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If a stranger offers you student loan forgiveness, hang up

If a stranger offers you student loan forgiveness, hang up

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If a stranger offers you student loan forgiveness, hang up

FILE - In this Dec. 11, 2019, file photo Virginia Tech students walk across the Drillfield in the snow in Blacksburg Va. Renewed interest in student loan forgiveness from Congress or an executive order has given fraudsters a new hook in the latest iteration of the student loan scam. Borrowers receive calls and messages urging them to pay a fee or provide private information in exchange for “Biden student loan forgiveness” or “stimulus forgiveness.” (Matt Gentry/The Roanoke Times via AP, File)

Student loan scammers have a brand-new hook: “Biden student loan forgiveness” or “stimulus forgiveness.”

Behind the pitch is the same old fraudster playbook, one that persuades federal student loan borrowers to pay for services they could get for free or to share personal account information in exchange for forgiveness.

The extended pause on federal student loan payments and revived talk in Congress of debt forgiveness make such deceptions easier to believe.

“Debt relief scams proliferate when there is a large amount of financial suffering or a lot of confusion, and we have both going on right now,” says Persis Yu, a staff attorney at the National Consumer Law Center and director of its Student Loan Borrower Assistance Project.

To be clear, there is no new broad-based loan forgiveness program available beyond the existing, often difficult-to-get options, such as Public Service Loan Forgiveness or Borrower Defense to Repayment. There’s also no application or fee necessary to receive the federal student loan payment pause that’s been in effect since last March 13 and will continue through Sept. 30.

‘Stimulus forgiveness’

It’s safe to dismiss as scams any out-of-the-blue offer to discharge debt, consolidate loans or alter your repayment plan.

“There isn’t a person or entity on the planet who can get you a better deal on your student loan or access a program that you can’t get yourself by working directly with your servicer,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.

Mayotte says she’s seen an uptick in complaints from borrowers about “Biden relief” and COVID-19 relief student loan scams.

In one instance, a borrower sent Mayotte the transcript of a fraudulent voicemail making an enticing offer: “It looks like your student loan has been flagged eligible for the recent stimulus forgiveness and relief legislation, however, your application needs to be completed.”

The caller sounded legit (she provided a name and an agent ID number) and expressed urgency to call back on a “dedicated eligibility line.” Then the caller further emphasized time sensitivity, saying the discharge would be first come, first served.

“What’s interesting is that this number came in as a D.C. number, which I’m sure just adds credibility to their scam,” Mayotte says.

Borrowers should continue to be on guard as student loan scams proliferate, largely due to the “whack-a-mole” effect: As soon as one company is shut down, another pops up in its place, says Michelle Grajales, staff attorney with the Federal Trade Commission’s Bureau of Consumer Protection.

Red flags

The maxim “If it sounds too good to be true, it is” goes hand in hand with spotting scams.

But the most effective ones often mix fact and fiction, Grajales says. Tactics like using of-the-moment phrases or claiming to work for the federal government make false promises more appealing to financially vulnerable people.

The basic structure of student loan scams has remained the same for years, Yu says: Companies promise some kind of forgiveness in a short period of time, charge and pocket a large upfront fee, then get access to a borrower’s account to consolidate their debt and enroll them in an income-driven repayment plan.

“If they even do something (with the debt), that’s what they tend to do, or they just take the borrower’s money,” Yu says.

Experts say it’s critical to avoid handing over cash upfront or your Federal Student Aid identification information, or FSA ID, which allows fraudsters to act on your behalf.

“What they’re doing is inserting themselves between you and your servicer,” says Scott Buchanan, executive director of the Student Loan Servicing Alliance. “Oftentimes they’ll change your mailing address, email address so all the servicer communication will go to these scam artists. Then when they don’t do what they’re supposed to do, you won’t know until it’s too late.”

Use caution if a company expresses urgency to “apply now” or offers to provide a service you could do yourself, such as enrolling in income-driven repayment or applying for Public Service Loan Forgiveness.

When in doubt, contact your servicer directly using a phone number on its website.


If you were conned, remember that you’re not the first student loan borrower who’s been victim to predatory tactics.

“It has nothing to do with how smart you are; it has more to do with how good they are at their swindle and how vulnerable you are at the time that they reach you,” Mayotte says.

Regaining control of your account is the most important first step to take if it happens, experts say. Here’s how:

• Sever all ties with the scammer.

• Contact your servicer to report the account breach. You may need to request a new FSA ID.

• Check the contact information on your account and make sure all ongoing correspondence goes to you.

• Contact your bank to stop any automatic payments to the scammer.

• Freeze your credit.

• Seek legal assistance for help recovering any money.

• Report the scam to enforcement agencies.

How to complain

You can, and should, report any scam correspondence to multiple sources. The more complaints these agencies receive, the more ammunition they’ll have to pursue legal action against fraudsters.

Scams can be reported to and are tracked by federal student loan servicers, the Federal Trade Commission, the Consumer Financial Protection Bureau, your state attorney general’s office and the U.S. Department of Education’s FSA Feedback Center.

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