How to Avoid Scholarship Scams

Every year there are fagraduationmilies who get taken advantage of by unscrupulous services claiming  to provide special help with college scholarships. It is estimated scholarship scams cost more than $5 million annually and hundreds of thousands of students are affected.

These scholarship scams have become so common, the federal government and consumer protection agencies such as the Better Business Bureau report they receive frequent complaints from consumers who have lost money.

The Federal Trade Commission provides this list of “tell tale lines ” of scholarship scams:

  •  “You can’t get this information anywhere else.”
  • “The scholarship is guaranteed or your money back.”
  • “I just need your credit card or bank account number to hold this scholarship.”
  • “We’ll do all the work.”
  • “The scholarship will cost some money.”
  • “You’ve been selected” by a “national foundation” to receive a scholarship – or “You’re a finalist” in a contest you never entered.

Secret and Surprise Scholarships
Some companies claim they have access to “secret” or “unclaimed” scholarship monies. They may charge a fee and promise you’ll get your money back if you don’t get the scholarship. The reality is that scholarship information is not secret but readily available for students who wish to search for it. Another common scam is to inform the student has been selected as a finalist for a scholarship they never applied for. This scam may be accompanied by a request for a bank account number. Teens should be warned that these are scams and told they should not respond or click links in these emails.

Free Application for Federal Student Aid
Some families also have confusion about applying for federal financial aid. Families should know that FAFSA stands for Free Application for Federal Student Aid. Note free is right in the name. It doesn’t cost anything to fill out this form. Most families do not need to pay for assistance to complete the FAFSA and typically families report they can fill it out in half an hour or less. Paid services may actually be much more confusing and time consuming!

High Pressure Free Seminar
Watch out for companies that contact you to inform you that you’ve been scheduled for a college planning seminar. You may be told if you attend you’ll be eligible for a scholarship. These companies often use high pressure tactics to pressure parents into purchasing services or taking out private loans.

Avoid Scholarship Lotteries
Beware of scholarships that require no qualifications – no resume, no essay, no application. These scholarships are likely more about data-mining or obtaining information about students to resell. While the company may indeed give out that $1,000 scholarship they are obtaining the personal information of thousands of students in the process. That information may be sold to colleges that with flood you with emails and irritating phone calls.

Safe Ways to Search
Families should use a separate email address for these types of searches so if your name is sold or you are subject to excess email it doesn’t clog up your primary account.  Talk with your teens about safe ways to search for scholarships and financial aid information. Your student should know not to give out personal information like their social security number or banking information. Scholarship scams make a great consumer education and online safety topic for teens and should be included in any financial literacy or personal finance course.

Scholarship and Financial Aid Sites


Detailed financial aid articles and calculators

Scholarship search site


  • We got this same phone call about the free seminar and they said they got the information from the school district but we have always homeschooled!!!

  • My older son applied for dozens of scholarships online and got no money but lots of junk mail. For our younger homeschoolers we are not wasting time on it.
    Great site!

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