Many students will encounter scams in college. The most common types of college scams include student loan scams, financial aid scams, scholarship scams, apartment rental scams, online shopping scams and identity theft.
Given that victims could see thousands in damage, we wanted to share some of the most common college scams - as well as signs to look out for so that you can potentially avoid it.
Let's break it down.
Signs Of A Scam
Most scams try to get you to pay money up-front, before you receive any benefit. The fee may seem innocuous, such as an application fee, deposit or taxes. By the time you realize you have been conned, the money is long gone.
Often, a scam will seek payment by prepaid debit card, gift cards, Western Union, wire transfer, cashier check, or money order. Some scams may seek payment by PayPal, Zelle, Venmo or other payment apps.
Other scams are focused on identity theft. They collect personal information, such as your name, address, date of birth, Social Security Number, driver’s license number, credit card numbers, bank account numbers and/or FSA ID.
If a scam gets your bank account number and the bank’s routing number, they can empty your bank account. They do not need your signature.
Scams often take advantage of a student’s lack of experience and confusion. Some scams may appeal to the student’s fear, embarrassment, greed, naivete or desperation for money to pay for college. There may be time pressure.
Sometimes, googling the name of the organization and “scam” will uncover fraud reports by previous victims. Also check for complaints at the Better Business Bureau (BBB)’s website, bbb.org.
Types Of College Scams
The most common types of college scams include:
Scholarship Scams
These scams often guarantee that you’ll win a scholarship, a claim that is on its face fraudulent. Nobody can guarantee that you’ll win a scholarship. Never pay money to search for scholarships or to apply for scholarships. Legitimate scholarships do not charge application fees. Although some scholarships may be taxable, the taxes are paid to the IRS and not to the scholarship provider. If you have to pay money to get money, it’s probably a scam.
Financial Aid Scams
The Free Application for Federal Student Aid, or FAFSA, is a free form, just as the name suggests. You do not need to pay a fee to complete the FAFSA. Do not share your FSA ID with anybody, as it is an electronic signature.
Student Loan Scams
An advance-fee loan scam charges an up-front fee to reduce your loan payment or interest rate, consolidate or refinance your loans, get a deferment or forbearance, or apply for loan forgiveness or other debt relief. Some scams have you send the monthly loan payment to them instead of the lender, pocketing the money. It is illegal to charge an up-front fee for credit repair and similar services under federal and state law.
You can change repayment plans, apply for loan forgiveness and make other changes in your student loans for free in just minutes by contacting your loan servicer or visiting StudentAid.gov.
Read our full guide to Student Loan Scams here.
Apartment Rental Scams
Housing scams involve a fake roommate or landlord seeking to rent an apartment. You pay a fee, deposit or the rent without visiting the apartment. But, the person who gets the money does not own the apartment and is not a legitimate roommate.
Read this guide to spot and avoid the college roommate scam.
Unpaid Tuition Scams
A student or parent receives a notice that their tuition payment is late or that the tuition has not been paid in full. It may even look legitimate, with the college logo and statement. Visit the college’s website directly. Do not click on a link in the email message.
Federal Student Tax
The IRS reports that students are getting calls about a non-existent “Federal Student Tax.” The scam demands immediate payment and threatens the student with arrest or deportation if they don’t pay the tax.
Online Shopping Scams
The most common type of online shopping scam affecting college students involves a fake online bookstore that offers great deals on popular textbooks. But, the textbooks may never arrive and digital downloads may include malware. Buy textbooks only from well-known legitimate websites and campus bookstores. If it sounds too good to be true, it probably is. Beware of buying anything advertised on social media.
Identity Theft
Identity theft scams may be perpetrated using unsecured public WiFi or fake hotspots at popular student hangouts or through phishing email messages and fake websites that look legit. These scams are designed to capture usernames and passwords and other personal information. Do not login to email accounts, bank accounts or other sensitive websites in a public location or by clicking on a link in any email message.
Make sure you check out this guide on how to secure your financial information..
Employment Scams
A fake job offers high pay, flexible hours and a work-from-home opportunity. But, it may require you to pay an up-front fee. Or, it may involve collecting personal information for identity theft purposes. Or, it may send you a check for too much money, ask you to refund the overage and the check turns out to be a forgery.
Mark Kantrowitz is an expert on student financial aid, scholarships, 529 plans, and student loans. He has been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. Mark has written for the New York Times, Wall Street Journal, Washington Post, Reuters, USA Today, MarketWatch, Money Magazine, Forbes, Newsweek, and Time. You can find his work on Student Aid Policy here.
Mark is the author of five bestselling books about scholarships and financial aid and holds seven patents. Mark serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education. He previously served as a member of the board of directors of the National Scholarship Providers Association. Mark has two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU).
Editor: Robert Farrington Reviewed by: Clint Proctor