Student Aid Scams: Don't be a Sucker
There are plenty of scams out there trying to part you with your money in exchange for scholarship information, listings, or scholarship funds themselves. Don’t get caught up in a scam—and don’t give scammers a dime. Here are a few signs to watch for when looking out for student aid scams.
You should never have to pay to get scholarship information or scholarships
Some fraudulent companies try to sell you listings, service subscriptions, or books of information. Others will advertise “scholarships” that are really low-interest loans requiring up-front processing and handling, origination, or advance fees. You should never have to pay for scholarship information or for the scholarships themselves.
The FAFSA is free
The first “F” in the acronym stands for FREE—and nobody has the right to charge you to fill out the FAFSA. Some fraudulent financial aid services have been found that ask for fees to pay for the application. This is a sure sign of a scam. You can go to the ed.gov website and fill out the application without paying a cent.
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Don’t get caught up in a scam—and don’t give scammers a dime. |
No one can guarantee you’ll get financial aid
Most people who apply to the government for financial aid receive it in some form or another. But nobody can guarantee you’ll get financial aid—either a scholarship, grant, or low-interest loan. Some fraudulent websites trick consumers by making them believe they can guarantee a result. They can’t. Beware of companies offering a guarantee even if they promise they’ll give you your money back—chances are, those money-back checks will bounce.
Who’s running that financial aid seminar?
Some fraudulent agencies run free seminars ostensibly offering information about financial aid. But what they’re really offering is a sales pitch—to try to get you to buy their products and services. If you’re considering going to a financial aid workshop, consider who’s running it. If it’s an insurance company or brokerage firm and not a legitimate financial aid agency, it’s likely to be a sales pitch rather than an informative workshop.
You can’t be pre-selected before you apply
Be very skeptical of letters or emails saying that you or your child has been “pre-selected” for a scholarship. To win a scholarship, you first have to apply—no financial aid agency simply picks names out of a hat. Many paid scholarship-matching services prey on the knowledge that parents want to hear their kids are special—to get them to buy.
There is no secret repository of scholarship money
You’ve probably seen the claims that “millions of scholarship dollars go unclaimed every year.” The fact is that the “millions” figure usually represents an estimated total of employee and member benefits available only to a small subset of the population employed by companies and other organizations that offer scholarship programs. You can check with your own or your parents’ employers to see if they offer scholarships—without paying a scholarship search service to get the information for you.
Requiring you to buy something to get aid is illegal
No company can legally insinuate that you need to buy insurance or another financial product in order to get federal aid. Financial aid agencies are not allowed to charge redemption and disbursement fees.
Scholarship information is available for free on several different websites, including FinAid.org and the College Board. These listings are extensive and it’s likely no paid agency could offer more information than sites like these. Be wary of organizations that charge you any kind of fee for information or scholarships; guarantee results; pre-qualify you or your child; or try to charge you to fill out the FAFSA. Scholarship money is there to help you with your money problems—not cause more of them.
Scholarship Scams - YouTube.com
Sources
Sources:
StudentAid.Ed.gov: Looking For Student Aid Without Getting Scammed
The Motley Fool: 7 Signs of a Student Aid Scam
University of Missouri: Avoid Student Aid Scams
More About Understanding Student Loans
- Credit Repair Services You Should Never Pay For
- Questions You Should Ask Before Applying for Student Loan Forbearance
- The Bank on Students Act: What It Is, and How It Could Help Student Borrowers
- How the Death of a Co-Signer Can Affect Your Student Loan
- Peer-to-Peer Student Loans: What They Are, and How They Can Help You Pay for College
- If You're Unable to Work Because of a Disability: What Happens to Your Student Loan?
- New Rules for Debt Collectors: How They Could Affect Your Student Loan
- Having Trouble Repaying Loans? The Department of Education May Be in Touch
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