How to Spot Scams and Protect Yourself from Fraud
If you’re figuring out how to finance college, online resources can help you find student loans and scholarships that may help you afford your education. But how do you know when you’ve encountered a student loan scam?
While there are many legitimate online sources for college financing – including student loans, financial aid, and scholarships – potential scams may make you vulnerable to identity theft and other risks. Let’s go over how to spot a scam and what you can do to protect your sensitive personal information as you finance your college dream.
What Are the Risks of Student Loan Scams?
When applying for loans, students and parents often submit a lot of personally identifiable information to schools and lenders. Cybercriminals use these identifiers to learn as much as they can about you. Once scammers gain access to pieces of information like your Social Security number, driver’s license number, bank account number, and email address, they could potentially steal your identity and use it to commit crimes – at your expense.
Student Loan Identity Theft Scams
Young adults and students between the ages of 17 and 25 are increasingly susceptible to student identity theft. But many students aren’t exactly sure what identity theft is, or how to protect themselves from it.
Identity theft occurs when a thief steals your personally identifiable information in order to commit fraud. Identity thieves may:
- Gain access to your bank account
- Open new credit cards and accrue debt in your name
- File fraudulent tax returns
- Buy or rent property while posing as you
- Perform other criminal actions
Before applying for, enrolling in, and accepting financial offers, it’s important to understand the risks involved. Make sure you only submit personal information to a trusted source. Authenticating websites, lenders, and awards before submitting your personal information can help you avoid identity theft. Scams That Target Students Besides identity theft, scammers have other means of taking advantage of unsuspecting students. Watch out for these college financing scams that target students (and their parents!) before, during, and after graduation.
New and Current Students
For brand new or first-generation college students, figuring out how to pay for college can be overwhelming. As you navigate the world of college financing for the first time, be aware of potential scams like:
- Advance Fee Scams: This is where a student loan lender offers a lower interest rate and better loan terms if you pay an advance fee for their services. Don't fall for this; legitimate public or private lenders never ask you to pay upfront. If expenses are incurred, these would be totaled into your monthly repayment schedule.
- Scholarship Scams: Just like advance fee scams, scholarship scams may ask you to pay money upfront to search or apply for scholarships. That’s a big red flag. Legitimate scholarship sites don’t cost anything, and you should be able to find plenty of scholarships to apply to, free of charge.
Recent Graduates and Young Professionals
Just because you’ve already graduated college doesn’t mean scammers will stop targeting you. As recent graduates and new professionals start tackling their college debt, they may be vulnerable to other types of scams, such as:
- Loan Consolidation Scams: This is when scammers contact recent graduates offering low consolidation rates in return for an administrative or service fee. Instead of consolidating your loans, these fake lenders collect money from you and do nothing. Remember that you should never pay to consolidate your student loan debt. Consolidating government loans is a free service offered by the Office of Federal Student Aid. And, while private consolidation loans may charge something called an origination fee to refinance loans, this is relatively rare and would be included in the overall cost of your loan, not charged upfront.
- Debt Elimination Scams: If it sounds too good to be true, it probably is. While there are a few rare cases in which student loan debt may be forgiven, most borrowers have to pay back their student loans in full. Some exceptional circumstances may include the death of the borrower, institution closure, and falsified enrollment documentation resulting from identity theft. In addition, eligible students may have some of their loans forgiven through federal loan forgiveness programs, if they meet very strict requirements. But if you are approached by an individual or company offering to eliminate your student loan debt, it’s a scam.
6 Tips to Help Student Protect Their Personal Information
You don’t have to fall prey to scammers and identity thieves who target college students. These tips may help you stay safe and protect your bright future as you finance your educational goals.
#1: Protect Sensitive Physical Records and Data
The danger isn’t just online. Keep physical documents like your Social Security card, passport, medical documents, and birth certificate in a safe place.
#2: Use Caution on Public Networks
It’s best to avoid exchanging personal or sensitive information through a public or unsecured Wi-Fi network, like the one at your favorite coffee shop. If a cybercriminal is monitoring a public network, your data could be intercepted and used against you.
#3: Stay Safe on Social
Don’t share private information over social media…especially the answers to the security questions for your sensitive accounts! Even seemingly harmless information, like the name of your pet or the street you live on, can help cybercriminals gain access to your accounts. Then, they can change your passwords and lock you out.
#4: Browse and Apply Safely
Use security software to protect yourself when browsing online or submitting information over the web. ID theft monitoring services, such as LifeLock, are always helpful, especially when exchanging personal information, applying for loans or scholarships, and shopping online.
#5: Defend Your Devices
A nabbed phone or laptop may be all it takes for a criminal to steal your identity. Always keep an eye on your devices and make sure they’re locked when not in use.
#6: Watch for Suspicious Activity
Keep an eye on your personal and financial records, including your credit report and bank statements, for signs of fraudulent charges or unauthorized activity. You may also want to watch your email spam folder, to learn if your email address is on an internet email list (making it easy for cybercriminals to find).
5 Steps for Student Identity Theft Recovery
By taking every precaution as you prepare for and finance your college education, hopefully you can avoid this worst-case scenario. But if you do become the victim of identity theft, it’s important to take action right away. Here are the steps you should take if you believe your identity has been stolen:
#1: Determine the Type of Identity Theft You Experienced
Criminals use different strategies to gain access to sensitive financial and government records. A thief can drain or open bank and credit card accounts, collect government benefits and tax refunds, or even use a stolen ID to evade police. Before reporting fraud, gather as much information as possible about the specifics of your case.
#2: File a Police Report
Immediately documenting your case is the best way to limit the damage done. Obtaining a police report will also help you establish credibility when reporting identity theft to lenders and major credit bureaus.
#3: Notify the Federal Trade Commission (FTC)
You can complete and submit their form on the FTC website.
#4: Enable Fraud Alerts on Your Credit Files
Identity theft should be reported to all of your lenders, plus the three major credit bureaus: Equifax, Experian, and TransUnion. After contacting these credit bureaus, ask if they can enable automatic fraud alerts on your credit files.
#5: Frequently Check Your Credit Reports
Keep monitoring your online accounts and financial reports. If you see something suspicious, report it immediately. Tell your financial lenders and creditors if there’s been any unauthorized access.
How College Students Can Stay Informed and Avoid Scams The world of college financing can seem scary, but by doing your homework, you should be able to avoid scams that target vulnerable students and recent grads. Follow these tips to stay safe, protect your personal information, and find legitimate sources of financial aid.
- Research Current Student Loan Scams. Ask your college’s financial aid office if they know of scams currently aimed at students, and always thoroughly look into loans or financial aid offers before applying.
- Enroll with Trusted and Credible Lenders. Avoid scams by entrusting your college financing needs to reliable lenders. First of all, always fill out the FAFSA and maximize any federal financial aid you may qualify for. Then, use the Student Loan Finder to find trustworthy private loans.
- Become a Student Loan Expert. Understanding how student loans work, as well as your rights and responsibilities as a borrower, can help you spot and avoid offers that don’t sound quite right. EStudentLoan.com is home to plenty of informational resources on the college financing process, and StudentLoans.gov also offers a wealth of information.
Embarking on your college journey is an exciting time in your life, and you should spend it pursuing new goals and experiences and not dealing with the aftermath of identity theft. By taking precautions as you finance your education, you can prevent scammers from getting in the way of your dreams.