When you are searching among suitable ways of paying for your education you will probably stumble over various types of scams and frauds connected to student loans, scholarships and grants. Some are easily identified as scams and frauds, while others are much ore cunning and can look very sincere at first glance. Estimates from the US Federal Trade commission show that prospective students and their families loose millions of dollars each year to scholarship and student loan scams. There are a lot of good and respectable foundations and agencies out there and by following the advice offered further down in this article; you will increase your chances of sorting the ones good from the bad.
Some companies claim that it is virtually impossible to fill out an application for a federal student loan without hiring expertise help. This is however not true. You can of course hire a consultant if you feel that you like someone to guide you through the application process, but it is definitely not a must. Also keep in mind that you are responsible for the accuracy of the facts entered into your application even if you hire someone to do it for you. If you need any help when applying for a federal student loan, you can always contact the Federal Student Aid Information Center by calling 1-800-4-FED-AID (1-800-433-3243). They provide comprehensive information free of charge regarding all the different types of federal student loans that you might be eligible for.
When contacted by a company that offers to help you with your application for a student loan or a scholarship, there are some telltale lines that should arouse your suspicion. Of course, the mere fact that a company does not use these phrases is in no way a guarantee of the reliability of the company. These seven sentences listed below are all commonly used telltale lines in scams regarding student loans and scholarships.
“We will guarantee a scholarship or your money back.”
No agency can ever guarantee a scholarship for you unless they are the entity that actually decides who gets the money. If you still want to use a company with a money back guarantee, make sure to get the guarantee in writing before paying them any money. Keep in mind that even if you do get the guarantee in writing, it might take a long time and involve a lot of legal work before, if ever, you get your money back.
“This is a great scholarship / student loan, but in order to receive the money you first have to pay some money.”
There are of course perfectly honest organisations out there that request a small application fee from those who ask for their financial aid. Unfortunately, they are a minority and you should always be suspicious of a company that asks for money in order to give you money. The idea behind giving a prospective student a scholarship or provide him or her with a favourable student loan, is to help a student in financial need. It therefore makes no sense to charge the student large amounts of money. Borrowing money from a commercial bank is of course a totally different matter and will often involve larger fees.
“We are the only source of information regarding this scholarship / student loan; you can not obtain this information anywhere else.”
If a foundation, organisation or the Government decide to support prospective students by offering them scholarships or favourable student loans, it would be very bizarre to keep it a secret. Only providing the information to students who are able to pay for it makes no sense. There are many free lists of scholarships and they can usually be found at school libraries. You can also contact the counsellor at your present or future school. If you feel that the information is strenuous to work through you can of course hire an agency to do the necessary searching and sorting for you, but that is a completely different situation. Never hire an agency because you think that it is the only way to find out about good, but secret, scholarships and favourable student loans.
“We just need your credit card information or bank account number to provide you with this scholarship / transfer you the student loan money.”
If something sounds too good to be true, it usually is. Always be careful with confidential information and be extra reluctant to provide agencies with such information over the phone or over the Internet. Always make sure that the agency or foundation is trustworthy before sharing financial information. It might be a set-up for unauthorized usage of you credit card or bank account.
“You don’t have to do anything; we will take care of all the necessary paperwork for you.”
This is a very common catch phrase for scams involving scholarships and student loans. The sad truth is that there is seldom any way around the paperwork, since you are responsible for the accuracy of the facts entered into your application even if you hire someone to do it for you. You are always the one who apply for the scholarship or favourable student loan. You can of course hire someone to help you, but agencies who claim that you only have to give them some money and then lay back and await your new fortune are seldom trustworthy.
“You have been selected to receive a scholarship / a favourable student loan with great conditions.” and “You are the finalist of a scholarship contest.”
If you haven’t even applied for a scholarship or entered a contest, chances are very small of you suddenly receiving a scholar ship or favourable student loan out of the blue. Even if you have entered a contest, you should be extra careful and make sure that the agency or foundation behind the contest is legitimate. Anyone can set up a simple contest online that require a minimum amount of effort to enter, and then claim that you have won. Also try to find out if anyone else, such as a teacher or a parent, has recommended you for a scholarship or signed you up for an honest contest.