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How To Spot 6 Student Loan Forgiveness Scam Warning Signs

These six warning signs can help you avoid student loan forgiveness scams, including upfront fees and requests for sensitive information.

Kat Tretina Kat Tretina Edited by Jared Hughes Updated December 1, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Many people are dealing with education debt, so it’s no surprise that numerous student loan forgiveness scams are preying on borrowers in desperate need of student loan relief.

The Federal Trade Commission (FTC) has filed suit against seven of these scam companies — but more continue popping up each year.

It’s become even more important to stay vigilant, especially with the recent student loan forgiveness announcement from President Joe Biden.

If you’re hoping for student loan forgiveness, be wary of these six warning signs of student loan forgiveness scams:

  1. Promises immediate student loan relief
  2. Want you to pay money up front
  3. Ask you for your SSN or other sensitive information
  4. Claim to be affiliated with a government agency
  5. Use high-pressure sales tactics
  6. Want you to sign a form giving them power of attorney

6 warning signs of student loan scams

If you get an advertisement from a company promising to help you with your debt, be skeptical. There’s nothing a student loan debt relief company can do for you that you can’t do on your own.

Some companies simply charge you high fees for services you can do yourself, while others will steal your information.

For example: The Consumer Financial Protection Bureau (CFPB) filed a suit in January 2020 against 26 defendants involved in a student loan repayment scam that impacted over 8.5 million borrowers.

The defendants falsely claimed to lower interest rates and improve borrowers’ credit scores. The company also said the U.S. Department of Education would become the borrowers’ new loan servicer and charged fees before providing services.

1. Promises immediate student loan relief

A scammer might assure you 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, none provide immediate relief. You have to spend years (often five to 10) working in a particular field and making payments before you might qualify. And with the recently announced plan by President Biden, you’ll need to meet the income requirements to be eligible for forgiveness. The limit is $125,000 for single people and $250,000 for couples.

Another example is Public Service Loan Forgiveness (PSLF), which requires you to make 120 qualifying payments while working full-time at a not-for-profit organization or government agency before you can apply to have your loans forgiven.

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.

Or if you’re eligible for Teacher Loan Forgiveness, you can fill out the Teacher Loan Forgiveness Application and submit it to your loan servicer.

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.

You can use our calculator below to see how much you could save by refinancing your student loans.

Step 1. Enter your loan balance

? Enter the remaining amount of the loans you’d like to refinance $

Step 2. Enter current loan information

? Enter the average annual interest rate of the loans you’d like to refinance %
? Enter the monthly amount you currently pay on your loans (or enter remaining term) $
? Enter the amount of time left to repay your loan (or enter monthly payment) years

Step 3. Enter your new loan information to start calculating your savings

? Enter an estimated new interest rate. %
? Enter the monthly amount to pay on your new loan (or enter new loan term) $
? Enter the amount of time you have to repay your loan (or enter monthly payment) years
Lifetime Savings Increased Lifetime Cost $
New Monthly Payment $
Monthly Savings Increased Monthly Cost $

If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $.


Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates

Checking rates won’t affect your credit score.

Learn More: Student Loan Deferment vs. Forbearance

2. Want you to pay money up front

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. In some cases, 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 at all 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

3. Ask you 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.

Keep in mind: Legitimate agencies and loan servicers will never ask for your information over the phone or through email.

Learn More: How to Refinance Your Student Loans

4. Claim to be affiliated with a government agency

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 if it’s truly affiliated with the federal government.
  • Keep an eye out for spelling or grammar mistakes, as these can be an indication that the site is fake.
  • If a phone number is listed, plug it into a search engine to see if it belongs to a legitimate government office or to a scammer.

Learn More: Can I Refinance My Student Loans If I Didn’t Finish College?

5. Use high-pressure sales tactics

Criminals know that 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.

Tip: Always ask for time to do your research. If a company pressures you or demands that you give them your credit card information immediately, there’s a good chance the business is fraudulent.

Check Out: Refinancing Student Loans With Bad Credit

6. Want you to sign a form giving them power of attorney

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

If you do this, you’re signing a written agreement that authorizes 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.

Learn More: Avoid Being the Victim of a Student Debt Scam

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.
  • Contact your bank or credit card company. Next, notify your bank and credit card companies. They can place fraud alerts on your account to stop scammers from making transactions. You might also be able to get a refund for any fees you paid.
  • 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 student loans, 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.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutes
  • Won’t impact credit score – Checking rates on Credible won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

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How to find student loan counseling

Student loan counseling is a service that involves a comprehensive view of your financial situation, such as your student loan debt and any repayment options. A counselor helps you strategize and develop a payoff plan that’s suited to your budget and circumstances. It can be in person or over the phone.

You can contact these organizations for assistance in student loan counseling:

  • American Consumer Credit Counseling
  • The Institute of Student Loan Advisors

It’s important to do your research and vet the company or organization before officially reaching out.

Remember: President Biden officially extended the student loan payment pause due to litigation surrounding student loan forgiveness. Payments are scheduled to restart 60 days after June 30, 2023 or when litigation on federal student loan forgiveness is resolved; whichever comes first. This means your loans will accrue 0% interest and you won’t have to make any payments until at least Aug. 29, 2023.
About the author
Kat Tretina
Kat Tretina

Kat Tretina is a freelance writer who covers everything from student loans to personal loans to mortgages. Her work has appeared in publications like the Huffington Post, Money Magazine, MarketWatch, Business Insider, and more.

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