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WRITTEN BY:
Jamie Ballard

Watch out for these financial aid schemes

Source: Flickr via Simon Cunningham

As the cost of college continues to rise, students and their families are growing increasingly desperate for financial aid of any kind, as they struggle to avoid loan debt or bankruptcy. Therefore, it’s understandable that many families are willing to jump at any offer that comes their way. Unfortunately, scammers are beginning to take advantage of this desperation, and are cheating students and parents out of hard-earned college savings.

There are several red flags to look for when considering financial aid offerings.
Some scammers will guarantee the student a scholarship in exchange for an advance fee so that they don’t “miss out on the opportunity.” Others will ask for access to a checking account to “ensure eligibility” and then charge the student without his knowledge or consent. An extremely common scam is a company that purports to handle all financial aid paperwork and make sure the student is eligible for aid, in exchange for a processing fee. (The FAFSA is the only application that can officially determine aid eligibility).

There are several ways to keep yourself safe from these types of scams.

Don’t apply for scholarships that you have to pay for. Legitimate scholarship organizations will almost never require you to pay to enter. Any organization that does is likely a scam, and you’re better off looking at one of the thousands of scholarships available without an entry fee.

Be cautious of any “guaranteed or your money back” offers. Scholarships are virtually never a guarantee. They’re usually based on an essay or some measure of academic performance, and it’s impossible to know who you’re up against, making a guaranteed scholarship impossible.

Do your own research. A financial aid scammer is going to say whatever they think will convince you to fork over your money, even if they’re blatantly lying. Don’t just take their word for it, do your own research on the organization and what they’re offering. Ask a lot of questions if you can. But always remain cautious, as scam organizations can very easily set up a website with fake winners, produce false documents, and create other things to make it seem real.

Use legitimate resources. There are hundreds of websites that can connect you to scholarships you’re eligible for. Sites like collegeboard.org or StudentAid.gov can help you figure out a way to pay for college.

As the adage goes, if it sounds too good to be true, it probably is. Trust your gut and don’t be afraid to walk away from sketchy-seeming financial aid offers. It could save you thousands of dollars.

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