Melanie Duquesnal is here to share some red flags about scholarship and financial aid scams. She is the CEO of the Better Business Bureau of Eastern Michigan.
Last year, on a national basis, consumers inquired to the BBB nearly 60,000 times about scholarship and financial aid types of businesses.
Here are those 7 red flags Melanie says to watch out for:
1. They 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.
• If the scholarship service claims students who don't receive a scholarship will be refunded, the business will often disappear or make it incredibly difficult to qualify for a refund.
• Legitimate scholarship foundations do not charge an application fee. You should not have to pay more than the cost of a stamp when sending an application or requesting scholarship information.
2. They Claim There is No Work Involved
• Be wary if the scholarship service claims they will apply on your behalf.
• A legitimate scholarship will require the applicant to submit their own application, essay, and/or letters of recommendation.
3. They Say Scholarship is Guaranteed
• Avoid scholarship services that claim you are guaranteed to receive scholarship money.
• Legitimate scholarship matching services have no control over who the scholarship foundation chooses to win the grant.
• An authentic scholarship service will never guarantee a student scholarship money.
4. They say 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.
5. They Tell You Everyone is Eligible
• Each scholarship is looking for an ideal candidate that fits their specific criteria.
• Whether the requirements are the student's GPA, career interests, athletic involvement, or volunteer work, legitimate foundations are looking for students that meet their characteristics.
• Avoid services that claim every student is eligible to receive the scholarship.
6. 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.
7. They Ask You 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.