Student loan scams prey on borrowers seeking to reduce their balance or monthly payments, repay their loans faster, stop payments temporarily, or avoid a delinquent status. Four common student loan scams risk a borrower’s money, identity, and credit rating.

1. Fees to Fill Out a Form

Borrowers do not need to pay anyone to complete an income-driven repayment (IDR) plan request. Income-based repayment application forms are free at the official federal student aid website, . This also applies to deferment and forbearance applications.

Individuals seeking federal student loan consolidation can complete applications and apply for free. Private student loan consolidation doesn’t exist, though borrowers may be able to refinance several private student loans into one and lower their interest rate. Loan fees may be associated with refinancing a student loan, but borrowers should never pay upfront.

Legitimate services exist to help borrowers evaluate their student loan repayment options and apply for the program that best suits their needs. Without guidance, it’s possible to make costly mistakes when repaying student loans. However, the federal government and private companies that service student loans should not charge borrowers to request information regarding different loan terms.

2. Paying to Get Loans Forgiven, Canceled, Discharged, Reduced, or Eliminated

If a company promises to negotiate student loan forgiveness, a student loan debt settlement, or have student loans discharged in bankruptcy on a borrower, it’s likely a scam. These scams typically involve a company or individual advising a borrower to pay a large sum to get their loan discharged. They may scam borrowers into sending student loan payments directly to the company instead of the student loan servicer. The company will likely keep the money, and borrowers will fall behind on their loans, affecting credit scores.

The federal government offers programs like Public Service Loan Forgiveness (PSLF). Teacher loan forgiveness and Perkins Loan cancellation may also be available to borrowers with eligible employment or volunteer service. Federal student loans can only be discharged in the following circumstances:

• Total and permanent disability
• Death
• School closure
• False certification
• Unpaid refund

3. False Relief or Forgiveness Programs

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of March 2020 provided some relief for federal student loan borrowers during the COVID-19 pandemic. In 2023, the pause ended, student loans began accruing interest in September, and repayment began in October.

Scammers often target borrowers with offers to fully erase or forgive debt. The U.S. Department of Education only sponsors three programs on its to assist borrowers with relief or forgiveness of student loan debt, including:

• Federal Direct Consolidation Loan Program
• Public Service Loan Forgiveness (PSLF)
• Teacher Loan Forgiveness
  

4. Requesting Personal Details

The Department of Education will never contact borrowers and ask for personal details like their Social Security number, account number, date of birth, Federal Student Aid ID number and password, address, or account balance. Neither will a student loan servicer or a government-contracted private collection agency.

Borrowers should be wary of any organization that asks for personal information, such as bank account details or a Social Security number (SSN), to gain access to a program. These scams will affect an individual’s financial health. If an entity requesting such information is reaching out, they would already have this information regarding a borrower’s loan. Borrowers should follow these guidelines:

• Do not call the phone number listed on the letter or send information to the address it provides.
• Do not reply to an email, call a phone number provided in an email, click on any links, or download any attachments.
• Ignore a caller seeking personal information and hang up.
• Contact the student loan servicer directly, using the information on the servicer’s official website, and report the incident.

The Bottom Line

To avoid student loan scams, borrowers should avoid companies that approach them personally or through marketing efforts. A company that pressures borrowers to pay fees or act quickly to resolve a student loan issue is likely a scam.