Paying for college or vocational training is expensive, and the Federal Trade Commission (FTC) says scammers exploit that by promising to secure scholarships or financial aid. This guide summarises the FTC’s advice on how these scams work and how to check an offer. It covers the United States only, including the federal FAFSA form; the UK student finance system works differently and this site’s separate guide on student finance scams covers it. It is general information, not legal or financial advice.
How the approach usually starts
The FTC says scholarship and financial aid scams often begin with a social media post, email or letter that looks like a personalised invitation, saying the person has been selected for a particular scholarship or aid package. According to the FTC, the calls and events that follow are usually high-pressure sales pitches that push people to pay immediately, or lose out on the supposedly special opportunity.
Financial aid scams: paying for a free form
Some companies claim they can make a person eligible for financial aid, including grants, loans and work-study, and say they will handle the paperwork for a processing fee. The FTC says what they are really doing is filling in the Free Application for Federal Student Aid (FAFSA), the free form that determines eligibility for federal aid. Two further risks follow:
- False information. The FTC says scammers sometimes use false information about family income, assets and benefits to qualify a student for more aid than the truth would allow. Its guidance states that a person can get into trouble for false information on a FAFSA, including fines up to $20,000 and/or jail time.
- The FSA ID. The FTC says only the applicant and their family can complete the FAFSA, which is always free to fill out and submit, and that the FSA ID, the username and password used to apply, must never be shared with anyone, including companies or consultants. Dishonest people could use it to get into the account and take control of personal information.
The FTC’s paying-for-school guidance adds that the only way to apply for federal student aid is the FAFSA, that it is free, and that the FSA ID should not be shared with anyone, no matter who asks.
Scholarship scams
The FTC’s rule of thumb is never to pay to apply for a scholarship. If a company promises a scholarship or grant in exchange for a processing cost, redemption fee or other upfront payment, the advice is to walk away. It says many such companies give nothing for the fee, not even a list of potential sources. Others claim the person has been selected as a finalist for an award they never applied for, or ask for a checking account or credit card number to confirm eligibility and then debit the account without consent. Some offer a money-back guarantee but attach conditions that make a refund impossible.
The FTC does distinguish legitimate businesses. It says many companies legitimately sell lists of scholarships, and some charge to compare a person’s profile with a database of opportunities. Online scholarship search engines exist as well. The difference, it says, is that legitimate companies never guarantee or promise scholarships or grants.
Six phrases that signal a scam
The FTC says an offer using any of these phrases, or a variation, is a scam:
- “The scholarship is guaranteed or your money back.”
- “You can’t get this information anywhere else.”
- “I just need your credit card or bank account number to hold this scholarship.”
- “We’ll do all the work. You just pay a processing fee.”
- “The scholarship will cost some money.”
- “You’re a finalist” for a contest the person never entered.
If invited to a seminar
The FTC says some financial aid and scholarship seminars are legitimate and some are scams, and warns that these events are often high-pressure sales pitches. Its steps for anyone who attends are:
- Do not pay any money at the seminar. Solid opportunities are not sold by rushing and pressure.
- Investigate the organisation before paying, including searching online for its name plus “complaint” and “scam”. The same help may be available free from a school guidance counsellor or financial aid adviser.
- Do not trust success stories, because the operator may have paid people to give glowing reviews. Ask for at least three local families who used the service in the last year and follow up with them.
- Do not deal with anyone reluctant to answer questions or give details.
- Ask how much the service costs and what the refund policy is, and get the total cost in writing. The FTC cautions that scammers may make refunds hard or impossible whatever the policy says.
Where genuine help is found
The FTC’s checklist is to fill out the free FAFSA, never pay anyone to fill out or process it, and talk to a high school guidance counsellor or a college financial aid office about aid and scholarship options. Its paying-for-school guidance also lists free sources of grants and scholarships, including a college financial aid office, a high school or TRIO counsellor, the US Department of Labor’s free scholarship search tool, state education agencies, foundations, community groups, professional associations and an employer.
If money has been paid, and reporting
Scammers often ask for payment in ways that make it hard to get money back. The FTC says that, however a person paid, the sooner they act the better. It advises reporting financial aid and scholarship scams to the FTC at ReportFraud.ftc.gov and to the state attorney general.
Frequently asked questions
Does it cost anything to file the FAFSA?
No. The FTC says the FAFSA is always free to fill out and submit.
The bottom line
The FTC’s advice is consistent: never pay to apply for a scholarship or to file the FAFSA, never share the FSA ID, treat guarantees and pressure to pay at a seminar as red flags, and use free help from school counsellors and financial aid offices. Suspected scams can be reported to the FTC and the state attorney general.