Four Types of Student Loan Scams to Watch Out for

From ghost students to fake debt relief, fraudsters are disrupting student aid

The U.S. student aid program is massive in scope, to say the least. According to the Education Data Initiative, federal student aid disbursements for 2027 are projected to total $124.4 billion. With so much money at stake, it’s no surprise that bad actors are constantly trying to scam the system as well as the individual borrowers who participate in it.

Fraudsters are particularly taking advantage of the uncertainty around a new set of federal student loan repayment rules that went into effect this summer. With loan payments generally increasing across the board and fewer repayment options being offered for many borrowers, criminals and con artists are stepping in with fake offers of debt relief, loan consolidation, or loan forgiveness. Others are outright stealing identities to illegally collect student aid.

The issue is so pervasive that the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently issued an alert to financial institutions regarding fraud schemes that target federal student aid programs.

The four main types of student loan fraud

Not all private debt-relief companies are fraudulent. And a number of legitimate loan servicers exist, all of them affiliated with the U.S. Department of Education. But bad actors are out there, so it’s important to understand their tactics.

The U.S. Department of Education Office of Inspector General (OIG), which has jurisdiction over federal student loan programs, advises student loan recipients—and anyone who wants to safeguard their identity—to watch out for these common types of student loan-related fraud:

Identity theft—In the so-called “ghost student” scam, fraudsters steal your personally identifiable information (PII) and impersonate you in order to falsely qualify for a federal student loan. The scammers might also create fake documents by using AI tools. This type of fraud often takes place in online educational programs, where fraudsters can easily access financial aid options. You might not even discover until much later that your identity has been stolen to fraudulently obtain student aid.

Debt collection scams—Fraudsters contact you pretending to represent a collection agency, telling you that your loan is in default. They’ll pressure or threaten you to pay them immediately. They may also look to steal your personal information by asking you to confirm your Social Security number or federal student aid (FSA) ID number.

Fraudulent promises of assistance—Scammers contact you through email, text, phone calls, or social media messages claiming they can help you with student loan forgiveness, debt relief, or managing your loan, for a fee. They may ask you to pay upfront for nonexistent things such as student aid refunds, processing fees to discharge your loans, or monthly service fees to have your loans managed for you.

Imposter scams—Bad actors attempt to gain your trust by misrepresenting who they are. They may pretend to be from the Department of Education, the IRS, or the vague-sounding “Student Loan Department,” urging you to send money or provide PII. The scammers might even use a “spoofed” phone number or email address to make it seem as if they are contacting you from a legitimate agency.

How to best avoid student loan fraud

The OIG recommends the following best practices for protecting yourself against identity theft and various other types of student loan scams:

• Never pay an upfront fee to anyone claiming they can help you manage or pay off your federal student loans. Debt-relief companies are not legally allowed to charge you before providing assistance. (Need help in consolidating your student loans, lowering your payments, or reducing your debt? You can find free resources at StudentAid.gov. Set up a free online account there if you haven’t already done so.)
• Never share your Federal Student Aid (FSA) ID number with anyone, including people who claim to represent your school, your student loan servicing company, or a collection agency.
• If you’ve been unexpectedly contacted by someone claiming to represent the U.S. Department of Education, the IRS, or any other organization you’re familiar with, don’t engage. Instead of clicking links or replying, log into StudentAid.gov and manage your account from there.
• Never engage with any party that contacts you regarding your loan and uses threats, coercion, or high-pressure tactics to get you to act immediately.
• Never share any personal information—including your date of birth, Social Security number, bank account number, or credit card details—with anyone unless you can independently verify their identity and trustworthiness. (Before you engage, reach out to your student loan servicer and ask if the other party is legitimate.)

Beyond these practices, the best defense against identity theft is comprehensive privacy and identity protection coverage like that offered by the IDX Complete Plan. It includes credit monitoring to detect changes to your credit files; the ability to easily lock or unlock your own credit file as needed; dark web monitoring to see if your personal data is being traded by cybercriminals; instant alerts on your TransUnion credit file when a lender attempts to verify your credit; and notifications if there’s been a new name added to your Social Security number.

Steps to take if you’ve been defrauded

If you believe you’ve been victimized by identity theft or any other form of fraud related to federal student loans, the OIG advises you to do the following:

• Contact the Federal Student Aid Information Center at (800) 433-3243 if you suspect that your FSA account has been compromised.
• Log into StudentAid.gov and change your password as soon as possible.
• Contact your federal loan servicer to make sure no unwanted actions have been taken on your loan.
• Reach out directly to your educational institution to make them aware of the situation.
• Contact the credit reporting agencies and freeze your account to prevent others from opening new credit accounts in your name.
• File a report with the OIG. You can do this even if you’ve simply received a student loan-related email, text, or call that you believe is a scam.

Apart from those measures, be sure to notify your bank or credit card company if you believe those accounts may be affected, and file a fraud report with the Federal Trade Commission.

Finally, should you need assistance in recovering your identity, the IDX Complete Plan offers a 100% identity recovery guarantee, $1 million in identity theft insurance, access to IDX’s expert care team, and more.