Scholarship Scams

Scholarship Scams

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The good news is that there are billions of scholarship dollars out there to help you fund college. The bad news is that a lot of shady scholarship offers are designed to take your money, not help you pay for school. Below are 10 common signs that a scholarship isn't legitimate.

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You Need to Pay to Apply

Kniel/Synnatzschke Kniel/Synnatzschke/Getty Images

If a scholarship organization asks you to pay a fee before you'll be considered for an award, beware. Often your money will simply disappear. In other cases, an actual scholarship is awarded, but your chances of winning are so slight that your application fee is a poor investment. Think about it-if a company collects a thousand $10 application fees and then awards a single $1,000 scholarship, they've successfully put $9,000 in their pockets.

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You Need to Buy Something to Be Considered

Here, as in the example above, the company is simply out to make a profit. Let's say you need to buy a widget from me to be considered for a $500 scholarship. If we can sell 10,000 widgets at $25 a pop, that $500 scholarship we give to someone is benefiting us a lot more than all the people who bought our widgets.

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You Need to Attend a Seminar to Be Considered

Scholarships can be used as a hook to get naive families to sit through an hour-long sales pitch. As an example, a company may advertise a free college information seminar at which one attendee will receive a small scholarship. The seminar, it turns out, is a pitch to get you to take out a high-interest loan or invest in expensive college consulting services.

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You Won Something You Didn't Apply For

"Congratulations! You've Won a $10,000 College Scholarship! Click Here to Claim Your Prize!"

Sound too good to be true? That's because it is. Don't click. No one is going to give you college money out of the blue. You're likely to find that the generous soul who wants to give you thousands of dollars is actually trying to sell you something, hijack your computer, or steal your personal information.

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The Scholarship is "Guaranteed"

Every legitimate scholarship is competitive. Lots of people apply, and a few people will get the award. Any entity that guarantees a scholarship or claims that half of the applicants will receive the cash is lying. Even the wealthiest foundations would soon be broke if they guaranteed awards to all (or even a quarter) of applicants. Some organizations may "guarantee" a scholarship because everyone who spends a certain amount of money will get a small scholarship. This is nothing more than a sales gimmick, much like winning a trip when you buy a $50,000 car.

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The Organization Wants Your Credit Card Information

If the scholarship application asks you to enter your credit card information, close the web page and do something more productive with your time like viewing kittens on CuteOverload. There is no reason why a scholarship-granting organization would need credit card information.

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The Application Asks for Bank Account Information

"Enter your bank information so that we can deposit your award in your account."

Don't do it. Legitimate scholarships will send you a check or pay your college directly. If you give someone your bank account information, you'll find that money disappears from your account rather than gets deposited.

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"We'll Do All the Work"

This is another red flag identified by the Federal Trade Commission's Bureau of Consumer Protection (see their page on scholarship scams). If a scholarship application states that you don't need to do anything other than providing some personal information to apply, chances are the supposed scholarship-granting entity is up to no good with your personal information.

Think about it-scholarships are awarded because you've proven yourself worthy of the award. Why would someone give you money when you've put in no effort to prove you deserve the funding?

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The Awarding Company Is Untraceable

Lots of scholarships are awarded by small organizations that you may not know, but a little research should tell you whether or not the organization is legitimate. Where is the organization located? What is the business address? What is the phone number? If none of this information is available, proceed with caution.

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"You Can't Get This Information Anywhere Else"

This is another red flag identified by the Bureau of Consumer Protection. If a legitimate company has a scholarship to award, they are not going to keep the information hidden behind a locked door. More likely, the company is trying to get you to buy something, sign up for a service, or divulge a lot of personal information.

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Places to Find Legitimate Scholarships

Doing a random web search for scholarships runs the danger of turning up scams. To be safe, focus on one of the big reputable companies that provide free scholarship matching services for students. Here are some good places to start:

  • One of our favorites, Cappex has a spam-free interface, and you'll find private scholarships, college-specific merit scholarships, and college-matching services all in one place. The listings at Cappex represent $11 billion in available money. The merit aid information is the best out there.
  • The maker of the SAT and Advanced Placement exams also brings you "Scholarship Search," a database representing $3 billion in scholarship funds.
  • FastWeb: FastWeb has been a long-time leader in scholarship search. In 2001 the company was sold to Monster Worldwide, the parent company of job search giant In recent years, the site seems to have more ads and fewer scholarships than in its glory days.
  • Despite a few annoying pop-up ads, has an impressive and massive database to deliver college and scholarship matching services for students.
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The Gray Area for Scholarships

Individuals, companies, organizations, and foundations offer scholarships for a variety of reasons. In some cases, someone donated money with the simple agenda of supporting a certain type of student. In many cases, however, a scholarship is designed as part of an advertising and publicity campaign. The scholarship forces applicants to learn about (and perhaps write about) a particular company, organization, or cause. Such scholarships are not necessarily scams, but you should enter them knowing that the scholarship isn't being awarded out of anyone's sense of altruism, but as part of a corporate or political strategy.

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Related Articles

Here are a few articles to get you started on your quest for college dollars: