How Can You Spot a Scholarship Scam Before It’s Too Late?

Secondary education has always been a luxury, but only recently has it become expensive enough to require loans. Thankfully, students looking to avoid indebtedness have some options available—the best of which are scholarships. Over 1.7 million scholarships are awarded yearly, granting billions of dollars in funding to in-need students and families. 

Scammers and malicious characters target and exploit students seeking financial assistance and design schemes that steal personal information and money from their victims. Even worse, the victims may not realize they were targeted until the fees come due, just before the semester starts. As part of a student’s research into personal and financial aid loans, they should also take the time to learn about scholarship scams—as they are the most at risk for becoming victims. 

What are Scholarship Scams? 

Scholarships account for nearly 25% of annual educational costs in the US. They come through various avenues, including government programs, university programs, and private benefactors. The most widely used scholarship in the US is reserved for undergraduates and is sponsored by the government—the Pell Grant; it is a gift of a few thousand each semester for students who meet its requirements. 

Of course, it’s not only undergraduates who rely on scholarships. Students at all levels benefit from these charities, with most students in the US relying on them entirely throughout their secondary and tertiary educations. Our community and university cultures and their connected costs expose vulnerable students to malicious actors. 

Scholarship scams are an insidious risk to college kids; a fake scholarship may disguise itself as a quick solution for funding books or parking passes or even stand in as an option for paying semester class fees. In reality, those most at risk for falling victim to a fraudulent scholarship scam are those students most in need just before and during the semester. However, these schemes are designed to steal personal information and money from their victims rather than providing financial aid.

How Scholarship Scams Work 

Here is when you should get suspicious when trying to apply for or get a scholarship. 

Fake Application Fees 

Students unfamiliar with scholarship entry processes have a high risk of falling victim to application fee scams. In practice, these scams function no different than advance fee scams—the victim requests a service (in this case, the student would request entrance into the scholarship pool), they pay a fee before receiving any service, and the scammer makes off with the fee payment. Scholarships will never require any upfront payment or application fee; however, if the student is still unsure, they can speak with their institution’s scholarship committee about the opportunity they want to pursue. 

Guaranteed Scholarships 

Other students may fall victim to fake scholarships when they promise a guaranteed option. Scholarships do not function with guarantees. Whether income-based or government-funded, there are always background and financial reviews the student’s information must undergo. These funds have no guarantees, so anyone promising a ‘sure thing’ concerning scholarship funds disbursement should be treated cautiously.

Personal Information Theft 

Some students may be victimized regardless of whether they pay for special applications or guarantees upfront. Scammers may create authentic-looking websites and forms to trick students into sharing personal details—Social Security Numbers, contact information, and even bank details can be targeted in these schemes. Don’t share personal information with parties who contact you or are not affiliated directly with your institution. 

Phishing Emails or Websites

Fraudster websites (mentioned above) aren’t the only impersonation tactics scammers use. Fake emails can darn institutions’ official seals and logos, tricking students into sharing personal information for the chance at legitimate offers. Phishing tactics like this are a severe threat to all institutions; subsequently, students should never respond to or interact with emails unless they know the sender.

Common Red Flags of Scholarship Scams

When you meet the below-mentioned or similar actions from scholarship providers, it might be a good time to stop the communication. 

Requests for Payment

One of the clearest red flags of a scholarship scam is the request for a fee payment. As mentioned above, this could look like an ‘application fee’ or ‘processing fee,’ but these are never connected to legitimate offers. If an offer looks promising but requires one of these fee payments to access it, the opportunity is not authentic.

“Guaranteed” Scholarships

Most scholarships are merit-based opportunities, disbursed according to the student’s financial needs. Above, we mentioned that background information reviews are conducted related to these decisions. Consequently, anyone promising guaranteed scholarship funds wants to gain something from their associates.

Unsolicited Offers

If a student ever receives an unsolicited offer to join a scholarship applicant pool, it is a clear sign of fraudulent activity. Legitimate scholarship hosts will never reach out to students, just as the IRS will never directly call a consumer. Students who have been sent an email or other communication without prompting the contact must use caution. 

High-Pressure Tactics

Some scammers may also create time-sensitive stories to push a student into making a decision (usually ending with the student giving the scammer whatever they asked for). These false urgency stories may range from “the first 100 applicants” to “for the next 24 hours” or anything in between. Don’t be confused; there are timelines associated with scholarships and universities, but they are never as aggressive as these scammers claim.

Vague or Missing Contact Information

The last red flag of a scholarship scam comes from the contact’s communication details. Even in cases where scammers impersonate a university official, they are not able to exactly copy the details of their disguise because then, these details would connect the student to the correct person instead of them. So, double-check the details of a communication before you answer it—most universities have public directories for this reason.

Who Is Most at Risk?

As indicated multiple times throughout this article, students risk falling victim to these scams. However, there are groups within “students” who may be more aggressively targeted by scammers looking to make a quick buck. In particular, high school students and first-generation college students are at risk for these scams due to their presumed inexperience with scholarship application processes. 

At the same time, international students are also hot targets due to their unfamiliarity with scholarship applications. Contrast this unfamiliarity with those familiar with the processes but under tremendous financial pressure, and we have the last group of students most at risk for falling victim to a scholarship scam. Consequently, with so many students at risk of being victimized by these bad actors, the situation begs the question: how to know if a scholarship is legit?

How To Verify a Scholarship’s Authenticity 

It’s better to be proactive in identifying scholarship scams rather than trying to solve the issues later. Being cautious and applying the steps below will help you be prepared to save you from scammer attacks. 

Research the Organization

There are many ways to verify the authenticity of a scholarship opportunity; one of the easiest is to research the organization offering it. Note, however, that this does not mean trusting the links sent via unsolicited communications—never click on a link sent by a stranger. Instead, open a new window and begin the verification process with a search engine. Most times, it will become apparent if the opportunity is authentic. 

Look for Accredited Sponsors

Meanwhile, students looking for scholarship opportunities must double-check that they are interacting with legitimate providers. They could be talking to scammers if they aren’t speaking with a verifiable business. Verifying a provider's legitimacy varies in difficulty, with the most challenging being contacting the BBB or federal representatives. The easiest way to ensure students are speaking with legitimate providers is by using their institution’s resources, which usually include a list of reputable businesses and conglomerates offering authentic options. Students should also consider speaking with financial aid representatives to review all their options.

Avoid Sharing Sensitive Information

Legitimate scholarship providers will never ask for personal information before confirming who they are to the student. For example, if students requested assistance from the Pell Grant, they would first go to the Federal Aid provider, FASFA. FASFA would then verify who the student is via their social security number—not from the student offering bank details or some other sensitive information. 

Contact the Provider Directly

As with everything in life, if something seems wrong, it probably is. Students can always contact organizations if they think something suspicious is happening, but they should use caution. Scammers can create fake organizations to hide themselves, so verifying the company’s status with their institution should always be the first step in any clarification process. 

How To Protect Yourself from Scholarship Scams

Wondering how to protect yourself from scholarship scams? The below strategy might help.

Use Trusted Scholarship Search Platforms

Students face many threats when they begin searching for scholarship opportunities, so what do they need to know to know how to avoid scholarship scams? The best way to avoid these scams is by only interacting with trusted, well-known platforms like scholarship.com. A range of other platforms connect students with providers, most of which can be provided to the student via their institution. 

Be Wary of Upfront Fees

Again, be cautious whenever a scholarship provider requests upfront fees. Legitimate scholarship opportunities are determined based on merit or student need, so students should avoid anyone attempting to collect money in this situation. Institutions can also assist students in these circumstances and verify whether the opportunity is legitimate. 

Read the Fine Print

Some scams may even have delayed consequences; like aggressive credit and loan companies, a scamming organization could offer legitimate money for a later cost. This would technically count as a fraudulent loan, but unless the student reads through the terms and conditions of their agreement, there is no way to anticipate such hidden traps.

Stay Educated About Common Scams

No matter why students are considering their scholarship options, the best way to protect themselves from scams is to learn about them. The cyber security community constantly evaluates scam trends and tactics. Reading about these topics and learning the signatures of these scams can be the difference between having money for books and becoming a victim of identity fraud.

What To Do If You Fall Victim to a Scholarship Scam

What’s the way out of the scholarship scam pitfall? Follow these steps; they might help. 

Report the Scam

If students believe they’ve fallen for a scam, they can take steps to protect themselves. They should start by speaking with their institution and local authorities about the events, then go online. They can report suspicious companies to the Better Business Bureau’s Scam Tracker, file a fraud report with the Federal Trade Commission’s online report tool, and make a complaint with the FBI’s criminal complaint center. 

Monitor Your Financial Accounts

Students who have given their sensitive information to scammers must act quickly to protect themselves. Financial fraud is a common consequence of falling for scholarship scams—so we suggest starting with financial account monitoring tools. 

Notify Credit Bureaus

Of course, notifying the BBB, FTC, and FBI isn’t the only group that needs to know about the situation. If a scammer has exposed a student’s credit or financial information, notifying the three credit bureaus can also help protect them. Experian, Trans Union, and Equifax have specialized methods for assisting victimized consumers with surviving fraud, but the student will need to contact them to get the help they need.

Spread Awareness

Victims should also consider sharing their experiences online. Sharing the story with others online helps to prevent further scams from succeeding in two ways. On the one hand, potential victims may see and recognize elements of their situation, helping to drive them away from the scammer; on the other hand, spreading the experience can help experts learn about and anticipate future schemes. 

Scholarships are a necessary part of life for most college students; they account for over a quarter of all secondary education expenses and, in many cases, are necessary for the student to walk into a classroom. But this doesn’t mean they are all legitimate offers of ‘free’ money. Scammers can impersonate authentic opportunities, putting students of all levels at risk for fraud. However, by learning to identify these threats, students can avoid and report these con artists before they can seriously damage a student’s education and reputation. That makes everyone on campus safer from the threats we face every day.