Protect Yourself: 15 Common Student Loan Scams & How to Avoid Them

With millions of Americans set to start repaying their student loans after a three-year pause during the pandemic, some bad actors are taking advantage of a confusing time for many. However, borrowers can take steps to ensure that they are not falling into scammers' traps.

To help you stay on track while you pay off your debt, here are 15 sneaky student loan scams you may encounter and how to avoid them.

Fake loan servicer scam

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During the pandemic, some loan servicers stopped transferring their student loans to a new servicer, so borrowers may be sending payments to a new company.

This is confusing and allows fraudsters to pose as servicers. Before making any payment, it's important to verify who your loans are serviced by, which you can do by logging into StudentAid.gov or calling the Federal Student Aid Information Center.

Companies charging fees for free forms

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Some scammers may offer to help borrowers fill out forms for income-based repayment plans or forbearance or deferment applications and then charge a fee. But you don't have to pay to fill out a form.

You can request to have your monthly payment lowered for free by using the official federal student aid website.

Scammers may claim to offer expert services for a fee, but any changes you need to make to your monthly payment, including applying for additional deferment or forbearance, can be done on the official government website.

Claims that your loans can be canceled, reduced, etc.

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Any company that promises to get your student loans canceled or seriously reduced if you pay some fee up front is likely a scam.

There are situations when loans can be forgiven after a set amount of time or number of payments, but any third party claiming they can arrange this for you is likely just trying to get your up-front payment.

Borrowers can check the official student aid website to determine if they are eligible for forgiveness.

Forgiveness offers that seem too good to be true

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Since the CARES Act, which paused student loan payments for borrowers amid the COVID-19 pandemic, expired in September 2023, many scams promising forgiveness have popped up.

The U.S. Department of Education has warned that scammers may try to appear legitimate by claiming to be affiliated with the Department of Education and may even include the borrower's loan balance when they contact them.

Claims of loan forgiveness or consolidation that seem too good to be true probably are.

Identity theft tactics

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Bad actors may also use forgiveness schemes, like offering to reduce or consolidate loans, to access a borrower's identifying information.

If these scammers get access to your name, Social Security number, and bank account information, that can lead to a whole host of problems.

Borrowers should make sure they are only entering information on the official federal student aid website.

'Advanced fee' scams

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Any company asking for any sort of advanced fee — whether it is a fee for helping you consolidate your loans or one that will allegedly lead to some form of forgiveness down the line — should raise a red flag.

You can look into consolidating your loans for free on the federal website and don't need to pay any third-party company.

Calls, emails, texts, and mail scams

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When scammers get your contact information, they may try to contact you in many different ways, bombarding potential victims until they get a response.

Scammers may email, call, and leave voicemails, text, or even send mail to your home address.

While there are relief and forgiveness services available in certain situations, borrowers need to seek these out themselves on the official government website.

Tricky law firm scams

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Let's face it: Legal language is complicated and very confusing to the large majority of Americans. Because of this, documents from law firms alleging that they can help borrowers settle their student debt, likely for some cash up front, may not raise the red flags they should.

If some firm reaches out to you, you should probably ignore it. Any changes you need to make to your payment plan can be done through your servicer directly.

Scammers offering urgent, 'expiring' offers

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Another clue that illegitimate loan servicing companies are contacting you is language that suggests that an offer for forgiveness or consolidation is urgent.

According to the Department of Education, these companies may cite changes to the law or discontinuing programs to make borrowers think signing up for their services (and paying) needs to be done immediately.

Offering to help change repayment plan

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There are many different repayment plans for student loans, including standard plans where loans are paid over 10 years, income-driven plans, graduated plans, and others.

Borrowers do not need the help of an outside company to change their plan, despite what some scammers may claim. This can be done by contacting your servicer directly as well.

Offering to help delay payment

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There are certain situations in which borrowers can qualify for deferment or forbearance of their loans. If you're dealing with financial hardship such as unemployment or inability to work, deferment or forbearance plans let you temporarily suspend payments.

Scammers may offer to help borrowers get access to these deferment options, but again, this is something you can do yourself by visiting the federal student aid page.

Scammers charging for FAFSA help

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According to the Department of Education, there are also many scams where companies offer students help filling out FAFSA forms for an up-front fee. But FAFSA stands for Free Application for Federal Student Aid.

This is another situation where help is available to borrowers for free. Students can get help from their school's financial aid department or FAFSA's online help page.

Claims debts can be removed from credit report

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Another claim scammers make is that they can help borrowers remove debts owed from their credit reports.

You have to pay off debts to see them removed from your credit report, and even then, it will be noted on your credit report that you have paid this debt in full.

Credit repair or debt settlement companies cannot remove any debts you are on the hook for legally.

Requests for log-in information

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Scammers who claim they can help you pay or reduce your student debts may ask for your StudentAid.gov account information, such as your login ID and password.

As mentioned earlier, scammers may be able to steal your identity with this information.

The Department of Education clearly states that companies they work with will never ask for your passwords.

Lies about Department of Education affiliation

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Some scammers pretend to be associated with the Department of Education to trick borrowers into paying for their services. They may even create official-looking email addresses to do so.

However, email correspondence from the department will only come from one of three email addresses: noreply@studentaid.gov, noreply@debtrelief.studentair.gov, or ed.gov@public.govdelivery.com. 

Make sure you check the sender's address before taking any claims about your loans seriously.

Bottom line

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If you're just scraping by financially, the last thing you need is to waste money on a scam.

The big takeaway here is if you have any questions or concerns about your student loans, you should go directly to the official government channels.

Companies that promise to help you get loans forgiven, delay payments, or fix your credit report are frequently bad actors. Any changes that need to be made to your payment plan should be done by contacting your servicer directly.

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