Financial Aid Scams: red flags you should be aware of

When it comes to paying for school, there are a lot of financial aid options. There are thousands of scholarships and grants available each year for students— but how do you know if they are legitimate?

According to the Federal Trade Commission (FTC), there are companies known for trying to scam students with false claims and promises of scholarship money and financial aid awards.

We’ve compiled some information to help you protect yourself.  

High-Pressure Sales Pitches

Some companies will try to pressure students into providing their banking information and giving consent for auto-debits to “confirm eligibility.” What happens next can vary from large withdrawals from the student’s account, weekly or monthly fees for an undetermined amount of time, or a one-time lump sum charge claiming that the scholarship is guaranteed, but they need an advance on the application fee.

Remember, the Free Application for Federal Student Aid (FAFSA®) determines financial aid eligibility, and it’s a free service. You do not have to pay to file your FAFSA®!

Here are some common phrases to listen for to identify fraudulent pitches:

  • “This scholarship is guaranteed or your money back.”
  • “You can’t find this information anywhere else.”
  • “If you provide your bank account or credit card information, we can reserve your scholarship.”
  • “We do all the work for you; all you pay is a processing fee.”
  • “Getting this scholarship will cost some money.”
  • “You’ve been selected by a national foundation to receive a scholarship…” or “You’re a finalist” in a contest that you never entered or heard of.
  • “Send gift cards to this address, and you’ll be placed on the list for a scholarship.”

You should never have to provide banking information or pay upfront costs to receive any type of financial aid. Financial aid is generally distributed directly to your college to be used for educational purposes. It will not be given to the student directly or deposited into your bank account.

Protect your identity

Identity theft is a real issue, and it can be difficult to reverse the damage. Make sure you stay alert for scams and protect yourself by not giving out sensitive information.

Here are some tips on how to make sure you keep yourself protected:

  • Use the FAFSA® form and/or official online site to apply for federal aid.
  • When you complete your FAFSA®, exit the application, and close your browser. This will automatically delete any cookies that were created during your session.
  • Do not share your FSA ID username or password with anyone, even if they are trying to help you fill out your form.
  • Never give out your personal information over the phone or internet unless you’re positive it’s a trusted source. People are calling unsuspecting students and trying to get their personal information to take advantage of them. Don’t fall for their trap!

Unfortunately, not everyone has good intentions, so it’s important to keep your guard up. When searching for financial aid, do your research and make sure you’re only working with trusted and reputable companies.

Remember, if it sounds too good to be true, it likely is.