As your young adult prepares to leave the nest, high school diploma in hand, be sure to share some real-world smarts to help themtake the plunge into higher education while avoiding the scammers who target them. Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago & Northern Illinois, notes, "College students are ripe for the picking because they are away from the protective wings of their parents. It's really a dangerous situation for them because there are many traps they can fall into."
Use our six lessons to help your student stay scam-free.
Lesson one: Be safe with credit cards.
Card companies love to prey on college students’ newfound independence and financial freedom. Credit card offers can be found all over college campuses. For many young people, the idea of having a $5,000 line of credit is a dream. However, this instant purchasing power can be dangerous if they don’t fully understand how credit works, how interest accrues and what fees may apply. You can help your student avoid incurring a mountain of debt by teaching them about credit and debt management and showing them how to shop around for the best possible rate.
Lesson two: Watch out for scholarship and grant fraud.
Scammers know how stressful it can be for families to pull together funds to cover college costs. They target students with too-good-to-be-true offers for lower tuition or the promise of a scholarship. Fraudulent companies also claim to be scholarship-finding services that can offer lists of companies that provide “guaranteed” scholarships if you pay a fee up front. Legitimate college scholarships and grants are more likely to come from individual colleges and universities or the federal government. For more information, check with your college or visit grants.gov.
Lesson three: Understand where to find safe student loan assistance.
Unfortunately, there are a multitude of fraudulent companies out there looking to cash in on your college student. Many offer financial assistance, but with red flags. A true loan provider won’t ask you to pay up front, offer instant loan forgiveness or charge you to consolidate your debt. If you’re looking for debt assistance, check out BBB Accredited debt management and consolidation experts at askbbb.org. Additionally, if your family has, or works for, a BBB Accredited Business, your child may be eligible for assistance through the BBB’s Educational Foundation Scholarship Program.
Lesson four: Know how to protect your ID.
Does your student know how to protect their identity from prospective thieves? Help your student understand that keeping his or her personal and financial information private is essential. All credit and bank cards, licenses and IDs should be kept in a safe place. Your student should also avoid any online sources and hang up on phone calls requesting personal information.
Lesson five: Watch out for fake roommates.
A popular scam targeting college students is a Craigslist roommate scam. The fraud begins when you post a room for rent or roommate ad on Craigslist. A scammer responds saying they are currently out of the country but are interested and can provide the money upfront in a money order. The scammer then sends you a check for far over the amount necessary — and asks you to immediately send back the difference.
Lesson six: Know how to identify a fake arrest threat.
Playing off people’s worst fears, many scammers call pretending to be a law enforcement official, or an IRS or FBI agent, and then threaten that you’ll be arrested if you don’t immediately pay off a debt. From claiming your tuition hasn’t been paid to allegations of unpaid taxes and overdue parking tickets — the calls vary in theme, but the goal is the same: to get you to panic enough that you’ll pay up, pronto. The IRS and other legitimate agencies don’t call. They send out written notices.
Use the BBB to help you identify scams.
Better Business Bureau of Chicago & Northern Illinois is here to help connect your college student with trusted loan advisors, financial consultants, banks and more. Visit askbbb.org to learn more about how our free services, directory and resources can help your grad find success in the years to come.