- When they ask for your bank account number
- They ask you not to call them, saying only they will call you
- When they charge a fee upfront, it is essential to note that some legit scholarship providers also do that, and it is vital to use all other signs mentioned on this page to determine if they are scams.
- They tell you you won a scholarship you never applied for.
Is ScholarshipOwl legit?
Is FastWeb legit?
Is scholarships.com legit?
Is Unigo legit?
Is Cappex legit?
Is QuestBridge legit?
Is GoingMerry legit?
More Resources
Free Application for Federal Student Aid (FAFSA) – The FAFSA online application determines eligibility for all scholarship programs. This form can be completed and submitted for free.
Student Aid – Another source of free information is this U.S. Department of Education’s site for free resources on preparing for and funding education beyond high school.
Financial Aid Guide – Read more about Financial Aid and Scholarships.
Citations:
Federal State Commission (FTC) – How to avoid scholarship and financial aid scams
U.S. Department of Education (USDE)
National Fraud Information Center (NFIC)
Federal State Commission (FTC)
U.S. Postal Inspection Service
Postal Crime Online Complaint Form
U.S. Department of Education, Office of Inspector General (OIG) Hotline
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