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Posted on Thursday, May 19, 2022 in Identity Theft Prevention

Student Aid Scams Hurting Iowa Families

First National Bank is warning Iowa families to beware of student aid scams after several individuals and families have been victimized recently, losing their hard-earned money on unfulfilled promises of financial aid, grants, or student loans.

GraduatesIt is the season for student loan scams. There are thousands of graduating high school students throughout Iowa who are planning to attend college and are seeking financial assistance. Scammers know it, too, and are looking for ways to take advantage: they are calling, texting, and emailing.

These sophisticated, high-pressure scammers make all types of promises and will often claim they are with an organization that makes you think they are associated with a legitimate higher education institution or a financial aid office. If you see or hear the word “Foundation” connected with the organization’s name, that should send up an immediate red flag.

Take Precautions and Beware of These Red Flags

If you get a call, text, email or message from someone about your federal student loan or grant application, here are some things to keep in mind.

Never pay an upfront fee or monthly fees. It is illegal for companies to charge you before they help you. If you pay up front, typically the scammers will ask for $1,000, on a promise that a check will be placed in the mail with your student aid funds --- you are likely not going to get any help, you will receive a fraudulent check in the mail, and you will not get your $1,000 back.

Never give out your Federal Student Aid ID, your Social Security number, or other personal information to anyone who contacts you. Scammers posing as student loan servicers can use this information to log into your account, change your contact information, and even divert your loan funds to them. You are left owing for a loan that you never received. Instead, call or contact your federal student aid advisor.

Scammers use fake seals and logos to lure people. Scammers promise special access to loan programs and will tell you the financial assistance they can get you will never have to be repaid …because it is from a “Foundation.” Unfortunately, checks issued by these scammers are designed to fool you and, on the surface, appear to be genuine. It is often not until you deposit them that you find out they are fraudulent. If you are counting on that money to go to college, you will be very disappointed. In addition, you will be out the money the scammer requested to process payment of the “fake” funds.

They ask you to sign and submit a third-party authorization form or a power of attorney. These are written agreements giving the third-party legal permission to talk directly to your federal loan servicers and make decisions on your behalf. These scammers often want the authorization so that they can change your account and contact information. As a result, funds you expect to receive are diverted to the scammer’s pockets.

They claim that their offer is limited and encourage you to act immediately. Scammers often try to instill a sense of urgency by citing “new laws” or discontinuing programs as a way to encourage individuals to contact them immediately.

Their communication contains spelling or grammatical errors. While many of the communications sent out by these scammers look very formal, they often contain spelling and grammatical errors. If you notice unusual capitalization, improper grammar, or incomplete sentences in the communication you receive, that is a red flag and suggests that the company is not affiliated with a legitimate business or organization.

Think You Have Already Been Scammed?

If you think you may have been scammed, turned over your personal information or paid a scammer, consider one or all the following options:

  • Log in and change your FSA ID password. Do not share your new FSA ID password with anyone.
  • Contact your loan servicer to revoke any power of attorney or third-party authorization agreement that your servicer has on file.
  • Make sure no unwanted actions were taken on your loans.
  • Immediately contact your bank or credit card company and request that any payment(s) to the scammer be stopped.
  • Report identity theft and get a recovery plan with the Federal Trade Commission. Then put your plan into action.
  • Submit a complaint of suspicious activity or a scam through the Federal Student Aid Feedback System.
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