Financial Aid Scams-College Bound Students Beware!!

cartoon picture of financial aid scams (puzzle pieces)

Introduction:

Scammers show no mercy to any one person, or age group. You often hear about scammers preying on older Americans. But at the same time, there’s another group of people that scammers have been targeting. It’s the younger folks. We often say that when your young, “you don’t know any better”. That may be true in some aspects. But when it comes to finances for both young people and their parents, it’s better to know about these scams and how to avoid them, than not know and end up being a victim.

With that said, the type of scam we’re going to focus on today, will be financial aid scams. This is a kind of scam that focuses on young people who are finishing up high school, and may be considering college. Yes, we know that a college education does not come cheap. So college bound students need financial aid, to guarantee that the college they decide to attend, gets paid. 

With that in mind, we’re going to dive into what distinguishes the real financial aid process from the fake, including what to look out for, and how you need to protect yourself (or if you’re a parent, your child) from these types of scams. After reading this review, you will go from not knowing any better, to being fully aware of this kind of foolishness.

How The Real Financial Aid Process Works:

If you’ve been accepted to a 2 or 4-year college/university (or even graduate school), then it’s important to look at different various options to determine how your going to pay for your education. One of the best options most students normally choose to exercise, is financial aid, by way of a student loan. This financial aid can come from your school itself, a private lenders, or through the, “Department of Education”. A student will apply for student aid thru a physical, mail-in application, or online through the FAFSA website.

You would give them your personal information, as well as other relevant information that might be needed, to see if you qualify for financial aid. Once you’re application is processed and looked over, you will receive a letter that states if you’ve been approved, or denied.

(Speeding forward) Once approved and the time comes to pay back your student loan/financial aid, you’ll receive a call, email, or recieve physical mail from your financial aid supplier. They’ll already have all of your personal information included, and won’t need to ask you any questions. If they do have to ask you any questions like your name, birth date, home address info, visa debit card information, what school did you attend, etc, disconnect from them immediately.

What To Look Out For In A Financial Aid Scam:

If you are unaware of how the financial aid process works, you may likely fall for this kind of scam. That is why it’s important to know what to look out for when trying to avoid a financial aid scam. If your applying for financial aid and your being contacted by a scammer, a scammer will contact you by way of either telephone, or email.

If it’s by phone, they’ll either call using a US toll free number, a 1-800 number, or a local phone number. This would give you the impression of the caller possibly being legit. Some will even claim to be someone from the “US Department of Education”. If it’s by email, you’ll notice that the email they’ve sent you is filled with consistent grammar, and spelling errors. Next they’ll be requesting your personal and banking information to apply for the loan, and than (more than likely) use that information to steal your money if they can, or your identity.

How does it work when scammers are trying to scam you into thinking you owe money?

If scammers are trying to scam you into thinking you owe them money, once they get in contact with you, they’ll claim “you have an outstanding debt, and this debt needs to be paid immediately to avoid future penalties, and interest”. Next they’ll ask, “so how would you like to make a payment”? But you know for a fact you’ve never applied for financial aid before! To this day, you have folks out here (myself included), that’s never recieved financial aid before, and still recieve scam phone calls and/or emails from these scamming fools.

With that said, here’s what you really need to look out for:

Application Fees: One thing you should note, is that when you fill out a FAFSA form for financial aid, you’ll never have to pay for an application or a processing fee. One of the common goals for a scammer is to extract as much information and money as possible from you and your parents. And the unfortunate fact is that already, millions of dollars have been stolen from people because of this and other similar scams. If a scammer asks you for money for the purpose of a processing fee, application fee, or anything similar to that, that’s when you need to end the conversation. As a rule, if you have to pay money to get money in a situation similar to this, then it’s a scam.

Grants Instead Of Loans: Sometimes the scammer will claim to be someone from the “U.S. Department of Education”. They will claim that instead of a student loan (that you’ll need to pay back at some point in the future), they have a grant with your name on it. Then they’ll ask for your personal information like your bank account, or social security number. At that point, you are to cease any communication.

It is important to never give out this type of information to anyone you don’t know over the phone, or Internet. While some scammers will often go after your finances, some will even go so far as to steal your identity. This can later cause bigger problems financially, and legally (which is bigger).

“Guaranteed” Money: If it’s too good to be true, chances are it probably is. Such as the case with guaranteed money by way of scholarships. Adding on to the previous point about grants, scholarships are for those who apply for them (you have to apply to be contacted), and of course not for those who haven’t. Furthermore, you will only qualify for scholarships if you meet certain standards, or guidelines (like GPA or intended major). If you are contacted by someone who claims that you owe them money, or that they can guarantee you a loan for your college education, in the form of a scholarship and you didn’t apply for it, simply ignore the “offer” or “accusation”.

Preventative Measures: How To Protect Yourself-

Knowing how to spot these scams and protect yourself from them is key. It is the difference between saving your bank account and identity from harm, and having to deal with the financial and legal headaches of restoring them both in the future. With that in mind, here are a few measures that you need to take:

Never Give Out Personal Information Over Phone Or Internet:  I can’t repeat this enough! But it is always important to never give out any financial or any other personal information that is tied to your identity. This means not doing so over the phone, or via email. Scammers will stop at nothing to extract every cent out of you and your bank account. Some of them may even outright steal your identity. As a result, your finances and even your credit might suffer.

Remember What You’ve Applied For: Make a note of any applications you have filled out in general, and applications that pertain to the financial aspects of your college education. This means keeping confirmation emails for your FAFSA application and even proof that you applied for a scholarship. This way, in the event someone calls, you’ll always have a hard copy of something to confirm that you’re speaking with real customer service, and not a scammer.

Report Scammy Activity To Proper Authorities: As mentioned before, there are scammers who will pose as an employee from the U.S. Department of Education. If they inquire about your application, say that you ole them money, or make promises like guaranteed money, then end contact with them immediately. Next contact the “Department of Education”, to report the conversation involving your financial aid. They will quickly determine whether or not if you were talking to a real customer service, or a big scammer.

A cartoon picture of a white man in a black suit, running away from a bank loan

My Final Conclusion:-

Financial aid is part of the college application process. Now in days you can’t go without it! But it can also be an opportunity that scammers might try to use to scam young people and their parents, out of their hard earned money. Remember the difference between the real financial aid process from the “scammer way”. Signing up for financial aid, and paying it back. It’s always important to protect your personal and financial information at all cost, and never give it out to anyone over the phone, or Internet. Plus, it never hurts to verify if you are speaking with real customer service, or not. It’s better to play it safe than become the next victim of a scam. Point blank, end of discussion..

Do you have any experience with being involved in a financial aid scam? Do you have any questions concerning this scam review? If so, please leave your comments or questions at the bottom of this post, and I will be more than happy to get back to you. Thanks again for checking out my post, and good luck with your success online..

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