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As parents and students you have to keep your eyes OPEN, and be really alert, even skeptical about federal and private college loans, and scholarships. There are countless cons, rip-offs and scams to avoid.


The tale-tell sign of a rip-off is any college financial arrangement that requires you to give THEM money up front (and any name: fees, service charge, processing charges, etc.), or disclose your financial/personal information (bank accounts, social security, etc). Much of the time this will be in some form of "service" where you pay someone to help you get grants, loans and "freebies" for college.


Since the individual amounts that are scammed range from $50-$1000, most of time the victim just moves on in embarrassment, and it’s not enough money to fight for (and next to impossible to get back anyway). Those small amounts add up to a over a HUNDRED MILLION dollars annually though, so it’s a big business ripping off college bound kids.


Look out for: offers with no contact information, poorly worded letters (a sign of a foreign scam), requests for money or personal information, or anything else that looks suspicious. When in doubt, CONSIDER IT A SCAM.


The typical scam will start with a letter offering different types of loans and financial assistance which requires you to pay a "processing" fee. Legitimate lenders do NOT ask for any fees up front as they take them from the actual disbursed funds.


Also be wary of letters that LOOK LIKE official government agency letterhead. The Government doesn’t solicit new customers so this is an automatic sign of a scam.[TIPJAR]


Be careful of emails that originate in countries like Nigeria. A common scam is to send a check for MORE than the loan amount and then ask the recipient to send the difference back. Be especially suspicious of offers of unclaimed or unused loan funds that require a fee to make sure your student gets their "share". There is also no need to pay money to have scholarship search of a database or report prepared. All that information can be easily obtained free of charge.


Parents should use well known organizations like Sallie Mae, or utilize legitimate sites like Finaid.org. Federal loans have lower interest rates, and there are lots of grants and scholarships available. The "free money" is harder to get, and takes a little more effort but obviously should be sought first before loans.


Of course, the BEST way to go, is to work your way through college and have no debt or loans. This should be the FIRST choice for most students and parents, although I realize that educations like medical school are as expensive as buying a house, and sometimes it is just not possible to do it debt free.

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