Students on the hunt for scholarships may soon find themselves enrolled in the school of hard knocks. That's because the marketplace is riddled with scam artists offering bogus scholarships and services. Students need to be careful, or else they'll be paying for more than just tuition when they enroll in college.

Part of a college education is learning about life. These are lessons that extend beyond the textbook, and they include learning how to function independently and make sound financial decisions. One particularly relevant subject involves understanding how to avoid being enticed by con artists, particularly those offering bogus scholarships. Here's a brief rundown of the most common scams.

1. Phantom scholarships: Students are encouraged to apply for a scholarship that requires an entry fee. The problem is that no one ever wins, except for the scammers, who pocket the fees.

2. Pay first, loan later: A bogus lender will offer an educational loan, generally at a low rate, but require a fee before distributing the funds. Students pay the fee, but receive nothing in exchange. A legitimate lender would deduct any fees from the loan and never charge upfront fees.

3. You've won (but you'll soon lose): In this simple scam, you're notified that you've won a scholarship, but you'll need to pay a fee or taxes before the money can be released. You pay, and the scammers see to it that you receive nothing but grief in return.

4. You pay, they profit: A common scam is to require an entry fee for a scholarship application. The scammer will receive thousands of applications, and only award one or two scholarships-unlike the phantom scholarships, which award nothing. The scholarships are small, however, and the scammers keep the remainder of the fees.

5. Guaranteed to fail: A guaranteed scholarship is hard to pass up. That's why so many students fall for the offer of one in return for a fee. Once you've paid your fee, you'll be lucky to get anything at all.

6. Bait and switch: There are plenty of brokers and insurance companies who feast on people hungry for financial aid. They'll host a "financial aid" seminar, which is actually a thinly veiled attempt to get you to buy insurance or investment products. Watch out for anyone who tells you that these types of products are required in order for you to be eligible for financial aid. That constitutes a violation of federal regulations, as well as state insurance laws.

These scholarship scams are a rude awakening for students; but they can serve as a valuable learning tool. There's a criminal element willing to do anything to snatch up an unsuspecting student's tuition dollars. Students should always scrutinize a financial offer-during their college days and beyond. There are pros to many scholarship offers; just be careful to avoid the cons.

Published on February 6, 2015