As students prepare to enroll in college this year and take out loans to pay for higher education, Attorney General Kamala D. Harris issued the following tips, encouraging Californians to know all the facts—and avoid potentially harmful scams—before taking on or paying off substantial student loans.

In advance of enrolling in a college or university, students should thoroughly research the types of financial aid they may qualify for and determine which loans, scholarships, grants, or work-study programs would be most beneficial to their personal situation. Student borrowers should be aware of factors that may impact their ability to repay student loans, such as changing the status of student enrollment, future job prospects, the amount of interest accruing on loans, and any loan prepayment penalties.

Students should also be cautious of private companies that charge for what would normally be free student loan services. Certain companies may impose fees for assisting with federal student loan consolidation or in submitting the Free Application for Federal Student Aid (FAFSA), without disclosing that such services are actually free. Student borrowers are strongly encouraged to use free student loan resources to avoid being charged unfair and unnecessary fees.

Consumers who take on student loans should be sure to make their payments on time. Contact the student loan servicer promptly to discuss options, if repayment of loans becomes difficult. Eligible borrowers may be able to lower monthly payments or may be eligible for loan deferment, forbearance, or cancellation. Late payments could adversely affect credit scores and harm future ability to make purchases or qualify for additional credit.

What to look out for

The attorney general offers student borrowers the following tips in order to educate themselves and take advantage of resources regarding student loans:

Before taking on a student loan, research the types of financial aid that are available and consider ways to lower the cost of higher education programs. To the extent possible, carefully consider job prospects, including salary information, in deciding whether and how to take out student loans.

Do not sign a loan document electronically without first reviewing and understanding the terms of the loan agreement. Make sure to understand how much money is being loaned, the interest rate of the loan, and when the loan will need to be repaid. Inquire about the available options, if loan payments cannot be made on time (which can come up during periods of unemployment, economic hardship, or enrollment in a graduate program).

Be aware of the differences between federal and private student loans. Federal student loans may offer lower, fixed interest rates, while private student loans may have higher, variable interest rates. Additionally, federal student loans generally do not need to be repaid until the student graduates and loan consolidation and income-based or other more flexible repayment plans may be available. In contrast, private student loans may need to be repaid while the student is still in school and may not offer deferment or forbearance options.

Be wary of private companies that charge a fee for assisting with filling out and submitting the FAFSA. Such companies are unaffiliated with the government. The U.S. Department of Education provides free assistance with filling out the FAFSA.

Beware of companies that charge an application fee and monthly fees for assisting with consolidating federal student loan debt. Consolidating federal student loans is free through the Federal Direct Consolidation Program. The loan consolidation process combines several federal student loans into just one. Consolidated loans may be eligible for various repayment plans, including income-driven repayment plans.

Ask about the student loan’s grace period and be aware that the grace period may change depending on circumstances. Engaging in active military duty, returning to school, and consolidating loans may alter grace periods. Make sure to stay in contact with student loan servicers to stay informed regarding the repayment time frame.

Defaulting on student loans will adversely affect credit and will impede the ability to make purchases down the road. It is important to stay in touch with student loan servicers, especially if there is a difficulty in making timely payments.

The U.S. Department of Education provides information on the types of federal aid available to students. The website includes basic eligibility requirements for federal aid. Additionally, the FAFSA4caster assists consumers with calculating the amount of federal student aid for which they are eligible.

The U.S. Department of Education offers a comparison of federal student loans and private student loans.

The Federal Student Aid website also helps student borrowers learn about federal loan consolidation before applying for consolidation. Students who have questions regarding the loan consolidation process can contact the Loan Consolidation Information Call Center at (800) 557-7392.

Finally, the Federal Student Aid website has information on scholarship opportunities that may help students fund their educational goals.

What to do if you are the victim of a student loan scam?

The Office of the Inspector General at the U.S. Department of Education investigates education programs and collects complaints regarding fraud or schemes related to the misuse of federal student aid. If you are the victim of a student financial aid scam, contact the Office of Inspector General’s hotline.

The California Department of Justice protects the rights of consumers and collects complaints on student loan scams in order to identify patterns of wrongful activity. To submit a complaint to the California Department of Justice regarding a student loan scam, use one of the following complaint forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf?

??: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf?

Ti?ng Vi?t: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf?

There are other options available that can help students and their parents find money for college, says Kevin Brown, founder of the Debt Free College Academy.

“Most people listen to those with no expertise in helping find money for college,” said Brown, who points out some of the myths that may cause people to shy away from financial aid. These include: thinking you are too old to obtain financial aid; that bad grades will make you ineligible for aid.

or schemes related to the misuse of federal student aid. If you are the victim of a student financial aid scam, contact the Office of Inspector General’s hotline.

The California Department of Justice protects the rights of consumers and collects complaints on student loan scams in order to identify patterns of wrongful activity. To submit a complaint to the California Department of Justice regarding a student loan scam, use one of the following complaint forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf?

??: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf?

Ti?ng Vi?t: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf?

There are other options available that can help students and their parents find money for college, says Kevin Brown, founder of the Debt Free College Academy.

“Most people listen to those with no expertise in helping find money for college,” said Brown, who points out some of the myths that may cause people to shy away from financial aid. These include: thinking you are too old to obtain financial aid; that bad grades will make you ineligible for aid; that you need to a particular family background.

Brown, who started his company Debtfreecollegeacademy.com after writing a book on the subject in 2012, and lecturing around the country, offers five key steps to take to get started: 1) take action by going straight to the source to find out information including the financial aid office of the school you’re interested in attending; 2) master your schedule now. That means figuring out exactly what classes you plan to take and how much they will cost. Then find the most economical place to take the class whether that is at a two-year college or as part of your four-year college experience; 3) Be financially smart by budgeting for each semester. Consider the cost of living on campus versus living off campus or figure out how to decrease the overall cost by taking classes during the summer; 4) Be prepared to appeal your financial aid award letter to make aid is distributed properly; 5) Understand what sacrifices you will need to make in order to obtain a college education debt free.