Student loan scams: Current warning signs, common fraud schemes, and how to protect yourself

Student loan scams continue to evolve as scammers find new ways to target students and borrowers. From fake student loan forgiveness offers and debt-relief schemes to phishing texts that imitate government agencies, scammers often use urgency and misinformation to steal money or personal information. Understanding the latest scams and warning signs can help protect your finances and your identity.

What you’ll learn

• How can you tell if a student loan offer is a scam?
• Types of student loan scams
• Emerging student loan scams to watch for
• Warning signs of student loan scams
• What to do when targeted by a student loan scam

How can you tell if a student loan offer is a scam?

A student loan offer may be a scam if it:

• Requests upfront fees
• Promises immediate loan forgiveness
• Asks for your FSA ID username or password
• Uses high-pressure sales tactics
• Arrives through unsolicited calls, emails, or text messages
• Claims special access to government programs

Federal student loan assistance, repayment programs, and most forgiveness applications are available directly through StudentAid.gov at no cost.

Types of student loan scams

Upfront fee scams

Some scammers advertise a paid service claiming to help students find potential student aid or fill out forms such as FAFSA (Free Application for Federal Student Aid). While there can be legitimate services that charge for additional help and information regarding student aid, many of these services are not worth it or are outright scams.

Be extremely cautious if a company wants you to pay upfront costs for help obtaining student aid. University financial aid offices will be happy to assist you and answer questions for free, and forms like the FAFSA are free.

Student loan forgiveness scams

Since student loan forgiveness continues to be a topic of interest and discussion, and many people with large amounts of student debt struggle to repay their loans, student loan forgiveness is frequently the focus of many scams. These scams often trick their targets into sharing financial information, such as their bank account numbers and Social Security number, thinking that this is required to receive student loan forgiveness. Alternatively, scammers may attempt to convince their targets to make an initial payment to receive forgiveness.

Today's forgiveness scams often arrive through phone calls, text messages, social media ads, or emails claiming you qualify for immediate loan cancellation. These messages frequently create a false sense of urgency by suggesting a program is ending soon or that only a limited number of borrowers qualify. Legitimate forgiveness programs have established requirements and do not guarantee immediate approval.

While student loan forgiveness programs exist, they don’t operate in the ways scammers want you to believe they do. No student loan forgiveness program will ever require payment to get started, and any required financial information should be entered through an official, secure online portal.

Student loan repayment scams

Besides complete forgiveness, many student loan programs exist to allow for consolidation or payment plans that greatly increase the recipient’s ability to pay. Like other upfront fee scams, many repayment scams target victims by convincing them to pay a fee to consolidate or change their payment plan. These services are free through the U.S. Department of Education and federal loan servicers.

If someone contacts you about a student loan consolidation or alternative payment plan, be cautious of their claims. Studentaid.gov has information on the repayment options available, including who is eligible and how to change your payment plan.

Emerging student loan scams to watch for

FSA ID and account takeover scams

One of the fastest-growing student loan scams involves criminals trying to gain access to your Federal Student Aid (FSA) account. Scammers may claim they need your FSA ID username or password to enroll you in loan forgiveness, lower your payments, or verify your eligibility for federal programs.

Never share your FSA ID credentials. The U.S. Department of Education and federal loan servicers will not ask for your password.

Phishing text message scams

Student loan scammers increasingly use text messages that look official. These messages may claim you qualify for immediate student loan forgiveness, that your account requires verification, or that a repayment deadline is approaching.

Before clicking any link, verify the information directly through your loan servicer or StudentAid.gov. Be especially wary of unexpected texts urging you to act immediately.

Government imposter scams

Some scammers pose as representatives from the U.S. Department of Education or other government organizations. They may use official-sounding names, fake seals, or urgent messages to create a false sense of legitimacy.

Remember that official federal student aid communications will not require upfront payments or ask you to provide sensitive information over the phone.

Warning signs of student loan scams

Student loan scams are nefarious, but many warning signs are similar to those of other scams. Be on the lookout for any of these red flags.

Additional fees

While you may have to pay back any student loans you’ve taken out, another fee on top of your monthly payment is a huge warning sign of a potential scam. You can obtain loan assistance at no cost, and federal loan servicers can work with you on any repayment or consolidation plans without any fees.

Asked to provide sensitive financial information

Always be on guard if anyone asks you to provide sensitive financial information, such as your Social Security number or bank information. While this information can be required on certain forms, it should only be provided on a secure online portal, not because someone claiming to help you with student aid asked for it.

High-pressure tactics

Scammers often claim that loan forgiveness opportunities are about to expire or that you must act immediately to maintain eligibility. In reality, legitimate federal student aid programs provide official information through established channels and do not pressure borrowers into making immediate decisions.

Too good to be true

Student loan debt is a major financial issue for many, and victims are unfortunately susceptible to promises that their problem could go away. Loan forgiveness and repayment plans that make it easier to pay exist, but the claims made by scammers are often too good to be true, promising total forgiveness in any circumstances.

Legitimate loan forgiveness programs have many limitations and qualification caveats, such as requiring years of qualifying payments or only a specified amount of debt to be forgiven. If you need student loan forgiveness, you can find legitimate opportunities on studentaid.gov.

Requests for your FSA ID credentials

Your Federal Student Aid account contains sensitive personal and financial information. A scammer who gains access to your FSA ID may be able to alter account information or take actions on your behalf.

If anyone asks for your StudentAid.gov login credentials, consider it a major red flag. Legitimate organizations will never request your password.

What to do when targeted by a student loan scam

Being targeted by a scam can be unnerving, even if you don’t become a victim. Here are the steps to take:

• Report the scam: If you encounter suspicious activity or a scam, go to https://studentaid.gov/feedback-center/ and follow the on-screen prompts to report the fraud. You can also submit a report to the Federal Trade Commission and your state’s Attorney General.
• Change your username and password: If you believe there’s a chance someone has access to any financial or student aid accounts, update your username and password for those accounts immediately. Remember to create a strong password that’s difficult to guess.
• Cancel fraudulent payments: If a scammer convinced you to schedule a fraudulent payment, immediately contact your financial institution to block this payment. Your financial institution should have policies and procedures to handle these situations and protect your funds.
• Contact your loan servicer: Prompt communication with your loan servicer is necessary so they are aware of the fraud and can take steps to ensure the scammers cannot continue to defraud you.
• Monitor your credit and student aid accounts: If you shared personal information with a scammer, regularly monitor your student aid account, bank accounts, and credit reports for suspicious activity. Promptly report any unauthorized changes and consider placing a fraud alert with the major credit bureaus.

Whether you are a soon-to-be student or have graduated and are paying off loan debt, awareness of student loan scams is vital to avoid becoming a victim. Pay close attention to potential warning signs of a student loan scam and always report and take measures to protect yourself if targeted.