Pursuing higher education opens up many opportunities. To afford this dream, you might have to opt for a Student Loan. However, this might make you an easy target for dishonest individuals and organisations. To protect your financial future, you need to be aware of Educational Loan scams and use practical tips to steer clear of them.
1. Scams involving upfront fees
One of the most prevalent scams involves the demand for upfront fees, often marketed as processing charges, administrative costs or guarantees for loan approval. Reputable financial organisations like Axis Bank never require such payments before granting an Educational Loan. If you're asked to pay any fee upfront, it's a red flag.
2. Loans with guaranteed approval
Watch out for organisations that say they will give you a loan no matter your credit history or finances. Genuine lenders, like banks and NBFCs, look at your credit score, academic records, your financial situation and the school's name before giving you a loan. Any offer that gets around these checks and promises acceptance is likely a scam.
3. Scams via phishing
Scammers try to get your personal and financial information by pretending to offer Student Loans. You may get emails, text messages or calls from people who say they work for reliable banks or other banking institutions. Some of the private information they might ask for is your KYC and banking details.
Remember, real organisations will never ask for such information through emails or calls. Make sure the request is real by getting in touch with the bank directly through official means.
4. Scams with scholarships
Scammers may say they can give you scholarships if you pay them a fee. They might also say they have special access to funds or awards that you need to pay to get. In India, both public and private institutions offer real scholarships and loans that don't require applicants to pay anything. For information on scholarships, conduct thorough research and only use approved, trustworthy sites.
5. Frauds involving debt consolidation and loans
Fraudulent lenders offer debt consolidation programmes or loan cancellation services in return for personal information or an advance charge. Services that claim to eliminate or reduce your Student Loan debt by rearranging your payments or negotiating with your lender could be scams. There are legal alternatives to handle your debt. Student Loan debt reduction programmes that charge fees are not supported by the RBI or any other regulatory agency in India.
6. Protecting yourself
- Avoid giving out any financial or personal details to strangers who contact you via phone, email or text message.
- Verify the authenticity of any offer or service by contacting the financial institution via official channels.
- Research thoroughly and rely on official and reputable sources for information on Student Loans, scholarships and grants.
- Be wary of any organisation that promises guaranteed loan approval or debt relief for an upfront fee.
- Report suspected scams to the appropriate authorities, such as the RBI, to help protect others from falling victim.
Also Read: Different types of expenses covered under Education Loan
Conclusion
Education Loan frauds in India are a serious issue that you must be aware of and take steps to avoid. Remember, your education is an important investment in your future, and you should pursue it in proper and ethical ways.
Axis Bank offers Education Loans with interest rates starting at just 6.5% p.a. Loan amounts start from as low as ₹4 lakh and include features such as pre-admission sanction and flexible repayment options. Get an Education Loan from Axis Bank and make your academic dreams come true!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
