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How to Avoid Student Loan Forgiveness Scams

ALERT: PSLF Time-Limited Waiver Opportunity

On Oct. 6, 2021, the U.S. Department of Education (ED) announced a time-limited waiver opportunity to its PSLF program rules. Under the time- limited waiver opportunity, borrowers could receive credit for past payments which would not have been previously classified as qualifying payments or instances in which payments were not made, specifically, servicemembers who were advised to put their loans in a deferment or forbearance status and did not make payments while on active duty.  The months the borrower spent on active duty can be counted toward the PSLF.

Borrowers will need to submit a PSLF form—the single application used for a review of employment certification, payment counts, and processing of forgiveness—on or before October 31, 2022 to have previously ineligible payments counted.

The time- limited waiver essentially waives all requirements except the employment requirement. If you have Federal Family Education Loans (FFEL) or Perkins loans, you will still be required to consolidate your loan with a Direct Consolidation Loan by Oct. 31, 2022. However, any payments made on your federal student loans, under any repayment plan (partial, full, or late), on any FFEL, Perkins, or Direct Loan, will count towards your 120 qualifying payments.

Under the new time-limited waiver, you need to have been employed or are currently employed by an eligible employer (government, 501(c)(3) not-for-profit, or other not-for-profit organization which qualifies), and working full-time. You can still qualify for the full-time requirement if you are working multiple part-time jobs (that totals at least 30 hours per week) with eligible employers. For more information on which employers meet PSLF Program requirements visit the PSLF Help Tool.

Student loan debt has been a hot topic recently. With the rising cost of higher education, more and more students and parents have had no other choice but to borrow money to cover the costs of tuition.  According to, the average cost of tuition and other related expenses to attend a public in-state college for 4-years can run over $100,000, with costs increasing for out-of-state and private schools.

For a large majority of students, these costs are offset with student loans. The average borrower owes around $30,000 in student loan debt, with half of all borrowers owing $20,000 or more, 20 years after entering school, according to

Most students are aware of scholarships and grants as resources to help defray the costs of education while in school, and many do take advantage of these to reduce the amount of money borrowed. Even still, dependent upon the course of study and school attended, loans may still be an important piece of the college education plan.

With federal student loans and many private student loans offering a deferment while in school, allowing students to focus on their education, the existence of loans take a back seat. These loans typically have the first payment set to be due 6 months post-graduation. This gives students an additional cushion to find a to help make their monthly payments. This 6-month grace period can create a situation where a student will not pay too much mind to the debt being acquired, until it’s time to make that first payment.

After graduation, with newly minted degree in hand, the realities of student loan debt set in and many students scramble for solutions. If this is you, you may be seeking a forgiveness program (a program that will cancel or pay your student loan debt for you). While just by virtue of having a loan forgiven seeming too good to be true, but there are in fact legitimate student loan forgiveness programs. However, there are even more out there looking to scam naïve and ill-informed students.

Don’t worry. We have all the red flags you need to be aware of when seeking out a loan forgiveness program and some tips, if you unfortunately discover that you are a victim.

Red Flags of a Student Loan Forgiveness Scam

You get a call or text form your “lender” claiming you qualify for Biden student loan forgiveness or New student loan Grant Forgiveness or some other loan forgiveness program.
 If you received a call or text from someone claiming to be your lender, even if they know the right name of your lender or student loan servicer as well as other specific information, do not respond.

Reach out directly to your lender to inquire if they have questions or business you need to take care of with them. DO NOT use the number provided in the call or text. Make sure you get their number from a trusted source or from your loan account portal.  Never trust just anyone that calls or texts.

More>>> Financial Aid Contacts and Student Loan Help

You are being asked to pay an upfront fee

It should raise a red flag if you are asked to pay a fee to receive forgiveness on money you owe. If you have federal student loans, there is no fee or charge to apply for a legitimate student loan forgiveness program (like, Public Service Loan Forgiveness). You can always contact your lender or servicer directly, or even the U.S. Department of Education to help you complete the necessary forms.

When it comes to private student loans, there are no blanket forgiveness programs that exist. If you only have private student loans and you are being told you could qualify for forgiveness, that should be a major red flag. Contact your lender yourself if you have any questions about potential forgiveness options.

There are some third-party companies can try to claim to be an intermediary for you but know that what they are charging you for is something that is free to you. If you are opting to use a service to help you complete paperwork, do not provide them with any private information, like your FSA ID or password, social security number, or bank account information. You can always contact your loan servicer for assistance, many servicers will offer to help you complete paperwork for free.

You are being promised quick results

Nothing is fast, especially loan forgiveness. Typically, student loan forgiveness programs require some sort of service in exchange for money given toward your loan. It’s not uncommon for programs to require years of service/work in advance of any monies paid toward your student loan. You are required to continue paying on your loan while completing this service. The idea of having a loan forgiveness program fulfilled in short amount is extremely rare, if not impossible.  So, if you find a company promising debt forgiveness quickly, avoid them.

Another common tactic which isn’t about student loan forgiveness, it’s a claim to lower your monthly payment to $0. There are some legitimate federal student loan repayment plans known as income-driven repayment plans that could have a payment as low as $0 per month  for eligible borrowers. However, the determination of your payment is based on your discretionary income (10-20% depending on your repayment plan), your income (and your spouse depending on your repayment plan and how you file your taxes),the state you live in, and family size. These third-party debt scam companies often times will promise you a $0 payment and will commit fraud on your account to qualify you. There have been cases where a borrower’s family size is increased to qualify them for a lower monthly payment, and servicers are now flagging these account changes. While they are aware of some other flags of known debt relief scam companies, you will be asked about the changes to your account.

The company claims to be affiliated with the federal government

Some scammers that try to charge you fees and tell you they can take care of your loans in short order, sometimes they will also try to claim to be affiliated with the federal government to give a sense of legitimacy to their scam. They might even try to facilitate the completion of applications and forms for you, that you could do yourself.  Be wary of these people and definitely don’t hand over any money or personal information.If a company is indicated that they are affiliated with the federal government, you want to report them to the Federal Trade Commission. When you submit a fraud complaint make sure to provide as much information as possible, like the phone number that called or texted you.

The company is asking for personal information or power of attorney

Some scammers will try to convince you to give them your personal information or even power of attorney, as they claim to “take care of” the forgiveness process for you. Never give your personal information (social security number, bank account number or FSA ID) to a company offering to seek student loan forgiveness for you. Not only will they take your money (their services are rarely free, and if you share your bank account information the consequences could be worse than just fees) but even if they are, they can use your personal information and steal or sell your identity.

You are being pressured to act

Urgency is a favorite tool scammers’ like to use to get someone to act without fully thinking through a situation. They will apply pressure to get you to turn over your money and personal information before you have a chance to realize they are not working in your best interests. Always avoid companies pressuring you to act. You can always call your loan servicer and discuss deadlines with them.

What to Do if you are scammed

See if you can retract payment

Chances are you will not recover any upfront fees paid to scammers. However, if you were able to pay with a credit card or some other form of payment where you can cancel the payment, there’s a chance you can recover your money. However, in most cases scammers are smart enough to ask for other forms of payment they know you will never be able to recover.

Freeze your credit

If you’ve given your social security number to someone to help with loan forgiveness. Your identity, credit score and credit report are at risk. Freeze your credit immediately with the 3 main credit reporting agencies (TransUnion, Equifax and Experian) and report the incident to the government at

Reset your FSA ID

Most students have federal student loans and it’s possible the scammer asked you for your FSA ID (Federal Student Aid ID). If this is the case, reset the password on this account immediately before anyone has a chance to go in and claim any more of your personal information.

Submit a complaint to CFPB and FTC

In addition to reporting the possible identity theft, you will also want to submit a complaint to the Consumer Finance Protection Board and Federal Trade Commission. It’s important to document the scam in as many places as possible, including your State Attorney General. Not only will it help you verify you are a victim, these actions will alert the authorities and could potentially prevent others from being scammed.

Contact Your Loan Servicer

This is an important step. Depending on the access you gave the debt forgiveness scam organization, they may have been able to change information in your student loan account, including your contact information. You need to fix this so your servicer can work with you and not the scammer with your account.

Legitimate Student Loan Forgiveness Programs

Don’t be disheartened by the scammers, there are legitimate student loan forgiveness programs out there for you to take advantage of. Many of these are facilitated by the U.S. government and are for federal student loans only, but there are some for those holding private student loans as well.

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness is a government program for those who work 10 years within the government, military, or eligible non-profit entity. After making 120 qualifying payments in an eligible repayment plan, while working at a qualified employer, the U.S. Department of Education will forgive the remaining balance on your eligible Direct Loans. your Federal Direct Loan.

There have been some significant waivers granted to this program on a temporary basis.

More>>>Public Service Loan Forgiveness

Teacher Student Loan Forgiveness 

Another government backed program, Teacher Student Loan Forgiveness, will forgive your student loan up to $17,500 dependent on the subject you teach and where you teach.

More>>>Teacher Loan Forgiveness

Nurse Student Loan Forgiveness

For nurses who serve in hospitals with a critical nursing shortage there are a number of programs to help repay part of your student loans. For students with private student loans the Nurse Corp Repayment program will pay up to 85% of a loan when certain criteria are met (such as working 2 or more years in a critical shortage facility or qualified nursing school).

More>>>Student Loan Forgiveness for Nurses

Other Loan Forgiveness Programs

In additional to these, there may be loan forgiveness and repayment assistance programs that aren’t part of the federal student aid program. However, to identity other legitimate programs will require you to complete some research. You may even qualify for assistance through your employer.

More>>> Employer Assistance

Student Loan Refinance

If after an exhaustive search you are unable to find a student loan forgiveness program you qualify for, don’t despair, there are still options.  If you have federal loans you can reach out to your student loan servicer and modify your repayment plan or even consolidate your loans. Another option is to refinance your student loans to either save money (if you qualify for a lower interest rate) or change the terms to lower the student loan payment and make it more manageable. Please keep in mind if you refinance your federal student loans with a private lender, you will lose benefits reserved only for federal student loan borrowers.

Don’t fall for a student loan forgiveness scam. There are programs that are legit but there are also people willing to take advantage of desperate borrowers. If you are stuck, talk to your lender or student loan servicer and see if you can work out something that agrees with both of you and if not, a loan refinance might be the solution.

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