How to Avoid Student Loan Scams

If you’re struggling to manage student loan repayment, several strategies can help you find relief. For federal student loans, you might qualify for a new repayment plan or even loan forgiveness if you work in a qualifying profession, and these options are available at no cost to eligible borrowers.

But it’s important to stay vigilant. Some companies or individuals might try to take advantage of student loan borrowers. To protect yourself, get familiar with the signs of potential scams and learn how to find trustworthy lenders and resources. Here’s what to look out for and how to ensure you’re making the best decisions for your financial future.

4 student loan scams to watch for

Student loan scammers are often convincing and have become more sophisticated in their approaches. Many student loan scams exist, which frequently tie into recent news, such as legislation about student loan forgiveness. 

Here are four of the most common student loan scams you might encounter. 

1. Student loan repayment scams

Student loan repayment scams are one of the most common tactics. A company might call, email, or even send a letter claiming they can modify your current student loan repayment plan to alleviate your burden. Scammers may pose as a representative from your loan servicing company.

Their language could be convincing and even refer to legitimate federal student loan repayment plans, such as income-based repayment (IBR) or Pay As You Earn (PAYE) plans. After offering a convincing sales pitch, the company rep might start discussing fees, such as upfront or monthly fees for services, and pressure you into signing a contract or payment authorization. 

2. Student loan phone scams

Be wary if someone calls or texts your personal number claiming they can help with your student loans. These callers tend to promise immediate loan forgiveness, lower monthly payments, a reduced interest rate, or another form of relief. They may request personal information, such as your Federal Student Aid ID or password. 

Tip

The U.S. Department of Education (DOE) only sends text messages from two numbers: 227722 or 51592. Do not share any information or agree to pay any suspicious callers with too-good-to-be-true promises.

3. Student loan relief scams

Another popular tactic is companies contacting you and claiming they can negotiate with your loan servicer on your behalf to settle all or part of your student loan debt. Again, these companies’ claims can be convincing, and they’ll often request a fee for services. 

While some legitimate debt relief companies exist, they won’t contact you if you haven’t signed up for a service. If you get an unsolicited call, email, or text, it’s likely a scam. 

4. Student loan forgiveness scams

Student loan forgiveness has been in the news more in the past few years, which has resulted in many related scams. Scammers posing as representatives from the Department of Education or your loan servicer may reach out and claim your student loans were selected for immediate forgiveness. If this happens to you, remember: This assertion is simply too good to be true. 

If you have federal student loans, you might qualify for loan forgiveness after a certain time period or if you work in an eligible role. But there’s a process to follow and requirements to meet before your loans can be forgiven; it’s not fast or automatic. 

6 red flags of student loan scams 

If a suspicious person has contacted you or you want to avoid student loan scams in the future, here are major red flags to watch out for. 

1. Unsolicited contact: If you receive a random call, email, or letter from a company offering student loan relief or forgiveness, it’s likely a scam. Legitimate companies generally won’t reach out unless you’ve requested a service, and the DOE will only contact you from specific emails or phone numbers. 
2. Urgent language: Scammers like to use urgent language to encourage you to take action right away. Be suspicious if you hear the phrases “first come, first served,” “reply immediately,” or “limited-time offer.”
3. Payment authorization requests: If you have federal student loans, switching your repayment plan or negotiating with your loan servicer is free. Be wary of companies that claim to do this on your behalf and request a fee for services. 
4. Requests for login information: Legitimate companies will never ask for your Federal Student Aid ID or password, or any other login information. 
5. Lofty promises: Scammers often make lofty promises, such as immediate loan forgiveness or much lower monthly payments. Remember: Anything that seems too good to be true likely is.  
6. Unofficial emails or phone numbers: You should always be suspicious if you receive a call from a random number or an email that doesn’t look official. The DOE only texts from 227722 or 51592; its emails will come from [email protected], [email protected], or [email protected]. 

Pay close attention to the email addresses; scammers typically change a discrete portion of the email address to still look legitimate, which can be easily missed, and scammers take advantage of this.

Erin Kinkade

CFP®

5 tips to avoid student loan scams 

Student loan scammers can target anyone, so you might not be able to avoid these companies or individuals entirely. But if one contacts you via phone, email, or the mail, you can take steps to protect yourself. Here are our most helpful tips to avoid student loan scams.

1. Avoid responding to unsolicited emails, texts, or letters from questionable companies. 
2. Don’t share any personal information. 
3. Don’t sign any contracts or payment authorization forms. 
4. Ensure you know your student loan servicer and only contact it through official channels. (Find more information about contacting your loan servicer on the Federal Student Aid website.)
5. Report any suspicious communications to the proper authorities: the Federal Student Aid Office, the Federal Trade Commission, and the Consumer Financial Protection Bureau (CFPB).

Our expert’s advice to protect your personal information

Erin Kinkade

CFP®

Use secure websites and avoid public WiFi when accessing personal information. Use multifactor authentication, and select strong passwords. Maintain software updates. Use extreme caution with emails. Check your financial statements for unauthorized transactions related to your student loans. Shred your personal information documents. Use the annual free credit check scores with all three bureaus. I also recommend freezing your credit with all three credit bureaus when you’re not seeking a lender’s approval.

If you’re concerned you’ve been victimized by a student loan scammer, contact your loan servicer to request guidance on best next steps. Also, alert your bank or credit card company if you’ve shared your payment information.    

How to find reputable student loan companies 

While scammers are out there, so too are reputable student loan companies. If you’re looking to apply for new private student loans or refinance private or federal student loans, review lender websites, consumer feedback, and sites such as the Better Business Bureau to help determine whether a company is legitimate. 

Our expert’s recommendations: Legitimate options if you’re struggling with student loan debt

Erin Kinkade

CFP®

First, I recommend consulting with a financial counselor. Depending on the type of student loans you have, you may have several options, specifically with federal loans. These could include income-driven repayment plans (adjust monthly payments based on income and family size), Direct Consolidation Loans (combine multiple loans and look for better terms with the consolidation), refinance into a lower interest rate with private student loans—however, if refinancing to private loans from federal, you will likely lose the federal benefits unless the private provider offers similar benefits—and deferment or forbearance, which will pause the payments, but interest will still accrue. You can also look into loan forgiveness programs and talk with a trusted family or friend about helping you during your time of hardship (although this could be a slippery slope you may want to avoid).

Also, compare different lenders’ loan options, interest rates, fees, terms, and repayment plans. Gathering this information will help you find the best possible loan for your situation. 

To help narrow your options, the LendEDU editorial team rated each of the following companies highly after a detailed evaluation. These lenders offer competitive rates and a top-notch borrower experience. Click on each one to learn more about what it offers.

Student loan scam FAQ

What should I do if I encounter a student loan scam?

If you encounter a student loan scam, stop all communication with the suspected scammer immediately. Do not provide any personal or financial information. Document all interactions, including emails, phone calls, or messages. Report the scam to the appropriate authorities (see next question), and monitor your credit report for any suspicious activity.

How do I report student loan scams?

You can report student loan scams to several agencies. File a complaint with the Federal Trade Commission (FTC) through its online complaint assistant. You can also report the scam to the Consumer Financial Protection Bureau (CFPB), your state attorney general’s office, and the U.S. Department of Education’s Office of Inspector General.

How can I check the legitimacy of a student loan?

To check the legitimacy of a student loan, ensure that the lender is listed on the Federal Student Aid website, which includes verified federal and private lenders. You can also verify the lender’s legitimacy through the Better Business Bureau (BBB) and check for online reviews. Be cautious of unsolicited offers, especially if they promise loan forgiveness or ask for upfront fees.