Beware of companies that prey on students

10 Steps to Avoid Scholarship Scams

by Pyper Barnes


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Nearly everyone needs financial assistance when they are heading off to college. You're probably no exception. Tuition seems to rise every year and room and board is often quite expensive.

You're not alone if you are looking for creative ways in which to finance your college tuition. Be careful that, in your efforts to secure funding, that you don't fall prey to scholarship scams.

The Federal Trade Commission (FTC) is the watchdog for consumers in the United States, and they warn you to beware of companies that prey on students looking for funding. Here are some specific scholarship scams to watch out for, and some suggestions on protecting your credit and your identity.

1. Paid Scholarship Searches

If you have done any online searches, you will already know that almost all scholarship information is free for anyone online. All it takes is the effort and time to conduct your own search. You shouldn't ever need to pay someone to help you find scholarships.

2. Guaranteed Scholarships

No scholarship service can guarantee you that you'll receive any scholarships. Many scams claim to offer a "money back guarantee." That's a red flag. If you check the fine print, you'll see that it would be nearly impossible to get your money back if you tried. Each real scholarship has some specific parameters, like volunteer service, club or employer affiliation, and grade point average.

3. Always Be Suspect of Any Unsolicited Offers

If you get a call that says you've been selected for a scholarship for which you don't recall applying, this is almost assuredly a scholarship scam. If you receive information that you didn't request, investigate fully before you give someone personal information or pay any alleged "processing fees." Ask how an unknown organization got your name, and make follow-up calls to see how the phone is answered. Check the organization out online, too.

4. Free Seminars

Free seminars or candidate interviews are not usually what they sound like. They are quite often glorified sales pitches for a scholarship or financial aid consulting service, or expensive student loans.

5. Free Scholarship Money with No Work

If you see "free money" for tuition, count it as another red flag. No one does all the work for scholarship applications for you for free. Legitimate sponsors want to hear from you, and that usually means that you'll need to fill out paperwork and include an essay or letter. There's no way around that.


6. Loans for Advance Fees

Advance fee loans that have an unrealistically low interest rate and require you to pay upfront fees before the loan is disbursed are expensive scams. True lenders will deduct their fees from your loan check before they send it to you. Be especially suspicious if you don't recognize the name of the lender.

7. "Exclusive" Scholarship Information

If a scholarship service tells you they have information you won't find anywhere else, it's probably a lie. Most financial aid comes from colleges, foundations, and the federal government. The private organizations that offer college scholarships advertise their scholarships in every way they can. Everyone who offers a scholarship wants the best candidates and it would not serve them well to keep their scholarships a secret.

8. Ask Questions

If you're dealing with a legitimate organization, you should be able to verify their telephone listing and physical address. Watch out closely for P.O. boxes, especially in California and Florida, where many schemes originate.

9. Investigate Companies

Your college office is a good first stop if you have doubt or suspect scholarship scams. You can also contact government and consumer protection organizations to make sure the company has not had complaints, and is not under investigation. Some of the organizations you may wish to contact include:

  • The Federal Trade Commission (877-FTC-HELP)
  • The Better Business Bureau (BBB) in the local city or area where the scholarship service address is located
  • Your state attorney general's office
  • Your state department of consumer protection
  • The Fraud Center of the National Consumer League

10. Protect Yourself and Your Identity

Never give anyone your personal information without checking them out first. Even if the request sounds reasonable, you don't want to give out your social security number or any other personal information.

Student loan calculator iconCalculator: Are you taking on too much student loan debt?

Get every deal in writing before you respond. Don't place any weight on promises made verbally. Check all refund policies on offers you receive before you send any money. Read everything, even the fine print.


Pyper Barnes is the Founder of Weird Scholarships. Weird Scholarships is dedicated to helping students find unconventional and unique scholarship opportunities.

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