BBB: Students Give Financial Aid Scams a Failing Grade
The college fall semester will kick off soon, so now is the time to beware of scams targeting students. Scholarships and financial aid are a great way to help with the high cost of education. Even though finances have already been planned out for the school year, scammers still use this time as an opportunity to take advantage of students and parents. Before you think about last-minute financial assistance, Better Business Bureau (BBB) serving Central, Coastal, Southwest Texas and the Permian Basin wants you to be wary of financial aid fraud.
According to FinAid, a resource for students looking for ways to finance their education, financial aid scams come in different forms—from seminars to awards. Some con artists contact families of potential college students and tell them they have been awarded a scholarship. These scammers claim the money is guaranteed if the "winner" provides bank account or credit card information first. Many of these fraudulent operations use official-sounding names with the words 'federal' or 'national', but FinAid warns they are not affiliated with any actual government agency.
FinAid warns of these additional red flags to be on the lookout for when researching financial aid:
Application fees. Do your homework before you do anything. Start with free options and be highly skeptical of any company that charges a fee and requires payment in advance. Federal Student Aid, an office of the Department of Education, says legitimate scholarship foundations do not charge an application fee.
Guaranteed scholarships. Avoid scholarship services that claim you are guaranteed to receive money. Legitimate scholarship services have no control over who the scholarship foundation chooses to win the grant.
Every student is eligible. Whether the requirements are the student’s GPA, career interests, athletic involvement or volunteer work, legitimate foundations are looking for students that meet their characteristics. Avoid services that claim any student is eligible to receive the scholarship.
Seminars. If you decide to attend an information seminar on scholarships or financial aid, be aware this is most likely a sales pitch for scholarship services. While at the seminar, do not be pressured into paying for services on the spot. Before you purchase any services, carefully research the organization at bbb.org.
You’ve been selected. Be wary of letters or phone calls stating you have been selected or are a finalist for a scholarship you never applied for. This is a sign of a scam. Scammers may be looking to steal your identity. Be careful not to send out personal or banking information, or write a check to businesses you haven’t researched thoroughly.
Advance-fee loans. Avoid lenders that offer you an unusually low-interest rate for an education loan and then require an upfront fee before you can receive the loan. If you are searching for an education loan, be aware that real lenders do not charge an upfront application fee. Instead, they deduct their processing fees from the check before the student receives the loan.