As student loan debt in the United States exceeds $1.7 trillion across 43 million borrowers, scammers are targeting desperate borrowers with fake forgiveness and relief programs. The FTC and state attorneys general have shut down dozens of student loan scam companies in recent years, but new ones appear constantly. In 2025, the FTC received over 35,000 complaints about student loan scams, with victims losing an average of $3,200 each.
How Student Loan Forgiveness Scams Work
The Upfront Fee
The most common pattern: a company contacts you by phone, text, email, or online ad claiming they can get your student loans forgiven — for a fee. They charge $500 to $2,000 for "processing," "legal review," or "application assistance." The problem: every legitimate student loan forgiveness program is free to apply to directly through the Department of Education. There is nothing these companies do that you cannot do yourself at no cost.
The Monthly Service Fee
Some companies charge a monthly fee of $30-100 to "manage" your forgiveness application or income-driven repayment plan. They collect your login credentials, make basic changes to your federal account, and charge you indefinitely. Federal student loan servicers provide this service for free.
The Advance Payment Scam
The scammer tells you to stop making payments to your loan servicer and pay them instead. They claim the money is going toward your loans but pocket it. Meanwhile, your actual loans go into default, destroying your credit and triggering collection fees.
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Red Flags of Student Loan Scams
- They charge upfront fees. No legitimate program requires payment to apply for forgiveness.
- They pressure you to act immediately. "This program closes in 48 hours" or "Limited spots available." Federal programs do not have artificial deadlines.
- They ask for your FSA (Federal Student Aid) login. Sharing your StudentAid.gov credentials gives them full access to your federal student aid information. A legitimate advisor may help you navigate the site, but they should never need your password.
- They claim a special relationship with the government. "We have direct connections to the Department of Education" or "Our company has been selected as an authorized provider." No private company is specially authorized to process federal student loan forgiveness.
- They guarantee forgiveness. No one can guarantee your loans will be forgiven. Eligibility depends on specific criteria set by federal law.
- They contact you unsolicited. The Department of Education does not hire private companies to call borrowers about forgiveness programs.
Legitimate Student Loan Forgiveness Programs
These are the real programs — all free to apply to:
- Public Service Loan Forgiveness (PSLF): For borrowers who work for government or nonprofit employers and make 120 qualifying payments. Apply at StudentAid.gov/pslf.
- Income-Driven Repayment (IDR) Forgiveness: After 20-25 years of payments on an IDR plan, remaining balances are forgiven. Enroll through your loan servicer or at StudentAid.gov.
- Teacher Loan Forgiveness: Up to $17,500 in forgiveness for teachers who serve in low-income schools for five years.
- Borrower Defense to Repayment: For borrowers whose school engaged in fraud or misrepresentation.
All applications go through StudentAid.gov or your federal loan servicer directly. No middleman is needed.
What to Do If You Have Been Scammed
- Contact your loan servicer to verify the current status of your loans.
- Change your FSA login credentials at StudentAid.gov if you shared them with the scam company.
- File a complaint with the FTC at ReportFraud.ftc.gov.
- Report to your state attorney general — many have student loan fraud units.
- Dispute credit card charges if you paid the scam company by card.
If you have received an email, text, or call about student loan forgiveness and are not sure if it is legitimate, paste the message into IsThisAScam.to. The analysis will identify manipulation patterns, known scam company language, and red flags that distinguish fraud from legitimate communications.