Scholarship and Student Loan Scams

With rising education costs, many students and families eagerly seek financial aid opportunities. Unfortunately, scammers often exploit this desperation through deceptive scholarship and loan schemes. Learning to identify these scams is crucial for protecting your financial future.

Common Red Flags

Application or Processing Fees Legitimate scholarships and federal student loans never require upfront fees. Be extremely wary of any organization demanding payment to apply or “process” your application. Remember: you should never have to pay money to receive money.

Guarantees of Success No legitimate scholarship provider can guarantee you’ll win their award. Similarly, no lender can promise loan approval before evaluating your application. Claims like “guaranteed or your money back” or “everyone qualifies” are telltale signs of a scam.

Pressure Tactics Scammers often create artificial urgency through “limited time offers” or claims that others are waiting for your spot. They may pressure you to make immediate decisions or wire money quickly. Legitimate opportunities allow reasonable time for consideration.

Requests for Sensitive Information Be cautious of organizations requesting bank account details, credit card numbers, or Social Security numbers during initial contact. Scammers use this information for identity theft. Legitimate providers only request sensitive data after you’ve verified their authenticity.

Unsolicited Offers Exercise extreme caution with scholarships or loans you haven’t applied for, especially those arriving via social media, text message, or unsolicited emails. Legitimate opportunities typically don’t seek out recipients this way.

Finding Legitimate Opportunities

Verified Scholarship Sources

• Your school’s financial aid office
• The U.S. Department of Education’s Federal Student Aid website (studentaid.gov)
• State education agencies
• Reputable scholarship search engines like FastWeb and Scholarships.com
• Professional organizations in your field of study
• Local community foundations and civic groups

Legitimate Student Loans

• Federal Direct Loans through studentaid.gov
• State-sponsored loan programs
• Private loans from established banks and credit unions
• School-certified private lenders

Protecting Yourself

Research Thoroughly

• Verify the organization’s physical address and contact information
• Check for reviews and complaints through the Better Business Bureau
• Search the organization’s name plus words like “scam” or “complaint”
• Confirm tax-exempt status for scholarship foundations through the IRS website

Document Everything

• Save all correspondence
• Keep detailed records of any interactions
• Screenshot suspicious messages or websites
• Never share financial documents through unsecured methods

Report Scams If you encounter a scholarship or loan scam, report it to:

• Federal Trade Commission (ftc.gov)
• Your state’s attorney general’s office
• U.S. Department of Education’s Office of Inspector General
• Internet Crime Complaint Center (IC3)

Resources for Help

Free Application for Federal Student Aid (FAFSA) Complete the FAFSA annually at studentaid.gov to access federal grants, loans, and work-study opportunities. This is your gateway to legitimate federal financial aid.

Financial Aid Counseling Schedule appointments with your school’s financial aid office for personalized guidance. These professionals can help you identify legitimate opportunities and avoid scams.

Consumer Protection Resources The Consumer Financial Protection Bureau (consumerfinance.gov) offers educational materials about student loans and financial scams. Their website includes complaint forms and resources for victims of financial fraud.

Remember: when seeking financial aid, maintain a healthy skepticism. If an offer seems too good to be true, it probably is. Take time to research thoroughly and consult with financial aid professionals before sharing personal information or making commitments. Your financial security is worth the extra effort to verify legitimacy.