Scholarship Scams

What about scholarship search services?

Many private scholarship search services provide sources of financial assistance. We do not evaluate those services. If you decide to use a search service, check its reputation by contacting the Better Business Bureau or a state attorney general’s office.

How can I tell these search services aren’t scams? Are there any signs I should look for?

Be careful when searching for information on student financial aid. Estimates show that families lose millions of dollars every year to scholarship fraud. The College Scholarship Fraud Prevention Act protects against fraud in student financial assistance. The Federal Trade Commission (FTC) cautions students to look for these telltale lines:

• “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.”
• “You’ve been selected by a ‘national foundation’ to receive a scholarship.”
• “You’re a finalist” in a contest you never entered.

DID YOU KNOW …

Identity theft is a growing problem for all of us. Our team has worked hard to ensure that information exchanged over our Web sites is secure. To help you with security concerns, we have published a handout called “Student Aid and Identity Theft: Safeguard Your Student Aid Information.” You can get it at 1-800-4-FED-AID.

Make sure the information you receive and offers for assistance are legitimate. Don’t fall prey to fraud. To file a complaint with the FTC, or for free information, call 1-877-FTC-HELP (1-877-382-4357). The TTY number is 1-866-653-4261. Or visit www.ftc.gov.

Identity Theft

Besides scholarship scams, you need to be aware of identity theft.

What is identity theft?

Identity theft is a widespread and growing national problem for everyone. This crime involves the theft of your personal information such as your name, address, telephone number and Social Security number. Identity thieves steal your personal information and ruin your credit.

These thieves often run up thousands of dollars in credit card debt, just to name one problem, and the bills are sent to you for payment. Your credit rating can be ruined. Even though it’s not your fault, you’re the one who has to clean up the damage, which can take months or even years to correct.

How can this happen?

Identity theft occurs when someone inappropriately obtains personal identifying information about you, such as your Social Security number or driver’s license number and uses that information to obtain credit cards, loans (including student loans) or merchandise and services in your name.

Identity thieves usually get this information from a personal computer that you used for online banking or purchasing transactions. Sometimes just using a cell phone or using your Social Security number for identification can leave you at risk. Why? Each of these transactions requires that you share personal information, such as your name, address and phone number and your bank and credit card numbers. Occasionally, this information falls into the wrong hands.

What can I do about it?

• Don’t throw credit card applications you don’t want into the trash. Cut them into several pieces, or shred them, so no one can retrieve them and apply for credit in your name.
• Safeguard your Social Security number at all times. You generally have to provide it to your employer or your bank, but if a business wants it, ask why it’s needed and how it will be used before you give it out. There probably is no legitimate reason for any business to need this type of information. Never give your Social Security number or driver’s license number to anyone who calls you on the phone or contacts you online saying they need this information to verify your identity.
• Never give personal or financial information over the phone or the Internet unless you initiated the contact.
• If you decide to apply for our federal student aid programs over the Internet, do so at www.fafsa.gov or through www.studentaid.ed.gov, which are official U.S. Government Web sites that are protected from unauthorized disclosure. Keep your PIN, your online student identifier, in a secure place and never give it to anyone.

These are just a few steps you can take to protect yourself from identity theft. For more information, contact the Federal Trade Commission (FTC) at www.ftc.gov, or call 1-877-IDTHEFT (1-877-438-4338).

To report identity theft that affects your federal student aid, call the U.S. Department of Education’s Office of Inspector General Hotline at 1-800-MISUSED (1-800-647-8733) or go to www.ed.gov/misused.

DID YOU KNOW …

Federal Student Aid is one of only a handful of agencies in the federal government designated as Performance-Based Organizations (PBO's) by Congress. The result: greater productivity and efficiency than the conventional government agency. This allows our team the operational freedom and flexibility to focus on fulfilling our mission: ensuring that all eligible Americans can benefit from financial aid for education after high school.

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This content courtesy of U.S. Department of Education, Federal Student Aid, Students Channel, Funding Education Beyond High School: The Guide to Federal Student Aid, Washington, D.C., 2006.