As the June 30 federal FAFSA deadline approaches, many students are searching and applying for grants and scholarships to fund their college education. With an average tuition of approximately $22,000 at 4-year institutions, according to the National Center for Education Statistics, paying for a college degree continues to be a challenging obstacle to overcome for prospective students. A challenge that is made more difficult by the presence of scammers looking to take advantage of students and parents searching for financial aid opportunities.
Better Business Bureau receives numerous reports of scholarship scams every year. Multiple reports have already been submitted to BBB Scam Tracker in 2022, detailing consumer interactions with unethical businesses which claim to provide financial guidance for students.
“The business claims to have been around for 14 years, but the website has been up for two,” reported one consumer. “The financial aid workshops are a pitch meeting where they try to get you to pay $2,000 for help with college admissions, but it turns out that help is limited to exchanging text messages with an unknown person. The fine print of the contract states that the person you are texting is not a professional and has no expertise in college admissions or financial aid.”
Due to the sensitive personal and financial information provided for scholarship and grant applications, it is important to be cautious when choosing one to apply for. Of the 2.47 million full-time students enrolled in post-secondary institutions during the 2018-19 school year, 84% were awarded financial aid through student loans or federal, state, local or institutional grants. On average, students were awarded slightly over $5,000 from federal grants, such as FAFSA, and more than $11,000 from institutional grants. While the amount awarded varies depending on the institution (public versus private or two-year versus four-year), applying for grants and scholarships is a great way to help ease the financial burden of attending college.
To protect students and parents searching for financial aid opportunities from falling victim to scholarship scams, Better Business Bureau recommends following these guidelines:
Beware unsolicited offers. It is rare to be awarded a scholarship or grant that was never applied for. If contacted by an organization offering financial assistance, be sure to ask how the organization got your name and verify their claim with the source. Never pay to apply for a scholarship. Some companies may claim that they can make you eligible to get financial aid for a processing fee. What they are really doing is filling out a free application on your behalf and will often falsify your information to ensure you receive funds. Falsifying personal information on certain applications, such as the FAFSA, is illegal and can carry fines up to $20,000.
Ask questions. Ask as many questions about a scholarship or grant as you can to help determine its legitimacy. If a company is reluctant to answer or provides vague responses, that is a sign it may be a scam. This is especially important if using a third-party service to locate and apply for scholarships. Be sure to ask pointed questions, such as how much they have awarded in previous years to what type of applicant.
Take your time. Spend the time to research an offered scholarship or grant to the fullest extent possible. Use the resources offered at your college or university, such as guidance counselors or financial aid offices, to determine if it is a right fit for you or if they recognize the company offering financial assistance.
Beware aggressive tactics. No matter the scam, one of the most common tactics scammers use is to pressure victims to make an immediate decision. They may claim that the offer is only available for a limited time and to “buy now or miss this opportunity.” For scholarship scams, companies may offer false “guarantees” that you will get aid as long as you pay a service fee.
Be skeptical of glowing success stories. While testimonials are often used by legitimate companies and businesses to demonstrate their successes, they may also be fabricated by scammers. Instead of making a decision to use a company based on testimonials, ask if they have helped anyone in your community in the past year.
Apply for grants and scholarships yourself. Filling out and submitting applications yourself is one of the best ways to ensure that the information provided is accurate, complete and controlled. Never pay anyone to fill out or process your FAFSA, it is most likely a scam. Students and parents can submit a FAFSA application online at StudentAid.gov.
For more information about how to avoid scholarship and financial aid scams, visit FTC.gov.
For a list of financial aid service companies the U.S. Department of Education works with, visit StudentAid.gov.
If you have been a victim of a scholarship scam, report it to BBB Scam Tracker. Information provided could prevent another person from falling victim.
ABOUT BBB: For more than 100 years, the Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2020, people turned to BBB more than 220 million times for BBB Business Profiles on 6.2 million businesses and Charity Reports on 11,000 charities, all available for free at BBB.org. There are local, independent BBBs across the United States, Canada and Mexico.