college

4 scholarship scams to avoid

When you're desperately searching for cash for tuition, you'll leap at anything that sounds even remotely like a scholarship or grant. Which is why thousands of students and their parents get taken every year by con artists promising -- but never delivering -- money for college.

The Federal Trade Commission warns about these seductive statements that might signal potential fraud. Here are some of the most prevalent:

"The scholarship is guaranteed or your money back." In exchange for a fee that can range from $10 to $400, fraudulent scholarship-search companies promise you'll win at least $1,000 for college. It sounds like a fabulous return on investment, but what you'll likely get is a list of scholarships no better than the ones you can find for free on the Internet or in a scholarship guide at your local library. Want a refund? You'll have to provide a rejection letter from every scholarship program on the list. Even then, you may never see your money.

"You've been selected by a national foundation to receive a scholarship" or "You're a finalist" in a contest you never entered.Few legitimate scholarship programs seek out potential applicants -- they just don't have the resources. Proceed with caution, particularly if you've been asked to send money or your credit card number.

"I just need your credit card or bank account number to hold this scholarship." You should never be asked to give money in exchange for a scholarship you've won. Giving out your financial information could allow scam artists to drain your bank account or rack up charges on your credit card, so check with the Better Business Bureau or the Federal Trade Commission to ensure you're dealing with a trustworthy program.

"The scholarship will cost some money." While a few legitimate scholarship sponsors require a small processing fee with your application, this is often the sign of a for-profit or fraudulent program, which takes in more money in fees than it gives out in scholarships, or never awards any money at all.

The best way to avoid getting tripped up by a scholarship scam: Don't take things at face value. Fraudulent scholarship operations use official-sounding names and professional-looking stationery to give an aura of respectability, and they may even claim endorsement by organizations like the Better Business Bureau (which never endorses private businesses at all). But as the old adage goes, if something sounds too good to be true, it probably is. Make sure you do plenty of up-front research so don't get ripped off. To complain about a scholarship scam, log onto the FTC's website.

advertisement

Show Bankrate's community sharing policy
          Connect with us
  • at
  • Private student loan search by SimpleTuition.com
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us