As of 2025, nearly 43 million people — one in six adult Americans — have outstanding student loans. With such a large number dealing with student loan debt, it’s no surprise that student loan borrowers are a frequent target of scams and fraudsters.
Recently, the Federal Trade Commission (FTC) found that a debt relief company charged student loan borrowers $7.3 million in illegal fees.
If you have education debt and you’re looking for relief, it’s important to be on the lookout for offers that sound too good to be true — because they likely are. Knowing how to spot a student loan scam will allow you to avoid compromising your personal information or losing your hard-earned cash.
How to Spot Common Student Loan Scams
Knowing some of the common lines and offers scammers offer can help you be on guard. These are five of the biggest red flags:
1. The Company Charges a Fee to Change Your Payment Plan
Many borrowers struggle to keep up with their required student loan payments, so when a company reaches out saying they can slash your payments, it can be appealing. But, the ways you can lower your payments — by consolidating loans with a Direct Consolidation Loan, refinancing your debt, or by applying for an income-driven repayment (IDR) plan — are all things you can do on your own for free.
There’s no need at all to pay a company to do it for you. By hanging over your money, at best, you’re paying a fee for a free service. But, you also risk the company stealing both your money and your personal information for fraudulent purposes.
2. It Promises Student Loan Forgiveness
While there are legitimate student loan forgiveness programs, the criteria for them is rigorous. For example, Public Service Loan Forgiveness (PSLF) is a program for federal loan borrowers. To qualify for PSLF, you must work for a qualifying non-profit organization or government agency full-time for 10 years (and make 120 qualifying monthly payments).
You can apply for all of the loan forgiveness programs on your own for free. and you can apply If a company promises it can have your loan balance forgiven or reduced, that’s a sign they’re taking advantage of you.
3. It Asks for Your Federal Student Aid (FSA) ID
Your FSA ID is a username and password you use to manage your federal financial aid and to sign the Free Application for Federal Student Aid (FAFSA) and apply for new loans. Some companies will ask for your FSA ID so they can apply for IDR plans or loan forgiveness on your behalf.
However, by handing over your FSA ID, you’re giving them your most sensitive information. They can make changes to your account and even apply for loans in your name.
Never share your FSA ID. If you accidentally gave someone access, change your FSA ID password right away.
4. The Company Asks You to Sign a Power of Attorney or Third-Party Authorization Form
Promising to achieve loan forgiveness or a reduced payment, some companies will ask you to fill out a third-party authorization form or a form to give the company power of attorney. But these documents are incredibly powerful (and dangerous).
When you sign these forms, you’re giving the company control to make decisions about your accounts. They can change your repayment, reroute your bill, and have access to your most private information — all things that can destroy your credit and put you at risk.
There’s no need to sign these forms to request a different payment plan or to apply for loan forgiveness.
5. They Pressure You to Act Quickly
Scammers know time is of the essence. If they give you too much time to think about their claims, you can research the company or think twice about handing over your personal details. As a result, scammers will pressure you to act right away, stressing that if you hesitate, you might lose out on a limited-time opportunity.
There’s no rush to hand over your information. Take the time to research your options. If a company pressures you to act quickly, hang up and move on.
How to Get Legitimate Help With Your Student Loans
If you need help with your loans, there are several legitimate resources:
- You can sign into your FSA account to view your accounts and loan servicers
- Contact your loan servicer or lender to discuss repayment options; you may be eligible for forbearance or an alternative repayment plan to reduce your payments.
- If you need help with high-interest debt, student loan refinancing through a reputable lender like ELFI could be a good option. You can quickly view your rates online anytime.
