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6 Common Scholarship Scams to Avoid

With college tuition rates skyrocketing, it’s no surprise that students are looking for ways to ease the financial burden. Public out-of-state colleges currently average $21,184 a year, with private schools coming in at a budget-busting $35,087. While numerous scholarships exist to help students fund their degree, the fact is that not all organizations are above board. In fact, scholarship scams are all too common, with students representing almost 10 percent of fraud allegations reported to the BBB Scam Tracker in 2018.


So, how do you secure money for college without running afoul of scams and fakers? Keep reading for tips on spotting scholarship scams and avoiding negative outcomes like wasted time, money loss, and even identity theft.


Don’t Fall for These Scholarship Scams


A form of fraud, scholarship scams refer to practices used by dishonorable individuals or organizations that claim to be helping students pay for school. Here are some of the most commonly seen scams to be on the lookout for, as you seek college funding:


1. Needing to pay to apply.


Scholarship organizations should provide students with money, not the other way around. If a company or website asks you to pay to apply for an award, then you’re almost certainly dealing with a scholarship scam. Be wary about any organization that promises you a scholarship in exchange for a fee, or tries to convince you to hand over money by sharing success stories from other students.


2. Winning something you didn’t apply for.


Hearing that you won a scholarship is always exciting. However, if you didn’t apply for the award in question, you might also feel confused and a little alarmed. Unfortunately, some dishonest organizations will tell you that you won a scholarship so they can ask for service or processing fees. They may also send a scholarship check that winds up bouncing. As a rule of thumb, assume that you didn’t win a scholarship if you didn’t apply for it in the first place.


3. Being asked for your financial/bank info.


Most legitimate scholarships send money directly to you or the school you’re attending. Moreover, because providers are not required to report scholarships to the IRS, they have no legitimate reason to ask for your credit card information, social security number, or banking details. If an organization asks for financial or banking information, it’s likely that you’re involved in a scholarship scam. Avoid providing these details to ensure no one can steal your identity or withdraw money from your accounts without your consent. 

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4. Services that claim to apply to scholarships for you.


Just as you’re unlikely to receive a scholarship you didn’t apply for, the odds are slim that a company will submit scholarship applications on your behalf. So-called scholarship matching services typically ask for money in exchange for finding scholarships or even applying for you. And while the organizations may promise to refund your money if you don’t win an award, many wind up keeping your cash. Avoid these paid services and find lucrative scholarships on your own. 


5. A “secret list” of scholarships you need to pay for.


Don’t fall for companies that claim to provide a list of scholarships for a fee. Although organizations may claim they have access to opportunities you can’t find through other sources, the truth is that legitimate scholarships want students to find them. When in doubt, avoid paying for scholarships or information. 


6. “Honors” you have to pay to accept.


Certain merit-based organizations may offer scholarships to top students. However, applicants should take care to avoid honors they have to pay to accept. 


For example, high schoolers often confuse the well-regarded National Honor Society with the National Society of High School Scholars, an academic society that students pay to join. While admission to the NHS is free and based solely on merit, students invited to the NSHSS have to shell out a $75 lifetime membership fee. Additionally, NSHSS has a broader criteria for admission, meaning colleges are likely to see it as less prestigious or noteworthy. 


In general, it’s best to avoid any scholarship programs or honor societies that promise renown or financial rewards for a price.


Debunking a Common Scholarship Myth


College services companies often encourage students to apply for external scholarships. While private scholarships are a valuable source of college funding, the truth is that winning these awards can be challenging. Hundreds or even thousands of students may apply for a single scholarship, and many of them offer relatively low award amounts. Although private scholarships aren’t a scam, students may be better off applying to schools where they are likely to receive funding. 


The fact is that colleges themselves give out numerous scholarships based on merit. In fact, colleges grant $175 billion in scholarship funding every year, while external organizations give out only around $11 billion. Awards recognize various achievements, including GPA, SAT scores, and extracurriculars. Depending on how strong your profile is at the college in question, you may even qualify for full tuition and room and board. 


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Short Bio
A graduate of the Master of Professional Writing program at USC, April Maguire taught freshman composition while earning her degree. Over the years, she has worked as a writer, editor, tutor, and content manager. Currently, she operates a freelance writing business and lives in Los Angeles with her husband and their three rowdy cats.