Complete Guide to Avoiding Financial Scams for College Students

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Setting out on your own for college can be one of the most exciting times in your life. There’s new people, new places, and new things to learn. You never really realize how much you don’t know until you’re doing your own laundry for the first time — or applying for a loan on your own. 

Unfortunately, the inexperience that comes with your college days also makes students targets for scammers. When paying for your education means acquiring financial aid, scholarships, grants, and student loans, it can be hard to investigate every organization that offers you money. 

With $1.5 trillion in collective student debt, and an average 11% delinquency rate on student loans, the only way out for many is with an offer that's too good to be true. 

However, when it comes to your finances, there are always organizations willing to help you navigate even the most tricky situations. You should always do your research before accepting an offer, and educate yourself on what a realistic debt relief or loan option looks like. 

We’ve put together a guide for what you need to look out for in every part of your financial life:

Table of Contents: 

Things to Look out For

Despite being at a greater risk for losing money and identity theft, 62% of college students say they aren’t concerned with getting scammed. The first step in avoiding being scammed is realizing it could happen to you. While not every scam will be easily recognizable, there are certain characteristics of scams that are easy to spot right away. In general, if you are asked to pay money, share confidential information, or make claims that seem to be good to be true — it just may be. Be wary of these scenarios: 

1. They Charge a Fee Up Front

For most transactions, it’s only natural that you’d pay upfront. However, when it comes to someone that’s offering to help you manage your student debt or negotiate with federal lenders, it’s likely this is a scam. 

The FTC has made it illegal for debt relief programs to charge a fee upfront, so if a company is promising to lower or renegotiate your debt after you send them money, that’s a red flag. Legitimate companies are only allowed to accept payment once the debt has been settled, or you agree to a new payment plan. 

It’s important to note that you don’t need a third party to help you negotiate your debt or restructure your student loans. There are several organizations that offer free debt counseling for students, that can help you apply for an income-driven repayment plan. The National Foundation for Credit Counseling or NFCC is a reputable non-profit that helps students with loan debt. The U.S. Department of State also has a list of approved credit counseling agencies here

2. They Advertise Aggressively

A company may be questionable if you found out about their services from a promoted Facebook post, or they show up in the paid section of a Google search result page. While there’s nothing inherently scammy about advertising online, at best it is an indicator that the company is for-profit, and may not have your best interest at heart. 

Do your research into the claims any advertisements make. It’s possible that even if the company isn’t an outright scam, the results they promise are exaggerated. 

3. You’re Required to Give Sensitive Personal Information

While applying for college, federal aid and scholarship may have required sensitive personal information, debt assistance programs do not need them. It is always better to err on the cautious side when handling your personal sensitive information. Unless you are certain an organization can be trusted, you should never give out: 

  • Social security number
  • FSA ID
  • Credit card information
  • Bank account number
  • Passwords

Be wary when giving identifying things that seem harmless. Your birth date or place of birth can be used as a second form of identification on many legal forms, so now’s the time to button up your Facebook account. 

4. They Promise Immediate Loan Forgiveness

While we wish there was a way to make student loans just disappear, the reality is this is an improbable scenario. When a company or organization claims they forgive your loans in little or no time, that’s a huge sign that they don’t intend to follow through once they have your money. 

Additionally, applying for student loan forgiveness in a qualifying situation (like working in public service for 10 years), doesn’t require that you pay an outside service. Even then, 99.5% of public service debt forgiveness applications are denied, so anyone guaranteeing loan forgiveness is lying most of the time. 

5. They Tell You to Act Quickly

If you hear a phrase like, “for a limited time only” or “this offer is only good for today,” you should be wary. This is a sales tactic designed to pressure you into agreeing to something without fully considering your options — or doing your research. Whether you’re buying a car, signing a lease on an apartment, or talking to someone about debt forgiveness, this is never a good sign. A truly great offer can wait until you’ve had time to evaluate all your options and look into their company history. 

Student Loan Scams

There are many ways for a scammer to trick you, and they may not all be listed here, these are just a few of the most common ones:

You Receive a Call From an “IRS Agent” 

The phone rings and someone claiming to be from the IRS claims you owe federal student taxes. Don’t be fooled — an IRS agent won’t call you without first sending official mail or demand immediate payment.

An Ad or Email Promises to Forgive Your Loans for a Fee

No company or service can forgive your loans for you, only the federal government can forgive your loans if you qualify. You will not receive an email or other personal notification that you qualify, but you can read more about loan forgiveness here

A Service Offers to Consolidate Your Loans For a Fee

You don’t need to pay someone else to restructure your student loan payments, because student loan consolidation is completely free through the federal government. If you’re interested in refinancing your loans, go through a legitimate servicer and do your research. 

A Lawyer Says They Will Negotiate With the Government to Settle Your Debt

A law firm may claim that they can settle your loans by arguing on your behalf. In the meantime you will pay them hefty legal fees, and even make payments through them — that may not ever make it to your loans. Once your loans are in default, they may then try to lower your loans, but only after your credit has been negatively impacted and you’ve spent a large amount on their “service.”

Financial Aid Scams

While less common than student loan scams, there are still ways for scammers to take advantage of you through the promise of financial aid.  Like before, you should always do your research into every institution you share sensitive personal information with, and keep a lookout for scammy pressure tactics or a suspicious online presence. Here are some of the specific financial aid scams to look out for: 

You Have to Pay a FAFSA Application Fee on a Fake Website 

Submitting your Federal Application For Student Aid is free, but some sites attempt to mimic the FAFSA website in order to scrape a fee from you before filing. The only place to file online is 

You’re Told Filing For Aid Requires Extensive Help

In short, it doesn’t. It requires time and digging up old documents, but it isn’t too hard to understand. Sometimes you and your family may even attend a seminar promising to share advice on the process — only to be matched with a financial aid counselor that insists you need their help in exchange for a large fee. At best, you’re paying for something you don’t need, and at worst, they disappear without doing anything for you.

You Receive a Grant You Never Applied For

Whether by a sudden phone call or mysterious letter in the mail, be wary of anyone telling you you’ve been randomly selected for a scholarship or grant. Often the next step is sending the scammer your bank or personal information so they can then steal your money or identity. 

A Service Promises to Secure Scholarships For You

For an often up-front or even recurring fee, these scammers will claim to be privy to special scholarships that only they guarantee they can get for you. They may even offer your money-back — but make it impossible for you to truly get a refund. Some legitimate organizations do charge a fee for an exclusive list of scholarships, however, the difference is that these companies never promise results.

Housing Scams

Whether you’re attending a large university or small one, housing in the area is often saturated with students and recent graduates, driving a competitive marketplace. This can make it easy for scammers to take advantage of students in desperate need of a place to live. An estimated 5.2 million renters have lost money to rental fraud so avoid being taken advantage of by keeping in mind these red flags when you’re searching for a place to live: 

  • The price is way under other similar places.
  • An image has an MLS watermark. These indicate the photos are from a sale and aren’t original.
  • The details are overly vague.
  • They are traveling and unable to meet.
  • The poster seems reluctant or refuses to show you the place.
  • They don’t ask for an application or background information.
  • You’re asked to wire rent or a deposit directly to them.

Remember that anyone can post on online housing marketplaces like your local Craigslist, Facebook, or rental listing site. Always tour the place and meet someone before sending a security deposit. Here are some common scams to look out for:

Someone Pretending to Be the Landlord of a Room

It’s easy for a scammer to list a room online that they don’t actually manage. You may even have contact with them and send through a security deposit, but when it comes time to move into the place, the real landlord has already rented it out. Prevent this by asking to see ownership documents.

A Scammer Overpays Their Sublease

Since it’s fairly normal for college students to move around and sublease, a scammer can take advantage of this by pretending to sublease your place. When they send a check, they “accidentally” overpay, but tell you to deposit the money anyways and wire back the difference. Because there is a delay in processing checks, you wire real money from your account before your bank realizes the check has bounced. 

You’re Required to Fill Out an Application Without Seeing the Place

Similar to the first scam, there likely is no real place for rent. Instead, you send money and fill out personal information in an application. The scammer then uses this to steal your identity. 

Employment Scams

Unusual schedules and spotty experience makes finding a well-paying job in college difficult. Once again, scammers can exploit this vulnerability. Look out for jobs that pay more than makes sense, or that hire you with little check into your experience or skills. 

You’re Overpaid in Your First Check

After your first few weeks of work, you may receive a check that’s more than what you’re owed. The scammer will then tell you to deposit it and send the difference to them. When the check is later revealed to be bad, you’re on the hook with your bank, then you’re out the amount of money you sent back to them, plus the work you did for free. 

They Ask You to Send Money For Equipment

You’re all set up to work for a new company — you only need some materials or a program first. The scammer will even send you a check to pay for the items, but like the previous check scam, once you wire the money to an unknown address for materials, the check bounces. 

You Have to Recruit Others

Common in work from home or Multi-level marketing scams, if you have to buy a kit to get started or sell to others, it’s likely a scam. If another representative signed you up, it’s likely you’re a part of a pyramid scheme, where the only real way to make money is through signing others up. 

What to Do if You’ve Been Scammed

Unfortunately, some of the time, you’ll be out of money or a place to live. However, there are steps you can take to make sure that you don’t lose any more money and your credit remains intact. 


  • Contact the Credit Bureaus: Notify Experian, Equifax, and TransUnion that you believe your information may have been compromised. They can place a fraud alert on your account notifying creditors that you don’t authorize new credit opened in your name. 
  • Secure Your Accounts: If you suspect a scammer now has access to your bank, cancel the card you gave them and notify them to look out for charges on your bank account. 
  • Notify Your Loan Servicer: For loan scams, change your account information and any logins to make sure the scammers can no longer manage your payments. Let your servicer know that you have been the victim of a scam. 
  • Report the Scam: To help officials catch the scammer and prevent others from falling victim to the scam, you can report the scam to the Federal Trade Commission (FTC), The Consumer Finance Protection Bureau (CFPB), and the Better Business Bureau (BBB).


Additional Resources

Student Aid on Avoiding Loan Scams

Student Loan Forgiveness Programs

FTC on Student Loan Scams

FCC Scam Glossary

Is This an MLM?

Student Loan Refinancing




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