Every year thousand of students and parents are defrauded by scholarship scams. And many of them even unaware that they had dropped into the trap of scholarship scams, the victims usually write off the money paid up front to the scams as thinking they just simply didn’t win the scholarship.

Let review some of common scholarship scams so that your will be alerted and precaution about the suspicious scholarship offers.

Common Scholarship Scams

According to the Federal Trade Commission’s Scholarship Scams, if you receive an offer that uses one of these tactics, be suspicious:

The scholarship is guaranteed or your money back

Beware of scholarship-finding services that guarantee you will win a scholarship or your money will be refunded. If it is a scam, you will find it extremely difficult to qualify for refund, because this refund guaranteed often have terms & condition attached. Get and review refund policies before you pay.

Ask for your credit card or bank account to hold the winning scholarship for you

If you receive phone call saying that you have won a scholarship and they need your credit card or bank account in order to hold the winning scholarship for you. Never! Never give out any credit card or bank account without getting information or confirmation in writing first. It might be a set-up for an unauthorized withdrawal from your account.

A super low interest rate loan that need advance fee

This scam will offer you an unusual low interest rate loan but they will ask you to pay for a fee during the loan application submission. And when you pay for it, the promised loan never materializes. Be aware, real education loan usually deduce the fees from the disbursement check. It never required you to pay for a fee when you submit an application. If the loan is not issued by a bank or other recognized lender, it is probably a scam. Check the offer with your local bank’s manager before you pay.

You can’t get this scholarship information from anywhere else

There are many scholarship lists available for public. A real scholarship is normally announced to public and you can get this information easily from college and the recognized financial aid agencies. Start your own researching from those locations before you pay for somebody to do the work for you.

You won a scholarship prize!

The scam will inform you that you have won a college scholarship worth a few thousands of dollars but you will be asked to pay for a “redemption” fee or taxes before they can release your prize. If you receive this good news but you don’t remember entering any scholarship contest, be suspicious. Even If you have entered the contest, check and get the winning confirmation letter first before any payment being made. There are scams use the real scholarship contest to cheat for money, they know many people are enrolled for the contest and by chance you are in the list.

Summary

The above are just some commons in scholarship scams. There are still many other scholarship scams around. Always be precaution in any scholarship offer to you and always check for confirmation before any money pay out. The basic guideline is “if you have to pay money to get money, it’s probably a scam”.

Common Online Scholarship Scams Most scholarships scams will try to request money during the application process. You will usually ask to pay for all kinds of fees during the scholarship application process. The scholarship sponsors may charge what they call an application fee, entrance fee, reading fee, judging fee, or administrative fee. You may also ask to pay a processing or handling fee just to receive a copy of scholarship application form or to request more details information about the scholarship.

Other than those kinds of fees, scams may pile on the hidden fees after you have submitted an application. You may receive an email or mail notification saying that you have won a scholarship, but to collect it, you must first pay a “disbursement” or “redemption” fee. A warning alert should be immediate triggered once you receive the message asking you to pay money in order to receive your scholarship award, because no legitimate scholarship program will ask you to pay any money in order to receive money that you have supposedly won.

Do you know that most of scholarships are tax-free? If you do not know, you may fall into the trap of scholarship scam when you are asked to pay for taxes on your scholarship award. Be aware that you only have to pay taxes on a scholarship award if you use the money for other purpose than paying your tuition fee; for example you use the scholarships money to buy a new computer, to pay for room’s rental or spending in paying the cost of traveling from and to the campus. Even if you need to pay taxes for your scholarship award because of these reasons, you should never have to pay federal, state, or sales taxes to organization giving you the scholarship; instead, any required taxes should pay directly to IRS.

Another technique used by scholarships scam that may causes you expose to identity theft, you may be asked to disclose a bank account or credit card number in order to hold the scholarship. Never give out information like this, not even if the sponsor insists it is required to process the scholarship that you have already won. No legitimate scholarship programs would ask for it.

How to Avoid Scholarship Scams? While a few legitimate scholarship programs do charge an entrance or administrative fee, the majority do not charge anything at all. Hence, to be safe, limit your scholarship applications to scholarship programs that don’t charge any fees to apply. If you are asked to pay for any hidden cost after you have submitted your application form, turn your scholarship hunt to elsewhere because there are many other legitimate scholarship programs that are free of charge in application.

Summary To avoid getting taken by scholarship scams, watch out for offers that seem too good and ask you to pay an up front fee. You must approach every scholarship program with caution and limit your application for scholarships that don’t ask you to pay any fee to apply.