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10 Ways to Identify Student Loan Forgiveness Scams

Scammers resurface when the government extends the moratorium on loan payments. Here are the 10 most common student loan forgiveness scams to know.

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      “Guaranteed Aid If We Get Paid”

      Scammers resurface each time the government extends the moratorium on student loan payments. Most recently, the pandemic relief payment deferment was extended until December 31, 2022.[*]

      This gaping window is sufficient time for someone to contact you about signing up for CARES Act forbearance or forgiveness programs — neither of which exist.

      For an upfront fee, scammers or fraudulent private companies may offer to speed up the forgiveness process, lower monthly payments, or consolidate loans.

      But federal student loan forgiveness is a free program; if you are eligible, you don’t have to pay anything to anyone

      “Nobody can get you in early, help you jump the line, or guarantee eligibility,” warned a consumer alert issued by the Federal Trade Commission (FTC).[*] “And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer.”

      10 Ways To Identify a Student Loan Forgiveness Scam

      1. Cold calls about loan forgiveness
      2. Urgent, time-limited offers
      3. Promises of immediate, complete loan forgiveness
      4. Demands for upfront payments
      5. Requests to share your FSA credentials
      6. Pressure to sign a power of attorney
      7. The caller is not an ED-affiliated company
      8. The caller is on FTC’s list of banned companies
      9. Unsolicited encouragement to block your loan servicer
      10. The offer doesn’t apply to you

      1. Cold calls about loan forgiveness

      In a cold call scam, fraudsters call you purporting to be from the U.S. Department of Education (ED) or legitimate companies tied to the ED. They promise to help lower your monthly payment or entirely cancel your student loan debt. Scammers may ask you:

      • To sign up for a monthly “contract” for the service.
      • To “confirm” your personal information, like your Social Security number (SSN).
      • To share your Federal Student Aid (FSA) login credentials.

      Any call, email, or text message that claims to be from the federal government (and comes out of the blue), should raise a red flag. 

      Qualifying candidates must initiate contact to participate in a student loan forgiveness program. The government is not going to contact you first.

      What to do: 

      • Hang up if someone calls you offering relief programs for which you have not applied. A loan servicer may only contact a borrower under specific instructions, such as if you applied for a forgiveness program.
      • For instance, Edfinancial Services received a consent order to contact those borrowers who may be eligible for the Public Service Loan Forgiveness (PSLF) Program.[*]
      💯 Zoom out: If you notice discrepancies on your Social Security statement or are not actively looking for employment, consider locking your SSN with Self Lock

      2. Urgent, time-limited offers

      Scammers use urgency tactics to get you to act quickly. They will use words like "as soon as possible" and "imperative" to rush you into signing up. This also ensures that you won't have time to research the company's services. 

      Scammers may also reference federal student loan payment suspensions and offer you a limited-time "opportunity." For elementary school teacher Kathleen Young, it was a scam phone call from Guidance Alum about the PSLF program.[*]

      By posing as the ED, Guidance Alum promised to consolidate Young's loans and forgive them after 60 payments. However, at least 120 qualified payments are required for this federal program. 

      Young was misguided into sharing her bank account information and SSN before she discovered that Guidance Alum wasn’t associated with the ED at all.

      What to do:

      • Being skeptical is the best way to avoid this scam. Make sure you research the loan servicer offering you student loan forgiveness. Some scammers say that they're part of the "Biden loan forgiveness" or "CARES Act loan forgiveness" — neither of which are real programs.
      • Look up the loan servicer on Better Business Bureau (BBB). Guidance Alum, for example, already has numerous complaints posted about them on BBB.
      • Close any bank accounts set up for recurring payments with the fraudulent loan servicer.
      • Consider signing up for an SSN monitoring service like Aura that monitors how your SSN is being used.
      Take action: If scammers have your personal information, your bank account, email, and identity could be at risk. Try Aura’s identity theft protection free for 14 days to secure your identity against scammers.

      3. Promises of immediate, complete loan forgiveness

      If you receive a phone call or letter offering you immediate loan forgiveness for a fee, it’s probably a scam. Here’s why: 

      • There are ways to have your federally-held loans forgiven, but you can only access them through one of nine ED-approved loan servicers
      • These services are free and will never charge you for services related to your federal student loan.

      What to do:

      • Identify your loan servicer either by checking your FSA account dashboard or by calling the FSA Information Center (FSAIC) at 1-800-433-3243.
      • Most government forgiveness programs require a minimum number of qualifying payments before relief kicks in. Contact your servicer directly to see if you qualify for an income-driven repayment plan.
      • Understand that debt relief companies cannot negotiate with federal loan servicers to lower your payment levels.

      Know that scammers target private loan borrowers, too. These loans do not offer options for cancellation or forgiveness like federal loans do. Scammers will try to convince you otherwise.

      📚 Related: How To Avoid the Credit National Assist Debt Relief Scam

      4. Demands for upfront payments

      Walk away from debt relief schemes that request upfront fees or your credit card information. Fraudulent companies may claim that such payments go toward your student loans. 

      The FTC recently banned Student Advocates from debt relief services for charging illegal upfront fees and inducing students to take on high-interest loans to pay these fees. Borrowers lost over $822,000 to this fraudulent scheme in 2019.

      What to do:

      • Familiarize yourself with the types of assistance your loan servicer can offer you for free. Managing your student loan payments, choosing repayment plans, and processing deferment are a few examples of their services.
      • Research payment options for federal student loans using the ED's free Loan Simulator. This provides information about repayment plans, loan forgiveness, and what you can do if you have trouble making payments.

      📚 Related: Can Someone Steal Your Identity With Your ID?

      5. Requests to share your Federal Student Aid (FSA) credentials

      Beware of callers who ask for your FSA ID or password. Loan servicers won't ask you for these credentials, and the ED can access your account without it.

      Since FSA usernames and passwords are used to sign legal documents, scammers may use your information to:

      • Sign into your account and make changes without your consent. 
      • Access your National Student Loan Data System (NSLDS) file and credit report to commit identity theft.
      • Change your contact information — or worse, block communications with your loan servicer.

      What to do

      • Create your own FSA ID and password as soon as you apply for a loan through Free Application for Federal Student Aid (FAFSA). Never share these details with anyone — even your parents. Dependent students and their parents must create separate FSA accounts.
      • Periodically review your loans and grants; report errors, and file disputes with the FSA Ombudsman's Office.
      Take action: If you accidentally give scammers your personal data, they could take out loans in your name or empty your bank account. Try an identity theft protection service to monitor your finances and alert you to fraud.

      6. Pressure to sign a power of attorney

      In a brazen attempt to fleece nearly 500 student loan borrowers, a Lithonia man operated a loan discharge scheme.[*] He pocketed $891,000 as payments to fraudulently discharge ~$50 million in outstanding federal student loans. 

      Fake student debt relief companies like these may ask you to sign legal documents authorizing them to work directly with your loan servicer. In reality, you're giving them legal power of attorney to unlawfully:

      • Change your account's contact information.
      • Consolidate or put loans into forbearance.
      • Set up a new payment plan.
      • Access your bank account and other sensitive information.

      What to do:

      • Never sign third-party authorization paperwork to handle your FSA account or loans. Any outstanding payments, interest accruals, and late fees will still be your responsibility if the debt relief company does not make payments.

      📚 Related: How Can Social Security Identity Theft Occur? [9 Ways]

      7. The caller is not an ED-affiliated company

      Some scammers will pretend to be a federal loan servicer to pilfer your FSA ID, SSN, or even bank account number. 

      The Department of Education only works with select lenders, servicers, and private collection agencies. If a loan servicer is not a representative of one of the approved companies, consider this a red flag.

      To find your loan servicer, head to and log in with your FSA credentials. Once logged in, you can view your loan and grant information from your dashboard. 

      For more information about your loan servicers, click on View Servicer Details in the dashboard. You'll find contact information to connect with your servicer(s) to discuss your loans and make payments

      What to do:

      • If someone calls you and claims to be your loan servicer, hang up. Then call your loan servicer directly. Use the number on your billing statement or your servicer's website. Never use the contact information from an email or voicemail.

      📚 Related: How To Avoid the Financial Hardship Department Scam

      8. The caller is on FTC’s list of banned companies

      There's a list that the FTC updates regularly of operators and companies prohibited from running debt relief businesses. Callers who claim to be from one of these companies are scammers.

      Many such illegitimate companies, like The Student Loan Group (SLG), also keep changing their company and brand names to dodge negative publicity.[*]

      Last November, the FTC obtained an order banning Automatic Funds Transfer Services, Inc. (AFTS) — a payment processor fronting SLG. AFTS processed at least $31 million in illegal upfront fees for SLG.

      • To see whether a specific company or individual offering debt relief has been banned by the FTC, press Ctrl-F on your keyboard. Type in the company name, and see if it appears on the list. If a caller purports to be from American Student Loan Consolidators, you can quickly find them with a Ctrl-F search, as seen above.

      9. Unsolicited encouragement to cut ties with your loan servicer

      Your loan servicer’s duties are supposed to begin once your school receives the first installment of your loan.

      Outside of tracking loan payments and interest, loan servicers are also bound to help you obtain PSLF or claim tax deductions. For these reasons, it's important for borrowers to stay in touch with their assigned servicers.

      What to do:

      • Don't engage with anyone who wants you to stop communicating with your loan servicer, or wants you to make payments to them instead of your loan servicer. 

      📚 Related: Zelle Scams and How Thieves Are Siphoning Away Your Money

      10. The offer doesn’t make sense for you

      A committed loan servicer will work with you to find the best repayment plans and billing options. Scammers, on the other hand, won’t consider your circumstances. They will offer solutions that work to their benefit.

      Common fraudulent offers tend to include these gaping holes: 

      • Federal loan consolidation or repayment eligibility even though you’ve borrowed from a private lender
      • Encouragement to refinance your federal student loan despite your being a PSLF-eligible public service worker

      What to do:

      • Understand whether you qualify for forgiveness, cancellation, or discharge based on the type of loan you’ve taken out. See all types of forgiveness and how students can enroll.
      • Do your due diligence before you sign up for an income-driven repayment (IDR) plan. IDR plans extend your repayment terms, consequently increasing your total interest charges over the loan period.
      Take action: Protect yourself from the risks of identity theft and fraud with Aura’s $1,000,000 in identity theft insurance. Try Aura free for 14 days to see if it’s right for you.

      Did You Fall Prey to a Student Loan Forgiveness Scam? Do This

      1. Change your FSA logins. Go to the FSA website and change your account credentials if you unwittingly shared these credentials with anyone. Contact the FSA immediately if you've already been locked out.
      2. Consult with your student loan servicer. If you were induced into signing a power of attorney or third-party authorization form, contact your loan servicer to revoke it.
      3. Notify your bank to cancel scheduled payments. If you've given your bank or card information to a scammer, contact your bank (or credit card company) immediately. They can cancel scheduled payments, reverse charges, and block future payments. 
      4. Report fraud with the FTC and CFPB. Once you've secured your credentials and accounts, file a complaint with the FTC and CFPB. Submit complaints to and 
      5. Set up credit monitoring, and freeze your credit report. If you freeze your credit report, scammers cannot open new lines of credit in your name. You can set up a credit freeze for free with each of the three credit bureaus — Equifax, Experian, and TransUnion.
      6. Contact the Office of Inspector General (OIG). The OIG Hotline is open to anyone who suspects or experiences fraud involving ED funds or programs. You can submit a report online or by phone at 1-800-647-8733. 
      7. Submit a complaint with the FSA. Tell the FSA what happened by filing a complaint at You can also view, track, and update your case from this online portal. 
      8. Add your number to the National Do Not Call Registry. The scammer may sell your contact information to various telemarketing companies. Place your phone number on this national registry to stop telemarketing sales calls.
      9. File a complaint with BBB. Visit the BBB website and leave a review of the scam company. You won't recoup any losses, but you can help prevent others from becoming victims of the same scam.
      10. Consider signing up for identity theft protection. Aura’s top-rated identity theft protection monitors all of your most sensitive personal information, online accounts, and finances for signs of fraud. If a scammer tries to access your accounts or finances, Aura can help you take action before it’s too late. Try Aura’s 14-day free trial for immediate protection while you’re most vulnerable.

      Don’t Let Scammers Outwit You. Aura Can Help

      Delays in student loan payments or changes to loan services can confuse borrowers. Where there are flustered borrowers, scammers aren’t far behind.

      Stay safe by identifying fraudulent callers and avoiding these common scam tactics. Don't panic if you’ve been deceived into giving your FSA information to someone. Alert your loan servicer right away. 

      For everything else related to fraud protection, Aura can help keep you safe. Aura continuously monitors your bank, credit, and investment accounts for signs of fraud and identity theft. You’ll be alerted in near real-time about suspicious activity on any of your financial accounts.

      Keep student loan scammers at bay. Try Aura free for 14 days

      Editorial note: Our articles provide educational information for you to increase awareness about digital safety. Aura’s services may not provide the exact features we write about, nor may cover or protect against every type of crime, fraud, or threat discussed in our articles. Please review our Terms during enrollment or setup for more information. Remember that no one can prevent all identity theft or cybercrime.

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