Making Smart Decisions In: Education

1. What Are Education Scams?
2. Most Common Education Scams
3. Education Scam Red Flags
4. How to Beat Education Scams
5. Fallen Victim to an Education Scam?

The modern world places a lot of importance on the concept of higher education. And while a push has been made lately to direct more people toward alternative options like a trade school, many career paths still require at least a college degree to get started.

Unfortunately, when something becomes a necessity, it also typically becomes a target for scammers, and all manner of college scams have been on the rise in the last few years.

What Are Education Scams?

Education scams can come in many forms, ranging from college to student loan scams.

Some people argue that the entire concept of higher education is a scam, saying that the crushing debt incurred from earning a degree isn't worth the starter-salary positions it often leads to. On the other side of the debate, some point to a recent set of statistics showing that college graduates earn, on average, $30,000 more annually than workers with high school diplomas only.

Regardless, there are several compelling issues around access to higher education in America. In response, an entire world of scholarship opportunities, grants, loans, and placement programs have blossomed.

And while the best of these programs have noble intentions at heart, the industry at large is ad hoc and unregulated, leaving plenty of room for enterprising scammers to take advantage of the complicated and interlocking problems at play.

Most Common Education Scams

Unfortunately, nearly every aspect of higher education has been targeted by scammers, from the college prep process to the application for grants and student loans, to the schools and diplomas themselves.

Student Loan Scams

Most people need student loans to afford college. As such, student loan scams have become one of the most widespread types of college scams.

The deceptions are especially insidious since student loans are at once so helpful for so many people and involve such personal details—the exact type of sensitive information scammers love to get their hands on. In fact, most student loan scams are after just that: Bank account and financial information as well as several personal details that can help a scammer pull off identity theft.

Student loan scams can happen before or after signing up for these payment plans. They can look like a company offering to help you secure a student loan or a financial intuition offering to help consolidate your student loan debt. These scams usually come from an organization that may otherwise seem legitimate or from a cold call or unsolicited message offering financial aid.

Scholarship Program Scams

Similar to the student loan scam is the scholarship scam. Once again, these deceptions play off the fact that many people need and seek out help paying for school.

Scholarship scams primarily come in two forms. In one, like with student loan scams, the organization will ask for a ream of personal information, supposedly as part of the scholarship application process but in reality, used to steal your identity.

The other popular scholarship program scam involves an organization that says it will help you find scholarships. Along with potentially asking for sensitive financial information to "set up your account" or offering to fill out your Free Application for Federal Student Aid (FAFSA) application—which is not only a scam but could get you in legal trouble—these programs may also charge fees for their "services."

Diploma Mill Scams

These types of scams come from organizations posing as anything from an online college or university to a technical school to a high school diploma program.

What they all have in common is that none of these ventures are real. None of these "schools" are credentialed, and while you may end up with a "diploma," it will be essentially worthless. But you'll still have to pay for it—both through money that will go straight to scammers and a wealth of personal information they can use for other deceptions.

College Test Prep Scams

A basic hit-and-run scam with an educational twist, college test prep scams happen when a "company" calls or sends you a message offering help studying for the PSATs, SATs, or other college entrance exams.

They may ask for personal information and ask you to pay upfront. Then, instead of providing the help promised, the scammers take your money and vanish.

Education Scam Red Flags

The role of higher education may be up for debate in society, but there's no doubt that further knowledge will help you avoid education scams.

While scammers are constantly adapting their schemes to attract new victims, there are still some red flags you can look out for when it comes to college scams.

Red Flags of Scholarship/Student Loan Scams

• Any unsolicited messages. This is the number one way scammers reach out to people, whether they're posing as a financial aid service, scholarship program, or actual school.
• Being notified about winning a scholarship you didn't apply for.
• Being charged for a scholarship, grant, or program that promises to find you one.
• Any type of "guarantee" that a program will find you a grant or scholarship.
• Companies touting "pandemic grants" or "Biden loan forgiveness plans."
• A company that offers to fill out your FAFSA application. This is not only a scam but could get you in legal trouble.

Red Flags of Student Loan and Debt Consolidation Scams

• Any upfront fees to consolidate the loans.
• Aggressive or pressure tactics used to close the deal.
• Any claim of working for or with the federal government. It doesn't approve or recommend any debt relief companies.
• Promises of quick or full loan forgiveness.
• Asking for your Federal Student Aid (FSA) login credentials.

Online College Program Scams

• Aggressive advertising or recruiting tactics.
• Promises of little coursework or unrealistically short timelines to earn your degree.
• Little-to-no interaction with the institution.
• Charging a flat fee for a degree. Most legitimate institutions charge by credit, course or semester.

How to Beat Education Scams

When it comes to beating college scams, once again, a little bit of education can go a long way.

These scams are often tricky to parcel out, as there are many legitimate companies and scholarships out there offering similar services. Your best bet in these cases is to arm yourself with a bit of research, including:

• Looking up the list of banned debt relief businesses through the Federal Trade Commission (FTC).
• Using the National Education Association's Student Debt Navigator to estimate how much loan forgiveness you actually qualify for.
• Visiting the Federal Student Aid website to see the types of (free) loans and scholarships you may be eligible for.
• Checking whether a school has been accredited through the U.S. Department of Education's database.

To avoid college scams, NEVER:

•  Give out any sensitive financial information, including your bank account and credit card numbers.
•  Give out your FSA ID, password, PIN code, or other personal information.
•  Agree to a debt collector on the phone. Hang up, do some research, and call back on an official customer service phone number you find online.
•  Pay for a scholarship or loan consolidation.
•  Let someone else fill out your FAFSA or other loan paperwork.

Fallen Victim to an Education Scam?

If you think you're the victim of an education scam, there are a few steps you can take to protect yourself.

First, you can—and should—report the scam to:

• The Federal Trade Commission (FTC).
• The Consumer Financial Protection Bureau (CFPB).
• Your state's Attorney General's office.
• The Department of Education's Inspector General.

If you gave away sensitive personal information, you should also:

• Follow the steps to recover from identity theft.
• Change any passwords, PINs, or other access information connected to any related accounts.
• Change your FSA login information.
• Notify your bank and credit card company about the situation.
• Cancel any credit or debit cards under your name and open new accounts.

If you paid a fraudulent company, you should contact your bank as quickly as possible to explain the situation and see if there's any way to cancel the payment.