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How to Spot Student Loan Forgiveness Scams

Slime takes all forms, and student loan forgiveness scams are one of the worst. It’s bad enough that you’ve got student loans. But now there are scammers trying to pull one over on you? It’s scummy and just plain sleazy. But you don’t have to fall for it.

When you can recognize a student loan scam, you can avoid it and save yourself time, money and stress. Let’s look at how these scumbags operate, so you can spot them from a mile away.

They Ask You to Pay for Loan Forgiveness

If you’ve got private loans, you won’t qualify for any government forgiveness programs. So don’t fall for their crap when scammers tell you they’ll set you up with a government program. And definitely don’t believe them if they tell you to send them money up front and all your loans will magically disappear. It’s not true!

Get a new student loan rate from a Ramsey-trusted company in 10 minutes.

If you’ve got federal student loans, the government doesn’t charge you to apply for loan repayment or forgiveness. All those scammers are going to do is set you up with an income-driven repayment plan, which you can easily do on your own for free. And it’s usually a one-time application, so anyone who asks you to pay monthly or up front is trying to cheat you.

The same goes for the Public Student Loan Forgiveness program. While it’s an ongoing application, it’s totally free! And you don’t need to waste your money paying some scammer based out of God-knows-where to do it for you.

They Promise Immediate Forgiveness

If it sounds too good to be true, it probably is. For example: If someone says they can forgive your $150,000 student loan balance for the “small fee” of $5,000, don’t believe them. They’ll take your money, and you’ll never hear from them again.

If you need student loan help, call your loan service provider to see what forgiveness or assistance you qualify for.

Oh! And don’t believe those fake federal student loan forgiveness calls that say Presidents Biden or Trump forgave student loans as part of the coronavirus relief package or CARES Act. They definitely didn’t do that. However, interest on student loans is suspended until the end of the COVID-19 emergency relief period.1

They Ask for Sensitive Information

Don’t give anyone your Social Security number, Federal Student Aid ID or passwords. Some of these scammers will say they need it to act on your behalf. Don’t believe them. They might try to steal your identity and open credit cards in your name. Then, you’d be left with a bigger mess to clean up, plus you’ll still have your student loans.

If this happened to you, contact your loan servicer and explain the situation. They should help you reclaim your account, so the scumbags can’t get in.

They Say They’re From the Government

Some companies lie and say they’re with the government when they’re not. The government has its own list of service providers, which you can check out here: 

  • FedLoan Servicing
  • Granite State
  • Great Lakes Educational Loan Services, Inc.
  • HESC/ Edfinancial
  • MOHELA
  • Navient
  • Nelnet
  • OSLA Servicing
  • ECSI
  • Default Resolution Group/ Maximus Federal Services, Inc.2

If they’re not with one of these guys, then they’re not a legitimate student loan forgiveness company. Avoid them like the plague.

You See Them on Social Media Ads

Be wary of any student loan forgiveness company advertising their services on social media. Ten times out of 10, this is a sign that they’re a for-profit company (not working with the government) and they’re looking for people to take advantage of.

Some are even using social media ads to gather your information to sell to other companies. Their ads will lead you to complete a form or call someone for more details. Then, they’ll sell your information to someone else, who will carry out the scam. These are known as lead-generating companies, but we call them con artists.

They Pressure You to Work With Them

These student loan forgiveness scams are brutal. They prey on desperate people and hire pushy salespeople to pressure you to take action with them.

Here’s the truth: Anyone telling you to “act now” before your chance at student loan forgiveness is gone is a bona fide scammer. You can take as much time as you need to make the right decision about what to do with your student loans.

So, if a slimy salesperson is pressuring you to give them money or your information, just hang up the phone and never talk to those jerks again.

They Ask You to Give Them Power of Attorney

Pay close attention to what you’re being asked to sign. If a student loan forgiveness company asks you to sign a power of attorney agreement so they can take action on your behalf, don’t sign it. Power of attorney agreements are legally binding documents that say someone can make financial and legal decision as though they were you.

You don’t want these guys opening accounts or making major decisions in your name. And you don’t need them to set up an income-driven repayment plan or apply for federal loan forgiveness on your behalf. You can do all of that yourself for free! Do your research, save your money and do it yourself. It’s quick and painless.

How to Report a Student Loan Forgiveness Scam

If you know about a student loan company that’s scamming people, contact the Consumer Financial Protection Bureau, the Federal Trade Commission and your state’s attorney general’s office to file a complaint.

The CFPB recently cracked down on a company in California, who was scamming people out of millions by promising to help them with their student loans.3 By speaking up, you’ll put another fraud on their radar and potentially keep someone else from being scammed.

Best Way to Pay Off Student Loans

There’s no shortcut to student loan forgiveness. And the truth is that student loan forgiveness programs aren’t all they’re cracked up to be. But there is hope. You have other options to pay off your student loans fast.

The first method is the debt snowball. Order your debts from the smallest to the largest. Then, while you’re still paying the minimum on your other loans, attack the smallest debt. When it’s paid off, move on to the next one until you’re debt-free. It’s worked for millions of people, and it can work for you too. Use the free debt snowball calculator to get started.

Another method is to refinance your student loans. You can get a lower monthly payment and a lower interest rate. That way you’ll pay your loans off faster and with less stress. Sadly, there are some scammers in this industry too. Check out our trusted choice for student loan refinancing.

And if you’re tired of getting the runaround for student loan forgiveness, check out the step-by-step plan to pay off your student loans fast, Anthony ONeal’s Quick Read Destroy Your Student Loan Debt.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Get Rid of Your Student Loans Faster!

Learn How

Get Rid of Your Student Loans Faster!

Find a new, lower interest rate in about 10 minutes.
Learn How

Get Rid of Your Student Loans Faster!

Find a new, lower interest rate in about 10 minutes.
Learn How