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   Financial Aid Scam

Help Students Avoid This Financial Aid Scam

It was brought to our attention recently that someone claiming to be a representative of the U.S. Department of Education (ED) is calling students, offering them grants or scholarships, and asking for their bank account numbers so a processing fee can be charged. Specifically, the caller tells the student he understands the student has federal student loans and offers to replace the loans with an $8,000 grant. The caller explains that a processing fee must be charged and obtains the student's checking account information.

We urge you to remind your students that there is no ED program to replace loans with grants and that there is no processing fee to obtain student grants from ED. Furthermore, students should never provide their bank account or credit card information over the phone unless they initiated the call and trust the company they are calling.

We recommend that you warn college students and college-bound students about this scam. A student who is a victim of this or a similar scam should take the following steps:

1. Immediately contact his or her bank, explain the situation, and request that the bank monitor or close the compromised account.
   
2. Report the fraud to ED's Office of Inspector General hotline at 1-800-MIS-USED (1-800-647-8733) or oig.hotline@ed.gov. Special agents in the Office of Inspector General investigate fraud involving federal education dollars.
   
3. Report the fraud to the Federal Trade Commission (FTC). The FTC has an online complaint form at www.ftc.gov/scholarshipscams and a hotline at 1-877-FTC-HELP (1-877-382-4357; teletype for the hearing impaired: 1-866-653-4261). The FTC will investigate if the fraud is deemed widespread; therefore, it is important that every student contacted by the person or people in question lodge a complaint so the FTC has an accurate idea of how many incidents have occurred.
   
4. Notify the police about the incident. Impersonating a federal officer is a crime, as is identity theft.

For information about identity theft prevention, you and your students may visit www.ed.gov/misused. For information about preventing financial aid scams, visit www.studentaid.ed.gov/lsa.