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Student Loan Scams

As of mid-2022, about 43 million people, including 8.9 million age , had outstanding federal student loans, with the average debt burden topping $37,600, according to data from the U.S. Department of Education’s Federal Student Aid office (FSA).
At the same time, the student debt landscape is undergoing big changes. On Aug. 24, President Joe Biden announced a plan to for millions of borrowers. For those who still have outstanding loans, federal repayments are set to resume Dec. 31 after a nearly three-year pandemic moratorium. Many have new payment arrangements amid a (companies contracted by the government to manage repayments). Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Circumstances like these can breed confusion and financial anxiety, a combination that gets high marks from scammers. They barrage borrowers with robocalls, emails, texts and social media messages touting sketchy strategies to quickly reduce monthly payments or procure loan forgiveness.​ Some of these schemes involve of the kind that also target people in arrears on , credit cards or . Other scammers pose as student loan servicers or representatives of the U.S. Department of Education. The common thread is that they will solicit an upfront payment or request personal information, like your FSA account credentials or Social Security number, supposedly to secure your freedom from student debt.

Dodgy debt relief companies​

There are legitimate companies and organizations that can help you navigate the complexities of the student loan system — for example, by sifting through myriad federal and state repayment and forgiveness programs to see if you qualify. Their tips and tools may save you time and money. But remember that there’s nothing a debt relief company can do to reduce or restructure your student debt that you can’t do yourself, for free, by contacting your loan servicer or the Department of Education. And if a company charges in advance to tackle your debt, that’s a sure sign of a scam: It’s illegal for debt relief firms to collect payment from you before they get results.​ Student debt scammers claim special skills to get you a more affordable repayment plan or “exclusive” access to loan consolidation or cancellation programs. They piggyback on the public interest and political debate around student loan policies, citing supposed “new law s” to benefit borrowers like you or pressuring you to act fast before an existing program is terminated. in 2020, according to the Federal Trade Commission (FTC).

Student loan foregiveness scams​

Nearly 8 million borrowers may be eligible for a measure of automatic debt forgiveness under the Biden administration's new plan. Existing can erase part or even all of outstanding student debt under certain circumstances or conditions — for example, if you go into or suffer a .​ Groceries 20% off a Freshly meal delivery subscription See more Groceries offers > These programs have complicated rules and may require years of regular payments or steady employment in certain fields before you qualify to have your loan terms changed. Scammers, presenting themselves as debt relief pros, loan servicers or government agents, promise instant, easy access to forgiveness if you act fast and pony up a payment, or turn over sensitive data that can be used for . The pandemic pause in student loan repayments fueled new variants of this scheme, with con artists promoting supposed “COVID-19 forgiveness.” Any such offer is a scam. As the FSA office states, “There is no coronavirus-related loan forgiveness for federal student loans.”

Warning Signs

You receive an unsolicited message from a debt relief company or student loan entity promising to quickly reduce your payments or get you loan forgiveness.You’re asked to make an upfront payment or pay recurring fees to get your debt reduced.You’re asked to provide your Social Security number or FSA ID (the username and password on your loan account). Federal agencies and loan servicers will not ask you for this information.

How to protect yourself from this scam

Do visit the Department of Education's site for free information on getting help with federal student loans.Do to learn about and apply for repayment and forgiveness programs, at no cost.Do check out a debt relief firm before giving it information or signing any agreements. Ask your about the company and use the to look up reviews and complaints.Do be skeptical of calls and emails claiming to be from or affiliated with the Department of Education. Scammers or feign ties with government agencies, sometimes appropriating official titles or logos to appear legitimate. Do log in to your FSA account and change your ID if you think it’s been compromised, and contact your loan servicer to make sure no unwanted actions were taken on your loans. AARP NEWSLETTERS %{ newsLetterPromoText }% %{ description }% Subscribe , the and . You can also to the Federal Student Aid office.The federal government’s FSA site has a wealth of information on , including options for easing your debt burden, all available for free.The FTC publication offers background information and advice on debt relief services, credit counseling and other tools to help you overcome financial liabilities. MORE FROM AARP Scam Tracking Map No matter where you live, fraud is never far away. Report a scam or search for existing scams near you. AARP VALUE & MEMBER BENEFITS See more Health & Wellness offers > See more Flights & Vacation Packages offers > See more Finances offers > See more Health & Wellness offers > SAVE MONEY WITH THESE LIMITED-TIME OFFERS