Tips on Avoiding College Loan Scams
Each year, hundreds of students and parents fall victim to scams involving college loans. Here are some ways to avoid them.
Do your research. Before handing over a check or credit card, check out the company. Does it have a website? A working phone number? When you call to ask questions, do you get answers? A Web search on the company's name can also turn up complaints others have made about it, although some scam artists change company names frequently.
Use a credit card. If you are going to buy the services of a company, pay with your credit card. Many cards offer protection for fraudulent activity, so if the company turns out to be a fraud, the card will reimburse your purchase. (Most card companies put limits on how long customers have to report such activity.)
Don't "pay" for money. If a check for a grant delivered in the mail costs money to cash, it is most likely a scam. In fact, many unsolicited checks that arrive in the mail are scams—be wary of them.
Beware common pickup lines. "This scholarship is guaranteed or your money back," "You can't get this information anywhere else," and "We'll do all the work," are a few of the lines the Federal Trade Commission warns against.
Rely on trusted sources. High school counselors and college financial aid offices are paid to help students and parents with the loan process—make use of them. If you need extra help, ask them for suggestions.