6 Student Loan Forgiveness Scams and How To Spot Them

Student loan debt has left millions of people searching for relief, and scammers are well aware of this. Some fraudulent companies take advantage of that desperation by promising guaranteed forgiveness or quick fixes that don’t actually exist. If you fall for one of these scams, you risk losing money, putting your personal information at risk, and delaying your path toward actual loan forgiveness. 

In this guide, learn six of the most common student loan forgiveness scams and how to spot them before it’s too late.

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Scam 1: Promises of immediate student loan forgiveness

A scammer might assure you of immediate student loan relief through loan forgiveness programs, as long as you pay them a fee to qualify.

While federal student loan forgiveness programs are available through the Education Department, none provide immediate relief. You have to spend 10 years working in a particular field to qualify for Public Service Loan Forgiveness (PSLF), or meet the income requirements to be eligible for forgiveness under income-driven repayment.

Tip: If you're eligible for federal loan forgiveness, you can apply on your own. For example, if you might qualify for PSLF, you can use the PSLF Help Tool to see what steps you need to complete.

Unfortunately, private student loan forgiveness doesn't exist. However, you do have other relief options, such as deferment or forbearance (depending on the lender) or student loan refinancing.

Learn More: Student Loan Deferment vs. Forbearance

Scam 2: Charging up-front fees

Some companies will offer to help you file for loan forgiveness, consolidate your loans, lower your interest rates, or even find scholarships and grants for a fee. Sometimes, the businesses will demand that you pay them a fee up front.

It's illegal for companies to charge you before they actually help you, so this is a major red flag. If you pay an upfront fee, you might not get any help and could lose your money.

Tip: You can apply for forgiveness programs or loan consolidation on your own — there’s no need to pay a company to do it for you.

Contact your loan servicer or visit StudentAid.gov for instructions on how to manage your loans or apply for student loan forgiveness programs.

Check Out: Private Student Loan Consolidation

Scam 3: Requests for your SSN or other sensitive information

Companies might ask for your Social Security number, Federal Student Aid (FSA) ID, or other personal information over the phone or email, claiming they need it to help you.

But you should never give out any of this information. Scammers can use it to steal your identity and open credit accounts in your name.

Learn More: How to Refinance Your Student Loans

Scam 4: False claims of government affiliation

To make themselves appear legitimate, some companies will use the logos from the U.S. Department of Education or Treasury Department. They might go by official-sounding names and say they've partnered with the Department of Education to offer these services.

But none of these claims are true. The Department of Education does not partner with or authorize any organization to handle federal student loans outside of your current loan servicer.

Tip: If you’re evaluating a website:

• Look at the web address and make sure it ends in “.gov” to see whether it’s truly affiliated with the federal government.
• Keep an eye out for spelling or grammar mistakes, as these can be an indication a site is fake.
• If a phone number is listed, plug it into a search engine to find out whether it belongs to a legitimate government office or to a scammer.

Scam 5: High-pressure sales tactics

Criminals know the longer you take to make a decision, the more time you have to research whether their services are legitimate. This is why scammers will pressure you to make a hasty decision and hand over your payment information right away.

For example, they might say you can reduce your interest rates or monthly payments only for a limited time or that loan forgiveness programs are set to expire.

Check Out: Refinancing Student Loans With Bad Credit

Scam 6: Asking you to sign over power of attorney 

Companies might ask you to sign a third-party authorization form or a power of attorney.

If you do this, you're signing a written agreement authorizing them to talk to your federal loan servicer and make decisions on your behalf.

Be careful! If companies have these forms, they can change your student loan account information — meaning you won’t even realize they’re misusing your account.

A reputable company will never ask you to sign such a form.

What to do if you've been a victim of a student loan forgiveness scam

Student loan scams are unfortunately very common. If you needed help and handed over your money or personal information to a fraudulent company, here's what you should do next:

• Contact your loan servicer immediately. Call your servicer right away if you think your information has been compromised. Your servicer can help you revoke any third-party authorizations.
• File a report with the appropriate agencies. It's important to file a complaint with the FTC, CFPB, and your State Attorney General. When you report fraudulent activity to the FTC, it will give you a list of steps you can take to protect your identity, too.
• Monitor your credit report. It's a good idea to freeze your credit report with the three major credit bureaus: Equifax, Experian, and TransUnion. A credit freeze prevents scammers from opening accounts in your name. Be sure to keep an eye on your credit report to make sure nothing slips through the cracks.
• Change your passwords. Change your passwords for your FSA ID, student loan account, and bank or credit union accounts. Make sure to use strong passwords that will be difficult for scammers to guess. This way, they won't have access to your information.

How to get legitimate student loan forgiveness

If you can't afford your student loan payments and need help, you can find legitimate ways to reduce your payments or pursue loan forgiveness. Some potential options include:

• Signing up for an income-based repayment plan to reduce your payments
• Exploring forgiveness options with the help of your servicer
• Consolidating your federal student loans into a Direct Consolidation Loan to extend your repayment term up to 30 years
• Refinancing to possibly get a lower interest rate and reduce your overall costs or to extend your repayment term for a lower monthly payment
• Seeking student loan debt counseling through a trusted organization, such as the National Foundation for Credit Counseling

Remember: You can pursue most of these strategies on your own or — in the case of refinancing or counseling — with the help of legitimate companies or organizations. And you’ll never have to pay exorbitant fees for any of them.

Be sure to thoroughly research your options so you can make an informed decision on how to handle your student loans.

If you decide to refinance your student loan, remember to shop around and compare as many lenders as you can. This way, you can find a loan that fits your needs. Credible makes this easy — you can see your prequalified rates from multiple, reputable lenders in two minutes.

Just keep in mind that if you refinance federal student loans, you'll lose access to federal benefits and protections. This includes access to income-driven repayment plans and student loan forgiveness programs.