Starting college can be one of the most exciting times in our lives. The days of sitting in a classroom for eight hours a day are over and we finally have a little bit of freedom! Despite how exciting college shopping and dorm decorating can be, it can also be pretty stressful to think about how we're going to pay for college.
43.4 million borrowers have federal student loan debt, and that doesn't even take private student loans into account. The average federal student loan debt balance is $37,014 while the total average balance (including private loan debt) may be as high as $40,904. The average public university student borrows $30,030 to attain a bachelor's degree. If these numbers scare you a little bit you're not alone – these numbers are daunting. Many incoming and current college students spend hours and hours searching for and applying to scholarships and other forms of financial aid to try to offset some of the costs of school, but many also rely on student loans to pay for college.
Applying for student loans can be extremely confusing and put a damper on our excitement when it comes to starting college. Navigating the world of student loans can be stressful, but it's important to stay informed and savvy to avoid falling victim to student loan or student loan forgiveness scams.
Here are some tips to avoid student aid scams:
- You never have to pay for help finding money for college or career school. Commercial financial aid advice services can cost $1,000 or more, charging for help or information that's available for free elsewhere. If you're unsure whether to pay a company for help finding financial aid, stop and think for a minute: What's being offered? Is the service going to be worth your money? Do the claims seem too good to be true?
- You don't have to pay for help with your federal student loans. Many student loan debt relief companies charge a fee to provide services that you can take care of yourself for free by contacting your loan servicer.
When it comes time to repay your student loans, it is equally as important to stay vigilant to avoid student loan forgiveness scams. Here are some red flags to watch out for:
- You're asked to pay an upfront cost or monthly fees. There's nothing a student loan debt relief company can do that you can't do yourself, especially with the help of your loan servicer. If you're having a hard time making monthly payments, your loan servicer can work with you to switch to a more affordable repayment plan at any time, at no additional cost to you.
- You're promised immediate loan forgiveness. No one can promise immediate and total student loan forgiveness or cancellation. A student loan debt relief company may claim to get rid of your loans quickly, but most government forgiveness programs require many years of qualifying payments and/or qualifying employment in certain fields before loans can be forgiven.
- You're asked to provide your FSA ID password. No one should be asking for your FSA ID password. Your FSA ID is used to sign legally binding documents electronically. It has the same legal status as a written signature. Do not give your FSA ID password to anyone or allow anyone to create an FSA ID for you. If you share this information or sign a Power of Attorney, you're giving a debt relief company the authority to take any action they choose, make decisions for you, and act on your behalf. And if the debt relief company collects fees from you, but never actually makes any payments on your behalf, you will still be responsible for those outstanding payments, interest accruals, and late fees.
The idea of paying for college can be intimidating, but it doesn't have to be. Free help is out there and ready to help you succeed and soar to new heights. College is a time for you to grow and flourish, explore your passions, and discover who you are. But if you start to worry about how you're going to afford college or how to apply for student loans, don't fret – lean on your high school mentors, college financial aid offices, or reach out to the U.S. Department of Education for help.