Avoid Student Loan Relief Scams

Learn how you can avoid becoming a victim to scams with these five warning signs.. Always be wary of too good to be true offers.

A woman putting books on a shelf.

With student loan debt at an all-time high, a growing number of borrowers are seeking assistance from debt relief companies. While the intent in doing so is to help make debt more manageable, in some cases, this can be a turn for the worse.

During the pandemic, the government paused payments for federal loans and scammers are capitalizing on the confusion that surrounds what’s happening with student loan policy and potential forgiveness.

Scammers are targeting those who have been financially hurt during this time with relief scams. Though not all companies are deceiving consumers, there is reason to be wary. To avoid becoming a victim yourself, watch for these five warning signs.

Upfront Costs

Being charged for a service that has not yet been rendered is a red flag. Companies that ask for payment upfront want to pocket money for a service they won’t provide, or a job they won’t complete.

Additionally, debt relief companies may be charging you for the convenience of doing something you can do yourself or with the department of education at no cost. The Department of Education has a number of repayment plans that allow you to consolidate federal loans or make payments based on income. Visit studentloan.gov to learn more and apply.

Immediate Forgiveness

Promising to eliminate your debt after an initial consultation is unreasonable. You must first apply with the Department of Education to make changes to federal loans like with consolidation or moving to an income-based repayment plan. Only the creditor has the ability to forgive your debt or modify your payment schedule.


Pay close attention to the interactions you have with a company and how you find them. Aggressive advertisements or targeted invitations are a sign that a company is seeking profits. If you feel any pressure to sign up or you’re told that an offer is temporary, end the discussion. Any company that truly wants to help you will give you time to make a decision.


FSA ID, used to log in to the Department of Education systems, serves as your signature for legally binding electronic documents. It’s for your exclusive use and sharing it with a commercial entity could result in penalties.

If a debt relief company asks you to provide your FSA ID, don’t. Not only is this against the rules, you also take the risk of losing access to your account, having changes made without consent, becoming a victim of fraud, and so forth. Any legitimate company won’t ask for this.


The best way to know whether you’re being scammed is to recognize the legitimacy of what you’re being told. Don’t fall for fabricated promises; know that there’s only a few ways in which federal loans may be forgiven, cancelled, or discharged. In fact, the full list is made available on studentaid.ed.gov. Teachers, public servants, and disabled persons are among those that may qualify.

Always remember, if an offer sounds too good to be true, it likely is.

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