Inside India’s Devastating Education Scam Industry

For thousands of students across India, scholarships are not bonuses — they are the difference between attending college and dropping out. They promise access, mobility, and a way out of financial constraint. But increasingly, that promise is being weaponised.

Behind professional-looking websites, official-sounding emails, and institutions that appear legitimate down to their terms of service, a parallel economy of education fraud has taken root. From fake scholarship portals and guaranteed-award scams to non-existent universities siphoning government funds, education-related scams today are structured, scalable, and devastatingly effective.

In many cases, victims only realise they have been deceived once they are too deep in — after money has changed hands, documents have been submitted, or years of study have been invested in a degree that ultimately means nothing.

“If you have to pay money to get money, it’s probably a scam”

In 2023, a first-generation college student from Uttar Pradesh applied for what appeared to be a government-linked merit scholarship circulated through a WhatsApp group run by a local coaching centre. The portal carried official-looking logos and testimonials. She was asked to pay ₹12,000 as a “one-time processing fee.” When the application deadline passed, the website disappeared. Emails bounced back. The contact number was switched off.

Her money was never recovered.

Cases like this are not outliers. Investigators and consumer protection agencies consistently emphasise a basic rule: legitimate scholarships do not charge application, processing, or discovery fees. Yet financial pressure, limited guidance, and digital opacity make such scams easy to fall for.

The most common scholarship and education scams

“Guaranteed award” scams

Victims are informed that they have already “won” or are “guaranteed” a scholarship — provided they act immediately. A small payment is required to secure the award. No legitimate scholarship guarantees funding in exchange for money or personal information.

Fake scholarship websites and organisations

Scammers create professional-looking portals that closely resemble official platforms. These sites harvest personal data, identity documents, and banking details before vanishing. According to advisories from the Federal Trade Commission, education-related phishing is one of the fastest-growing categories of identity theft globally.

Fee-based applications and “secret lists”

Some schemes charge applicants for access to “exclusive” databases of scholarships or insider opportunities. In reality, reputable scholarships are publicly listed and free to apply for.

Phishing and data-harvesting scams

Applicants are asked for Aadhaar numbers, PAN details, bank credentials, or OTPs under the guise of verification. None of this information is required during a legitimate scholarship application process.

Fake universities and degree mills

Perhaps the most damaging scams involve institutions that claim to offer recognised degrees without legal authority to do so. Students often discover the fraud only when employers or regulators reject their qualifications.

A student from West Bengal who completed a two-year distance degree later found that the university issuing it did not legally exist. The name was missing from accreditation lists. The years and fees were lost, with no legal recourse.

Fake universities: legitimacy as a façade

The University Grants Commission periodically publishes lists of institutions falsely claiming university status. As of 2025, more than 20 fake universities have been identified across states including Delhi, Uttar Pradesh, Andhra Pradesh, Maharashtra, Karnataka, Kerala, and West Bengal.

These institutions often:

• Promise fast-track admissions

• Advertise unapproved online or distance degrees

• Operate without physical campuses

• Use names resembling well-known Indian or international universities

Despite repeated public warnings, many continue operating under new identities — highlighting weak enforcement and slow regulatory response.

When scholarship fraud scales into welfare theft

While individual students bear the emotional and financial cost, scholarship scams increasingly target government welfare systems themselves.

Between 2017 and 2022, the Ministry of Minority Affairs identified 830 fake or non-operational institutions that fraudulently claimed minority scholarships, causing losses of approximately ₹144 crore. These institutions manipulated admissions records and bank accounts to divert funds intended for students.

In May 2025, the Central Bureau of Investigation uncovered a ₹250-crore post-matric scholarship scam in Himachal Pradesh. Educational institutions established centres across states, collected documents from eligible SC/ST and OBC students, often from below-poverty-line families, but never granted admission. Instead, the documents were used to open fake bank accounts and siphon scholarship money.

Several affected students later discovered accounts opened in their names without their knowledge.

The psychology that keeps these scams working

At the heart of education fraud is not ignorance, but manipulation. And this manipulation comes in many forms.

Urgency and panic

“Act now or lose your chance” messaging pressures students into hasty decisions. Legitimate scholarships have fixed deadlines and transparent selection processes.

Authority and trust

Scammers impersonate universities, government bodies, or recognised platforms, borrowing credibility from institutions students are conditioned to trust.

Aspiration and empathy

For first-generation learners and financially vulnerable families, the promise of education carries enormous emotional weight, making skepticism feel like risk.

Cognitive bias

Once time or money is invested, victims tend to ignore red flags and seek information that confirms their belief. Academic research on fraud psychology consistently documents this pattern.

Regulatory responses and their limits

India’s National Scholarship Portal was launched to centralise applications, reduce duplication, and improve transparency. Managed by agencies such as UGC and AICTE, it provides eligibility criteria, deadlines, and tracking mechanisms.

While the portal has improved oversight, enforcement gaps remain:

• Many scams operate outside centralised systems

• Detection often occurs only after funds are disbursed

• Convictions and recoveries remain rare

Cybercrime units continue to report rising education-related fraud complaints, even as prosecution lags behind scale.

Red flags students and parents should not ignore

• Requests for application or processing fees

• Vague eligibility criteria described as “open to all”

• Unverifiable addresses, phone numbers, or email IDs

• Poor grammar or inconsistent communication

• Pressure to act immediately

Verification should always include cross-checking official portals, accreditation lists, and consultation with teachers or counsellors.

What to do if you encounter a scam

Do not engage further or share information. Preserve emails, messages, and transaction records. Report the incident to cybercrime authorities, like the Federal Trade Commission (FTC), or consumer protection bodies such as the Better Business Bureau.

Early reporting helps prevent wider victimisation.

Case studies: when scams become systems

The Bihar Scholarship Portal Scam

Between 2020 and 2022, thousands of students in Bihar applied for state-linked post-matric scholarships through what appeared to be authorised intermediaries helping with online applications. Many were first-generation learners from SC, ST, and OBC communities who lacked access to digital resources and relied on local cyber cafés and agents to complete the process.

Students later discovered that while their applications had been “successfully submitted,” the scholarship money was never credited to their accounts. Investigations revealed that in numerous cases, bank details had been quietly altered during submission, redirecting funds to accounts controlled by middlemen or shell beneficiaries.

According to reports cited by state vigilance authorities and local media, several cyber café operators and private agents were found to be running parallel application pipelines, charging students a small “service fee” while manipulating backend details. By the time complaints were filed, many of the accounts used to siphon funds had already been emptied.

For students, the loss was not just financial. Many had taken loans or deferred fee payments expecting scholarship disbursement. When funds failed to arrive, colleges withheld hall tickets, exams, or certificates. In several cases, students only learned they had been defrauded after institutions flagged “already paid” scholarship records under their names.

Despite arrests and departmental inquiries, recovery remained limited. The scam exposed a major vulnerability in scholarship delivery systems: dependence on intermediaries in states where digital access is uneven.

Minority Scholarship Scam (2017–2022)

Between 2017 and 2022, India’s minority scholarship schemes were systematically exploited by hundreds of fake and non-operational educational institutions, resulting in losses of approximately ₹144 crore to the Ministry of Minority Affairs. The fraud spanned multiple scholarship programs, including Pre-Matric, Post-Matric, and Merit-cum-Means schemes meant to support students from minority communities. Its scale only became clear after a multi-year audit flagged widespread irregularities in disbursement records.

Investigations found that at least 830 institutions had managed to access scholarship funds by submitting forged admissions data, attendance records, and fee receipts through government-linked portals. In several cases, student identities were duplicated or used without informed consent. While official records showed scholarships as “successfully disbursed,” many students reported never receiving the money, suggesting funds were being quietly diverted to institution-linked or intermediary-controlled bank accounts.

The scam persisted for years due to fragmented oversight. Institution verification was largely handled at the state level, while payments were processed centrally, creating accountability gaps. Physical inspections were rare, Aadhaar and bank checks were inconsistently applied, and repeated red flags—such as unusually high approval rates from specific institutions—went unaddressed. As a result, several institutions continued receiving funds year after year without revalidation.

In 2022, the Ministry initiated a nationwide review that identified 1,572 suspect institutions, confirming 830 as fake or non-operational. Payments were suspended, institutions were blacklisted, and recovery proceedings were initiated, with several cases referred to investigative agencies. Beyond financial losses, the fallout was severe: legitimate students faced delays and heightened scrutiny, while trust in minority welfare schemes eroded, underscoring how education fraud can operate not outside the system, but from within it.

These cases underscore a troubling reality: education fraud in India is not opportunistic, it is organised.

Conclusion

Scholarship and education scams exploit aspiration, inequality, and trust, often hiding behind the appearance of legitimacy. While individual vigilance matters, the burden cannot rest solely on students and families navigating opaque systems.

Stronger enforcement, faster audits, and institutional accountability are essential to prevent education from becoming a gateway to financial exploitation.

For applicants, one principle remains constant: legitimate opportunities do not demand secrecy, urgency, or payment in exchange for access to education.

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