If you are on the hunt for scholarships, student loans or grants – beware! Scam artists are on the prowl for vulnerable students. The more you know, the better you can protect yourself. Here are some common college loan and scholarship scams, and how you can avoid becoming a victim.
100 million According to FinAid, a Web-based nonprofit resource for college students seeking financial assistance, victims college scholarship scams lose $ annually to scam artists posing as legitimate Grant foundations, scholarship matching services or government agencies. Here are three of the more common ways con artists use to trick students
Scholarship :. Application Fee Required
All scholarship applications promising impressive performance that requires a fee should raise a red flag. Even if the fee seems nominal compared to the potential return, do not be fooled. The most common system charge an application fee of running somewhere between five and thirty-five dollars. Applicants fill out an application and send a check. The grant comes out never check disappears. Even for a poor student, thirty-five dollars may seem a small loss. To scammers, however – receiving between 5,000 and 10,000 applications to run – these “nominal” fees can add up to a large torque
The Advance Fee Loans
The Advance-Fee Loan is another common scam. In this game of bait-and-switch, scammers pose as lenders to offer student loan package with impossibly low interest rates. The only catch? Before payment, the lender requires you to send a “processing fee.” Other phony lenders may ask you to pay tax on the loan up front. Do not be fooled. If you mail off a check, you are unlikely to get anything in return.
you’ve won! Bogus Prizes Scholarship
Imagine this scenario: you open the mailbox one day to find that you’ve won a scholarship worth thousands of dollars! True, you can not remember entering the contest, but you’re glad. As you scan down the fine print, you discover processing fee is required before you can collect the money. Uneasy feeling comes over you: the prize is substantial, certainly modest fee is not a big deal, right? Wrong. Remember, low rates, multiplied by the number of victims, can add up to big bucks for con artists.
Variations on. Some insurance companies or brokerage firms offer financial aid alleged “courses” – in fact, nothing more than shady pitches insurance or investment products. Other scammers bill itself as a service scholarship search and boast a money-back guarantee. At best, they send you a list of active scholarships – more likely, they take the money and run
How to Protect Yourself
By now. , You’ve probably noticed a common thread: if you are paying the money, it’s probably a scam. The legitimate, high-quality scholarship matching services, for example, are usually free and available on the web. Reputable lenders students have never fee to look at your application.
If you suspect something might be a scam, report it! If you are still in school, bring any suspect scholarship or loan paperwork to the attention of a teacher or guidance counselor. If you’re an adult, you can lodge a complaint with the National Fraud Information Center (NFIC) or the Federal Trade Commission (FTC). Do not rely on someone else to report it for you :. Even modestly successful scam can turn a profit for years before someone catches on
legitimate Financial Aid
If you know where to look, you can find more than enough legitimate ways of financing higher education. Take Federal Student Aid (FSA), the reliable resources of college financial aid. Office of the US Department of Education, FSA provided $ 83000000000 in new aid to 10 million postsecondary students between 2007 and 2008. Among the most important services, the FSA can provide you with a free application for Federal Student Aid (FASFA), the fundamental qualifying form used federal and government-assisted commercial lender program (FSA works FASFAs 10 million annually).
In addition to federal loans, you may also qualify for federal grants. Grants are generally reserved for undergraduate and based on need. While the government has deep pockets, you may also be interested in public loans. Just remember, when applying for a loan, be sure that you are banking with a legitimate lender with some recognition.
ultimately the best defense against college loan and scholarship scams are good information, common sense and clear thinking. Remember the basic rule of thumb :. If something sounds too good to be true, it probably is