In the past year, you may have received a call or voicemail telling you that you qualify for student loan forgiveness. As the conversation around Biden’s student loan forgiveness plan continues, bolstered by the ongoing legal battle over its legitimacy, 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.

Updates on Biden’s student loan forgiveness plan 

In August 2022, the Biden administration released its student loan forgiveness plan. This plan would forgive up to $20,000 if you make less than $125,000 per year and received a Federal Pell grant, and up to $10,000 if you make less than $125,000 per year and did not receive a Federal Pell grant. Applications for student loan forgiveness opened in October 2022 but were quickly closed as the plan became entrenched in legal conflict. The United States Supreme Court will begin hearing arguments on February 28 to discern the legality of Biden’s student debt relief plan.  

As the fate of national student loan forgiveness hangs in the balance, recent data shows that roughly 26 million people applied for student loan forgiveness in the four weeks the application was open, and 16 million were fully approved. While these numbers do not mean much in terms of the legal battle surrounding loan forgiveness, they do illustrate the mounting interest surrounding student debt relief, and how easy it might be for scammers to take advantage of that interest.  

How to spot a student loan forgiveness scam 

Student loan forgiveness scams rely on one thing: desperation. These scams come in many forms, but they often promise loan forgiveness or help with applying for it. 

If immediate forgiveness is brought up, be on guard. 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. You may also be eligible if you have certain qualifying circumstances, these can include being permanently disabled or your school being closed.  

Be cautious about any offers from anyone other than your loan servicer, especially if they ask you for money. You shouldn’t pay anything to start a loan forgiveness program. If you qualify, your loan servicer will help you for free.  

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 the fate of wide-scale student loan forgiveness is unknown, the current 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 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.