Borrowers with federal student loans in the United States often see adverts and hear calls promising quick debt relief or forgiveness. The Federal Trade Commission (FTC) and the US Department of Education’s Federal Student Aid office warn that some of these offers are scams. This guide summarises their advice. It covers US federal and private student loans only; the separate UK scam involving messages that appear to come from the Student Loans Company is covered in the site’s guide to student finance scams in the UK. The information is general, not legal or financial advice.
The core warning: free help exists
The FTC says there is nothing a student loan debt relief company can do for a borrower that the borrower cannot do for free, and that some of the companies promising relief are scams. It states that it is illegal for companies to charge before they help. Federal Student Aid makes the same point: a loan servicer works on the government’s behalf to collect payments, answer questions, help choose a repayment plan and help switch to a new plan at no cost, and the government’s forgiveness programmes are always free. It lists legitimate programmes as the Federal Direct Consolidation Loan Program, Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness.
Red flags listed by the FTC
- An up-front fee. The FTC says never to pay one. A borrower who pays up front to reduce or get rid of student debt might get no help and no refund.
- Quick forgiveness. The FTC says scammers may claim they can get rid of loans before knowing the borrower’s situation, promise a forgiveness programme most people will not qualify for, or say they can wipe out loans by disputing them. It says they cannot do either.
- Official-looking seals. Scammers use official-looking names, seals and logos and promise special access to repayment plans, new consolidations or forgiveness programmes. The FTC says this is a lie and that federal borrowers should deal with StudentAid.gov directly.
- Pressure to act fast. Scammers say a borrower will miss out on a plan, consolidation or forgiveness unless they sign up right away.
- Requests for the FSA ID. The FTC says never to share it with anyone, because dishonest people could use it to get into the account and steal an identity.
Red flags listed by Federal Student Aid
Federal Student Aid adds detail on how scams look in practice:
- Aggressive advertising language. Examples it gives include “Act immediately to qualify for student loan forgiveness before the program is discontinued” and “Enrollments are first come, first served”. It says language like this will not come from the Department of Education or its partners, although the Department may sometimes highlight temporary programmes.
- Too-good-to-be-true promises. Scammers frequently request an up-front or monthly fee while promising immediate and total cancellation. Federal Student Aid says most government forgiveness programmes require years of qualifying payments or employment in certain fields.
- Requests for login details. The Department and its partners, including loan servicers, will never ask for a StudentAid.gov username and password.
- Unofficial addresses or numbers. Scammers may use official-looking names, seals and logos. Federal Student Aid says its emails come only from [email protected], [email protected] and [email protected], and its texts only from 227722 or 51592.
Where legitimate help comes from
The FTC says borrowers with federal loans should start at StudentAid.gov/repay, and those with private loans should contact their lender directly. Federal Student Aid says a first step for someone having difficulty paying is to contact the loan servicer, and that the Department and its affiliated servicers can help lower a monthly payment, consolidate federal loans, switch repayment plans or check eligibility for forgiveness.
If a borrower has paid or shared details
Federal Student Aid recommends acting fast on one or more of these steps:
- Contact the federal loan servicer to check no unwanted actions were taken, or to revoke any authorisation agreement on file.
- Contact the bank or credit card company to stop payments to the company.
- Submit a complaint to Federal Student Aid, to the FTC and to the Consumer Financial Protection Bureau.
For a StudentAid.gov account scam, or if a username and password were shared with a suspected scammer, it advises logging in to change the password as soon as possible, checking that the contact email, address and phone number are still correct, and filing a complaint so the account can be monitored for suspicious activity. The FTC says to report student loan scams to ReportFraud.ftc.gov and to the state attorney general. The site’s guide to what to do if you paid a scammer in the United States covers the payment-method steps.
Frequently asked questions
Does the Department of Education call borrowers to offer forgiveness?
Federal Student Aid says it may reach out about temporary programmes, but aggressive advertising language will not come from it or its partners, and it will never ask for a StudentAid.gov password.
Is every unaffiliated debt relief company a scam?
Federal Student Aid says using one does not necessarily mean a borrower will be scammed, but that seeking out unverified services is a common path to a scam.
The bottom line
The FTC and Federal Student Aid agree that federal loan help and forgiveness are free, that up-front fees, guaranteed cancellation, urgency and requests for an FSA ID or password are red flags, and that borrowers should go to StudentAid.gov or their loan servicer directly. A borrower who has paid or shared details should contact the servicer and bank quickly and report the scam.