Watch Out for These College Financial Aid Scams

Freelance Writer

“This scholarship is guaranteed or your money back." "I just need your credit card or bank account number to process this scholarship." “You’ve been pre-approved for a low-interest student loan. But first we need an advance fee.”

As the cost of college has increased, so have the number of financial aid scams. Even the smartest students, anxious for assistance, can fall victim to the ploys above (and others like them).

To avoid losing out on precious college savings and protect your personal information, it’s important to know the most common types of financial aid fraud. Here are some of the college money scams to watch out for.

  • Giving money to get money. No proper scholarship should require an application fee, especially a costly one. Think about it: an organization could easily make a fortune off of paying applicants while offering a paltry amount of actual aid. Legit scholarships organizations are charitable groups that want to give money, not take it.
  • The U.S. Department of Education is calling. Beware of calls or e-mails from someone claiming to be from the U.S. Department of Education. This individual may try to tell you that you can have a grant instead of a loan, and will ask for your bank account number for a processing fee. Hang up! The federal government does not charge a processing fee for student loans and grants.
  • Paying for the FAFSA. The Free Application for Federal Student Aid is just that: free. Any website that asks for your payment information is not affiliated with the U.S. Department of Education. Some companies may offer services to fill it out on your behalf, but keep in mind that doing it yourself is very easy. Plus, you can always get cost-free help on the FAFSA website or from the financial aid office at any school you’re applying to.
  • “Guaranteed” money. Every genuine scholarship comes with some sort of requirements, whether it’s a certain GPA, religious affiliation, or attending a specific school. But if a scholarship claims it is “guaranteed” or has no requirements, keep scrolling. The fine print will reveal this is far from true, with extensive red tape designed to prevent the funds from ever making their way into the hands of the recipient.
  • Unsolicited offers. If you are contacted about a scholarship or loan that you haven’t heard of or asked for, be wary. This is especially true if you’re told you’ve been pre-selected for aid by an organization that doesn’t have any information about you; an authentic scholarship organization always requires and reviews applications.
  • Advance-fee loans. Be suspicious of loans that come with an upfront cost. These typically reel victims in with an exceedingly low interest rate or overly beneficial terms. They are likely a scam that will take your money and disappear into the sunset. Bona fide lenders wouldn’t charge a fee in advance.
  • Exclusive scholarships. Nearly all scholarship information is freely available online. Real scholarship organizations want applicants to know about their grants and apply to them. It is unlikely someone can get you access to information you can’t get yourself.
  • Financial aid seminars, services, and consultations. Not all financial aid services are fraudulent, but that doesn’t mean they’re a good idea. But we’re not talking about things like the FAFSA night at your high school (those are good. Go to those); rather, this is about those paid services that promise you financial aid help and lots of scholarships and grants as a result. However, it is unlikely someone else can obtain more financial aid than you can get yourself via the FAFSA. Aside from being unable to deliver on lofty promises, these costly services may offer decidedly bad advice, like encouraging you to cheat the system by moving money around to appear as though you have less. If caught, this could prevent you from receiving any help at all. In addition, free financial aid seminars often may just be glorified sales pitches for high-interest loans or other unnecessary or even unrelated financial services.

These are only some examples of the scams out there. Use your instincts and read the fine print, whatever financial aid offers come your way. If you come across a scam, or you’ve been a victim of one, report it to the Federal Trade Commission or go to

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