How to Avoid Scholarship Scams - 2023
The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.
Applying for college scholarships and financial aid can be overwhelming. There are over 5 million scholarships in America and it can be challenging to find scholarships that are most suited to you.
Scammers take advantage of students’ confusion during scholarship applications to run a variety of schemes aimed at coaxing students out of money, selling insurance, selling loans or even stealing personal data.
To help make sure that you don’t fall victim to scholarship scammers, we have complied the following guide that highlights common scams and what to look out for when applying for scholarships.
Common Scholarship Scams
There are a variety of scholarship scams to watch out for:
Scholarships that don’t materialize: Numerous scams lure students into paying an ‘application fee’ upfront to qualify for a scholarship, but ultimately never deliver a single scholarship to any applicant. Many victims end up accepting the loss, believing that their scholarship application was simply unsuccessful.
Scholarships for profit: Similarly, some scholarship will require an applicant to pay an ‘application fee’ ranging from $5 to $35, but will grant low paying scholarships to only a few individuals, pocketing a substantial profit.
Scholarship prizes: This type of scam involves scammers informing students that they have won a scholarship, but to receive the scholarship, students must first pay a ‘redemption fee’. Oftentimes, once the fee is paid the scholarship will not materialize and the scammer will cease contact.
Guaranteed scholarship service: Some fraudsters will ‘guarantee’ that you’ll win a scholarship if you use their services – for a fee. No one can guarantee that you will win a scholarship. Often students will pay for this service, yet the scammer will never make a single application.
“Exclusive” scholarship database: Some scammers claim that they have access to an ‘exclusive scholarship database’. Scammer will charge a fee for access to this ‘exclusive database’. In relativity, all legitimate scholarships can be found freely accessible online.
Scholarship or Financial Aid Seminar: Prospective students are approached and asked to attend a seminar (either paid or for free) that claims to offer valuable information on scholarships and financial aid applications. Although some seminars are legitimate, many are actually scams that involve high-pressure sales tactics aimed at coercing attendees to pay a fee or risk losing out on the supposed ‘opportunity’. Additionally, sometimes speakers will seek to sell insurance and loans to students during these seminars.
Signs of Scholarship or Financial Aid Scams
Scholarship scams revolve around asking students to pay an upfront fee for a ‘service’ or attend events where speakers have the chance to sell other products to students.
If a proposal has any of the following phrases, it is highly likely to be a scam:
- “Guaranteed or your money back”
- “This is exclusive information”
- “We have exclusive access”
- “It will only cost”
- “need your credit card or bank account information”
- “need your FSA ID.”
- “We’ll do the work for you.”
- “The scholarship has an application fee”
- “You’ve been selected/you’re a finalist” – for a scholarship that you never applied for
- “Act now”
- “need to attend our scholarship seminar”
In addition to those specific phrases, common scholarship and grant red flags include:
- Asked to pay a fee: Legitimate scholarship opportunities are always free. Never pay to apply for a scholarship.
- Sharing personal information: If you are asked to share personal information, the scholarship is likely to a scam
- Guarantees: No one can guarantee a your scholarship application will be successful.
- Unsolicited awards: If you have not applied for a scholarship, chances are, you will not have won one.
Best Practices for Avoiding Scams
To avoid falling for scholarship scammers, follow these guidelines:
- Protect your personal information.
- Fill out the free FAFSA form by yourself.
- Do not share your FSA ID username or password.
- Keep note of the scholarships that you have applied for.
- If you are unsure if a scholarship is legitimate, ask a guidance counselor for advice or the financial aid off of the school that you will be applying to.
- Never pay for a scholarship award, application or at a seminar.
- Use reputable sources for your scholarship and financial aid search.
Pachyy Financial Scholarship
At Pachyy, we are passionate about helping hardworking Americans build their financial health. As part of our mission, we instituted the Pachyy financial scholarship to help students to attend college without incurring substantial student debt.
The Pachyy Financial Scholarship is offered annually to future and current college students with a desire to follow a career in the finance industry. 3 students stand to receive a share of $2,000 towards their education. 1st place will receive $1,000, 2nd place will receive $600 and 3rd place will receive $400.