Student Loan Scams and How to Spot Them

Roughly 48 million college graduates carry some form of student loan debt. It’s no wonder, then, why student loan scams abound. 

In 2022, student loan scams stole an estimated $5 billion from people across the U.S. After the announcement of the federal student loan forgiveness program by President Biden, scammers doubled their efforts. 

But you don’t have to be the next victim. Learn to spot today’s most common types of scams so you don’t lose any of your hard-earned money.

The Most Dangerous Student Loan Scams

Scammers may attempt a number of strategies to steal your money or your personal information. Here are three of the most common — and most dangerous — student loan scams.

Student Loan Consolidation Scams

Some scammers claim to represent student loan consolidation companies. They promise to consolidate your federal student loans — for a fee. They may charge money upfront for a “processing fee,” only to never follow through with your consolidation plan.

This scam may be combined with a phishing scam (see below). Scammers may ask about your existing loans to start the consolidation process, but in reality, they’re harvesting your personal data, leaving you vulnerable to identity theft.

Debt Relief Scams

Beware of scammers offering full or partial student loan relief. They may claim to be connected to President Biden’s student loan forgiveness program or an extension of the pandemic relief plan. 

According to the Federal Student Aid website, these scams often urge you to “act immediately before the program is discontinued.” The truth is, scam artists are trying to harvest your bank account information or charge you money upfront to complete the application process.

A variation of this scam is an income-based debt relief scam. Scammers offer a repayment plan with a lower monthly premium based on your current salary. Again, this is often a ploy to gather your personal information or charge you upfront for filling out the necessary forms.

Student Loan Phishing Scams

Some scammers won’t offer anything at all, but simply impersonate someone in authority asking to confirm your personal information. 

For instance, you may receive a phone call or letter from someone claiming to represent the Department of Education or another financial authority. They’ll ask for details like your Social Security number (SSN), Federal Student Aid (FSA) number, or other personal or financial details. 

Giving away this data can leave you vulnerable to identity theft or other forms of fraud.

How to Spot Student Loan Scams

Why do so many college-educated Americans fall victim to student loan scams? It’s not for a lack of education. Modern scam artists often use sophisticated and/or aggressive tactics to persuade desperate borrowers to hand over their cash or personal data. 

When you receive that phone call, it’s natural to wonder, “How do I know if I’m being scammed?” Here’s how to spot today’s scams.

You Have to Pay a Fee to Get Help

Watch out for people offering help for a fee. You can consolidate your loans and apply for deferment through the Federal Student Aid website. But some scam artists offer student loan forgiveness or income-based reductions in your monthly premium as long as you pay a fee.

In some cases, these scam artists will charge money over the phone or ask you to pay for the application process. But it’s illegal to accept payment prior to actually adjusting your loan in any way. If they ask you to pay a fee or cover upfront costs in exchange for any sort of debt relief, it’s a sure sign of a scam.

They Offer You Instant Loan Forgiveness

You’ve heard the old saying, “If it sounds too good to be true, it probably is.” Beware of anyone offering instant student loan forgiveness.

It’s true that there are legitimate paths to student loan forgiveness, such as the Biden-Harris Public Service Loan Forgiveness (PSLF) program. But most student loan forgiveness programs come with stipulations attached, and none of them offer immediate loan forgiveness. Also, they typically require years of qualifying payments. 

If someone claims that they can offer you a shortcut to student loan forgiveness, they’re likely trying to steal your money or personal details.

They Turn Up the Pressure

“Act now!” “Enrollments are first come, first served!” “Your eligibility is about to expire!” These sorts of phrases are telltale signs of a student loan scam. They’re designed to dial up your emotions so you’ll react without thinking things through.

Be careful, because in some cases the messaging can be downright threatening, with talk of penalties and fees if you don’t take immediate action. Again, these are tricks designed to goad you into responding. 

Legitimate companies won’t use these aggressive tactics. You should always make a decision after careful planning and research.

They Ask for Your FSA ID or Other Information

The Department of Education will never ask you for personal details such as your Social Security Number or Federal Student Aid ID number. Scam artists might impersonate a legitimate organization and ask you to confirm these details.

If you’re contacted by someone perpetrating this scam, hang up immediately and don’t speak to them again unless you’re able to determine their legitimacy. Contact your student loan servicer directly instead of dealing further with a questionable phone number or email address.

They Advertise

A company that advertises its services on Google Ads or social media has to be legit, right? Actually, no. This just means that the company has the money to pay for ads. In other words, the company is making a profit, usually at the expense of borrowers like you. 

Other scam companies might use this kind of aggressive advertising to lure in unsuspecting borrowers, only to steal their personal details or charge them fees for services they never render.

How to Avoid Student Loan Scams

What can you do to avoid student loan scams? Here are some tips to keep you safe, and your personal data confidential.

Never Pay for Student Loan Forgiveness

No matter what you may hear, no company can get you out of debt faster, even if you pay them. On the contrary, you can sign up for forgiveness programs at without spending a dime. Beware of anyone who claims to offer immediate student loan forgiveness, especially if there’s a fee attached.

Never Pay for Services Upfront

Legally, companies can’t charge you before they help you. No matter how good an offer may sound, never pay an upfront fee since this usually means that the company will take your money without offering any help.

Don’t Give in to Pressure

Scam artists like to increase the pressure to convince you to cave in. Don’t do it. Instead, research your options carefully, and make a decision that’s right for you. Don’t respond to their “limited offer” or other high-pressure tactics.

Never Give Away Your Personal Data

Never give away your personal information. This includes your Social Security number, FSA ID number, and other crucial details. Scammers might try to convince you that they simply need to “confirm” this data, but the Department of Education will never ask for this information. Hang up immediately.

Don’t Trust the Department of Education Seal

Many scam artists use the Department of Education official seal to convince you that they’re legit. They may even use names or job titles that sound official, trying to lure you into signing up for a particular program. Don’t always believe what you see. If you’re ever in doubt, use the Federal Student Aid website to ask questions.

Avoid Suspicious Links

Don’t click the link inside an unsolicited email. The sender may claim to represent the Department of Education or a debt consolidation agency. But sophisticated scammers can leverage technology to harvest your data or install malware on your computer. Instead, delete the email without clicking any embedded links.

Contact Your Student Loan Servicer Directly

When in doubt, go to the source. If someone contacts you to “confirm” your details or to discuss your existing loan program, simply decline to continue the call, and hang up. 

Understandably, you might be concerned that you’ve ignored a legitimate request. All you have to do is contact your student loan servicer directly to ensure that your account is up to date. Never use any of the phone numbers or emails provided by a potential scammer.

Consolidate Your Loans for Free

Sometimes, you’ll stumble across a scam while you’re on the lookout for valid debt relief solutions. Instead of searching online, visit the Federal Student Aid website to apply for debt consolidation or deferment programs, which you can obtain for free.

Be Proactive, Not Reactive

As with any scam, it’s always better to be proactive than reactive. This means that you’re prepared ahead of time to respond to a potential scam, rather than letting yourself be lured in by a sophisticated or aggressive scam artist. 

Learning to spot these common scams can prevent you from becoming another statistic and keep your personal data — and your money — safe from student loan scams.