How To Avoid Scholarship and Financial Aid Scams

What Scammers Promise

Scholarship and financial aid scams often start with a social media post, email, or a letter in the mail. It might look like a personalized invitation, saying you’ve been selected for a particular scholarship or financial aid package. Sometimes, there’s a callback number or details about an in-person workshop at a local hotel. But these calls and events are usually high-pressure sales pitches where they pressure you to pay for their services immediately — or risk losing out on these “special” scholarships or financial aid packages.

Financial Aid Scams

Some companies claim they can make you eligible to get financial aid, including grants, loans, work-study programs, and other types of aid. For a processing fee, these companies say they’ll handle all the paperwork for the so-called program. What they’re really doing is filling out the Free Application for Federal Student Aid (FAFSA), which is the free form that determines if you’re eligible for federal aid. Sometimes, scammers will use false information about your family’s income, assets, and benefits to qualify you for more financial aid than you would get if they told the truth.

In addition to losing money to these scammers, you can also get in trouble — including fines up to $20,000 and/or jail time — for any false information on your FAFSA.

Only you and your family can complete your FAFSA — which is always free to fill out and submit. Never share your FSA ID (the username and password that you use to apply for the FAFSA) with anyone — including companies or consultants. Dishonest people could use that information to get into your account and take control of your personal information.

Scholarship Scams

Never pay to apply for a scholarship. If a company promises you a scholarship or grant in exchange for a “processing cost,” “redemption fee,” or other upfront payment, walk away.

Many of these companies give you nothing for your fee — not even a list of potential sources of scholarships. Others say you’ve been selected as a “finalist” for a scholarship award that you never applied for, or that requires an upfront fee. Sometimes, these companies ask for your checking account or credit card information to “confirm eligibility,” then debit the account without your consent. Some may offer a “money back guarantee” but attach conditions that make it impossible to get a refund.

There are many legitimate companies that have lists of scholarships they offer for sale. Others might charge you upfront to compare your profile with a database of scholarship opportunities — and then give you a list of awards that you may qualify for. And there are online scholarship search engines, too. The difference is that legitimate companies never guarantee or promise scholarships or grants.

Signs of a Scholarship or Financial Aid Scam

Not sure if an offer is a scam? Here’s how to tell. If someone advertises an offer with any of these phrases, or a variation, it’s a scam.

• Scammers say: “The scholarship is guaranteed or your money back.”
• Scammers say: “You can’t get this information anywhere else.”
• Scammers say: “I just need your credit card or bank account number to hold this scholarship.”
• Scammers say: “We'll do all the work. You just pay a processing fee.”
• Scammers say: “The scholarship will cost some money.”
• Scammers say: “You're a finalist [for a contest you never entered].”

Attending a Seminar

Companies like to promote seminars where you can learn about how to get scholarships and financial aid. Some are legit, but some are scams. These events are usually high-pressure sales pitches where they tell you to pay immediately or risk losing out on the so-called “opportunity.”

If you go to a financial aid or scholarship seminar, follow these steps:

• Don’t pay any money at the seminar. Only scammers will tell you to pay now or risk losing out on the opportunity. Solid opportunities aren’t sold through nerve-racking tactics like rushing and high pressure.
• Investigate the organization and other options before you pay anything. Search online for the organization’s name plus the words “complaint” and “scam.” See what others say about them. You may find that you can get the same help for free from a school guidance counselor or financial aid advisor.
• Don’t trust “success” stories. The seminar operator may have paid people to give glowing stories. Instead, ask for a list of at least three local families who’ve used the company’s services in the last year. Follow up with the families and ask if they’re satisfied with the products and services they got.
• Don’t do business with anyone who’s reluctant to answer questions or give details. Legitimate business people are more than willing to give you information about their service.
• Ask how much money you’ll have to pay, and what the company’s refund policy is. Get information on the total cost and get it in writing. Keep in mind that scammers might make it hard or impossible to get your money back, no matter what their refund policy says.

What To Do If You’re Looking for Financial Aid or a Scholarship

As you start looking for financial aid or a scholarship, follow these steps:

[ ] Fill out the free FAFSA form to apply for financial aid. (It’s the most important step you can take to get financial aid.)

[ ] Never pay anyone to fill out or process your FAFSA. That’s probably a scam.

[ ] Talk with a guidance counselor (if you’re in high school) or the financial aid office (if you’re in college) about your financial aid and scholarship options.

[ ] Never pay at a seminar on how to get financial aid or scholarships. Especially if they pressure you to pay. That’s probably a scam.

[ ] Do your research before you pay anyone for help with financial aid or scholarships.

[ ] Share these ideas with others who are looking for financial aid, too. You can help them avoid a scam.

What To Do If You Paid a Scammer

Scammers often ask you to pay in ways that make it tough to get your money back. No matter how you paid a scammer, the sooner you act, the better. Learn more about how to get your money back.

Report Scams

Report financial aid and scholarship scams to

• the FTC at ReportFraud.ftc.gov
• your state attorney general