Unfortunately, there are many scholarship scams out there created in hopes to get a student’s money or personal information. Here’s what to keep in mind:
You should never have to pay to apply for a scholarship, including application fees, administrative fees, or processing fees.
You don’t need to provide a Social Security Number, a credit card number, a bank account number or any other personal financial information to apply for a scholarship.
While scholarships are taxable, students do not pay the taxes to the scholarship provider.
Another common scam is a scholarship provider sending a check for more than the amount of the scholarship and asks you to refund the difference. The original scholarship check is a forgery and will eventually bounce.
You also don’t need to pay for a scholarship search. There are many legitimate places to look for a scholarship for free.
What Happens to My College Savings if I Win a Scholarship?
If you are in the wonderful situation where you have money in a 529 college savings plan and win a scholarship, you can take a non-qualified distribution from the 529 plan, up to the amount of the scholarship, without having to pay a penalty. You can also use a 529 plan to pay for qualified expenses that a scholarship may not cover, such as transportation and room and board costs.
How to Find Scholarships
If you’re in high school, ask your high school counselor for additional resources.
If you’re a college student, ask the financial aid department how to locate scholarships at your school.
Community organizations, including civic organizations
Organizations and professional associations based on your major and career path
Your parent’s employer
Upromise is an online platform that helps families save for college. You can register for free, and earn cash back towards college by shopping online through their links and registering your credit cards and dining at participating restaurants. They also award one member every month with a $529 scholarship, automatically. Sign up for free.
At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.