How to Avoid the Scholarship Scams

There are people out there looking to take advantage of students searching for financial aid. Learn to manage your search and avoid scholarship scams.

Your college-bound senior’s newest hobby of searching for private scholarships might seem helpful until she excitedly tells you she’s found a “guaranteed” grant, and it requires a credit card to apply.

While many legitimate private scholarships exist, parents and students need to keep an eye out to avoid potential scams, says Michael Trivette, the co-founder of College Transitions, a national college admissions research organization.

“Anything that’s asking you to pay money to create a profile or to submit any kind of money to be considered, it’s a scam,” Trivette says. “Be wary of the types of scholarships you’re applying to, too, because it can be random chance and a lot of effort for something you have a very small chance of winning.”

When searching for private scholarships, the Better Business Bureau says there are a few things to look out for.

If a “representative” calls to announce you’ve won a scholarship — without ever applying — it’s probably a scam. Or, if you receive a check in the mail for a scholarship and are told to send back money to pay for fees or taxes, you could end up losing the money you sent and be responsible for any spent from the check if it turns out to be fake.

Avoiding scholarship scams may be step one, but focusing on acquiring the largest amount of financial aid is the end goal for most students.

“You’re going to see tons of books and content on how to win private scholarships, selling this idea that ‘Oh, there’s all this free money out there!’ but the biggest amount of aid comes from the federal government, state scholarships and the university,” Trivette says. “Private scholarships make up only 5-6% of all financial aid awarded, so we tell students and families to focus on institutions that give away need- or merit-based aid.”

To search for legitimate scholarships and save time, find a website that has students create a profile and matches them with scholarships. A few Trivette recommends are College Board, Fastweb, FinAid and Scholar Snapp.

Trivette says another thing students and their families should keep in mind is what actually happens when a student wins a private scholarship.

“The federal government requires institutions to take private scholarship money into account when awarding other aid,” he says. “A lot of institutions will take that money you won and actually deduct it from your financial aid package.”

Private scholarships aren’t all bad, however. They can be useful in some cases, such as when a student’s family makes too much money to qualify for need-based scholarships.

Whether a student is writing essays for private scholarship competitions or putting together applications for need- or merit-based scholarships, avoid roadblocks like late applications or sloppy essays by asking for help in the right places and starting early.

“When you’re looking for help on those essays, going to a teacher in your high school or a tutor or just any fresh set of eyes can be helpful,” he says.

“Search early – before senior year,” he adds. “We find when students get into the college application process, adding this scholarship component and keeping those timelines tight can be difficult.”

Trivette says students can start researching scholarship opportunities in their junior year or even earlier, but if that window has passed, waiting until all college applications are submitted before diving deep into the scholarship search is the best call.

“The last thing we want to see is a student who is so entrenched in applying for private scholarships that the quality of college applications diminishes,” he says.

“You don’t want that to suffer, especially knowing you may not get those scholarships.”

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