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For the most up-to-date information on federal student loan forgiveness, go to the U.S. Department of Education's Federal Student Aid website.
As a student loan borrower, you're an unfortunate target of ill-meaning scammers. According to a 2022 report from Tech Transparency Project, a tech monitoring nonprofit organization, 12% of Google ads displayed with student loan forgiveness-related queries are fraudulent.
Even though the Biden administration's general loan forgiveness plan was rejected by the Supreme Court, scammers may still attempt to take advantage of borrowers who are part of other federal loan forgiveness programs, such as the Public Service Loan Forgiveness program or income-driven repayment plans. To avoid student loan forgiveness scams, only use the Education Department's applications and ignore messages claiming you need to act now for student loan forgiveness.
Here are the warning signs to identify student loan forgiveness scams and four ways to safeguard yourself against them.
Warning Signs of Student Loan Forgiveness Scams
While many debt relief companies provide legitimate services, others perpetuate student loan forgiveness scams that prey on unsuspecting borrowers.
Here are red flags to look out for to safeguard yourself against fraudulent programs and student loan forgiveness scams.
- Requires an upfront payment: The offer is likely a scam if you're expected to pay an upfront fee for student loan debt relief. The Education Department never imposes fees to apply for student loan forgiveness, income-driven repayment plans or other forms of debt relief.
- Includes unrealistic promises: You've likely seen ads touting pie-in-the-sky claims like the following: "Your account has been flagged for student loan forgiveness. Call now to activate debt relief." Trust your instincts; if an offer sounds too good to be true, it likely is.
- Guarantees immediate results: Don't believe anyone promising immediate forgiveness or cancellation. To be eligible for most federal student loan forgiveness programs, you typically must make qualified payments for several years or work in specific fields, like teaching or public service occupations.
- Seeks an urgent response: Scammers want you to rush into making a bad decision. As such, they may urge you to pay for their service immediately before the program is discontinued or some other time-sensitive deadline. Don't fall for it, but instead, remember this advice directly from the government: "Though the U.S. Department of Education may reach out to highlight temporary programs, aggressive advertising language … will not come from the Education Department or our partners."
- Asks for your FSA ID password: Many scammers call their targets impersonating representatives for student loan servicers. They often ask questions to get you to part with your personal information, like your FSA ID password—something the Education Department and its partners will never request.
4 Ways to Avoid Student Loan Forgiveness Scams
You've likely seen ads on television or online promising to help you get student loan relief. While some of these companies may offer legitimate services, like help consolidating your loans, there's nothing you can't do yourself or with the free help of your loan servicer. And, sadly, many of these companies promising relief are scams.
Here are four ways to avoid a student loan forgiveness scam:
- Only work with the Department of Education or its affiliated partners. Shield yourself against would-be scammers by applying for student loan forgiveness only through the official website at StudentAid.gov. Additionally, confirm a servicer is on the government's list of contracted federal loan servicers before contacting them.
- Don't respond to aggressive phone calls, texts or emails with claims that are too good to be true. This is a big red flag as the Department of Education explicitly states they never send advertising-style messages. The department also reminds borrowers their emails will only come from firstname.lastname@example.org, email@example.com and firstname.lastname@example.org, so be wary of emails coming from a different address.
- Don't pay for student debt relief. Why pay for something you can get for free? There's no fee to apply for federal student loan forgiveness programs. Similarly, paying a fee won't speed up the application process, improve your odds of approval or qualify you for a larger amount of debt forgiveness. If you're having trouble making your student loan payments, contact your loan servicer immediately; they can advise you of your options.
- Protect your personal information. Beware of emails or texts that look legitimate but ask you for details about your account. The messages may even use the official Department of Education name, seal or logo. Bear in mind, phishing scams aim to look authentic to get you to click on the link in the message. Sadly, the link typically leads to a fake site requesting your account number, Social Security number or other personal data to steal your identity. Instead of responding to these types of messages, contact the Department of Education or your loan servicer directly using their official phone number.
What to Do if You Think You've Been Scammed
If someone scams you, consider taking the following actions:
- Report the incident to the Federal Trade Commission or your state's attorney general. Contact the agency by phone at 877-382-4357 or online at ReportFraud.ftc.gov. Once you file your report, the FTC will advise you on the best steps to get your money back or stop an impending charge. You can also report incidents to your state's attorney general, who is responsible for protecting consumers in your state.
- Inform your servicer. Head off any harmful activity with your student loans by immediately contacting your federal loan servicer or your private student loan lender. If your loans are federal, submit a claim through the department's website to open and manage your case.
- Get law enforcement involved. Report the financial fraud to the FBI at 202-324-3000 or tips.fbi.gov. The Department of Justice also advises reporting fraud involving Education Department funds to the Department of Education Office of the Inspector General hotline at 800-MIS-USED (800-647-8733).
- Contact your bank. Inform your bank immediately if a fraudster tricked you out of your banking or routing number. Your bank or credit card company can also stop payments to any fraudulent debt relief company.
Monitor Your Credit and Identity
The steps above should help you avoid student loan forgiveness scams, but mistakes can happen to anyone. And no matter how cautious you are, your personal information can be compromised in a data breach.
Consider signing up for free credit report monitoring for real-time alerts whenever suspicious activity is detected. Additionally, Experian IdentityWorksSM scours databases and the dark web to detect your personal information. IdentityWorks also includes fraud resolution and up to $1 million in identity theft insurance, which could help you recover financially from identity theft.