How to Avoid Scholarship Scams when Paying for Your Kid’s Education

Every year, millions of high school graduates seek creative ways to finance the costs of a college education. With four year college education costs rising faster than the rate of inflation, many parents are understandably concerned about how to pay those costs without saddling themselves or their children with heavy debt.

Scam artists prey on those concerns. Every year, several hundred thousand students and parents are defrauded by scholarship scams. The victims of these scams lose more than $100 million annually. Scam operations often imitate legitimate government agencies, grant giving foundations, education lenders and scholarship matching services, using official sounding names containing words like “National,” “Federal,” “Foundation,” or “Administration.”

You need to know how to identify these rip-offs, how to distinguish between legitimate and fraudulent organizations, how to protect yourself from scholarship scams, and what to do if you fall victim to a scam.

In general, be on your guard against offers of scholarships which have an application fee, scholarship matching services who guarantee success, advancefee loan scams and high-pressure sales pitches disguised as financial aid “seminars”.

The FTC cautions students to look for tell tale lines:

• “The scholarship is guaranteed or your money back.”

• “You can’t get this information anywhere else.”

• “I just need your credit card or bank account number to hold this scholarship.”

• “We’ll do all the work.”

• “The scholarship will cost some money.”

• “You’ve been selected by a ‘national foundation’ to receive a scholarship” or “You’re a finalist” in a contest you never entered.

The single best piece of advice we can give you is that if you have to pay money to get money, it’s almost certainly a scam.

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