College Loan Scams Can Cost You Much More Than Money, Warns the Better Business Bureau

CHICAGO, IL – Student loans are a huge part of college for parents and students. The process of applying can be stressful and frustrating. The Better Business Bureau (BBB) is warning students and parents to beware of scams and unnecessary fees from loan consolidation companies and organizations.

“Student loans are becoming essential because the cost of college is rising,” said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. “Unfortunately, some companies are trying to take advantage of struggling families looking for funding by charging for students to start the application process. Applying should NEVER cost you money.”

Robert Caulfield of Chicago had an issue with a loan consolidation company. “I authorized them to take three $200 payments from my account and consolidate my loans. They told me to stop paying on the loans because they would take care of the payments. A few months later I realized that they were taking out some smaller amounts like $50 or $75 that I didn’t authorize. Then I got collection notices and found that they never made any payments. I am in worse shape [now] then when I got started.”

The BBB recommends listening for the following red flags when given advice when given student loan advice:

  • “You cannot get this information anywhere else.” Information is widely available in financial aid offices and often very conveniently on the internet.
  • “May I have your credit card or bank account number to hold this?” This is never a requirement for a legitimate loan.
  • “Buy now or miss this opportunity.” Don’t give in to pressure tactics. Remember, the “opportunity” is a chance to pay for information you could find yourself for free.
  • “We guarantee you’ll get aid.” A company could claim it fulfilled its promise if you were offered student loans.

For more tips and free information about loan companies, visit www.bbb.org/chicago, like us on Facebook, follow us on Twitter or add us on Pinterest