SCHOLARSHIP SCAMS
So you’ve made it through the college applications process and been accepted to the college of your choice. Congratulations, that’s an achievement! But paying your tuition every semester is going to be its own challenge, and there are plenty of grifters out there who know that. That’s why they run scholarship scams – schemes that trick innocent folks like you into sending them money. The following are a few common cons:
Scholarships that encourage you to send them money upfront. You apply for scholarships because you need money to pay your tuition fees. That’s the one safe assumption anyone offering a scholarship can make about every applicant sight unseen. Why would they ask you for money? Because they’re con artists, and you’re their mark. Don’t fall for it.
Scholarships that require application fees. What we said in [1] applies here, but the scam is different enough that a separate entry is needed. These crooks send out thousands of applications and charge fees of $5 on up. They may award a few scholarships to keep up appearances and pocket the remaining profits, or they may just take all the money and run. You might be thinking, “Well, if they are awarding scholarships, and it’s only five or ten bucks, why not?” First, you probably have a better chance of winning the lottery than you do to get a scholarship out of these scammers. Second, you don’t know where that money came from. If it came from another pool of ill-gotten gains, it might be subject to money laundering statutes. You don’t want your senior year peppered with – and this is best-case – hours-long interrogations by about seven different government agencies, do you? Oh, and the worst case is you go to prison. The Hollywood fantasy of the innocent bystander getting off scot-free with a bag full of cash is just that – a fantasy.
“You’ve already won a scholarship worth thousands of dollars!” - not. This sly swindle takes the old “You may already be a winner!” spam business model to the next (illegal) level by removing “may” from the equation. Now you’ve somehow “already won” a contest you never entered in the first place. How? Why? Don’t ask questions, kid – just send us a “disbursement fee” and we’ll send you your award. Needless to say, they will not send anything back. General scam-spotting rule of thumb: if anyone you don’t know contacts you out of the blue with an offer you absolutely must respond to now before it vanishes forever, you can be 99.9% certain they’re trying to run a con on you. Don’t fall for it!
The unbelievable! (#facts) low interest rate: As with all these scams, it will require you to pay a fee before you can receive the loan. Legit loans deduct the fees from the loan check itself. Remember – money is money, so figure out the total costs of a loan before you sign up for anything. For example, if I offer to give you a “0% loan” of $1000 and all I need is a $500 “processing fee”, then you’re paying 50%, not 0%...Run away!
The bounce back scam: In this scam, the so-called sponsor sends or offers to send the student (that’s you, a total stranger to this person) a check for tens of thousands of dollars “out of the blue” … but requires you to send back a check or electronic payment for the taxes or some other fees. Sound too good to be true? Yeah, because it is. The scholarship check from the rich magic sponsor ends up bouncing, but by then the money you sent is long gone! Another variation on this one is when the sponsor sends a check for more than the scholarship amount and asks the student to send back a check for the difference. It pays (literally!) to use your common sense and be alert- ask yourself if you receive one of these offers, “why would they do that?”. The answer is they want to steal your money.
The “free” financial aid seminar: They are usually disguised sales pitches for overpriced student loans or financial aid “consulting services” you don’t need. Your college has a financial aid office and they can give you correct information about scholarships and financial aid and are knowledgeable about student loans as well. And they are free!
The guaranteed scholarship search service scam: Avoid scholarship matching services that guarantee you will get a scholarship or they will refund your money. They will likely take your money and disappear or send you a worthless list of scholarships you supposedly qualify for.
As you have surely noticed by now, all these scams have one thing in common-they want you to send them money – NOW!-- and without asking too many hard questions. Be very suspicious of anything of this nature, and if you are unsure, contact your school’s financial aid office and get the real story!