College Loan & Scholarship Scams

By Beth McCann, Denver District Attorney ~

Scammers see back-to-school time as an opportunity to take advantage of students and their parents who are new to student loans and scholarships. The following are common types of back-to-school scams, along with some tips to avoid falling victim to them.

Financial Aid Scams
Scammers are well aware of the desperate measures young adults are willing to take in order to pay for school, books, room and board. Many scammers will pose as a legitimate scholarship foundation or government agency offering money to hard-working students who meet certain requirements. Here are some red-flags to look out for when applying for scholarships:
1.     Processing and Application Fees
You will never be required to pay upfront for anything when applying for scholarships or loans. The safest tool to be sure you are applying for government aid, is Private scholarships are out there as well, but remember, you will never be required to pay to apply for a real scholarship. Scholarships do not have entrance fees.
2.     Promised Money
Scholarships are never guaranteed. If you are being told that you are 100% guaranteed to receive a scholarship, you are being scammed. Scholarship recipients receive aid because they have qualified for it in some way or another. If you are promised an award, the award probably does not exist, and the scammers are likely going to use your personal information to commit fraud.
“Student Tax” Scams
Many students receive calls from the “IRS” saying their “student tax” has not been paid and they will not only be un-enrolled from school, but sent to prison as well, if payment isn’t immediately received. This is a scam – here’s how we know:
1.     The IRS will never call you demanding immediate payment.
The IRS does not call you regarding unpaid taxes without first issuing a billed notice (or several) via U.S. mail. If you have not paid your taxes, you or your family would know in advance. 
2.     The IRS does not accept payment in the form of gift cards or wire transfers.
Most IRS scams involve the scammer demanding that the person purchase gift cards and provide them with the access code, or transfer money to an account through a wire transfer. The IRS does not accept these forms of payment. If you actually were to owe the IRS money, you would have to make your payment to the United States Treasury. For more information about what the IRS does and does not do, visit

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