September 6, 2022

ABA: Foundation Infographic Released with Tips for Avoiding Scholarship and Student Loan Scams

New Infographic from ABA Reveals Tips for Avoiding Student Loan and Scholarship Scams

As part of its annual Get Smart About Credit campaign, the American Bankers Association Foundation released a new infographic today providing consumers with information on common scholarship and student loan scams and tips on how to avoid falling victim.

The infographic is the first in a suite of four infographics the Foundation will release in the coming weeks highlighting scams targeting college-aged students. Banks of all sizes participating in the Get Smart About Credit campaign are encouraged to share the infographics with their customers and distribute the information in the communities they serve.

With college costs on the rise, many students are in search of scholarships and federal student loans to help them pay for their education. The new infographic shows that 84% of first-year students receive financial aid and 66% apply using Free Application for Student Aid (FAFSA).

Unfortunately, the high volume of scholarship and student loan applications also creates an opportunity for scam artists. More than $100 million is lost in scholarship scams every year and more than half of all students who applied for a private loan reported receiving a fraudulent loan, according to the FTC. 

“We think it’s critically important to help spread the word on the prevalence of these scams and what students and parents can do to protect themselves during the application process,” said Lindsay Torrico, executive director of the ABA Foundation. “With the Biden administration’s recent decision to offer student debt relief to millions of borrowers, we want consumers to be particularly vigilant and informed as they navigate the new forgiveness program. Paying for college is challenging enough without losing money to these bad actors.”

The ABA Foundation infographic offers three quick tips for how to stay safe while applying for scholarships and student loans:

  1. Never share FAFSA information.
  2. Only solicit loans from companies identified by the Department of Education.
  3. Never pay to apply for college scholarships.

If you or your family encounter suspected scholarship scams, report them immediately to the following government agencies:

Get Smart About Credit is one of three ABA Foundation youth financial education campaigns held each year. The national program allows bank employees to share real world financial knowledge with students on obstacles facing young adults including saving for the unexpected, managing money, paying for college, knowing their credit score, protecting their identity and exploring careers in banking. The ABA Foundation provides campaign resources including the lesson plans, in English and Spanish, program materials and real-time customer support entirely free to member and non-member banks to encourage industry participation. This infographic and the three debuting later this fall will be new additions to this year’s programming. Since 1997, the ABA Foundation’s financial education initiatives have reached 11.6 million young people through more than 375,000 banker lessons.

View the full infographic

This post was originally published here.