TDCI: Don’t Fall Victim to Scholarship & Student Loan Scams

Scholarships and student loans are the most common way to ease the financial burden of tuition costs for many students. Unfortunately, financial predators prey on consumers’ fears of greater monetary responsibility with scams that promise more than they deliver and leave consumers facing greater headaches and debt.

The Tennessee Department of Commerce & Insurance’s (TDCI) Division of Consumer Affairs warns consumers that care must be taken to ensure these options don’t leave you caught in a scam.

“Unsolicited offers, upfront fees, and no-strings-attached debt forgiveness can all be red flags of scholarship and student loan scams,” said Tennessee Department of Commerce & Insurance Commissioner Julie Mix McPeak. “We urge Tennessee students to take the time to thoroughly investigate their student loan and/or scholarship options. When it comes to scams, a few minutes of research could help you avoid years of regret.”

The Division of Consumer Affairs offers the following tips to help keep Tennessee students from falling victim to scholarships and student loan scams.

  • Scholarship and Student Loan Scams:
    • If scholarships or student loans are offered to you with an upfront fee attached to them or from a scholarship or loan you never applied for, it’s best to walk away.
    • Never hand over personal, payment, or account information from unexpected or unsolicited calls, letters, or emails.
    • If you’ve given account or payment information to someone and later find it to be a scam, call your bank or credit card company to suspend cards or accounts.
    • Remember that you have time to check out your options. Scammers will pressure you into making a quick decision by telling you this is a limited-time offer and you’ll miss out.
  • Loan Forgiveness or Payment Reduction Scams :
    • Be cautious of someone offering student loan negotiations for a fee. These can lead to your account being moved into a higher-rate, private loan; your money being taken without the advertised services being rendered; or you simply paying for a service that can be done for free.
    • If you decide to take out student loans and receive letters, phone calls, or emails with offers of loan consolidation, lower monthly payments, or assistance in eliminating student loans, be sure to read the fine print. Many times, fees will be attached to these services that are available for free through government programs.
    • While there are government programs that can reduce or eliminate federal student loans, there are certain stipulations and requirements you must meet. For information on the requirements of student loan forgiveness, read more from Federal Student Aid here. More information on student loan forgiveness scams can be found here.
    • If someone advises you to quit making payments on your loans and stop talking to your loan servicer, it is likely a scam. Skipping payments on your loans can damage your credit and inflate your loan balances.
    • If you feel you have fallen victim to a scam, file a complaint with the Federal Trade Commission or by phone at (877) 382-4357.

Remember, you can file a complaint about a business with the TDCI Division of Consumer Affairs at www.tn.gov/consumer or by phone at (615) 741-4737.

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