One reason for the establishment of the U.S. Education Department (ED) in 1979 was to assist students in paying for a post-secondary education. Like corporations that market to consumers, the ED conducts much of its business with its student-consumers over the Internet. Although this is far more secure than conducting business via paper-based systems, there is a level of financial risk inherent in the use of the Internet. There are many clever scams designed to pick the pockets of students who seek funds to pay for college. Students should beware of scammers and take steps to avoid making mistakes that will make them more prone to fraud.
Federal agencies do their utmost to protect the privacy of every student’s personal information. Information shared on ED’s websites is encrypted, which entails the use of an algorithm with a randomly-generated, constantly-changing key that makes the data meaningless to a hacker. The data is decrypted at its destination using the same algorithm and key. Although the agencies do their utmost to protect personal data, students must also make themselves less vulnerable.
Common Scams Directed at College Students
Scammers are always on the lookout for new ways to steal personal and financial information. In most of these scams, criminals are counting on people to act quickly before they’ve thought through all the details of the offer or request. The following scams are common and criminals are continuously creating new ones:
- Fake listings:These scams for apartments, used books, movers, and other services, start with an ad, usually at the beginning of a semester, that offers things that students need quickly — at an attractively low price. Once a student sends a partial or full payment, what was promised is never delivered.
- Student loan debt relief scams: Representatives from private debt relief companies contact students with promises to reduce or eliminate their student debt for a fee. While some companies may be legitimate, most are scams. They will use pressure tactics — such as limited-time offers — to get students to sign up.
- Fake employment offers:An online or print ad may describe a job that is a great fit for a student’s schedule and pays well. But when students contact the “employer,” they are asked to pay a fee or to provide personal or financial information to complete the job application process.
- Unsolicited scholarships and grants:A student may receive a phone call or email from an organization they don’t know. The representative will tell the student that they’ve received a scholarship and ask them to supply key personal information such as their Social Security number to confirm that they are the correct recipient.
- Social media scams: Social media platforms are often filled with details about where students live, who they know, and what groups they’ve joined. Criminals can collect this information and reach out to students, pretending to be people with similar backgrounds and interests. Once they’ve established trust, they will ask for personal financial information.
Students often hear or read claims like those below from scammers via seminars, telephone, or email:
- “Buy now or miss this opportunity.” Students shouldn’t yield to pressure. All of the information that a student needs is free.
- “We guarantee you’ll get aid.” No guarantee of aid should be taken seriously. A scammer could claim it fulfilled its guarantee if the student is offered a loan or a $200 scholarship, and yet for this the scammer may have charged a $1,000 fee.
- “I’ve got aid for you; give me your credit card or bank account number.” A student should never divulge credit or debit card information unless they are positive that the receiving organization is legitimate. This is true even if the caller states that they represent the college’s financial aid office.
Be Wary of Providers of “Legitimate” Services
There are hordes of scammers using countless ways to fleece people by fraudulently inducing them to divulge personal information. Students need to be wary of these cons, just like everyone else with a mobile phone and email address. But in the case of students, there are some cons that target them exclusively.
Students should be able to identify fraud by scammers who lure student borrowers by claiming to be affiliated with the ED. There are no firms that can represent themselves as being affiliated with the ED or its payment service partners. Firms are illegitimate if:
- They charge a fee for assisting students in the completion of the FAFSA form.
- They require payment pay up-front for their assistance.
- They promise immediate and total loan forgiveness or cancellation.
- They ask for a student’s FSA ID username and password.
- They ask for third-party authorization or power of attorney.
- They claim that their offer is limited and the student must act now.
- Their communications contain spelling or grammatical errors.
Students should also check that the “Sent From” address on an email is legitimate. This can be determined by the domain name to the right of the “@” sign. It is fake if it is anything other than the name of the purported sender, such as “finaid.gov” or “umich.ed”. A domain name can be spoofed in a variety of ways, but the real domain name is only usable by its legitimate owner.
Rely on the Assistance of Certified NICCP Professionals
Professional fee-based services firms should never state or imply that their assistance is essential to achieving college affordability. Families must understand that any claim implying that a firm is indispensable is baseless. However, some firms in this niche provide legitimate services from which many families benefit. They offer valuable expertise, especially to families with complex financial situations and they provide advice on ways to strengthen the security of assets.
The best way to ensure that a professional firm is well qualified to provide guidance is to select one that belongs to the National Institute of Certified College Planners (NICCP). The NICCP is the governing body for the Certified College Planning Specialist (CCPS) designation.
As the first and most highly regarded college financial planning certification organization in the financial industry, the NICCP serves the public interest by promoting the value of professional, competent, and ethical college financial planning services. Financial professionals attain CCPS® status by means of a rigorous training and testing certification process.
NICCP members are licensed financial professionals qualified to share prudent tax, financial, cash flow, and lending advice that can help families lower the cost of college. All NICCP members must adhere to the highest standards of professional competence, ethical standards, and continuous professional education in the college financial planning field.
Free Financial Aid-Related Services
Students can obtain help by contacting their loan servicer or the ED’s FSA for free assistance in accomplishing such tasks as those below:
- Terminate an FSA account that is in danger of being accessed illegitimately.
- Create a new FSA account and password.
- Consider a request to lower the monthly payment and extend the term.
- Change the repayment plan.
- Consolidate multiple Federal student loans.
- Postpone repayments while a student resumes their education.
- Postpone repayments while the student is unemployed.
- Check to see if a student qualifies for an ED loan forgiveness program.
- Assist in getting a student’s loan out of default.
Steps Recommended for Victims of Scams
Students who have been victimized by scammers should take quick action, as outlined below.
- Report Identity Theft Immediately
Like anyone who loses all of their identification documents, a student should assume the worst — that the information is in the possession of criminal who can illegally obtain credit cards, set up mobile phone accounts, take out loans, and make purchases. They may also be able to defraud the student’s account at their college financial aid office.
Anyone who knows or suspects that their identify is at risk should take action immediately by informing the police. The public agencies and credit bureaus listed below will help determine what steps should be taken according to the circumstances:
- The appropriate local law enforcement agency.
- The ED’s Office of Inspector General Fraud Hotline
- Federal Trade Commission
- Social Security Administration
- Equifax Credit Bureau
- Experian Information Solutions
- TransUnion Credit Bureau
- If Federal Student Aid Information is Compromised
If a criminal has a student’s FSA ID log-in information, they can make changes to the account. Students should log in to account and, when logged in, change the “Account Information” in settings. The account-holder will be prompted to enter the current password and then choose a new one.
If a student can’t log in because they have forgotten the username and password, he or she will need to satisfy security procedures. FSA will send a six-digit code to the student’s mobile phone or email address. If an electronic device is unavailable, ED will ask the account’s challenge questions as the basis for terminating a vulnerable account.
If a student no longer has access to the mobile phone number or email address associated with their FSA ID, they should contact the Federal Student Aid Information Center at 1-800-433-3243. An agent will walk them through the necessary steps to recover the account and change their password. If a student is unable to access their account through the methods above, they need to need to undergo the full FSA ID Account Recovery process by submitting copies of identification documents.
- Report Fraudulent Activity by a College
Students should contact the ED’s Office of Inspector General Fraud Hotline to make a confidential report of a college’s suspected engagement in fraud, waste, or abuse involving Federal student aid programs. They can contact the ED’s Federal Student Aid Feedback Center if they believe that someone at their college has misrepresented any aspect of educational programs, prices, or outcomes or if the college’s administration of aid programs or its recruitment practices may have violated Federal regulations. The whistleblower student’s name will not be revealed to the college.