Student Loan Scams: How To Protect Yourself and Stop Scam Callers

Nicolas Cesare
A woman sitting at a desktop computer on the phone visibly upset.

Scammers often target vulnerable populations by exploiting their concerns for a profit. Given that 44 million Americans collectively own about $1.5 trillion in student debt, it’s safe to say that many Americans are concerned about their student loans. Unfortunately, this means that student loan scams are a ripe opportunity to exploit our common fears about student debt in order to extort cash from us.

You can avoid student loan scams by knowing what to look for, knowing what appropriate channels student loan servicers will use, and keeping your guard up. Whether you’re considering taking out your very first student loans to pay for college or you’re already paying back your student loans, make sure that you’re aware of scammers and the tricks that they use.

Table of Contents

Student Loan Scams

Just like identity thieves and charity scammers, people running scams based on student loans will often use high pressures sales tactics. They will try to get you to send in money or personal financial information right away, insinuating some sort of bad outcome for you if you don’t go along with them. Here are some specific types of student loan scams that you should be watching out for:

Advance Fee Scams

Many scammers will ask you to pay a fee in exchange for servicing or managing your student loans. In particular, it’s common for them to tell you that they can get you new interest rates or repayment terms for your student loans, as long as you pay their fee. However, if it’s possible at all to improve your repayment plan or get a new interest rate, it’s something that you can easily do yourself without paying any fees.

Remember that your loan servicer or the Department of Education will never ask you to pay a fee outside of your regular student loan and interest payments. Any services related to student loans — such as applying for a new repayment plan, filing for student loan forgiveness, or asking for deferment on  your payments — can be handled through your student loan servicer at absolutely no additional cost to you. The only exception to this is if you have private student loans, but even then you should contact your lender to determine who they have authorized to act on their behalf, and never pay any fees upfront.

FedLoan Servicing Scam

Many people are concerned about or may have heard of a FedLoan Servicing scam. However, FedLoan Servicing is a legitimate student loan servicer that operates on behalf of the Department of Education. If you do receive official communications from FedLoan Servicing, then you should take them seriously — they are not a scam, even if FedLoan Servicing is not well-liked by many graduates with student loans.

Law Firm/Lawsuit Scams

For many college graduates, working with a law firm to settle your student debt at a much lower amount than you originally owed sounds like a great idea. Unfortunately, some scammers will try to take advantage of this dream. Victims of this scam may be referred to a law firm by a fake “student aid company” or otherwise contacted directly by the law firm itself. They may give you good news: that the law firm is willing to work for you to negotiate or settle your student debt. In order to do this, they claim, they’ll need you to pay the full balance of your student loans (or as much as you can) to the law firm, which they will then use to negotiate with your student loan servicer.

In reality, the law firm will likely sit on your student loan funds without making payments while they “negotiate.” After a period of time, your student loans will default, at which point the law firm may try to settle with your servicer for the amount that you paid them. In the end, though, your credit score will be devastated and you can’t be sure that you’ll even settle your student loan debt. Needless to say, do not fall for scams that promise to negotiate your student loan debt.

It’s important to note that there are sometimes legitimate lawsuits against student loan servicers, such as the Navient lawsuit brought by the California Attorney General. Do your research before joining in any legal action against your student loan servicer.

Student Loan Consolidation Scams

Debt consolidation is a legitimate strategy for managing your debt, moving to a new repayment plan, or getting lower interest rates. Many student loan borrowers will consolidate their student debt in order to pay less in the long term. However, there are also many scammers mixed in with legitimate student loan consolidation companies.

If you have federal student loans, it’s possible to consolidate them online through the Department of Education’s student loan portal for no additional fee. If you’re interested in private student loan consolidation, then ask your lender for a referral or do extensive online research on student loan refinancing companies before you agree to pay anything.

Student Loan Forgiveness Scams

Student loan forgiveness is a dream come true for many college graduates who are unsure of how they can pay off their student debt over a reasonable period of time. There are legitimate loan forgiveness programs out there, many of which are run by federal, state, or local governments, or others of which require serving in a particular division of the government, such as the military. However, there are also scammers who are trying to sell themselves as third parties that can connect you with these forgiveness programs or are otherwise making up brand new forgiveness programs of their own.

Student Loan Forgiveness Scam Calls

Typically, if you are interested in student loan forgiveness, then you must research programs and apply for them yourself. Beware of people who call you and use high pressure tactics in an attempt to get you to sign up for a student loan forgiveness program. Callers who warn you that your eligibility for a student loan forgiveness program is almost expired are almost certainly scammers

Student Help Center Scams

Recently, scammers have been calling people and identifying themselves as employees of the “Student Loan Help Center.” These scammers will suggest that you are eligible for a student loan forgiveness and that they will work to have your student loan balance forgiven once you have given them certain personal information and paid a fee.

While there are legitimate student loan forgiveness programs out there, you should never pay a fee to be eligible for them. Oftentimes student loan forgiveness is available for people working in a certain occupation — such as teachers or nurses — and you will not have to pay a fee to any third party in order to apply for these programs.

How To Stop Student Loan Forgiveness Calls

If you receive a call from someone who sounds like a scammer, you can block them from calling your phone again. Some consumers have reported not receiving scam calls after signing up for the National Do Not Call Registry. The most permanent way to avoid getting calls from scammers and to help out your fellow college graduates is to report student loan scammers after they contact you.

How To Report Student Loan Scams

If you have been contacted by a student loan scammer, there are three ways that you can report them and contribute to legal action against scammers:

  • Contact the Consumer Financial Protection Bureau. The CFPB protect consumers against financial mistreatment by companies. Reporting companies who are engaged in scamming can help to expose them.
  • Contact the Federal Trade Commission. The FTC is also looking out for the interests of consumers. They have a specific complain category to handle reports about scammers.
  • Contact the office of your state’s attorney general. State-level attorneys general will sometimes bring lawsuits against companies that are engaged in harmful practices such as scamming in their state. Reporting your experiences can help your state’s attorney general to build their case.

Image Source

Keep Learning


Want a FREE Credit Evaluation from Credit Saint?

A $19.95 Value, FREE!

This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as This compensation may impact how and where links appear on this site.  This site does not include all financial companies or all available financial offers. Learn more in our Earnings Disclaimer.
Get a FREE Credit Evaluation from Credit Saint Today!