Student loan forgiveness scams: What to watch out for

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In a Nutshell

Legitimate student loan debt relief programs exist — but so do student loan forgiveness scams. If you need student loan relief, it’s important to learn how to spot a student loan scammer and what to do if you come across one.
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With outstanding federal student loan debt hitting an incredible $1.6 trillion in the first quarter of 2023, it’s no wonder people may be searching for debt relief.

For people currently paying off student loan balances, there are ways to get legitimate student loan relief, where you may be able to get your student loan payments lowered or have your debt forgiven. But if you’re looking into legitimate ways to get relief, you may come across some student forgiveness scams. So it’s a good idea to know how to recognize real relief options from predatory scammers.

We’ve researched the most common student loan scams to help you determine whether a relief program is legit. Keep reading to learn about some of the most common types of student loan forgiveness scams and red flags to watch out for.

How common are student loan forgiveness scams?

There are legitimate resources to help you get relief on your student loan debt. But the Consumer Financial Protection Bureau is warning people to be on the lookout for scammers, and the Federal Trade Commission has already started cracking down some of these fraudulent companies.    

You can learn more about other types of student loan debt relief.

5 red flags that can help you spot student loan forgiveness scams

Student loan forgiveness scams take all shapes and forms these days. Here are five red flags to watch out for if you aren’t sure whether a student loan forgiveness program is legit.

  • Asks for an upfront fee — Your student loan servicer offers free assistance, so if a student loan debt relief company asks you to pay upfront fees, it’s more than likely a scam. Debt relief companies that ask for cash upfront are also breaking the law, so be sure to avoid giving out your bank account information or credit card number over the phone.
  • Promises immediate loan forgiveness — Since debt relief companies can’t negotiate directly with your creditors, be on the lookout for offers to have your loan instantly forgiven or your debt canceled.
  • Wants to talk directly to your loan servicer — Scammers will often insist that you sign a power of attorney or third-party authorization in order to be able to talk to your loan servicer, make decisions or pay the loan servicer on your behalf. It’s almost never a good idea to let another company stand between you and your loan servicer for student debt relief.
  • Requests your personal information — If a debt relief company asks for your Federal Student Aid ID or password, it’s most likely a scam. The Department of Education or your loan servicer will never ask you for this type of information, so be wary of any company that does.
  • Claims to be affiliated with the federal government — Student loan scams often try to look official by using language, logos and even websites that look similar to legitimate government resources. Pay extra attention to companies with “national” or “federal” in their name or any other details that make them seem as if they’re affiliated with a government agency.

How to report a student loan forgiveness scam

When comparing different student loan forgiveness options, it might not always be easy to spot student loan debt relief scams. But if you’re unsure whether a company is legit, you can always contact the U.S. Department of Education to find out if the company is on its list of trusted student loan service partners.

If you think you’ve been contacted by a scammer, the CFPB encourages you to report the company to the Federal Trade Commission’s Complaint Assistant.

Next steps: Finding legitimate student loan relief resources

If you need assistance with your student loans, help may be available. You may even be able to get it for free if you look in the right places. Start by talking to your loan servicer to see what options may be available, such as loan deferment and forbearance.    

If you’re not sure who your loan servicer is, you can find out by logging into your Federal Student Aid account or calling the Federal Student Aid Information Center at 1-800-433-3243. If you have a private student loan, contact your lender to see what relief options are available.

About the author: Kevin Payne is a freelance writer and the family travel and budget expert behind He writes regularly for Club Thrifty, FinanceBuzz, Millennial Money, PT Money and Student Loan Planner. Kevin … Read more.