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Students, watch out for this scam!

Someone claiming to work at 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. Sometimes the caller tells the student he (or she) 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 asks for the student's checking account information.

There is no ED program to replace loans with grants. There is no processing fee to obtain grants from ED. Also, you should never provide your bank account or credit card information over the phone unless you made the call and trust the company you are calling.

Please tell other students about this scam. A student who is a victim of this or a similar scam should:

  1. Immediately contact his or her bank, explain the situation, and request that the bank monitor or close the account in question.
  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 a lot of people become victims of this crime; 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. Tell the police what happened. Impersonating a federal officer is a crime, as is identity theft.

When filing complaints, the student should provide detailed information about the incident, including what was said, the name of the person who called, and from what number the call originated (if the student has Caller ID and was able to get the number). Also, if money has already been taken from the student's bank account because of this fraud, the student should mention this fact in his or her complaint. Records of such debits could be useful in locating the wrongdoer.

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

Last updated/reviewed October 30, 2006

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