Skip to Main Content

3 Ways to Spot a Student Loan Scam

You likely already keep a close watch on your bank accounts and credit card statements in an attempt to prevent fraud and identity theft, but, following the Cares Act, which was enacted in 2020 to bring relief to students and graduates by pausing student loan payments, this is a new area to pay close attention to. Sadly, scammers jumped on the opportunity to take advantage of this situation by posing as student loan servicers or other companies willing to help you pay off your student loans or even forgive them entirely.

Stressed young woman on phone.

Here are three key ways to spot a student loan-related scam:

1. You’re asked to pay upfront costs or a monthly fee.

Your loan servicer should not be charging any fees for the loans they’re currently managing, outside of any outstanding bills you may have. However, you should be able to see these on your regular monthly statement. Your loan servicer is there to work with you if you are having a hard time making payments, as there may be other repayment options better suited for you situation. There are no fees for changing your repayment plan. All you need to do is communicate with your current servicer. 

2. You’re promised immediate student loan forgiveness.

Always remember, if it sounds too good to be true, then it’s probably a scam. There are no programs in place right now that promise immediate and total student loan forgiveness. Most programs that do provide some kind of forgiveness require years of qualifying monthly payments and qualifying employment. There are other circumstances that may qualify for student loan forgiveness, but you would need to provide proper documentation and an application. In order to find out more information, call your current student loan provider and they can help walk you through any options that you may qualify for.

3. You’re asked to provide your FSA ID and SSN.

This is a huge red flag, as legitimate companies should NOT need this information—they already have it. Giving this information to a scammer allows them and others to log-in to your account and make decisions on your behalf. Among other actions, it allows fraudsters to sign legally binding documents using “your” electronic signature. This has the same legal status as your written signature. Additionally, if a company asks you to sign a power of attorney agreement, don’t do it. This allows them to communicate and act on your behalf!

Here's what to do if you think you’ve been scammed:

If you’ve given out any personal or log-in information, you should:

  • Immediately log-in to your account(s) and change your password(s). Make sure to use strong passwords that aren’t similar to your prior one;
  • Call your student loan provider and explain to them what’s happened. They’ll take note and take extra security measures to ensure your information is safe;
  • If you’ve signed a power of attorney agreement, make sure to revoke that with your provider as well;
  • If you’ve set up automatic payments with fraudsters, call your bank or credit union to cancel those payments;
  • Finally, file a complaint with the Federal Trade Commission (FTC). The FTC has already taken legal action against seven different debt relief companies. To file a complaint, click here.

We’re here to help!

Still have questions? Not sure what your options are, or the next steps to take? Reach out to our Youth & College Advisors! We’re always happy to answer your questions and connect you with appropriate resources. Give us a call at 260.399.8265 or send us an email at

Stay safe, readers!

Return to the top of the page