The Environment is Ripe for Scholarship Scams: Here’s What Financial Aid Offices Can Do

This year, when funding higher education is harder than ever for millions of American students and their families, financial aid professionals are challenged to dig deep to unlock every dollar for both incoming and existing students. Schools know that scholarships are one of the most important tools in removing financial barriers to completing a degree.  

As more students seek out scholarship opportunities available to them, and more advisors leverage solutions to help their students, we’re reminded of an extremely unfortunate thing that happens year after year – scholarship scams. 

A byproduct of an overworked system 

Visit any financial aid office at a college or university, and the teams working there will tell you that they are taxed. Helping students navigate the financial aid process is a full-time-plus job. In many schools, there simply aren’t enough time and resources to help students navigate scholarships in addition to the FAFSA, state aid, veterans' benefits, tuition reimbursement, payment plans, and private loan options. Because of this shortfall, students and their families are often left to fend for themselves when it comes to searching for external scholarships. And that’s left the door open for predators. 

A predator is defined as “a person or group that ruthlessly exploits others.” They are constantly scanning for vulnerabilities of which they can take advantage. It is this ancient animal instinct and relationship between predator and prey that has led to the explosion of scholarship scams. In case it is not clear, students are the prey, and financial aid offices often feel helpless in protecting them. 

Our society is consistently bombarded with bad information about student debt. That fear is, in part, makes students a unique target for bad actors. Actively seeking alternatives online to traditional financial aid makes students vulnerable and easy to find.  

Here’s how they work: scammers will guarantee students they can either find scholarships on their behalf (do the hard work), or award them a scholarship in exchange for an advance fee, personal information, or social media promotion. Some are especially slimy and tell students they’ve been selected as finalists for a specific scholarship award, and all they need to secure their eligibility is an advance fee that will be reimbursed later. 

Others are extremely sneaky and make their marketing look and feel official. According to the FTC, these companies claim "...they have programs that could make you eligible to receive financial aid, including grants, loans, work-study and other types of aid. For a processing fee, they'll handle all the paperwork.” It’s critical that financial aid offices let students know that the only application that will determine eligibility for federal aid programs is the FAFSA, which is free to submit. It’s a constant and never-ending endeavor for aid offices to fight against misinformation about the FAFSA. 

This current environment, where students are struggling more than usual to fund their higher education dreams, is a breeding ground for fraudulent behavior. And yes, asking financial aid offices to step in and help students side-step a parasite is a lot to ask with everything else they’re trying to do. 

What CAN financial aid offices do to help? 

Keeping a close eye on potential scams is paramount, and unfortunately, most financial aid offices simply don’t have the bandwidth. They're overburdened by regulations and obligations handed down from the Federal and State Governments, Veterans Affairs, and collegiate administrations. Aid Office employees work through all these things before they ever do anything to serve a student, who is the primary customer. And when push comes to shove in terms of prioritization, do you think maintaining federal compliance or providing scholarship search tools and assistance will win out?   

If this describes your office, and you could use an extra hand (or three), consider tools that can free up advising time and streamline the scholarship vetting process. 

ScholarshipUniverse, for instance, offers comprehensive institutional scholarship management with student matching and has a fully vetted external scholarship database as well. Our research team digs in to learn as much information as possible about potential scholarship providers, the applications, and any promotional materials that exist. If a scholarship passes this initial vetting round, a second research pass works to identify any inconsistencies: think grammatical errors, unprofessional presentation of information, invalid contact info, or requirements for social sharing. 

VirtualAdvisor, our newest product, is an AI-powered virtual assistant that helps students navigate commonly asked questions – and can integrate with ScholarshipUniverse to tell students what scholarships they qualify for – so advisors have more time to...well...advise. It runs 24/7 in 67 languages, so students can get the help they need, when and where they need it. 

Helping protect students from scams is not always easy or quick. Providing tools for students and staff to educate them on what is a scholarship scam and how to avoid them is key. We created a checklist to help you as a first step in this process while you explore more efficient technological solutions. Regardless of how your office tackles the problem of scholarship scams, know that it must be tackled. It’s unfortunate that times of financial uncertainty bring predators out of the woodwork, but that’s where we are. Hopefully, technology will someday outsmart even the slickest bad actors. Until then, financial aid superheroes are our best defense. 

About the Author

Amy Glynn, VP Student Financial Success

Amy Glynn joined CampusLogic in 2013, focused on helping colleges and universities deliver student financial success through automation, advising, and analytics. Ever-focused on improving staff efficiency and the student experience, Amy has spent more than a decade optimizing the financial aid process while ensuring institutions maintained compliance with Federal Title IV regulations. A sought-after national-stage speaker, Amy champions ideas that can help turn the tide for the nearly 3 million students who drop out of higher education every year for reasons related to finances. Student financial success has become a strategic imperative for all higher education institutions and Amy often lends her voice to policy discussions focused on improving accessibility, driving informed borrowing, and increasing completion. Amy earned her Master of Science in Higher Education from Walden University.

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