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The Scary World of Scholarship and Financial Aid Scams

scamFamilies that are paying for college are facing one of life’s biggest expenses. To make college affordable, students often search for scholarships to help themselves pay for school. Unfortunately, although many legitimate and generous scholarship opportunities exist, there are also scammers that prey on vulnerable students and their families.

Online financial scams are getting more and more common. In fact, people who earn a Certificate in Financial Crime Investigation often spend their careers rooting out online fraud. To read more about using due diligence before paying someone who approaches you over the Internet, visit this page. Then, before you commit to a school, familiarize yourself with some of the most common scholarship and financial aid scams.

“Come to Our Free Seminar!”

If you get a direct mail or email invitation to a free scholarship seminar, you’re usually better off staying at home. When you show up to the seminar, you’re more likely to hear about annuities, insurance and other investment products than scholarships. Presenters might also ask for money to enroll you in a scholarship matching service, or they might offer student loans with exorbitant fees and interest rates. Always verify the identity of the company that’s hosting the event. If the company doesn’t list a legitimate phone number, it’s a scam.

hooray“You’ve Been Pre-Qualified for a Scholarship”

Scholarships are competitive, and there are usually many qualified applicants. No scholarship has to try to recruit students via email. If you receive an email saying that you’ve been pre-qualified for a scholarship, delete it immediately, and never click on any of the links.

Also, beware of pop-up windows that say, “Congratulations! You’ve just won a $10,000 scholarship!” Be especially cautious if you’re told that scholarships are available on a first-come-first-served basis.

“Please Send Your Application Processing Fee”

Legitimate scholarships don’t ask for a fee when you apply, and neither do legitimate financial aid offers. If you’re asked to provide a credit card number or bank account number to hold your scholarship, never provide the information.

Most scholarships are paid directly to the university, not to the student. Even if the disclosure statement offers a money-back guarantee, never ever pay a fee to hold a scholarship or student loan.

“We’ll Do All the Work”

Some companies offer to help you apply for grants, work-study, loans and other kinds of aid. They say that they’ll fill out your paperwork for a “nominal upfront fee.” The only way to get federal student loan funds is to fill out a FAFSA, and you never have to pay to submit your FAFSA. Also, don’t be duped by testimonials praising the company’s amazing service. Most of the time, companies pay for these testimonies, or they make them up entirely.

Other Signs of a Scam

The scams described here are just some examples of potential scenarios. Fraudsters are dreaming up new kinds of scams all of the time. However, by recognizing some of these additional warning signs, you can steer clear of almost any scholarship or financial aid scam.

  • “You won’t find this information anywhere else.” Legitimate scholarship programs are transparent about what they offer, and they’re eager to give away their funds. If someone promises special insider scholarship information, then it’s probably a scam.
  • “You’re a finalist — even though you never entered the contest.” Scholarships have a competitive application process. People who award scholarships probably aren’t going to cold call you or send you an unsolicited email.
  • “You get a scholarship, or you get your money back.” Some legitimate services do enter your name and qualifications into a database and match you with available scholarships for a fee. However, no legitimate service guarantees that you’ll win a scholarship or get your money returned to you.
  • “This offer won’t last long.” Most scholarship applications have strict deadlines, but you’re not going to be pushed to apply. If a salesperson is pressuring you for money for a limited-time opportunity, then the salesperson is probably shady.

What If You’ve Been Scammed?

If you’ve been victimized by a scholarship or financial aid scam, file a complaint with the Federal Trade Commission, and contact your state attorney general’s office. You might feel embarrassed to admit that you’ve become a victim, but your report might help someone else to avoid the same fate.

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