PHEAA urges caution as millions are being victimized by student loan scams & misleading solicitations
DAUPHIN COUNTY, Pa.– The Pennsylvania Higher Education Assistance Agency (PHEAA) is warning students and their families to be wary of financial aid scams that could expose them to significant financial loss and identity theft.
In one recent example, scammers were fraudulently representing themselves as PHEAA employees in order to collect personal information by claiming that a student had “won” a PA State Grant award. The PA State Grant Program is funded by the Commonwealth and administered by PHEAA.
“PA State Grant awards are determined by a student’s financial need and can never be offered up as a prize – nor can anyone be promised or guaranteed to receive an award,” said Representative Mike Peifer, PHEAA Board Chairman. “Submitting an application is completely free and easily accessible, as are the other services provided by PHEAA in support of Pennsylvania students.”
The most effective way to avoid becoming the victim of a scam is to be alert and vigilant when asked by anyone to provide any form of personal information or when engaging in financial transactions.
Recent scams include:
- Student loan payback scams – Companies or individuals claim to help reduce or eliminate student debt in exchange for money. However, many of these offers are fraudulent, while others are unnecessary and should be avoided when no-cost assistance is available from your loan servicer and other government resources.
- Tuition scams – These involve someone claiming to work for your school’s administrative office. They call to warn that your tuition is late and you risk being dropped from class unless you pay immediately. If you are contacted about anything involving money, end the call immediately and contact your school directly in order to check the status of the alleged problem.
- Unnecessary fees for service – Beware of anyone charging a fee in exchange for completing an application, a scholarship, debt counseling, or almost anything else. In most cases, it is either a scam or you are being charged for something that you can easily access for free.
- Credit cards – While not necessarily a scam, aggressively solicited credit cards tend to be loaded with bad terms, expensive fees, and high interest rates. However, some of these solicitations could be an identity theft or phishing scheme. If you must have a credit card, take the initiative to control the process and search for the card offering the best terms and borrower protections.
- “Scammers tend to prey on individuals who are struggling financially and may feel desperate for some kind of assistance,” said State Senator Wayne D. Fontana, PHEAA Board Vice Chairman. “Today’s sophisticated and accessible technologies help scammers make fraudulent pitches seem legitimate, so everyone needs to be especially vigilant in order to avoid becoming a victim.”
The Consumer Financial Protection Bureau (CFPB) recommends the following tips to avoid scams:
- Never release your Federal Student Aid (FSA) ID credentials to anyone.
- Never send money or provide personal information in response to an unexpected request, whether it comes as a text, a phone call, or an email.
- Verify a company or product by using the internet to research its existence and reputation. Search for the name of the company along with words such as “review,” “complaint” or “scam.” You can even search for phone numbers to see if other people have reported them as being associated with scams.
- If someone asks you to pay in advance for debt relief, credit, loans, mortgage assistance, a prize, or a job opportunity – don’t believe them.
- Talk to a friend. Scammers want you to act quickly. Slow down, take your time. Never be pressured into making a decision quickly.
- Be careful how you pay. Credit cards have some fraud protection built in, but other methods, such as money transfers, don’t. Government offices and honest companies won’t require you to use such payment methods.
- Beware of free trials. Often, they’ll take your credit card information and, after the trial period is finished, will automatically bill you unless you cancel.
- Don’t trust caller ID, which can be manipulated. If someone calls asking for money or personal information, hang up. If you think the caller might be telling the truth, call a phone number that you can verify as genuine.
- Ignore any pitch in which you are promised to receive a check or a money transfer. The check can easily be faked, but it may take weeks to be detected.
- Hang up on robocalls. If you hear a recorded sales pitch, hang up and report it to the Federal Trade Commission (FTC) at ftc.gov/complaint. Responding in any way can identify you as a target and encourage more calls.
- Sign up for free scam alerts from the FTC at ftc.gov/scams.
If you believe that you have been targeted or victimized by a scam, please contact the Pennsylvania Department of Banking and Securities, the CFPB or the FTC.