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Free Scholarships: Something Too Good to be True?

By Kathy Truong and Anne Nguyen
Graduate

Imagine you’re a high school senior, and you’re scrolling through countless links to gather funds for your college tuition.  After about 30 minutes of scrolling, you land on a page that claims: “100% Guaranteed-to-Win $10K Scholarship.” You, naturally, click on the link and proceed to enter your personal information. However, the page requires you to pay $50 to complete the application. “In comparison to $10K, $50 is nothing,” you tell yourself, and pay the amount. Fast-forward a few months, not only did you never receive a response, but you find yourself getting tons of unsolicited emails for everything from payday loans to credit card offers with zero interest.

Unfortunately, this scenario is all too common. Every year, a multitude of students and their parents fall victim to scholarship scams.  In fact, recent cases involving Student Advocates, Manhattan Beach Ventures, and others have underscored the prevalence of deceptive student loan practices, resulting in millions of dollars in refunds [1, 2, 3, 4]. 

Moreover, there are even companies that claim to ensure a student’s eligibility for federal financial aid (from grants to work-study programs) by charging a “processing fee” to fill out the Free Application for Federal Student Aid (FAFSA). These companies use false information about the student and family to qualify them for more aid. In such cases, the student’s family would not only lose money from the processing fee, but also be fined $20,000 and/or receive jail time for presenting false information on a FAFSA [5].

In addition to monetary losses, these too-good-to-be-true offers often involve the extraction of sensitive personal information, risking privacy. A quick internet browse of scholarship websites will load dozens of sites with lengthy privacy policies. These policies may include statements that allow the site to share user information with third parties, if the user agrees to the policy. Some companies doing lottery-style scholarships, like ScholarshipPoints and Edvisors, collect and sell personal information if the student signs up, leading to spam emails and potential privacy nightmares. The aftermath of such breaches can be long-lasting, impacting not only financial stability, but security [6].

Therefore, to navigate this terrain more safely, it is wise to explore clearinghouses or directories that screen for authenticity. Organizations like the Better Business Bureau (BBB) and the U.S. Department of Education provide resources to help students verify the legitimacy of scholarship opportunities. Students can also look for reputable scholarship clearinghouses that compile verified opportunities. Fastweb, Chegg, and College Board's Scholarship Search Tool are some examples of platforms that thoroughly vet scholarships before listing them.

Furthermore, students should consider reaching out to experts in the field, like financial aid counselors who can help distinguish between genuine opportunities and potential pitfalls. They often maintain categorized lists of known scams, and can provide checklists to help assess the authenticity of offers.

 

When vetting opportunities, keep in mind the following points:

  • Upfront Fees: Legitimate scholarships typically do not require upfront fees. Be wary of any program asking for payment before providing services.

  • Official Affiliations: Verify the legitimacy of the organization by checking for official affiliations with recognized educational institutions or government bodies.

  • Clear Contact Information: Legitimate opportunities will have clear and accessible contact information. Be skeptical if contact details are vague or nonexistent.

  • Transparent Application Processes: Authentic programs will have a clear and transparent application processes. Watch out for vague or convoluted procedures.

 

We spoke to Emily Arth, Director of the Office of Scholarships at Indiana University Bloomington. She advises never to input bank or social security information in a scholarship application. If you are awarded a scholarship, the funds generally go to the school. If the funds are meant to be sent personally, be cautious of the offer’s legitimacy. To help students find scholarship opportunities, Arth and her office have created a website with resources to find both general and counselor-vetted scholarships. 

As you navigate the sea of free scholarships, be armed with caution to distinguish authenticity from deceit, especially with thousands of dollars on the line. Taking the time to vet opportunities establishes a sound way to finance college tuition. You should utilize tools and checklists to make informed decisions, verifying that the opportunities you pursue are genuine and beneficial. Together, let’s create a safer environment for aspiring students, shielding their secure and successful educational journey.

 

Wishing you a safe and prosperous educational path!


 

For additional resources or to report suspicious activities, visit ReportFraud.ftc.gov or call 1-877-FTC-HELP.

 

[1]: FTC Takes Action against Operators of Student Loan Debt Relief Schemes and the Financing Company that Assisted Them 

[2]: Federal Trade Commission Sends More than $822,000 to Students Deceived by Student Advocates’ Debt Relief Scam 

[3]: FTC and DOJ Send More Than $9 Million in Refunds to People Who Lost Money to a Student Loan Debt Relief Scheme 

[4]: FTC Stops Scammers Charged with Preying on Students Seeking Debt Relief 

[5]: How To Avoid Scholarship and Financial Aid Scams | Consumer Advice (ftc.gov)

[6]: The Ultimate Guide to Scholarship Scams - The Scholarship System

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