The U.S. Department of Education (ED), like most other public agencies and large consumer-oriented companies, conducts most of its business with individuals over the Internet. Although doing business this way is far more secure than paper-based systems, there are scams in use to defraud students in financial aid programs. There are also mistakes that students can make that will cause security problems if not corrected.
The ED does their utmost to protect the privacy of a student’s personal information. For example, the information you share on ED’s secure websites undergoes a process called encryption. Encryption uses a mathematical formula to scramble your data into a format that is unreadable to a hacker. Your data is then unencrypted safely at its secure ED destination. However, while ED is protecting your data, you also need to do your part to maintain security.
There are scams that occur at different points in the student aid process. They are identified below:
- Report Fraudulent Activity by a College
Contact ED’s Office of Inspector General Fraud Hotline to make a confidential report if you suspect your school of fraud, waste, or abuse involving Federal student aid programs.
Contact ED’s Federal Student Aid Feedback Center if you believe that someone at your school has misrepresented any aspect of educational programs, prices, or outcomes; or if the school’s administration of aid programs or its recruitment practices may have violated Federal regulations.
- Report Identity Theft
Using your stolen ID information, a criminal may be able to illegally obtain credit cards, set up mobile phone accounts, take out loans, make purchases, and defraud your account at your college financial aid office, among other things. If you suspect that your ID information has been stolen, it’s important to act quickly. The public agencies and credit bureaus listed below will help you to determine what steps you should take depending upon your situation:
- ED’s Office of Inspector General Fraud Hotline
- Federal Trade Commission
- Social Security Administration
- Equifax Credit Bureau
- Experian Information Solutions
- TransUnion Credit Bureau
- Change Your FSA ID Password If It May Have Been Compromised
If someone has your FSA ID log in information, they can make changes to your account without your permission, as noted above. To reset your password, log in to your FSA account using your username and password. Once logged in, change the “Account Information” in your settings. You’ll be prompted to enter your current password and then choose a new one. Be sure to record your new password and don’t share it with anyone.
If you cannot log in to your FSA Account because you don’t know your valid username and password, you’ll need to retrieve these lost credentials. To do so, request that a six-digit code be sent to your mobile phone or email address, or successfully answer your challenge questions.
If you no longer have access to the mobile phone number or email address associated with your FSA ID, and you don’t know the answers to your challenge questions, contact the Federal Student Aid Information Center at 1-800-433-3243. An agent will walk you through the necessary steps to recovery. If that process doesn’t recover your account access, you’ll need to undergo the FSA ID Account Recovery process by submitting copies of your identification documents. Account recovery takes 7–10 days from the date that your documentation is received.
- Paying Service Providers for Help is Optional
Many student loan debt relief companies charge a fee to provide services that you can perform for yourself for free by contacting your loan servicer. At no cost, your Federal student loan servicer can help you on the following matters:
- Lower your monthly loan payment.
- Change your repayment plan.
- Consolidate multiple Federal student loans.
- Postpone payments while you’re continuing your education.
- Postpone payments while you’re unemployed.
- Check to see if you qualify for loan forgiveness.
- Get your loan out of default.
You don’t need to pay for help with your Federal financial aid, yet many companies will offer to provide help for a fee. Make sure that you understand which claims that they may make are legitimate.
Commercial financial aid consulting services can be expensive. Some consultancies charge $1,000 or more. Even though they’re charging students for assistance and information that’s available for free, they are not committing fraud. They may offer valuable expertise, especially to families with complex financial situations or those that seek to save time that would consumed in research.
If a commercial service provider promises more than it can deliver, it may be a scam. If you’re unsure whether to pay a company to help you, don’t give them the benefit of the doubt. Ask yourself questions like: “What’s being offered?”; “Is the service worth the money?”; and “Do these claims seem too good to be true?”.
Students often hear or read assertions like those below from service providers at seminars, over the phone, by email, or on a website:
• “Buy now or miss this opportunity.” Don’t give in to pressure tactics. Remember, you can find all the information you need for free.
• “We guarantee you’ll get aid.” A company could claim it fulfilled its promise if you’re offered a student loan or a $200 scholarship. Is that worth a fee of $1,000 or more?
• “I’ve got aid for you; give me your credit card or bank account number.” Never give out a credit card or bank account number unless you are sure that the organization you’re dealing with is legitimate.
Shut down any conversations with service providers offering a “Pandemic Grant” or “Biden Loan Forgiveness”, two scams that arose during the pandemic.
- Identify Scams by Fraudulent “Student Loan Debt Relief” Companies
Companies that use tactics to lure borrowers such as those listed below are not affiliated with ED or its partners. They are illegitimate if:
- They require you to pay up-front or monthly fees for help.
- They promise immediate and total loan forgiveness or cancellation.
- They ask for your FSA ID username and password.
- They ask you to submit a third-party authorization or power of attorney.
- They claim that their offer is limited and need you to act immediately.
- Their communications contain spelling or grammatical errors.