• Home
• About CyberStreetSmart
• About NYPIRG
• Support NYPIRG

Get Street Smart about Scholarship Scams

"Guaranteed Success or Your Money Back"

How can anyone guarantee that you'll win a scholarship? The truth is, they can't. Although some legitimate scholarship search services charge money to help you find scholarships, they will never guarantee that you'll win a financial award. If there's a guarantee, chances are it's a scam. And not surprisingly, refund policies are written so it is nearly impossible to get your money back.

"Millions of Dollars Go Unclaimed"

The claims that millions of dollars in scholarships go unused every year are perpetuated by those running costly "scholarship services" advertising their services to help you get a share of that money. The College Board reports that most available financial aid actually comes from individual colleges or the federal government and private scholarships that are for very specific applicants (members of a certain church, students with a specific career interest, etc.) are usually well advertised by the organization, company or church offering the award; their goal is to award the money, not keep it a secret.

"Information Available Nowhere Else"

Scholarship information is widely available for free on the Internet, in books, libraries, your guidance counselor's office, and other places. Research this yourself before paying to supposedly have it done for you.

"We Will Do All the Work for You"

Like so much else on the Internet that seems too good to be true, this type of offer is just that – too good to be true. When only the student and his or her parents know the personal and financial information necessary to complete scholarship applications, how could anyone else do the work for you?

Scholarship Advance or Up-Front Fees

If you are told you must pay a "disbursement fee," taxes, or any other up-front fee in order to claim your financial aid award, or if you're told that you're a finalist and must pay money to be considered for the scholarship, chances are you're dealing with a scammer. If there are fees associated with a real grant or scholarship, they will be taken from the disbursement check, not paid up front.

Advance-Fee Low-Interest Loans

This is another too-good-to-be-true scenario: you are offered an unusually low interest loan for your education, only you are told you must pay an upfront fee. After the fee is paid, the loan does not materialize. Fees that accompany legitimate educational loans are deducted from the disbursement check; they never require up-front fees.

Unsolicited Emails

You should always be wary of unsolicited emails. Scholarship notices from sources you have not contacted are likely to be fraudulent.

Requests for Credit Card or Account Information

This information is sometimes requested, with the claim that it is needed in order to hold a scholarship or confirm a student's eligibility. This is never a prerequisite for a legitimate scholarship or grant. Be very wary of giving out personal information such as your bank account and credit card numbers, as you may be setting yourself up for unauthorized withdrawals or charges on your account, or for identity theft. See our Identity Theft page for further information.

Financial Aid Seminars

According to the Better Business Bureau, the most common type of scholarship scam is the seminar scam, in which you receive a letter inviting you to attend a "seminar" which in reality is an opportunity for an in-person, high-pressure sales pitch for a useless and expensive scholarship consulting services, investment products, scholarship matching services and overpriced student loans.

"You've Been Selected!"

Announcements that you are a finalist in a competition you never entered, or that you've been selected by a "national foundation" to receive a scholarship are common gimmicks designed to lure people into scholarship scams. How could you have won a competition you never entered or been awarded a scholarship for which you did not apply?

Testimonials and High Success Rates

Whether on a Web site or at a seminar, remember that success stories can be fabricated. "Shills" or accomplices are paid to give glowing testimonials, and success stories can easily be written and posted next to photographs of smiling students.

Rearranging Assets or Bargaining for Scholarships

Be wary of professionals who promise to advise you on how to shift you or your parents' assets around to qualify for more financial aid. Administrators can easily detect this and may be unlikely to even consider your financial aid application if they suspect deceit. What's more, by signing the affidavit at the end of your Free Application for Federal Student Aid (FAFSA) form you are swearing the information you provided is true. You can be prosecuted for fraud if you provide false information, even if you did so upon the advice of a "consultant." Also look out for those who say they will use your credentials to bargain for aid money with financial aid administrators; they don't bargain.