Top 5 College Financial Aid Scams
The opportunity to go off to college and move into a dorm room is arguably one of the most exciting times in any young adult’s life.
College-bound high school students and their parents put a significant amount of time and money into selecting the right school and seeking out funding to pay for college. According to statistics, it costs approximately $173,000 for a 4-year degree at a private university.
Sadly, this time of excitement can turn into a nightmare for those students and their parents who are subjected to one of the many college scholarship or financial aid scams that are taking place these days.
According to FinAid.org, consumers lose about $100 million dollars each year to financial aid scams.
But, you don’t have to be a victim of these vicious financial aid schemes. In this post I’ll share what MoneyCrashers.com calls the 5 most common financial aid schemes.
Scam 1 – High Pressure Seminars
A student receives a flyer in the mail, inviting him or her to attend a “free” seminar on how to get the most financial aid. During the presentation, the facilitator informs the student on just how “difficult” it is to get financial aid. This is designed to scare the participants.
At the end of the seminar, students and their parents are teamed up with an “advisor” who tries to pressure the parents into paying large sums of money to help their son or daughter get the financial aid he or she deserves. Sometimes these fees can be thousands of dollars.
In this scam, the salesperson tries to lure the parents into paying the fee because they know that every parent wants to provide their child with a quality education.
Scam 2 – Shady Websites
If you’ve done any college planning, then by now you know that every student has to fill out a FAFSA form to apply for financial aid. In order to do this, every student must visit the government’s website (fafsa.ed.gov) and the service is completely FREE.
However, there are some websites out there that try to make visitors believe that they have to pay a fee to submit this form. These websites all use the word FAFSA and even contain wording that would cause visitors to believe the site is indeed official – like “foundation,” “national,” or “association.”
Do not fall for this scam! Submitting a FAFSA form doesn’t cost a dime.
Scam 3 – Paying for Unnecessary Services
Some fraudsters will try to convince students and their parents that the FAFSA form is way too difficult for them to complete on their own, and offer to assist them with it for a fee. Some scammers will charge anywhere from $100-$1,000 for this “service.”
Yes, it’s true…the FAFSA form can be tricky to fill out and requires a lot of time and effort, but you should NEVER pay anyone to fill it out for you. If you need help with the form, solicit the help of your high school guidance counselor or read my blog entitled – Fill Out FAFSA.
Scam 4 – Suspicious Phone Calls
What’s the rule of thumb that your parent’s always told you? – If it sounds too good to be true…then it probably is! Keep this in mind as I describe this scam.
Some students receive unsolicited phone calls from anonymous individuals claiming that he or she has won a college scholarship or have been awarded a grant. Some callers will even pretend like they are from the Department of Education and inform the student that they have “won” a grant that will cover the entire cost of their loans.
The caller will then proceed to ask for the student’s or parent’s bank account information in order to deduct a “processing fee.” Do not provide this information to the fraudster! This is a scam! There is no program to replace loans with grants and no one wins a free scholarship without applying. The fraudster will steal your money and never be heard of again!
Scam 5 – Identity Theft
As a high school senior, your mailbox will be bombarded with college information. Sometimes students receive letters informing them that they’ve been selected to receive additional financial aid or a scholarship.
In order to “claim your prize,” you will have to call a number and pay a small process fee (similar to the situation described above). However, when you call the number, the scammer will ask you for all of your personal information – social security number, bank account information, driver’s license number, etc.
If you give it up, as soon as they get off the phone with you, they’ll begin taking the necessary steps to steal your identity! Again, if it sounds too good to be true…then it probably is. Do not give your personal information out to strangers over the phone.
If you have a child who is heading off to college soon, share these scams with him or her and keep these things in mind as your family goes through the college application process. This could be crucial to their financial future.