Having a good education is more important than ever in today’s tight job market. Unfortunately, along with everything else, the cost of a college education has skyrocketed. Many people have turned to student loans as the way to finance their educations. There are two main sources of student loans, federal loans and private loans.

Federally funded loans have limits such as caps on the maximum amount which can be lended, and need-based financial requirements. If you are unable to qualify for federal financial aid to help pay college expenses, you may want to check out private student loans. Unfortunately, there are many scam artists out there who are posing as student loan organizations. They may be involved with identity theft thieves or merely lure students into bad loans with less-than favorable terms. The FTC has issued a list of things to watch out for when evaluating private loan institutions:

• Some private lenders and their marketers use names, seals, logos, or other representations similar to those of government agencies to create the false or misleading impression that they are part of or affiliated with the federal government and its student loan programs.
• ED does not send advertisements or mailers, or otherwise solicit consumers to borrow money. If you receive a student loan solicitation, it is not from ED.
• Don’t let promotions or incentives like gift cards, credit cards, and sweepstakes prizes divert you from assessing whether the key terms of the loan are reasonable.
• Don’t give out personal information on the phone, through the mail, or over the Internet unless you know with whom you are dealing. Private student lenders typically ask for your student account number — often your Social Security number (SSN) or Personal Identification Number (PIN) — saying they need it to help determine your eligibility. However, because scam artists who purport to be private student lenders can misuse this information, it is critical to provide it or other personal information only if you have confidence in the private student lender with whom you are dealing.
• Check out the track record of particular private student lenders with your state Attorney General (www.naag.org), your local consumer protection agency (www.consumeraction.gov), and the Better Business Bureau (www.bbb.org).

The official department of education website is ed.gov. Please leave a comment if you have any other tips!

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