"What they may do is employ pressure techniques or seminars on financial aid to entice people. "There are unfortunately companies out there who prey on students and their parents who are concerned about their ability to pay for college, which seems to be getting more expensive every year," Breyault says. When the check later bounces, you are out the money." "Another variation is a fake check scam, where you deposit what looks like a real check and then are asked to send part of the money back to cover fees. Of course, once you pay the money, the scholarship disappears," Hutt wrote in an email. Often these offers ask for a 'processing fee' or require you to 'pre-pay taxes' before getting the award. "The biggest red flag is getting selected for a scholarship you never applied for. Students represented 9.4 percent of fraud reports submitted to the BBB Scam Tracker in 2018, and about 24 percent of students reported a loss when exposed to a scam, compared with only about 28 percent of non-students, Hutt says.Įxperts say the two most prominent red flags are when students are selected for college scholarships they never applied for, and when students are asked to pay an advance fee to be eligible for a scholarship. A combination of inexperience, vulnerability and desperation as college costs increase and states cut funding for public institutions create a perfect storm. Students are prime targets for scholarship scams, experts say. The report says in 2017-2018, families paid for about half the cost of college using income and savings, while relying on scholarships and grants to pay for 28 percent of the cost and using loans for the remaining 24 percent. The 2018 How America Pays for College report released by Sallie Mae shows that scholarships hold a small but significant role. "So far in 2019, we've received 24 reports, which is more than we got in all of 2018 (21)."įederal student loan identity theft reports in 2018 were up 119 percent over the previous year, according to the same FTC report, and consumer reports of student loan problems with banks and lenders in 2018 numbered 29,346.Ī typical student might piece together a combination of family income and savings, student loans and scholarships to pay for college. "BBB Scam Tracker doesn't get very many reports of scholarship scams - a few dozen a year - but we've seen a big jump recently," Katherine Hutt, spokeswoman for the Council of Better Business Bureaus Inc., wrote in an email. These data are based only on consumer reports of issues, and therefore do not reflect the actual number of fraudulent incidents.īut new Better Business Bureau numbers indicate a possible surge in 2019. This is down slightly from the prior two years, in which the FTC received 972 consumer reports of problems with scholarships in 2016 and 770 reports in 2017. The latest data from the Federal Trade Commission's report released in February says it received 725 consumer reports of problems related to scholarships and educational grants in 2018. Department of Education logos emblazoned across websites asking for an upfront fee to apply.
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A student searching for scholarships to help pay for college might find lengthy surveys promising a pot of money waiting at the end, an inbox cluttered with spam emails and U.S.
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As college costs rise, scholarship scams employed by predatory companies continue to target prospective students and their families.