Scholarship Scams!

Continue to watch out for scholarship scams!
High school and college students are continually looking for scholarships to help them pay for post secondary education. Each year there is a growing number of offers from various sources to help students find those " billions of unclaimed dollars." To be sure, some search aids are legitimate, but many are not.

Many scholarship scams tend to have a particular set of characteristics. These characteristics can be warning signs of possible scams. Some of these warning signs are as follows:

  • Application fees. Beware of ANY "scholarship" that requests an application fee.

  • Other fees. If you must pay money to get information about an award, it MIGHT be a scam.

  • Guaranteed winnings. No legitimate scholarship sponsor will guarantee that you will win the award. Also be wary of guarantees that you'll receive a minimum amount of financial aid -- usually such guarantees are counting the federal student aid programs and private student loan programs, for which most people are eligible.

  • Everybody is eligible. Scholarship sponsors do not hand out awards to students simply for breathing.

  • Unsolicited opportunities. Most scholarship sponsors will only contact you in response to your inquiry. If you've never heard of the organization before, it is probably a scam.

  • Typing and spelling error. If the application materials contain typing and spelling errors, or lack an overall professional appearance, it may be a scam.

  • No telephone number. Most legitimate scholarship programs include a telephone number.

  • Mail drop for a return address. It is illegal to misrepresent a mail box for an office.

  • Time pressure. If you must respond quickly, and won't hear about the results for several months, it might be a scam.

  • Unusual requests for personal information. If the application asks you to disclose bank account numbers, credit card numbers, calling card numbers, or social security numbers, it is probably a scam.

  • High success rates. Overstated claims of effectiveness are a good tip-off to a scam. Less than one percent (1%) of users of scholarship search services actually win an award.

  • Excessive hype. Scams try to get you so excited that you'll ignore your natural sense of caution. If the brochure or advertisement uses a lot of hyperbole (e.g., "Free money," "win your fair share," and "everybody is eligible") or mentions the $6.6 billion in unused scholarships, be very careful.

  • A Florida or California address. A disproportionate number of scams seem to originate from Florida or California addresses. (This does not mean that all offers from Florida or California are scams.)

Due to the fact that fraudulent scholarship search programs have proliferated so widely across the country, the Federal Trade Commission (FTC) has launched an attack to identify and eliminate them. In conjunction with a program called "Project $cholar$cam," the FTC has filed suit against five companies alleged to have bilked families out of 10 million dollars.

If you wish to do a scholarship search, we encourage you to use one of the FREE scholarship search links located on the "Important Links to Other Websites" link from the Financial Aid Home Page. You can locate most, if not all, of the scholarship information that a fee-based research company can, but without paying unnecessary costs.

At Montana State University, we encourage students and families to make informed decisions about financial aid. We highly recommend that you borrow only the amount of loans you need to successfully complete your education.

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Updated 12/23/10