Paying for Higher Education? Don't Let Scammers Make It More Expensive

Back-to-school season is here, and for college students and their families, that often means more than buying textbooks, packing up a dorm room, and figuring out class schedules. 

There's also the question of how to pay for it all. 

Tuition, housing, books, supplies, and everyday expenses can add up quickly. Scholarships, grants, financial aid, and student loans can help make higher education possible, but navigating all those options can also be confusing. Unfortunately, scammers know it. 

As students head back to campus, take some time to understand your options, recognize the warning signs of a scam, and protect both your money and personal information. 

 

Start with Money You Don't Have to Repay

Before borrowing for school, look for scholarships and grants. Unlike student loans, these generally don't have to be repaid. 

Scholarship opportunities can come from many places, including colleges and universities, community organizations, employers, foundations, local businesses, professional associations, and government programs. 

And remember: you should never have to pay someone to find or apply for legitimate federal financial aid. 

The Free Application for Federal Student Aid, better known as the FAFSA® is exactly that — free. Completing the FAFSA can help determine eligibility for federal grants, work-study opportunities, student loans, and some state and school-based aid. 

When searching for scholarships, be cautious of anyone promising guaranteed money, asking you to pay to apply, or pressuring you to provide financial information before you've had an opportunity to verify the organization. 

 

Understand Before You Borrow

Scholarships and grants may not cover the entire cost of higher education. If borrowing becomes necessary, make sure you understand exactly what you're agreeing to. 
Federal student loans are issued by the U.S. Department of Education and include certain borrower benefits and protections, such as fixed interest rates and flexible repayment options. 

Private student loans are offered by private lenders, including banks and credit unions. They don't come with the same federal protections and may require a credit check or co-signer. 

Before signing any loan agreement, look beyond the amount you're able to borrow. Consider: 

• The interest rate
• Whether the rate is fixed or variable
• When repayment begins
• The estimated monthly payment
• How long you'll have to repay the loan
• The total amount you'll repay over the life of the loan
• Available options if you have trouble making payments

Borrowing for your education can be an investment in your future, but it's still debt. Take the time to understand how today's borrowing decisions could affect tomorrow's budget.

Keep Your FAFSA and FSA ID Secure

Your Federal Student Aid ID—or FSA ID—is the username and password used to access your Federal Student Aid account and complete important financial aid tasks. 

Treat it like you would the login information for your bank account. 

Never share your FSA ID with anyone, even if they claim they need it to help complete your FAFSA, consolidate your loans, or enroll you in a repayment program. 

Someone who gets access to your FSA ID may be able to access your personal information and make changes to your account.

Be Skeptical of "Guaranteed" Student Loan Relief

The scams don't necessarily stop once tuition has been paid. 

Borrowers may receive calls, emails, texts, or online advertisements from companies promising to reduce student loan payments, eliminate debt, consolidate loans, or provide access to a special government forgiveness program. 

Some may even make it sound like they're affiliated with the U.S. Department of Education. 

That's where it's important to slow down. 

For federal student loans, you can explore repayment plans, consolidation, and qualifying forgiveness programs yourself without paying a third-party company to do it for you. You can contact your federal loan servicer or use StudentAid.gov to explore your options. 

And according to the Federal Trade Commission, it's illegal for debt relief companies to charge you before they've provided assistance. 
An upfront fee to “fix” your student loan debt should be a major red flag. 

 

Watch for These Student Aid Scam Warning Signs

Whether you're searching for scholarships, applying for financial aid, or managing student loans, be cautious when someone: 

• Guarantees a scholarship, grant, or loan forgiveness. Legitimate organizations can't guarantee that you'll qualify.
• Asks you to pay upfront for student loan relief. You can access federal repayment and forgiveness information for free.
• Asks for your FSA ID or password. Keep your login credentials private.
• Creates a false sense of urgency. Be suspicious of messages claiming you must “act immediately” or risk losing access to aid or forgiveness. 
• Contacts you unexpectedly and asks for personal or financial information. Verify who you're dealing with independently before providing anything.
• Promises access to a special program you can't get on your own. Check StudentAid.gov before trusting claims about federal programs.

Already Have Student Loans? Know Where to Get Help

If you're struggling to make payments, ignoring the problem usually won't make it better. 

For federal student loans, start with your loan servicer or StudentAid.gov. Depending on your circumstances and the type of loans you have, options may be available to help make payments more manageable. 

If you have private student loans, contact your lender directly to discuss available repayment options. 

Be especially cautious about turning to a company that contacted you first or promises an immediate solution in exchange for a fee. 

Make Financial Wellness Part of Your College Plan 

Preparing for college isn't only about choosing classes and buying supplies. It's also an opportunity for students to begin developing financial habits they'll use long after graduation. 

Create a realistic spending plan. Track everyday expenses. Understand how credit works. Build savings when you can. And before taking on debt, know exactly what it will cost to repay. 

At InRoads, we're committed to helping members build those skills. Our Financial Wellness resources include information and tools for budgeting, saving, managing debt, monitoring your credit, and building healthy financial habits.

Before You Head Back to School, Do Your Homework

College is an investment—and protecting that investment starts with making informed financial decisions. 

Research financial aid opportunities carefully. Understand your loans before you sign. Protect your personal information. And if an offer promises easy money, guaranteed forgiveness, or a solution that sounds too good to be true, take the time to verify it before acting. 

A little homework now can help protect your money—and keep your focus where it belongs: on the education you're working so hard to achieve. 

Learn more about paying for school and avoiding student aid scams from the Federal Trade Commission.