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According to the National Center for Education Statistics, 66 percent of undergraduates in America received financial aid in recent years. However, students seeking financial aid should beware of frauds.
Each year hundreds of thousands of students lose an estimated $100 million to financial aid scams. There are significant characteristics and warning signs of such scams.
First, if a student is required to pay money to invest in financial aid, it’s a scam.
The financial aid company or organization may send an application for the student to fill out, claiming that they will give the student information on his/her eligibility to receive financial aid. The ploy is that they may request a so-called “application fee” or a refundable “processing fee.”
Organizations may also elicit students with low-interest loan offers for a monetary fee as well.
Similarly, companies may even send a check for a scholarship but will require the student to send back a check for the taxes and some other fees, or the company will send a check for more than the scholarship amount and ask for the difference. The check will typically bounce because it’s fraudulent, and the student will have to pay the bank for it.
If a student doesn’t recall applying for the scholarship than he/she most likely never did. This should be considered in the beginning on evaluating the validity of scholarship donors/organizations.
Be wary of scholarship search engines that charge a fee for their services and promise the student that he/she will win a scholarship. Scholarships can’t be guaranteed, and there’re many search engines that are free.
These companies will also try to appear official. These scammers will try to be a copy cat with other legitimate financial aid resources by having similar seals, logos or titles on their website and in their financial aid applications.
Second, students should be hesitant if financial aid services are requesting personal information.
Such information generally includes social security number, bank account number etc. Unless a student is certain that the organization is legitimate, the information is to remain private. Otherwise, this company has the potential to use the information to make the student a victim of identity fraud.
Lastly, students should beware of free seminars for financial aid.
Although honest seminars are available, some are simply trying to sell their product. Companies such as insurance and brokers can be involved in such seminars. These firms will try to manipulate and pressure students by reminding them of the high expenses of college, or that their way is the only solution. If these seminars require students to purchase a product to receive federal student aid, then it’s probably a con. This is against federal regulations and state insurance laws.
Fortunately, candid sources for financial aid still exist.
Federal Application for Federal Student Aid is a free resource to connect students to loans, grants and work study. The website is www.fafsa.ed.gov. Don’t mistake this for www.fafsa.com. These two sites aren’t the same because fafsa.com will charge for their services. The site may appear official in layout and graphics, but there’s no point in paying money for a service that can be obtained for free.
Search engines such as WASHboard.org, finaid.org, scholarship.com, fastweb.com, zinch.com and collegeboard.org are free resources to search for scholarships and other forms of financial aid.
The Pierce College financial aid office is an on-campus source of information.
If a student has been a victim of financial aid fraud or is suspicious of one taking place, visit the finaid.org website. The site has information concerning different institutions that handle fraud.
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