Student Loan Forgiveness Scams
Americans lost $12.5 billion to fraud in 2024, according to the FTC.
Quick Answer
Student loan forgiveness scams lure borrowers with false promises of debt cancellation, often impersonating government agencies and stealing millions; in one 2024 case, the FTC stopped a scheme that bilked over $20.3 million from consumers.
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How It Works
1
Scammers contact you unexpectedly through calls, texts, emails, or social media ads. They often impersonate government agencies like the Department of Education or your loan servicer, using official-looking logos and language to appear legitimate.
2
They promise special access to immediate or complete loan forgiveness through programs that sound official, like "Biden Loan Forgiveness" or referencing the CARES Act. They create a sense of urgency, pressuring you to act quickly before the supposed program expires.
3
The scammer demands an illegal upfront fee to process your application or consolidate your loans. They may also ask for sensitive personal information, such as your Social Security number, bank account details, or your Federal Student Aid (FSA) ID and password.
4
After you pay, the scammers either disappear or provide no service. In some cases, they may take over your loan account, pocket your monthly payments, and leave you in a worse financial situation with more debt and a damaged credit score.
Red Flags
- You are asked to pay an upfront fee for help with student loan forgiveness, which is illegal.
- The company promises immediate and total loan forgiveness, which is not how legitimate federal programs work.
- You are pressured to "act now" or risk missing a limited-time offer.
- You are asked to provide your Federal Student Aid (FSA) ID, password, or Social Security number via phone or email.
- The communication contains spelling or grammatical errors and uses unofficial-looking branding.
- The company advertises on social media or contacts you unsolicitedly.
- They claim to be affiliated with the Department of Education or your loan servicer, but the communication seems suspicious.
What to Do If Targeted
- Never pay an upfront fee for help with your student loans. Legitimate assistance is available for free from the Department of Education and your loan servicer.
- Do not share your Federal Student Aid (FSA) ID, password, Social Security number, or bank account information with anyone who contacts you unexpectedly.
- Go directly to StudentAid.gov for reliable information on federal loan repayment plans, consolidation, and forgiveness programs.
- If you receive a suspicious call or message, hang up or delete it. Do not reply or click on any links.
- Contact your loan servicer directly using the contact information on their official website to verify any offers you receive.
- If you have shared personal information, visit IdentityTheft.gov to create a recovery plan.
How to Report It
- FTC — File a fraud report with the Federal Trade Commission if you encounter a student loan scam.
- FBI IC3 — Report online scams and internet crime to the FBI's Internet Crime Complaint Center.
- State Attorney General — Contact your state's attorney general to report local scams and fraudulent business practices.
- FCC — File a complaint about phone scams, robocalls, or unwanted calls with the Federal Communications Commission.
- AARP Fraud Helpline — Call 877-908-3360 for free support from trained fraud specialists. Available to anyone, not just AARP members.
Key Statistics
- In 2023, the FBI's Internet Crime Complaint Center (IC3) received 880,418 complaints with potential losses exceeding $12.5 billion from all types of online scams. — FBI IC3 2023 Report
- In June 2024, the FTC stopped a student loan debt relief scheme that took more than $20.3 million from consumers by pretending to be affiliated with the Department of Education. — FTC 2024
- In March 2024, the FTC sent over $4.1 million in refunds to 27,584 consumers who were tricked by a student loan debt relief scheme that operated under names like Mission Hills Federal and Federal Direct Group. — FTC 2024
- One debt relief operation shut down by the FTC in 2020 siphoned more than $23 million from borrowers by collecting their monthly payments but keeping the money instead of paying down their debt. — AARP / FTC 2022
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Frequently Asked Questions
No, you never have to pay for help with federal student aid. The U.S. Department of Education and your official loan servicer will not charge you for information or assistance with repayment plans or forgiveness programs. Anyone who demands an upfront fee for these services is a scammer.
Legitimate information about federal student loan forgiveness comes directly from the U.S. Department of Education (StudentAid.gov) or your loan servicer. Scammers often promise immediate results, charge illegal fees, and pressure you to act fast. Federal programs have specific eligibility requirements and take time to process.
If you provided your FSA ID, change your password immediately at StudentAid.gov. If you shared bank account or credit card information, contact your financial institution to stop payments and monitor for fraud. You should also file a report with the FTC at reportfraud.ftc.gov and consider placing a fraud alert on your credit reports.
Scammers increase their activity during times of confusion, such as when new government relief programs are announced or when payment pauses end. They use robocalls and mass texts to reach millions of borrowers, hoping to find people who are anxious about their debt and willing to pay for false promises of help.
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