Hundreds of students, parents, and guardians fall victim to college financial aid scams every year. Best government estimates suggest that more than $100 million is lost annually to scam operators posing as government agencies, education lenders, scholarships, and grant-giving foundations. Though many of these scammers have official-sounding names, or work from legitimate-sounding websites, they are anything but.
Here are some tips on how to distinguish between college financial aid scams and true offers.
- The first thing that you should do when looking for college financial aid scams is to be wary of any scholarship with an application fee. Most legitimate scholarship programs do not require you to pay anything up front. Many people pay the application fee, then, when they hear nothing for several months, assume they didn’t win the scholarship.
- The second thing that you should do when watching for college financial aid scams is to watch out for anything you receive in the mail telling you (a) that you’ve won a college scholarship worth thousands of dollars, and (b) you must pay the taxes or a disbursement fee so they can release the prize. Legitimate scholarship prizes do exist, but you must enter them to eligible. If you don’t remember entering a scholarship contest, or if you must pay money to receive money, it’s a scam.
- The third thing that points to college financial aid scams is a check in the mail. Disregard any checks you receive in the mail. Scammers sometimes send a check in the mail for more than the actual scholarship amount, along with a letter asking you to deposit it and write them a check for the difference. The check will inevitably bounce, but you’ve already given them a hefty amount of money.
- Avoid ‘guaranteed’ scholarship-matching services. These services claim that, for a nominal fee, they can match you to scholarships for which you qualify, and that their services come with a money-back guarantee. If the service doesn’t pocket the money outright, they will send you a list of scholarships for which you may or may not qualify. When you don’t receive any scholarship money and then apply to them for a refund, you discover that you don’t qualify.
If you suspect one or more college financial aid scams, immediately contact the National Fraud Information Center, the Federal Trade Commission, your state’s Attorney General, the Better Business Bureau, or the US Postal Inspection Service.