How to Avoid a Scholarship Scam

Whether you attend a university, college, trade school, or a programming boot camp, education is expensive any way you slice it. For many students, financial aid and scholarships are the best way to pay for college because there's no debt to repay. This scholarship money might be a boon to students, but scammers always want a piece of the pie.

Here are four tips to help you avoid common scholarship scams as you secure your college funding.

The number-one way to spot a scholarship scam is if they ask you for money while promising you a grant or college scholarship in return. This is some twisted logic because scholarships give you cash for free; they don't cost anything to apply for. Here are some red flags to help you spot fake scholarships:

• Requests for a bank account or credit card number for any reason
• Processing fee
• Application fee
• Redemption fee
• Money-back guarantee

This advice also applies to anyone offering to fill out your FAFSA for a fee, which is more troublesome because of the sensitive personal information on that form.

You can often find potential scholarship scams if you receive an unsolicited letter, email, phone call, or message—meaning you didn't contact them first—especially if it seems too good to be true and asks for your personal information.

In most cases, the person, company, or organization offering a legitimate scholarship will not contact you first. They are unlikely to single you out since they may already have hundreds or thousands of applicants to sort through. They likely won’t bother with people who haven't even applied yet.

Typical phishing scam best practices apply when someone contacts you about a scholarship program out of the blue:

1. Research every person or organization to make sure they're genuine.
2. Don't make any payments or share financial information.
3. Watch out for suspicious email addresses that don't match the contact name or company name and use so many numbers that a human likely didn't create them.
4. Don't open any attachments in emails or messages.
5. Delete, report, or discard the correspondence.

Financial aid seminars can be useful places to learn information about applying for a scholarship. Sadly, they're often sales pitches for a service that's entirely unnecessary when applying for scholarships and grants.

We recommend applying our advice from previous sections if you plan to attend a seminar: watch for fees and do your research to check that the service is legitimate.

If the financial aid service checks out on other fronts, the FTC recommends asking about their refund policy.¹ Anything other than a direct price quote with clear instructions for getting a refund is probably a scam to avoid.

Most colleges and vocational schools have financial aid offices that direct you to the best financial aid and scholarship resources. Stopping by the financial aid office is the best way to learn about your options, but you can also find resources on your school's website.

Every student should fill out a Free Application for Federal Student Aid (FAFSA) each academic year to see if they qualify for federal aid. You'll need to fill out the FAFSA form with information about your current enrollment, income, citizenship, prior education, and recent academic performance.

If you're eligible, your school receives your financial aid payment—it applies it to tuition and other fees before giving you the remaining balance to cover textbooks and other school-related expenses.

While your school's financial aid office should be the first stop for finding scholarships, you can also use the CareerOneStop Scholarship Finder from the US Department of Labor.

This excellent tool can search over 8,000 scholarships using filters based on location, award type, if you're a minority, or identify with a social group.

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1. Consumer Advice, Federal Trade Commission, "How To Avoid Scholarship and Financial Aid Scams," May 2021. Accessed July 22, 2022.