Paying For College: How To Recognize Scholarship Scams

Explains how to spot a potential scam, and how to find out if a scholarship search or program is legitimate.

College tuition costs can appear frightening to high school students and their parents, making them targets for scam artists who prey on their fears by offering scholarships, consultations, seminars, and loans, but only run off with the money.

Such scams and frauds can be avoided, if you know what to look for and how to investigate a possible scholarship opportunity.

General Rules

1) Real scholarship foundations don't charge fees.

If the scholarship offer is asking for a fee to offset costs in order for a scholarship to be given, it's most likely not a real scholarship. Foundations conduct fund raisers and have money given to them in order for them to give the money away; they have no need to charge the student for receiving the money.

Note, however, that there are legitimate consultants and scholarship searches that charge fees. Using some of the following tips you can learn how to separate the legitimate ones from the frauds.

2) There are no guarantees.

If the offer promises or guarantees that you will be given a scholarship in return for a fee, be warned that even the best scholarship consultants and scholarship searches cannot "guarantee" that you will receive a scholarship.

3) Real scholarships have restrictions.

Whether it is based on merit, ethnicity, athletics, extra-curricular activities, your major, or even the fact you are left-handed, scholarships are given to select individuals. There is no scholarship given to everyone and anyone, so beware if such a scholarship is offered.



4) You have to enter to win.

Be especially wary if you are notified that you are a finalist or you won a scholarship competition that you did not enter. Your name was most likely plucked from a mailing list, not a winner's list.

5) Beware of high-pressure sales.

If the company or foundation is pressuring you to send a check or give a credit card number immediately or very soon, back off. Legitimate companies will not use such tactics as you carefully plan for a future in college. Someone interested only in your money, however, will.

5) If it sounds too good to be true, it probably is.

This bit of common sense applies to scholarship opportunities just as well as it does in other cases. Is the offer for a student loan at incredibly low rates (provided you pay a fee now to guarantee it) or for an exceptionally large scholarship in contrast to other offers you have received? Take note of such "red flags" as you look for creative ways to pay for higher education costs.

6) Do your homework.

Check up on any suspicious company before agreeing to pay anything. Some places to seek help:

-A high school guidance counselor. Even if you have put other children through college, realize that guidance counselors help dozens of students every year, and may have heard of a fraudulent opportunity, as well as many other legitimate ones.

-The Federal Trade Commission. This branch of the federal government monitors fraud, and has information on scam artists and fraudulent companies. They also provide consumer alerts to new and growing trends.

-Other parents. Locally, or even over the Internet, you can network with other parents and find out about scholarship services that never did what they promised. Be careful on the Internet, though, as some shady companies will pay for promoters or testimonials that are not truthful.

There are some excellent free services on the Internet for locating scholarships. You can also visit your local library for books of scholarship opportunities. Note that the most recent edition will probably be located in the reference section.

© High Speed Ventures 2011