Game of loans: Getting schooled on deceptive student loan debt relief scams

Debt relief scams make false or misleading promises. Fraudsters prey on your hope for a solution to financial stress. They use official-looking names, fake logos and fake seals to pretend to be affiliated with the government and loan servicers. They can even include your loan balance information in communications to appear legitimate. They say they have special access to federal programs when they don’t, and trick victims into believing that money paid upfront goes toward paying down a loan when it doesn’t.

Officials say you should avoid anyone who asks you to pay an upfront fee. It’s illegal for a for-profit company to charge you an advance fee before it has provided debt relief services. A company that claims an offer is limited and that pressures you to act now, or asks you to sign and submit a third-party authorization form or a power of attorney, and promises quick and total loan forgiveness, elimination or cancellation should tip you off to a student loan debt relief scam.

Whether you have a federal or private student loan, always protect your personally identifiable information. Federal loans require the use of a Federal Student Aid (FSA) ID, which consists of a username and password. A FSA ID gives you access to Federal Student Aid’s online systems and can serve as your legal signature. Don’t give your FSA ID to anyone. Scammers ask for your FSA ID so they can take control of your financial aid information and make changes to your account without your permission.

You don’t have to pay a third party for help with your federal student loans. Officials say there’s nothing a company can do for you that you cannot do yourself for free. You can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the U.S. Department of Education or your loan servicer at no cost. For federal student loan repayment options, visit

Debt relief isn’t a one-size-fits-all proposition. Before you decide to engage a student loan debt relief company, make sure to research the company online on your own. Type in the name of the company for general information, as well as the name of the company with the words “scam,” “complaints,” “reviews,” “lawsuit” or similar terms.

If you’ve done your due diligence to evaluate a company by searching online for general information as well as reviews and complaints and you’re still not sure whether you should trust it, listen to your intuition and don’t proceed. Additional information for borrowers is available at

Here are steps to take if you’ve been scammed.

  • Change your FSA ID.
  • Contact your federal loan servicer to revoke any power of attorney or third-party authorization agreement. Make sure no unwanted actions have been taken on your loans. Information about loan servicers is available at
  • Use the Federal Student Aid Feedback System to file a report of suspicious activity.
  • Contact your bank or credit card company to stop payments to the company.
  • File a complaint with the Federal Trade Commission and your state attorney general’s office.

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