Student Loan Debt Relief Scams

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​​​​​​​​​Paying back student loans can be overwhelming. So-called student loan debt relief companies promise to defer, lowe​​​​r, consolidate, or eliminate federal student debt, but end up costing you more money and may not reduce your federal student loan debt at all. These companies typically offer services you can get for free from the federal government or your loan servicer. Often, these "companies" are just fraudsters who are after your money. It is important to know the signs of a scam.

There is nothing a student loan debt relief company can do for you that you cannot do yourself for free.

Signs of a student loan debt relief scam

Requests for upfront fees. If a company charges you an upfront fee to reduce your debt, it is likely a scam. If you pay upfront to reduce or get rid of your student loan debt, you might not get any help — or your money back. These types of fees are prohibited for loan service providers. Do not provide credit card numbers or bank account information.

Promises of immediate loan forgiveness or cancellation. Before they know the details of your situation, scammers might say they can quickly get rid of your loans through a loan forgiveness program — programs most people will not qualify for. Scammers might also say they will wipe out your loans by disputing them, but they cannot do either. Most government forgiveness programs require many years of qualifying payments and/or employment in certain fields before loans can be forgiven.

Requests for your Federal Student Aid (FSA) ID. Some scammers claim they need your FSA ID to help you. Do not share your FSA ID with anyone. A borrower's FSA ID has the same legal status as a signature, and it can be used to make changes to the borrower's account. Scammers could use your FSA ID to get into your account and take control of your personal information without your knowledge.

Limited time offers. To get you to act fast, scammers may try to instill a sense of urgency by saying you could miss qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you do not sign up or contact them immediately. Take your time and thoroughly research any claims like this before taking any action.

Requests to sign a third-party authorization form or a power of attorney. These written agreements give a company legal permission to talk directly to your federal loan servicer and make decisions on your behalf. Scammers often want these authorizations so that they can change your contact and payment information without your knowledge - this may prevent you from being notified if they stop payments.

Claims that the program has a special relationship with the government or Department of Education. Scammers use official-looking names, seals, and logos, and tell you they have special access to certain repayment plans, new federal loan consolidations, or loan forgiveness programs. They do not. If you have federal loans, go to the Department of Education directly at

What To Do if You Are a Victim of a Scam

​​​If you believe you have been victimized by a fraudulent student debt relief company follow-up with these recommended steps as soon as possible.

  • Change your FSA ID. Do not share your new FSA ID password with anyone.
  • Contact your loan servicer. Revoke any power of attorney or third-party authorization agreement that your servicer has on file. Make sure no unwanted actions were taken on your loans.
  • Contact your bank or credit card company. Request that payments to the company be stopped.

Find FREE Help for Student Loan Debt

If you have a federal student loan, free loan assistance is available through the U.S. Department of Education
at or from your federal loan servicer (the company you pay). If you have a private loan, you
should contact the private lender directly for assistance.

Helpful Resources

Visit the Wisconsin Department of Financial Institutions’ website Look Forward to Your Future to find resources for both parents and students on planning for and repaying student debt, including the College & Career Readiness Guide.

(Some information on this webpage taken from the FTC and U.S. Department of Education’s webpages.)