Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
March 2025: The Saving on a Valuable Education (SAVE) Plan for federal student loan repayment is on hold due to a court injunction. As of late March, these loan repayment plans are available: Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment. Federal student loan consolidation applications are also live. To monitor the latest decisions on federal student loan plans, check the Federal Student Aid site.
With the national student loan balance totaling $1.72 trillion and counting, some Americans are desperate for debt relief. Unfortunately, scammers are taking advantage of people’s financial struggles in an attempt to steal their money or even identity. While there are legitimate student loan forgiveness programs available to borrowers, there are also plenty of student loan forgiveness scams.Read on to learn about the signs of a student loan forgiveness scam so you can protect yourself and your finances.
What Are Student Loan Forgiveness Scams?
Almost all of the scams are connected to federal student loans, which is the bulk of the debt in America. When looking at federal vs. private student loans, be aware that the former are more vulnerable to scams.Student loan forgiveness scams come in many forms. Some (falsely) promise immediate student loan forgiveness — in exchange for a fee, of course. Others request sensitive personal information, such as your Social Security number or FSA ID. Giving out this information could compromise your online security. Some companies will also charge you fees to apply for loan forgiveness on your behalf. While these companies may not be scams per se, working with one is not necessary. It doesn’t cost anything to apply directly to legitimate loan forgiveness programs, so these services aren’t providing anything you can’t do on your own for free.There are legitimate forgiveness programs offered for federal loans, including SAVE and military student loan forgiveness.Read more: A Guide to Student Loan Forgiveness
Signs of Student Loan Forgiveness Scams
If you’re struggling with student loan debt, it’s easy to be tempted by promises of student loan forgiveness. Paying off student loans fast isn’t always easy.But if an offer sounds too good to be true, it probably is. Here are some signs of student loan forgiveness scams to watch out for you so you don’t fall into a scammer’s trap.
Promises Immediate Student Loan Relief
Any promise of immediate student loan relief is probably false. Most legitimate student loan forgiveness programs require years of qualifying work or public service. The Public Service Loan Forgiveness program, for example, requires 10 years of working in public service before providing loan forgiveness. The Teacher Loan Forgiveness program offers partial loan forgiveness after five consecutive years of working in a qualifying school. If someone claims they can get rid of your student debt overnight, the offer is probably a scam.Note that there are a few legitimate federal student loan discharge programs for special circumstances. For instance, you may be able to get your federal student loans canceled if you have a total and permanent disability or if you were defrauded by your school. While these discharge programs don’t require years of work, they do still involve an application process that can take some time before your loans are approved for discharge. For those enrolled in PSLF or other income-driven programs, the Department of Education sometimes notifies recipients by email when the loan has been discharged. These emails are meant to share information, never to request personal or banking data.
Suggest That You Pay Money Upfront
There is no fee to apply for legitimate student loan forgiveness programs. If a company wants to charge you upfront fees in exchange for loan forgiveness, it’s probably a scam. As mentioned, some companies might charge fees to help you apply for loan forgiveness. If you’d rather outsource this process, you may consider hiring someone for assistance. But the company isn’t doing anything that you can’t do on your own for free. If you need help with the process, consider checking out information on the Federal Student Aid website and calling your loan servicer for guidance instead. And if you do want to hire a third party to help you deal with your student loans, make sure to research its reputation online. If you’re looking to hire a student loan counselor, for instance, look for one who’s certified with a trusted organization, such as the National Foundation for Credit Counseling.
Ask You for Your SSN or Other Sensitive Information
If a company asks for your Social Security number, FSA ID, or other sensitive information, that’s also a red flag. Sharing your sensitive information could leave you susceptible to identity theft. At the very least, a company could sign into your accounts and make changes on your behalf. A reputable company will never ask for your FSA ID, as this ID acts as your electronic signature and should never be shared. You should be especially wary of giving out any information over the phone to a company that contacted you. Legitimate loan forgiveness programs don’t get in touch with you — rather, you need to seek them out and apply. If someone is calling you or advertising student loan relief, think twice before trusting them.
Claim to Be Affiliated With a Government Agency
Some student loan scammers will use official government logos to make themselves appear legitimate. They’ll use official sounding names with “national” or “federal” in the title, or they may even say they’re a partner of the Department of Education. Don’t get drawn in by appearances, though. The Department of Education only works with its authorized student loan lenders, collections agencies, and servicers, which handle your loan repayment and will not reach out to you with offers of loan forgiveness. You can certainly call your loan servicer for information on loan forgiveness, but it will not go out of its way to call you about these programs. If someone is claiming to work on behalf of your servicer, consider hanging up and calling your loan servicer’s official number to confirm.
Use High-Pressure Sales Tactics
Scammers may ask you to sign a power of attorney or third party authorization, allowing them to speak directly with your loan servicer and make decisions on your behalf. Reputable companies will likely never ask you for this. If a company does, it can change your account information and potentially make your challenging situation even worse. If a company is asking for this level of access to your accounts, beware.
Want You to Sign a Form Giving Them Power of Attorney
Scammers may ask you to sign a power of attorney or third-party authorization, allowing them to speak directly with your loan servicer and make decisions on your behalf. Reputable companies will likely never ask you for this. If a company does, it can change your account information and potentially make your challenging situation even worse. If a company is asking for this level of access to your accounts, beware.
What to Do if You Have Been a Victim of a Student Loan Forgiveness Scam
If you’ve been a victim of a student loan forgiveness scam, there are steps you can take that might help, including contacting your loan servicer and reporting the scammer.
Contact Your Servicer Immediately
First, contact your loan servicer right away about the situation. Your servicer may be able to secure your accounts and prevent the scammer from accessing them. It may also be able to reverse changes to your student loans that a third party made on your behalf.
Contact Your Bank or Credit Card Company
Let your bank and credit card companies know if your information has been compromised. They may freeze your accounts so a scammer can’t go any further. Plus, they may be able to refund any fees or cancel charges that the scammer incurred.
File a Report With the Appropriate Agencies
You can also file an official report with the Federal Trade Commission, Consumer Financial Protection Bureau, and State Attorney General. Not only will filing a report help protect other consumers from the scammer, but you might get some additional information about protecting your identity.
Monitor Your Credit Report
If a scammer has got their hands on your sensitive personal information, they may be able to open accounts in your name. Keep an eye on your credit report to see if anything out of the ordinary pops up. You can also place a freeze on your credit reports to prevent any new accounts from being opened. Note that the freeze will also prevent you from opening new accounts, so you’ll have to lift it before you can take out a loan or open a new credit card.
Change Your Passwords
Make sure to change your passwords as soon as possible to prevent the scammer from accessing them. While you can’t change your FSA ID, you can change your password. Choose a strong password that’s different from your previous one to secure your accounts.
The Takeaway
When it comes to student loan debt, be wary of any promises that sound too good to be true. While there are legitimate loan forgiveness programs out there, most of them require years of qualifying services before canceling your student loan debt. What’s more, there’s no cost to apply for loan forgiveness programs or alternative repayment plans, so be wary of anyone charging you fees for this. If you’re feeling overwhelmed with debt but can’t qualify for student loan forgiveness, another avenue worth considering is refinancing student loans. Through refinancing, you might be able to lower your interest rates, as well as consolidate multiple loans into one and choose new repayment terms. Be careful about refinancing federal student loans with a private lender, however. One of the disadvantages of refinancing federal student loans is that doing so makes them ineligible for federal forgiveness programs, repayment plans, and other benefits. If you’d like to explore refinancing, Lantern can help you find and compare student loan refinance rates from multiple lenders at once with no obligation or impact on your credit score.
Frequently Asked Questions
How do you get legitimate student loan forgiveness?
How do you spot student loan forgiveness scams?
How can I pay my student loan faster?
Photo credit: iStock/evgenyatamanenko
LCSL-Q224-1920825-V1
About the Author
Rebecca Safier
Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
