January 20, 2016
The email starts out great. An institution wants to offer your child a scholarship, and they barely need anything from you! Just a credit card number, social security number, bank account information… Maybe this isn’t such a great opportunity.
Financial aid scams are increasingly common and increasingly difficult to spot. Parents want to believe that their children have qualified for financial aid, and it can be hard to admit that this offer is not real.
Here are the big ones to look out for, and how you can find financial aid with no strings attached:
- Having to pay a fee. One common way that scammers make money is that they promise you access to top lists of scholarships and grants, only to take your money and leave you with nothing. Be wary if an organization says you need to pay them money to access their database of scholarships. There are plenty of free resources, including Fastweb, our very own resource center, and the federal government’s Department of Education.
- Offering a guarantee. No matter how good the scholarship service, no one can guarantee that your child will receive an offer. Beware of anyone who promises that your kid will be a recipient. Millions of students apply for scholarships every year and it can be impossible to predict why your child will or won’t receive a scholarship. Of course, if your child doesn’t get a scholarship, many of these companies will not give you your money back (even if they make that promise). It will usually be lost forever.
- Using hyperbolic and definitive language. If it sounds too good to be true, it usually is. If an organization promises to have an exclusive list of scholarships not available anywhere else, be wary. There are plenty of free sites with access to scholarships so don’t pay for that. These scammers often use definite words such as “always,” “never” and “promise.”
- Calling you a winner. Students will often receive letters and emails claiming they’ve won a scholarship. But if your child didn’t enter a competition, double check that letter. Many scams operate on promising your child that they’ve won, but requiring payment before you can access your funds.
- Using a similar URL. This is called phishing. Companies will use URLs and email addresses similar to ones from real colleges or financial aid groups to convince you that their letter or email is real. Many of these emails can fool even the savviest user. If you’ve not contacted the organization before, compare the emails or contact the organization directly using a phone number or email not listed on whatever you received.
- Pressuring you to sign up. Parents will do anything to get their children access to a debt-free future. Many organizations use deadlines to convince parents to send in a check or their personal information. The only deadline you have to worry about is the Free Application for Federal Student Aid or FAFSA. This is the official government application that colleges use to offer scholarships, grants and federal loans to students. There is no application fee and you can find more information here.
- Salesy seminars. Some parents attend free seminars in which people promise to hold the key to their child getting a full-ride to the college of their choice. Remember what I said earlier about being offered a guarantee? No matter how well-qualified your kid is, there’s never a certainty that they’ll be eligible for scholarships. If you feel pressured by an in-person pitch, walk away and do your research.
- Contacting you directly. This is an easy way to determine a scam from a legitimate prospect. Unless your child has applied to a scholarship directly, they will likely not be getting personalized phone calls, emails or letters. Many organizations directly contact parents, who are happy to pay whatever fee so their child can receive thousands in aid. Take down their information and look them up online or ask your child’s guidance counselor. You’ll often find other parents warning about the scam.
How to Detect and Avoid Scams
If your child’s school has a college counselor, run any letters and emails past them. They often have the experience to detect scams and can let you know how to verify that information. They’ll also have suggestions of how your child can apply for financial aid without falling for shady practices.
No matter how official the name of the organization or scholarship sounds, do your research before you waste your money and your child’s time. In October 2015, the Consumer Financial Protection Bureau announced it had filed a complaint against a company that had swindled thousands of families.
This organization used official school logos to convince parents that they were a legitimate organization. The CFPB is hoping to recover those families’ money and wants other consumers to be aware of what financial aid scams look like. You can go to their website to find more information or file your own complaint.
How to Survive the Financial Aid Process
Applying to college can be frustrating for parents and students alike. The pressure to receive a good financial aid package, as well as admission to a prized university, can set many people spiraling.
Keep your head and make sure that you’re not giving money to a scam. Use the FAFSA to find out your eligibility and contact colleges directly for more specific information. Finding free money isn’t as easy as getting a letter in the mail, so don’t be afraid to put some work in.
Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.
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