
Student debt forgiveness scams are on the rise, and it's essential to know how to avoid them. Many scammers are preying on unsuspecting students and graduates with false promises of debt relief.
Be wary of companies that claim to have a "special relationship" with the US Department of Education or the government. This is a common tactic used by scammers to gain your trust.
Legitimate debt forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness, are administered directly by the government or through non-profit organizations. They usually require you to apply through their official websites.
Don't fall for promises of "guaranteed" debt forgiveness or those that require you to pay upfront fees. These are clear red flags that indicate a scam.
Expand your knowledge: Government Debt Forgiveness for Seniors
Understanding Student Debt Forgiveness Scams
Student loan forgiveness scams are a type of scam that targets borrowers who are struggling to pay back their student loans. These scams often involve cold calls or emails from individuals or companies claiming to offer forgiveness or relief from student loan debt.
Intriguing read: Debt Reduction Scams
Be cautious of unsolicited contact, as scammers often use this tactic to get in touch with potential victims. If you receive a call or email from someone claiming to offer student loan forgiveness, do not share your personal information or pay any fees.
Scammers may promise quick and easy solutions to your student loan problems, but these promises are often too good to be true. In reality, legitimate student loan forgiveness programs take years to complete and are only available through the Department of Education.
Some common red flags of student loan forgiveness scams include promises of immediate debt forgiveness, requests for personal information, and demands for upfront payments. Be wary of companies that use official-sounding names or claim to be affiliated with the federal government.
Here are some ways to identify a student loan forgiveness scam:
- Cold calls about loan forgiveness
- Urgent, time-limited offers
- Promises of immediate, complete loan forgiveness
- Demands for upfront payments
- Requests to share your FSA credentials
- Pressure to sign a power of attorney
- The caller is not an ED-affiliated company
- The caller is on FTC's list of banned companies
- Unsolicited encouragement to block your loan servicer
- The offer doesn’t apply to you
If you think you've fallen prey to a student loan forgiveness scam, take action quickly to protect yourself. Change your FSA logins, consult with your student loan servicer, notify your bank to cancel scheduled payments, and report fraud with the FTC and CFPB.
Protect Yourself
Be cautious of unsolicited contact regarding student loan forgiveness. Unsolicited offers for student loan forgiveness are a red flag.
Don't share your Federal Student Aid log-in or PIN with anyone. Requests for personal information, like your FSA log-in or PIN, are a common tactic used by scammers.
Legitimate student loan servicers will never demand upfront payments. Any company demanding payment upfront is likely a scam.
Work directly with your loan servicer or the federal government to change your repayment terms. Disruption of communication is a sign of a scam.
Verify the legitimacy of any company contacting you about student loan services. Check for email addresses or websites that do not end in ".gov" or contain typos.
If you're unsure about a company's legitimacy, check with the Better Business Bureau (BBB) for complaints. Checking the BBB can help you verify if a company is legitimate.
To report suspected scams, contact your lender, FSA, and/or the FTC. Report suspected scams to the FTC and your lender to help prevent others from falling victim.
Related reading: Spot Student Loan Scam
If you've given away your FSA ID password, change it right away. Change your FSA log-in credentials immediately if you've shared them with anyone.
To protect yourself from student loan scammers, don't share your FSA ID with anyone. Protect your FSA ID like you would your banking information.
To stay vigilant against student debt forgiveness scams, stay up-to-date on the latest information on the studentaid.gov website.
Identifying Suspicious Communications
Be cautious of unsolicited contact, as scammers often reach out with offers of student loan forgiveness. Never share your Federal Student Aid log-in or PIN with anyone, even if they claim to be from a legitimate company.
Scammers may use official-sounding names, such as "federal" or "national", to appear legitimate. However, be suspicious if a company demands payment upfront or requires you to sign a contract or payment authorization.
If you receive a suspicious call or text, hang up and call your student loan service provider at their publicly listed number to verify the legitimacy of the call. Block and report the phone number to the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), or your state's attorney general.
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Here are some red flags to watch out for in suspicious communications:
- Cold calls about loan forgiveness
- Urgent, time-limited offers
- Promises of immediate, complete loan forgiveness
- Demands for upfront payments
- Requests to share your FSA credentials
- Pressure to sign a power of attorney
- The caller is not an ED-affiliated company
- The caller is on FTC’s list of banned companies
- Unsolicited encouragement to block your loan servicer
- The offer doesn’t apply to you
Laurel Road and GradFin Communications
Laurel Road and GradFin Communications are not to be trusted with student loan forgiveness or debt relief. They work with borrowers to provide an expert analysis of their student loans and design a student loan management plan.
Laurel Road and GradFin teams of student loan specialists offer one-on-one guidance to help borrowers understand their student loan options. This guidance is meant to help borrowers save time and stress less about student loan debt.
Borrowers should be wary of organizations that claim to provide student loan forgiveness or debt relief. Laurel Road and GradFin explicitly state that they do not provide these services.
Laurel Road and GradFin offer annual subscription membership services for continued guidance and account auditing. These services are called PSLF Membership and IDR Membership programs.
Borrowers should be cautious of organizations that charge for services that claim to provide student loan forgiveness or debt relief. Laurel Road and GradFin charge for their PSLF Membership and IDR Membership programs.
Discover more: Student Loan Debt Relief Tax Credit
Urgent, Time-Limited Offers
Urgent, time-limited offers are a common tactic used by scammers to get you to act quickly. Scammers use words like "as soon as possible" and "imperative" to rush you into signing up.
They may reference federal student loan payment suspensions and offer you a limited-time "opportunity." For example, a scam phone call from Guidance Alum promised to consolidate Kathleen Young's loans and forgive them after 60 payments.
However, at least 120 qualified payments are required for this federal program. Young was misguided into sharing her bank account information and SSN before she discovered that Guidance Alum wasn’t associated with the ED at all.
To avoid this scam, be skeptical and research the loan servicer offering you student loan forgiveness. Look up the loan servicer on Better Business Bureau (BBB), where Guidance Alum already has numerous complaints posted about them.
Close any bank accounts set up for recurring payments with the fraudulent loan servicer, and consider signing up for an SSN monitoring service like Aura to monitor how your SSN is being used.
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Here are some red flags to watch out for:
- Scammers say they're part of the "Biden loan forgiveness" or "CARES Act loan forgiveness" – neither of which are real programs.
- Scammers use urgency tactics to get you to act quickly.
- Scammers reference federal student loan payment suspensions and offer limited-time "opportunities."
Some things to remember:
- Familiarize yourself with the types of assistance your loan servicer can offer you for free.
- Research payment options for federal student loans using the ED's free Loan Simulator.
Red Flags and Warning Signs
Be cautious of unsolicited contact, as scammers often reach out with unrequested offers for student loan forgiveness. This can be a red flag, as legitimate student loan servicers typically don't initiate contact with borrowers.
Scammers may promise quick relief, but be wary of immediate debt forgiveness. Legitimate programs and services usually involve a process that takes time.
Requests for personal information, such as your Federal Student Aid log-in or PIN, are a major red flag. Never share this information with anyone.
Official-sounding names, such as "federal" or "national", can be misleading. Scammers often use these terms to sound legitimate.
Upfront payments are a clear indication of a scam. Any company demanding payment before providing services is likely not trustworthy.
Urgency tactics, such as pressure to act quickly to avoid losing opportunities, are a common scamming technique. Take your time and research the company thoroughly.
Here are some warning signs to watch out for:
- Unsolicited contact
- Promises of quick relief
- Requests for personal information
- Official-sounding names
- Upfront payments
- Urgency tactics
By being aware of these red flags, you can protect yourself from falling victim to a student debt forgiveness scam.
Dealing with Scammers
If you've fallen prey to a student loan forgiveness scam, it's essential to act quickly to minimize the damage. Change your FSA password immediately to prevent further unauthorized access.
Scammers often try to get their hands on sensitive information, so be cautious about sharing your personal details. Don't give cold callers your FSA ID, bank account number, or Social Security number.
If you've already given away your information, contact your lender and revoke any third-party authorization or power of attorney agreement you might have previously given. This will help prevent scammers from making changes to your accounts.
To protect yourself, file a complaint with the Federal Trade Commission (FTC) and report the incident. This will help the FTC take action against the scammers and prevent others from falling victim to the same scam.
Here are some steps you can take to prevent further damage:
- Change your FSA password and keep it confidential.
- Contact your bank and ask to discontinue any payments to debt relief programs.
- Monitor your accounts regularly for any suspicious activity.
- Consider signing up for identity theft protection to monitor your personal information and finances.
Remember, it's always better to be safe than sorry. If you're unsure about the legitimacy of a student loan forgiveness program or if you've fallen prey to a scam, take action immediately to protect yourself.
File Complaints with Authorities
If you've fallen prey to a student debt forgiveness scam, it's essential to file complaints with the relevant authorities to prevent further damage. File a complaint with the Federal Trade Commission (FTC) to report the scam.
To report the scam, you can submit a complaint online at reportfraud.ftc.gov or file a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov/complaint. Contact your state officials, such as the Attorney General in your state, and your state student loan ombudsman if you have one, to report the scam.
Here are the authorities you can contact to file a complaint:
- Federal Trade Commission (FTC)
- Consumer Financial Protection Bureau (CFPB)
- Your state Attorney General
- Your state student loan ombudsman
By filing a complaint with these authorities, you can help prevent others from becoming victims of the same scam and ensure that the perpetrators are held accountable.
Options and Next Steps
If you're feeling overwhelmed by student debt, know that there are legitimate forgiveness options available. Public Service Loan Forgiveness and Income-Driven Repayment Plans are two examples of programs that can help.
To qualify for these programs, you'll need to meet certain requirements, but rest assured that they don't come with any fees. You can find more information on these programs by visiting the Department of Education's website.
If you're experiencing total and permanent disability or your school closed while you were enrolled, you may be eligible to have your loans discharged. Some borrowers with disabilities have also had their student debt cancelled.
Immediate, Complete
If you receive a phone call or letter offering you immediate loan forgiveness for a fee, it's likely a scam. There are ways to have your federally-held loans forgiven, but you can only access them through one of nine ED-approved loan servicers.
These services are free, so be wary of any company charging you for services related to your federal student loan. You can identify your loan servicer by checking your FSA account dashboard or by calling the FSA Information Center (FSAIC) at 1-800-433-3243.

Most government forgiveness programs require a minimum number of qualifying payments before relief kicks in. Contact your servicer directly to see if you qualify for an income-driven repayment plan. Understand that debt relief companies cannot negotiate with federal loan servicers to lower your payment levels.
Private loan borrowers beware: these loans do not offer options for cancellation or forgiveness like federal loans do. Scammers will try to convince you otherwise, so be cautious of any company promising immediate loan forgiveness for a fee.
Explore further: How to Calculate Debt to Income Ratio with Student Loans
What Are Options?
There are legitimate forgiveness options available for federal student loans. You can explore Public Service Loan Forgiveness, which doesn't charge any fees to apply or enroll.
Income-Driven Repayment Plans are also an option, which can help with repayment. These plans are designed to accommodate your income level.
You may be eligible to have your loans discharged in the event of total and permanent disability. This is a valid reason for loan forgiveness.
If your school closes while you're enrolled, you may also be eligible for loan discharge. This is a rare but possible scenario.
The Department of Education has cancelled student debt for some defrauded borrowers and for some borrowers with disabilities. This is a specific instance of loan forgiveness.
For another approach, see: Debt Forgiveness Income
How Legislative Efforts Impact
Legislative efforts can be a double-edged sword when it comes to student loan scams. Scammers stay in tune with recent events, so it's essential to keep an eye out for scams exploiting legislative efforts like the Biden-Harris administration's Student Debt Relief Plan.
The plan, announced on August 24th, 2022, offered up to $10,000 in debt relief for eligible borrowers, with repayments to resume 60 days after the issue is resolved, with June 30th, 2023 as the deadline. The application for debt relief was an online-only process that didn't require uploading any files or attachments.
The Federal Trade Commission (FTC) has received almost 49,000 student loan-related complaints since the beginning of the year, with about two-thirds relating to student loan debt relief and scam calls. This uptick in student loan scam calls is a clear indicator of the opportunistic nature of scammers.
Scammers prey on borrowers who may be financially stressed and dealing with confusing repayment programs, making fake offers that won't deliver on their promises. They charge upfront fees or monthly prices for phony debt relief solutions, and gain access to your accounts, siphoning off payments meant for your loan.
Recommended read: Student Debt Forgiveness Plan Legal Challenge
Frequently Asked Questions
Is there really a student loan forgiveness program?
Yes, there is a student loan forgiveness program in the US, offering relief through programs like Public Service Loan Forgiveness and qualified repayment plans. Learn more about eligibility and application requirements to see if you qualify for forgiveness.
Is debt forgiveness legit?
Debt forgiveness is not always legit, as some companies promise unrealistic outcomes and charge upfront fees. Be cautious and do your research before seeking debt relief to avoid falling victim to scams
Sources
- https://dfpi.ca.gov/news/insights/dont-fall-victim-to-student-loan-debt-relief-scams-2/
- https://www.robokiller.com/scam-call-alerts/student-loan
- https://www.aura.com/learn/student-loan-forgiveness-scams
- https://www.laurelroad.com/student-loans/student-loan-forgiveness-scams/
- https://www.businessinsider.com/personal-finance/student-loans/how-to-avoid-student-loan-forgiveness-scams
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