10 Ways to Spot and Avoid Student Loan Debt Relief Scams

With Americans owing over $1.81 trillion in student loan debt, scammers have found a lucrative target. The confusion surrounding recent policy changes—from payment pauses to forgiveness programs—has created the perfect environment for fraud to thrive.

This comprehensive guide will teach you exactly how to identify, avoid, and report student loan scams. More importantly, you’ll learn what legitimate help actually looks like.

Fast facts by the numbers:

• $339 million refunded to people who lost money to student loan debt relief scammers in 2024
• $500 – $700 charged on average for upfront fees
• $42,673 average total loan balance per person.

How to Spot a Student Loan Scam

Not sure if someone you’re considering working with is the real deal? Here’s how to tell if they’re a scam.

1. Asking for Money Upfront: If anyone associated with loans or debt ever asks you to pay for their services before they assist you, then they’re not who you think they are. The Federal Trade Commission (FTC) has made it very clear that it’s illegal for any debt relief company to collect fees from a customer before they’ve actually settled or otherwise resolved the consumer’s debts.

The government and the private companies that they’ve approved to service student loans will never charge you for what they do. The forms and applications that scam companies claim to file on your behalf can be done on your own for free.

Legitimate services that ARE free:

• Free Application for Federal Student Aid (FAFSA)

• Income-Driven Repayment (IDR) plan applications

• Public Service Loan Forgiveness (PSLF) applications

• Federal loan consolidation

• Changing your repayment plan

• Deferment and forbearance requests

• Scholarship forms

2. Pressuring You to “Act Now”: Scammers use urgency as a weapon. They’ll tell you that slots are “limited,” the program is “closing soon,” or you’ll “miss out forever” if you don’t act immediately.

3. They Ask for Your FSA ID or Personal Login Information: Whenever someone asks for your personal information such as your Federal Student Aid (FSA) ID or password, hang up the phone. Under no circumstances should this information ever be given out to anyone.
   
   Your FSA ID is the key to your entire financial aid record. With it, a scammer can:

• Lock you out of your account by changing your password

• Change your contact information so you don’t receive important notices

• Alter your repayment plan without your knowledge

• Access your personal information

• Apply for additional loans in your name

The same thing could happen when you update your bank or demographic information.

4. They Want Your Social Security Number: Your Social Security number is the master key to your financial identity. With it, scammers can:

• Open credit cards in your name
• Take out loans
• File fraudulent tax returns
• Access your existing accounts
• Steal your identity completely

When It’s OK to Share Your SSN: You should only provide your Social Security number to entities you’ve contacted directly (not those who contacted you) and that you’ve verified are legitimate—like your actual loan servicer, the IRS, or your bank. Even then, share it through secure channels, not over email or in a text message.

5. They Promise Immediate Loan Forgiveness or Cancellation: This is perhaps the most common scam, especially following political discussions about student loan forgiveness.

   The truth about loan forgiveness:

• Federal loan forgiveness programs have specific eligibility requirements
• PSLF requires 120 qualifying monthly payments while working full-time for an eligible employer
• IDR forgiveness takes 20 or 25 years of payments, depending on the specific plan
• No one can guarantee you’ll qualify—that’s determined by the Department of Education
• There is NO upfront fee for any legitimate forgiveness program

6. They Guarantee “Quick Relief” or “Instant Approval”: Another line scammers will use is that they can provide you with “quick” relief. Government bureaucracy is many things, but “quick” isn’t one of them. Any claim of immediate results is a lie.
   
   Filling out the proper forms for debt consolidation or changing your payment terms based on income will take time to process. Be patient while you await a response from the government.
   
   If someone promises you’ll see results “within 24 hours” or “immediately,” they’re lying.

7. They Found You Through Ads or Contacted You Directly: How did you find the company or offer that you’re considering? Was it at the top of a Google search or in one of the sidebars of a website? If so, then it was most likely a paid advertisement.
   

   
   

   Companies regularly pay to be at the top of search engines. And while their listing is clearly marked “Ad”, some people miss this detail and click on it anyways.
   
   Although there’s nothing wrong with advertising, think about it logically… These companies are paying for advertising because they want to boost their revenue. That means they may be more financially motivated than interested in providing you with honest help.
   
   Be extremely skeptical of student loan companies that:

• Appear at the top of Google searches (marked “Ad”)
• Send you unsolicited emails or texts
• Call you out of the blue
• Mail you “official-looking” letters
• Message you on social media

8. Their Website URL Doesn’t End in .gov: Check the address (URL) of the website that’s contacting you. Unless it says “.gov”, then it’s a for-profit company and most likely a scam. A lot of companies will create their websites with a “.us” URL to make it seem like an official government entity, but the reality is that anyone can register a .us domain… including criminals.

9. They Use Official Logos and Fake Endorsements: Another trick that fraudsters will use is to add the Department of Education’s official seal or other organization logos to make it seem as though they’re affiliated or endorsed. However, these companies most likely have no actual connection to the government and are most likely using these images illegally to trick consumers.
   

   
   

   Scammers will illegally use:

• The Department of Education seal
• Federal Student Aid logos
• Government agency emblems
• BBB (Better Business Bureau) ratings they don’t have
• Fake testimonials and reviews

10. It Sounds Too Good to Be True: As the old saying goes, any time someone makes you an offer that seems too good to be true, then it probably is.
    

    
    

    Everything you need to know about your options is right on the Department of Education’s website. The best way to stay up-to-date with the latest news and programs is to check their official website.
    

    
    

    Claims that should trigger immediate suspicion:

• “Your loans will be completely forgiven!”
• “Cut your student loan payments by 90%!”
• “Get out of student loan debt without paying!”
• “We guarantee approval!”
• “This is a special government program only we can access!”
• “Your loans will disappear in 30 days!”

How to Tell the Difference: Legitimate vs. Scam

What to Do If You’re the Victim of a Student Loan Scam

If you read any of these tips and believe you may have been or are currently being scammed, the first thing to do is not to panic. Check online for any negative reviews or with the Better Business Bureau to see if anyone else has reported trouble with this company in the past.

Report your case immediately to the following:

• The Federal Trade Commission (FTC) at ftc.gov. Additionally, if someone has stolen your identity, then you can also report it to the FTC at identitytheft.gov.
• Local state attorney general’s office
• The college or university’s financial aid or admissions office (if applicable)
• The loan service provider

To further stop the scam, take the following actions:

• Alert your financial institution
• Stop payment with your credit card company

It will be helpful to collect any emails, documents, or financial transactions that might help build your case.

Protect Yourself from Scams

Don’t allow yourself to become the victim of a student loan scam. Criminals know there’s a lot of misinformation out there, and they’ll use every chance they can to spin it into an offer to defraud customers of their money or personal information.

We all want our student loans to be paid off and behind us. But we also have to be patient as we repay them off just like any other money we’ve borrowed. Remember this and keep yourself informed by staying up to date on the latest official information.

What Legitimate Help Actually Looks Like

Not all companies offering student loan assistance are scams. Here’s what legitimate help involves:

Federal Loan Services (Always Free)

These should never cost you anything:

• Your loan servicer: The company managing your federal loans (Nelnet, Mohela, Aidvantage, etc.) provides free assistance with repayment plans, forgiveness applications, and account management
• gov: The official government portal where you can manage everything yourself for free
• Federal Student Aid Information Center: Call 1-800-433-3243 for free help understanding your options

How Legitimate Student Loan Refinancing Generally Works

• You research and choose to apply with a refinancing company
• The company checks your credit and finances
• You receive rate quotes with no obligation
• You decide if the new rate is worth giving up federal benefits
• If you proceed, they pay off your existing loans and you start making payments to them
• There are NO upfront fees—the company makes money from the interest on your loan

If you have defaulted private student loans, you may qualify to work with Yrefy. Call us at: (888) 346 – 3394 to learn more about how we may be able to help you.