How to avoid student loan forgiveness scams

Student loan forgiveness scams come in all shapes and sizes. Learn about 11 signs of scams to look out for so you’re not caught off guard.  (iStock)

Getting a call from someone claiming to be a lender or loan servicer offering to pay off your student loans may sound like a dream come true. But don’t take them up on the offer. 

Student loan forgiveness scams like these prey on people desperate for relief from student loan payments, and they’ve increased since the start of the pandemic. Here are some tips to help you avoid student loan forgiveness scams.

Refinancing your student loans could help you get a lower monthly payment and a lower interest rate. With Credible, you can compare student loan refinance rates quickly and easily.

  • Types of student loan forgiveness scams
  • 11 signs of student loan scams to look out for
  • What to do if you’re a victim of a student loan forgiveness scam
  • Companies the Department of Education works with
  • Relief available to student loan borrowers
  • Is it a good idea to refinance student loans?

Types of student loan forgiveness scams

Student debt in the U.S. hit $1.75 trillion in the third quarter of 2021, according to Federal Reserve data. With so many Americans weighed down by student loans, it’s no wonder many are looking for relief. 

Scammers know you’re frustrated and will try to charge you a fee in exchange for a promise of loan forgiveness, or push you for money for loan consolidation. These scam artists typically persuade you to send money to them instead of your loan servicer — this is a huge red flag.

11 signs of student loan scams to look out for

1. You’re charged a fee for loan forgiveness or consolidation. Participation in student loan forgiveness programs is free, and it’s illegal for debt relief service providers to ask for money — upfront or monthly — to settle or lower a loan before the service is carried out. Some scammers present offers to lower your monthly payments by consolidating your loans — but they charge a high fee to do so. Paying a fee to consolidate your student loans is rare, so be wary. 

2. They’re not a Department of Education (ED) provider. A number of debt service providers work with the ED. But if you’re uncertain whether a company is legitimate or tied to the ED, reach out to your loan servicer before offering any information — personal or financial. 

3. You feel pressured to sign up. It’s not uncommon for scammers to push for an immediate response to an offer. If a caller presses you for information that you hesitate to give out, ask for their number so you can do your research first before calling back.

4. They promise immediate loan payoff. It can take 10 to 20 years to pay off student loans. A company that says it can immediately discharge your loans is misleading you and likely a scammer. 

5. The company asks for personal information. Legitimate companies never ask for personal information over the phone, by email, or by text. If a company asks you to supply information like your Federal Student Aid ID number or PIN, or your Social Security number, sign in to your account or call your loan provider first.  

6. They won’t provide necessary information. Legitimate debt collectors are required by law to share general information with you, like the amount you owe and the name of the lender or service provider. Some scammers obtain credit reports illegally, so they won’t give you this information upfront.

7. You don’t recognize the debt. A caller may provide information about a debt you’re not even sure you owe. If that‘s the case, tell the caller you’ll send a written request to the company asking for an explanation or disputing the claim. 

8. The email is from a personal email account. If you receive an email, right-click on the sender's email address. If the company is legit, it will have a company email address that you’ll likely recognize, not a personal email. Even so, never provide personal information via email. Call instead. 

9. They ask you to do a money transfer. Money transfers and prepaid credit cards aren’t traceable, so scammers often prefer these methods of payment. Consider it a red flag if you’re asked to use a money transfer.

10. They threaten to contact your employer. Debt collectors can’t contact anyone other than you or your spouse about a debt. A legitimate collector can call others to find out your phone number or address, but they can’t tell anyone you have debt.

11. They call late in the evening or very early in the morning. Debt collectors aren’t allowed to call after 9 p.m. or before 8 a.m. If a supposed debt collector calls you during these times, it may be a scammer. 

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What to do if you’re a victim of a student loan forgiveness scam

If you think you’ve been scammed, don’t panic, but act fast and follow these steps.

Report the incident 

If you think you’ve been the target of a scam, file a report with your state attorney general’s office or the Federal Trade Commission. You might also consider notifying the Consumer Financial Protection Bureau about the possible scam. This helps others avoid becoming a victim. 

Contact your student loan servicer immediately

Log in to your Federal Student Aid account as soon as possible (if you have federal student loans), or your private loan servicer’s website. Then, submit a complaint. Follow the next steps you’re given to find out if someone has accessed your information.  

Call your financial institution 

Call your bank, credit union, or online lender right away to put a hold on your account or flag it for unusual account activity. 

Pull your credit reports

Scammers may be interested in more than just your money. They may want to commit identity theft and steal all your personal information. Pull your credit reports at, check for any unrecognized activity, and place a fraud alert on your file. Because of the COVID-19 pandemic, the big three credit-reporting agencies — Equifax, Experian, and TransUnion — offer free weekly credit reports until April 20, 2022.

Companies the Department of Education works with

The ED works with various lenders, servicers, and private collection agencies to handle its workload. But it’s important to know which ones are legitimate. The ED maintains a list of its loan servicers as well as its private collection agencies. If the company that contacts you isn't on one of these lists, it’s likely a scammer. 

For federal loans not owned by the ED, here’s who you should contact:

  • FFEL Program loans — Contact your servicer. If you’re not sure who your servicer is, look at your most recent billing statement.
  • Federal Perkins Loans — Contact the school where you received your loans. Keep in mind that your school may be the servicer for your loan.
  • HEAL Program loans — Contact your loan servicer with the information it provided you for help with account-related questions. Contact details will be on your most recent billing statement.

Relief available to student loan borrowers

Legitimate relief is available to both federal and private student loan borrowers. 

How to get federal student loan relief 

Federal student loan relief has been extended through Jan. 31, 2022. A few ways to get relief include:

  • Forbearance — The federal government has extended the suspension of student loan payments through at least Jan. 31, 2022. You can still make full or partial payments on your student loans or make interest-only payments during this time.
  • 0% interest — All U.S. Department of Education student loans have zero interest through at least Jan. 31, 2022.
  • Refunds — Payments made from March 13, 2020, through Jan. 31, 2022, can be refunded. Reach out to your loan servicer for details.
  • PSLF credit — If you’re a Direct Loan borrower who works full-time for a qualifying employer during the payment suspension period, you can receive credit toward PSLF (as if you were making on-time payments). If you’re on an income-driven repayment plan (IDR), your suspended payments will count toward IDR forgiveness.

How to get private student loan relief

Many private student loan lenders, banks, and other financial institutions offer forbearance to borrowers due to hardship caused by COVID-19. But keep in mind that during forbearance, interest still accrues, which will be due once forbearance ends. 

Is it a good idea to refinance student loans?

Refinancing your private student loans can lower your interest rate and monthly payments. If money is tight, you may want to consider this option. You can use an online student loan refinancing calculator to get a sense of what your new monthly payments could be. Keep in mind that to lower your monthly payment, you may need to refinance into a longer term, which will increase the total amount of interest you pay over the life of the loan.

Although lower monthly payments and interest rates are great advantages, think carefully before refinancing federal student loans with a private lender. When you refinance into a private loan, you can no longer take advantage of the suspension of payments or PSLF.

Credible makes it easy to compare student loan refinance rates from various lenders.

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