Got a Student Loan? Don’t Let Scammers Take Advantage

High-pressure pitches, illegal fees, and more: What to watch out for

Getting a higher-education diploma should be a joyous occasion. But if you or someone you know has an outstanding student loan, it can be a burden that stretches on for years. Paying it off is often difficult—in fact, more than 5 million people in the U.S. are currently in default on their federal student loans. Earlier this year, the U.S. Department of Education began referring these loans for collection; those in default could soon have their wages garnished.

People who are having a tough time repaying their loans, or are dealing with collection agencies, often find themselves preyed upon by bad actors who try to take advantage of the situation. Scammers reach out by phone, text, or email, impersonating legitimate loan servicers or debt-relief agencies. They promise victims that they can reduce their federal student loan payments or get their debt wiped out immediately—for an upfront fee.

The Federal Trade Commission (FTC) settled a case against one student loan debt-relief company that had tricked consumers into paying $16.7 million in illegal upfront fees. More recently, the FTC refunded $356,900 to consumers who had been tricked by scammers into signing up for a fake program that promised loan forgiveness.

How to spot a student loan repayment scam

Of course, not all private debt-relief companies are fraudulent. And there are several legitimate loan servicers out there, affiliated with the U.S. Department of Education. But the Department warns borrowers to watch out for bad actors, unaffiliated with the government, who guarantee immediate debt-relief results or demand money upfront for services they can’t deliver. Signs that you’re being scammed include:

High-pressure sales pitches—Beware of claims such as, “Act immediately to qualify for student loan forgiveness before the program is discontinued,” or “Your student loans may qualify for complete discharge. Enrollments are first come, first served.”

Unrealistic promises—Scammers often promise immediate student loan cancellation in exchange for an upfront or monthly fee. It’s too good to be true. Real government forgiveness programs usually require years of qualifying payments and/or employment in certain fields.

Requests for account access—Fraudsters might ask for your StudentAid.gov account login credentials, including your username and password. Neither the Department of Education nor its official partners will ever ask for this information.

Fraudulent addresses or phone numbers—Scammers might use official-looking names, seals, or logos to make it seem like they’re affiliated with the Department of Education. Be extremely wary of any calls or texts you receive about your student loans. With emails, always check the sender’s email address. Emails from the Department of Education will only come from @studentaid.gov, @debtrelief.studentaid.gov, or @public.govdelivery.com.

(Note, though, that fraudsters can even fake email addresses like these. Instead of clicking links or replying, log into StudentAid.gov and manage your account from there.)

What to know when navigating the repayment process

The FTC offers several tips regarding student loan repayment, including:

• For help with federal student loan repayment, always start at StudentAid.gov. (If you haven’t done so already, set up a Federal Student Aid account on the site, so you can easily access your loan information.)
• Never pay upfront for student loan debt relief. Debt-relief companies are not legally allowed to charge you before providing assistance.
• Never share your Federal Student Aid ID number or related personal and financial information, including your StudentAid.gov account login details.
• Scammers often urge you to act fast to qualify for repayment plans, loan consolidation, or loan forgiveness programs. Don’t give in to the pressure—do research on the company before signing anything.

It’s important to note: You don’t need to pay someone for loan assistance. The U.S. Department of Education contracts with several legitimate private companies to support federal student loans and borrowers. Among these are loan servicers such as MOHELA and Nelnet, which collect loan payments, help borrowers choose the right repayment plan, and more, all for no fee. (Find contact information for your federal student loan servicer here.)

You also don’t need to pay someone for help paying off your loan. Your loan servicer can work with you—again, for no fee—to lower your monthly payment, consolidate multiple federal student loans, or see if you qualify for loan forgiveness. (The Department of Education provides a list of circumstances in which federal student loans may be forgiven.)

What to do if you’ve been victimized

If you believe you’ve become a victim of a scam involving your StudentAid.gov account, the Department of Education advises you to:

• Log in and change your password as soon as possible. Check your contact information (email, address, phone number) to be sure it’s still accurate.
• Contact your federal loan servicer to make sure no unwanted actions have been taken on your loan.
• Contact your bank or credit card company to stop all payments to the company that’s scamming you.
• File a complaint so that the Department of Education can monitor your account for suspicious activity.

Paying off a student loan can be stressful, and unfortunately there are fraudsters out there hoping to capitalize on that stress. Remember, you don’t need to turn to sketchy repayment solutions or dubious quick fixes. Instead, use the legitimate resources available to help you, starting with StudentAid.gov, so you can start focusing on the better parts of life as a graduate.