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(BBB) – During this season, many students are in the process of securing financial aid for the upcoming semester or academic year. While scholarships, grants, work-study, and loans help make college more affordable, scammers are taking this opportunity to try to steal some of that money through various schemes and scams. Better Business Bureau of North Alabama recommends caution when applying for financial aid opportunities.

Using words like “national” and “federal” to sound more official, scammers typically pose as a financial aid representative from the government, a university, or a nonprofit organization. They claim you have won a scholarship or grant without ever applying and ask for payment of a one-time processing fee.

In another scenario, the scammer pressures you into applying for a guaranteed scholarship or grant. However, there is a fee to apply. You pay up, but never receive the promised money, and the company has set so many conditions that it is almost always impossible to get a refund.

If you are in the market for financial aid for college, keep an eye out for the following red flags:

  • Scholarship Programs that Charge an Application Fee: Beware of scholarship foundations that charge an application fee, even if the fee is minimal or the foundation claims the fee is to only encourage serious students to apply. Legitimate scholarship foundations do not charge an application fee or charge one with the promise of a refund if a scholarship is not awarded.
  • No Work Involved: Be wary if a scholarship service claims they will apply on your behalf. A legitimate scholarship program will require an applicant to submit their own application, essay, and/or letters of recommendation.
  • The Scholarship or Financial Aid is Guaranteed:  Avoid scholarship or financial aid services that claim you are guaranteed to receive money. Legitimate scholarship and financial aid matching services have no control over who is ultimately selected for a scholarship or qualifies for financial aid. Usually, this statement is made to entice you into paying a fee for help in applying for a scholarship.
  • You Have Been Selected Without Applying:  Be wary of letters or phone calls stating you have been selected or you are a finalist for a scholarship you never applied for, this is a sign of a scam. Authentic scholarships do not send students unsolicited offers. Be careful not to give out personal information, banking information, or write a check to businesses that are unfamiliar or suspicious.
  • The Advance-Fee Loan: Avoid lenders that offer you a strangely low interest rate for an educational loan and then require an upfront fee before you can receive the loan. Only work with lenders or banks that you recognize. If you are searching for an educational loan, be aware that real lenders do not charge an upfront application fee, rather they deduct their processing fees from the check before the student receives the loan.
  • Invitation to Attend a Seminar.  If you decide to attend an informational seminar on scholarships and financial aid, be aware this is most likely a sales pitch for scholarship services. While at the seminar do not be pressured into paying for services on the spot. Before you purchase any services carefully investigate the organization and see if you can find the same services for free. Do not make a purchase if the representative does not directly and fully answer your questions.


If you would like to report a scam, call 256-533-1640 or go to BBB Scam Tracker.