Scammers exploit student loan confusion with fake forgiveness offers, debt relief programs, and consolidation scams.
Student loan scammers call claiming to be from the Department of Education or a "federal student loan forgiveness center." They offer immediate loan forgiveness, reduced payments, or interest rate drops — but require an upfront "processing fee" ranging from $200 to $1,500. They may also request your FSA ID (Federal Student Aid login), which gives them access to your entire loan portfolio.
These scams surge after major policy announcements about student loan forgiveness. The Biden-Harris SAVE plan announcements in 2023-2024 triggered a 250% increase in student loan scam calls, as scammers exploited widespread confusion about eligibility.
Any call about student loan forgiveness that requires upfront fees is a scam — federal loan programs never charge application or processing fees. Other red flags: pressure to act immediately, requests for your FSA ID password, promises to eliminate all your debt regardless of loan type or employment, and claims of a "limited-time" government program.
Legitimate servicers will never ask for your password, demand payment to "process" federal programs, or cold-call you with forgiveness offers. Everything related to federal student loan forgiveness can be done for free through studentaid.gov.
The SAVE Plan (Saving on a Valuable Education) caps payments at 5-10% of discretionary income with forgiveness after 20-25 years. Public Service Loan Forgiveness (PSLF) forgives remaining balances after 120 qualifying payments while working for a qualifying employer. Income-Driven Repayment (IDR) plans offer reduced monthly payments based on income.
All of these programs are free to apply for through studentaid.gov or by calling your loan servicer directly. There is never a fee to enroll in a federal repayment plan or apply for forgiveness.
Never share your FSA ID or password with anyone claiming to help with your loans. Only access loan information through studentaid.gov or your official loan servicer. If you need help navigating repayment options, contact your servicer directly or seek free assistance from a nonprofit like the National Foundation for Credit Counseling (nfcc.org).
Be wary of companies that contact you unsolicited claiming to be student loan specialists. Legitimate student loan counseling is available for free — you should never pay a company to do what you can do yourself online.
Report to: the FTC at reportfraud.ftc.gov, the Department of Education's Office of Inspector General at oig.ed.gov, and the Consumer Financial Protection Bureau at consumerfinance.gov/complaint. If you shared your FSA ID, change your password immediately at studentaid.gov.
If you paid a scam company, dispute the charge with your credit card company or bank. File a complaint with your state attorney general's consumer protection office. Document everything — dates, amounts, company names, and phone numbers.
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