Scammers are targeting student-loan borrowers trying to make payments. Do this to protect yourself.

By Jeffrey R. Young

Borrowers have been contending with major changes to the program in recent years, and scammers are capitalizing on their confusion

Student-loan borrowers are being targeted with scams, but there are ways to protect yourself.

Borrowers have had to contend with changes to the student-loan program coming at a dizzying pace over the past five years - and scammers have been there to capitalize on the confusion.

They've claimed they can help borrowers access relief related to COVID-era programs, debt forgiveness sponsored by DOGE and more. The Hechinger Report, a nonprofit focused on education reporting, has found more than two dozen companies promising to help win loan forgiveness, many of which take fees of hundreds of dollars for doing nothing or for filling out paperwork that the borrower could easily complete themselves - and experts say there are likely many more.

Student-loan scams have been operating for years, and they've eluded multiple efforts by regulators to quash them. They often become particularly active during periods of significant change to the student-loan program, and now, millions of borrowers are staring down several developments at once: the end of a repayment plan called SAVE, the launch of another new repayment plan, the sunsetting of decades-old programs, and constant announcements from the Education Department about changes to the agency and what borrowers in default can expect.

"There's a lot of chaos in the industry right now," said Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, a nonprofit that advocates for student-loan borrowers. "It's a great time if you're in the scam business, because people are vulnerable."

Misinformation online is exacerbating the confusion. One TikTok post shared by hundreds of thousands of users last year, for instance, wrongly stated that borrowers could file a claim to have their loans forgiven because DOGE had accessed a student-loan database in violation of federal student-privacy laws. "I'm about to get all my loans forgiven, and so are you," says the woman in the video. Though a federal judge ruled that DOGE must stop accessing the records, that doesn't entitle borrowers to forgiveness.

Popular artificial-intelligence tools like ChatGPT also do a bad job of answering questions about student loans, research has found.

Meanwhile, consumer advocates say borrowers are struggling to get good information from servicers - the companies that are legitimately handling their loans. And the Trump administration has significantly cut back the staff at the Education Department who oversee them.

"The reason there's such a big market for debt-relief scams is because the actual student-loan servicers who often the federal government pays to provide servicing to borrowers are not doing their job," said Samuel Levine, who led the Bureau of Consumer Protection at the Federal Trade Commission during the Biden administration.

For their part, the companies that service student loans say they are doing the best they can with the resources the government gives them - and that being vilified by nonprofits just adds to confusion among borrowers and makes them hesitant to reach out to servicers for help. "Instead they turn to anyone who promises unicorns and rainbows," said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a nonprofit trade group representing student-loan servicers.

Amid this confusion, here's how to protect yourself from scammers.

What red flags indicate that an offer to help with loans might be a scam?

You should be skeptical of any pitch that charges for help with student loans. Borrowers can access all of the benefits of the federal student-loan program for free.

Last summer, the Federal Trade Commission announced it would distribute $256,900 in refunds from seized assets to customers who had been scammed by SL Finance, a company run by two brothers who claimed to work for the Department of Education and charged junk fees for a nonexistent loan-forgiveness program they claimed was tied to pandemic relief. The refunds were the result of a case the agency brought in 2023.

In its review, the Hechinger Report found other companies that similarly allude to fictitious government programs. FSLA RELIEF, for instance, until recently, promised on its website to help borrowers enroll in the "American Student Loan Forgiveness Program," which is not the name of any government program. The site featured a graphic that said "USA Forgive Sponsored by DOGE," referring to the entity also known as the Department of Government Efficiency that was established by President Donald Trump.

A disclaimer in smaller print at the bottom stated that the company "is not affiliated with or endorsed by the U.S. Department of Education or any government agency." When the Hechinger Report reached out to the company with questions, a representative immediately hung up, and the company did not respond to a follow-up email. The link to the website later stopped working.

You should also watch out for companies asking for your student-loan password or verification code so they can confirm your information. Fraudsters often use such access to lock borrowers out of their own loan portals or make changes without the borrower's knowledge.

Some scammers secretly reset the borrower's password while on the phone with them. They log in to the borrower's account and request a password change, which will send a two-factor authentication code to the borrower. The scammer, meanwhile, will say something like, "We're going to send you a code to verify your identity," and then ask the borrower to share it.

The scammers change the settings so the borrowers no longer receive any communication regarding the loan, according to Bonnie Latreille, who heard from many victims of these scams while working as the student-loan ombudsman at the Department of Education's Federal Student Aid office during the Biden administration. When the loan becomes active again, the borrowers are unaware and miss payments until they go into default, which can have severe consequences. By the time victims realize they've been scammed, the company has often shut down that operation and gone to work under a different name.

You should be skeptical of companies making a hard sell. If you receive a call from a company promising a generous loan-repayment program that you must enroll in today because it's about to end, beware. Authorized repayment programs don't use high-pressure tactics, experts say.

And be wary of promises that seem too good to be true. Some companies guarantee they will get your loan forgiven - but experts say that's not a promise any legitimate company can deliver on.

What should I do if I've fallen for a scam?

If you signed up for something and realize it may be fraudulent, you'll want to make a couple of phone calls. First, contact the Department of Education and your loan servicer and revoke any authorization you granted to a third party related to your loan. Call your bank and disable any recurring payment you set up. If you shared your password, change it immediately.

You should report the incident to the Federal Trade Commission using this form, and to the Consumer Financial Protection Bureau online or at 855-411-2372. It's also a good idea to let your state attorney general's office know.

Are document-prep companies a legitimate way to handle student-loan repayment?

Some companies will charge an up-front fee of hundreds of dollars and then a monthly fee to enroll you in a loan-repayment plan and maintain that status.

"We'll handle the detailed process so you can focus on what's important. Leave the headache and sea of confusing paperwork to us!" says the website for one such company, called Alumni Counseling Service. An agent named Jasmine who answered the phone there on a recent afternoon said of the service, "I guess it's as if you're hiring a tax preparer to represent you when filing your taxes." She referred further questions to a supervisor, who did not return a call asking for comment, and the company did not reply to follow-up questions sent by email.

Experts say that the amount of work it will take you to provide these companies with the information they need is the same as it would be to fill out the forms yourself.

What are my official options for reducing student-loan payments or getting loans forgiven?

If your student-loan payments are too high to manage, there are ways to reduce monthly installments and even limit the amount you'll have to pay off. The federal government offers plans where the monthly payment amount is tied to a borrower's income, which can make bills more manageable.

There is also a program for public-service employees like teachers that forgives any remaining balance after 10 years.

The Department of Education offers an online simulator to help borrowers sort through their options. Experts also recommend using an online calculator offered by the Education Debt Consumer Assistance Program to explore your options.

Where can I go if I have specific questions about my student loan?

The best first stop is studentaid.gov, experts say. Your loan servicer, the company that manages your loan, is also a good resource.

Latreill notes that there are other free options as well, including experts at nonprofit organizations. One such group is Mayotte's Institute of Student Loan Advisors, which says it helps 20,000 student-loan borrowers each year.

"Borrowers should never, ever pay for help with their student loans," Latreille said.

This story about student debt relief was produced by the Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.

-Jeffrey R. Young

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04-30-26 0830ET