obama student loans forgiveness medical consolidate privet student loans

College Scholarship Scams and How to Avoid Them

College scholarship is type of financial aid granted to college students to help them pay educational costs. Because of the fact that they do not involve any repayment terms, hundreds of thousands US students apply for college scholarships every year. According to recent reports, each year thousands of these students and their families lose about $100 million because of widespread scholarship scams. They have been cheated by individuals or organizations who usually imitate legitimate government agencies, federal or private student loan lenders, scholarship providing services or other student financial aid providers, using similar logos as official universities or official-sounding names including words like “Federal”, “National”, “Foundation”, etc.

Here are some advices on how to identify these college scholarship scams, how to protect yourself and what to do if you are scammed.

Widespread College Scholarship Scams

When talking about scholarship scams, as a general rule, you should be cautious of scholarships which guarantee fast success, require an application fee, offer too low interest-rates or ask for your personal information. Generally, if you have to pay money in order to receive money, it’s probably a scam.

Here is a list of common college scholarship scams and some useful tips how to avoid them.

The Up-front-fee Loans

This scholarship scam usually offers low-interest student loans, and students are required to pay a fee in advance to obtain a loan. It might be called an ”origination fee”, “application fee”, “processing fee” or similar.  After you pay the amount required, your student loan never materializes. To protect yourself, keep in mind that real student loans never require an advance fee, since they deduct the fees from the disbursement check. If you are taking a private student loan, the best idea is to show the offer to your loan servicer to get their opinion.

College Scholarships for Profit

This scholarship scam looks identical to a real scholarship financial aid program, but it requires an application fee to be paid, which usually comes from $5 to $35, but they generally don’t award any scholarship to applicants.

Free Seminars

If you receive an advertisement for a free financial aid interview or seminar, be careful, since, even though these seminars often provide useful information, they also can be smartly camouflaged sales pitches for expensive educational loans, investment products or financial aid consulting services.

The Scholarship Award

This type of scam informs you that you have won thousands of dollars worth college scholarship, but asks you to pay taxes or disbursement fee in order to realize your prize. If someone informs you that you’ve won some prize and you don’t even remember that you’ve applied or enter the contest, be alert, it’s probably a scam, since no legal scholarship sponsor will guarantee you’ll win an award.

No Eligibility Criteria

This type of scams offers scholarships with no eligibility requirements. All official college scholarship providers are looking for candidates who best meet certain criteria, so be wary on these scholarship offers.

Unusual Requests for Personal Information

If the scholarship application requires to disclose your credit card number, bank account numbers or social insurance number to “validate your identity” or “confirm your eligibility”, it’s almost certainly a scam. They may use this information to theft your identity. To protect yourself, be alert and don’t give out your personal information if not totally sure about loan provider. In fact, it is the best if you check out their reputation through your local consumer protection agency.

Time Pressure

If your potential scholarship sponsor urge you to act quickly to obtain your college scholarship and you don’t get a feedback for several months, it’s most likely that you deal with the scholarship scam, because the most of legitimate scholarship sponsors do not urge applicants in this way, they let you to take time you need to consider their offer.

How to Protect Yourself

Caution Signs of College Scholarship Frauds

Certain signs can be helpful in identifying possible scholarship scams. Of course, the following does not automatically indicate a deception, but if the potential scholarship sponsor demonstrates several of these signs, you should be alert and treat it cautiously.

Fees involved. As it was mentioned, if the scholarship offer involves any money that it should be given in advance, thus don’t sign any contract which requires you to pay any up-front fees in order to get the scholarship.

Personal information requests. Be alert of what type of your personal data is required. Never give out information such as SIN number or credit card numbers to strangers.

Time pressure. Ignore all the scholarship offers that involve such time demands.

Everybody is eligible. Don’t trust such promises. Every legal college scholarship  provider has some particular eligibility requirements.

Once more, if you are suspicious about a particular college scholarship offer, always keep in mind the following:

  • If the offer sounds too good to be true, it probably is.
  • If you are asked to give money to get money, it’s possibly a scam.
  • Information about college scholarships are available for free.
  • There is no guarantee that you’ll win a scholarship.

The US Department of Education upholds a list of federally accredited colleges and universities; any school that it isn’t on the list may be a subject of your caution (although schools that not participate in the federal student aid program might not be on the list, but yet be accredited).

Tagged with:

Speak Your Mind

*