Student loans are brutal.
Over the last twenty years, college tuition has climbed at a rate that is well above overall inflation, and undergraduates are finishing school carrying roughly $30,000 in student loan balances on average.
With about 3,000 borrowers defaulting each day, many students are turning to scholarships to reduce their college expenses.
Unfortunately, that spike in demand has also attracted fraudsters looking to exploit hopeful applicants. For example, one student spent an entire year applying to “sweepstakes” scholarships only to have her details sold and used for spam.
There are more than 1.5 million scholarship opportunities out there, so it’s crucial to recognize red flags that indicate a scam aiming to take your money or trade your information.
How to Recognize Scholarship Scams
The most common scholarship frauds promise exclusive award lists or insider guidance and charge a small fee for access. They typically contact you through the mail, email or online ads.
Watch for these common scam approaches, as noted by experts:
- Scholarships that require an “application” or “processing” fee.
- Complimentary seminars that claim to offer financial aid tips but turn into hard-sell sessions for investments, annuities or insurance.
- Prizes you didn’t enter for — for instance, a postcard or email saying you’ve won a scholarship you never applied to.
The Federal Trade Commission warns about language such as:
- “This scholarship is guaranteed or your money back.”
- “You can’t find this information anywhere else.”
- “We’ll handle everything — you just pay the processing fee.”
- “Receiving this scholarship will cost you some money.”
If you encounter suspected scholarship fraud, you can report it to the Federal Trade Commission and your state Attorney General’s office.
Even trustworthy platforms sometimes list questionable scholarships, so learn how to spot the signs to avoid a flood of unwanted emails and voicemails. Follow these checks:
- Watch for poor grammar and spelling; if the copy reads like a bad translation, steer clear.
- Browse the rest of the site. Does it offer useful content or is the whole site poorly written?
- Real scholarships will provide a phone number and a physical street address — not just a P.O. box.
- Check the organization’s social media presence. Is it actively maintained? Does it publish original posts and mention the scholarship?
- Some legitimate programs request application submissions via email; just verify the source’s credibility before sharing any personal data.
Don’t forget to complete the Free Application for Federal Student Aid (FAFSA) each year you want federal assistance. Don’t squander your own or your parents’ money paying someone to fill out this or any form on your behalf.
If you’re searching for authentic scholarship opportunities, explore our extensive roundup of 100 college scholarships — you’ll likely find the support you need.
Alex Gardner is a contributing intern at Savinly and writes the blog Practical Pennies. After eliminating $53,000 in student loans, he wishes he had pursued more scholarship opportunities.
