Financial Education Blog

Protect yourself from financial aid scams

With the recent release of the 2019-2020 Free Application for Federal Student Aid (FAFSA), millions of students and their parents are starting the search for next year’s college financial aid, making them susceptible to scammers. Navigating the world of college financial aid is not an easy task. Making it even more difficult are those out there willing to take advantage of you.
The pitch
A typical financial aid scam starts with the person contacting you claiming to be with a university, the government or a non-profit organization to sound more official. The Better Business Bureau (BBB) suggests that fraudsters will use the terms “federal” or “national” in their organization name to make it sound more official. It’s potentially followed up by success stories and glowing reviews from “satisfied clients,” the request for up-front fees and personal information, and promises of “guaranteed” financial support that never materializes from a company that seems to have disappeared. Or, maybe you do receive a check that clears only to find that it’s from a fraudulent source.
What to watch for
There are a number of signs to look for when it comes to identifying a fraudulent financial aid offer. Both the Federal Trade Commission (FTC) and offer a list of identifiers to watch for, and among them are:
Be careful with any financial aid source that requests application fees, loan fees, search fees, or any fees that must be paid in order to apply. It’s most likely these are sham offers that provide nothing in return. It should be noted that sometimes legitimate personal loan offers will include fees, but those are deducted from the disbursement check and are not requested upon application.
Also, remember that the FAFSA is free. It says so right in the name. There are some sites that will charge you a fee to access the information. Only should be used to apply. Some companies will charge you a fee to complete the FAFSA for you; this requires you to not only pay for a free application but to disclose personal information.
Asking for personal information
If you did not initiate contact in searching for the grant or scholarship, do not give out your personal information. There are plenty of fraudsters will claim to work for a company that will help you secure financial aid, but that they need personal information from you to do so. As in any instance where someone asks for your personal information, do not supply it.
Guaranteed money
Not to be the bearer of bad news, but no scholarship or grant money is ever guaranteed just by virtue of the fact that you applied for it. If someone is telling you that if they apply on your behalf – especially if a fee is involved – you are guaranteed financial aid, then it’s not legitimate. The governing body of the scholarship is the only entity that makes the decision of who receives the scholarship.
A sketchy return address
Always check on the return address of the company sending you the offer. If it is a mail drop, meaning it has a box number, or a residential address, then it’s likely not legitimate. Often the mail drop will be disguised as a suite number to make the address appear legitimate. offers a Mail Drop Search Form to allow you to confirm whether it’s a mail drop.
Pressure to commit
Let’s face it, the world of college financial aid is not the easiest to navigate. There are a number of seminars offered that try to help you figure out how college financial aid works. Many are helpful. If you attend one that is pressuring you to respond quickly, it’s most likely a scam. Scholarship programs typically have a firm deadline of response for those interested in applying and a set date on which the winner is announced.
Report it
If you feel like you might have encountered a potential scholarship scam, document any interaction you might have had with the company. This includes letters, notes on phone calls and any emails you might have exchanged. Seek a second opinion, too, from a school financial aid counselor or even a high school guidance counselor. Then, if you conclude that it is a scam, you can report it to the FTC, the Ohio State Attorney General’s Office, your local BBB and the U.S. Department of Education’s Office of the Inspector General.
For more information on how to keep yourself protected from fraud, visit our Identity Theft and Fraud Center.