How to avoid student loan forgiveness scams

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In recent months, you may have received a call or voicemail telling you that you qualify for student loan forgiveness. As the conversation around student loan forgiveness continues, bolstered by actions from the Biden administration in revising programs like Public Service Loan Forgiveness and borrower defense to repayment, many new scams have appeared targeting student loan borrowers. Understanding how these scammers work and who they’re targeting can help you know what to look for and how to protect yourself.

How to spot a student loan forgiveness scam

Student loan forgiveness scams rely on one thing: desperation. These scams come in many forms, but some of the more common ones include promising immediate loan forgiveness and offering to help you apply for forgiveness for a small fee.

However, most federal student loan forgiveness programs require years of qualifying payments and/or employment in certain fields before you’re eligible, and you can apply for free through your loan servicer.

Additionally, you may qualify to have your student loans canceled if you’re permanently disabled, your school has been closed or you’re experiencing other qualifying circumstances. But again, you can work with your loan servicer for free to find out if you’re eligible.

Here are some ways to know if an offer for student loan forgiveness is a scam:

  • The company promises to help you enroll in a certain assistance program and charges a fee for the service.
  • You’re asked to pay upfront before any work is done or promised services are provided.
  • The company asks for your Social Security number or other sensitive personal information. Don’t give this information out, even if someone calls you claiming to be from your student loan servicer.
  • The company guarantees loan forgiveness in a short time frame. This just isn’t possible unless you have circumstances that qualify for immediate discharge. Contact your loan servicer for details.
  • The person or company asks you for your Federal Student Aid (FSA) ID or password. Your ID can be used to electronically sign documents, and your loan servicer will never ask you for it.
  • The company promises forgiveness for private student loans.

What to do if you’ve been scammed

If you’ve already given money to a company offering false promises about student loan forgiveness, contact your attorney general’s office.

You can also file a complaint with the Federal Trade Commission. It’s especially important that you report scams that target more than one person or ones that use fake names or official-looking websites.

It’s also good to spread the word about these scams by sharing this information with your friends and family on social media.

You may also:

  • Log in to your FSA account and change your ID and password.
  • Contact your loan servicer and revoke any third-party authorization you’ve provided or that has been added to your account.
  • Contact your bank or credit card company to cancel your account and issue a new one if you’ve provided any financial account information.

What are the current student loan forgiveness programs?

The federal government offers a few different ways you can qualify to have your loans forgiven:

  • Income-driven repayment plans: Income-driven repayment plans lower your monthly student loan bills to a percentage of your income. Depending on the plan, your remaining loan balance will be forgiven after 20 or 25 years of qualifying payments.
  • Public Service Loan Forgiveness: The Public Service Loan Forgiveness program cancels your remaining loan balance after you’ve made 10 years of qualifying payments on an income-driven repayment plan while working full time for a government agency or an eligible public service organization.
  • Teacher Loan Forgiveness: The Teacher Loan Forgiveness program can forgive up to $17,500 in Direct or FFEL Loans if you teach full time for five consecutive years at certain elementary and secondary schools that serve low-income families.
  • Perkins Loan cancellation: If you have a Perkins Loan, you may be able to get it canceled if you work in certain fields or teach at certain schools.
  • Total and permanent disability discharge: If you become permanently disabled, your eligible federal student loans will be forgiven.
  • Borrower defense to repayment: If your school misled you or violated state law in regards to certain types of financial aid, you may be able to have your federal loans forgiven and be reimbursed for fees you’ve already paid.

If you believe that you may qualify for loan forgiveness, contact your loan servicer to review your options and fill out the necessary paperwork.

The bottom line

Scammers may try to take advantage of you by charging for services that are free, encouraging you to sign up for repayment programs you don’t need or stealing your personal information. Don’t be afraid to ask for the company’s name and a callback number, then run an internet search for the information to determine if the company is legitimate.

While there are no shortcuts to student loan forgiveness, the programs set up by the federal government can help you pay back your loans if you meet certain requirements. But it’s important to remember that you don’t have to pay money to apply for loan forgiveness programs and income-driven repayment plans, and you definitely don’t have to go through a third party to go through the process. Contact your loan servicer if you’re interested in learning more about those options.

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Written by
Ben Luthi
Contributing writer
Ben Luthi is a personal finance and travel writer who loves helping people learn how to live life more fully. His work has appeared in several publications, including U.S. News & World Report, USA Today, Yahoo! Finance and more.
Edited by
Student loans editor