How To Avoid Student Loan Forgiveness Scams?

President Biden recently announced a student loan relief program, which aims to forgive up to $20,000 in federal student loan debt for eligible borrowers. However, even before the legitimate program has been fully implemented, scammers are actively targeting individuals burdened with student loan debt. In response to this growing concern, the Federal Trade Commission (FTC) has issued a consumer alert to warn people about the likelihood of criminals exploiting the news to prey on borrowers. Fortunately, there are steps you can take to protect yourself from these fraudsters. Here are some red flags to watch out for in order to avoid falling victim to student loan forgiveness scams.

1. Beware of Out-of-the-Blue Calls and Emails

One of the primary tactics scammers use is reaching out to borrowers through unsolicited phone calls and emails. It’s crucial to know that the Department of Education will not contact you out of the blue to request sensitive information such as your social security number, FSA ID, password, or other personal details. Therefore, refrain from sharing such information over the phone or by email with anyone who claims to be a government representative.

Criminals can be crafty, sometimes even using fake government seals and email addresses. If you receive a phone call or email requesting personal information, do not engage with the caller or click on any links. Instead, go directly to secure government websites to ensure the legitimacy of the request.

2. Avoid Upfront Fees

Once the program officially rolls out, you should be aware that you will not be required to pay any fees to sign up. As stated by the FTC, nobody can expedite your eligibility, allow you to jump the line, or guarantee your eligibility for loan forgiveness. Any individual or organization claiming they can do so or trying to charge you for it is both dishonest and a scammer.

In addition to scams related to the upcoming relief program, be vigilant for other schemes that involve requesting upfront payments for debt relief services. The Federal Student Aid department explicitly states that it is illegal for a company to charge an upfront fee for debt consolidation services.

3. Protect Your FSA ID

While you might already be cautious about sharing your social security number, it’s equally important to safeguard your Federal Student Aid (FSA) ID. CNET emphasizes that the FSA ID is considered a legal signature by the US Department of Education for use in all of its online systems. Scammers can exploit your FSA ID to gain access to your student aid account, make unauthorized changes, and even divert your payments. Therefore, refrain from sharing your FSA ID with anyone, and consider it a red flag if someone requests it.

4. Don’t Succumb to Pressure

Feeling pressured to act quickly is another warning sign that you may be dealing with a scammer. If someone insists that you must begin the loan forgiveness process immediately to avoid missing out, be cautious. Take your time and verify the details of the program independently. Visit government websites directly and ensure that you are on a secure site with a .gov address. Scammers can create fake websites, so exercise caution and confirm the authenticity of the sites you visit.

What to Do If You Were Scammed

If you suspect that you have fallen victim to a scam, it is crucial to take immediate action to prevent further damage. Contact your financial institution and credit card company to close accounts if you provided your bank account or credit card information to a scammer. Additionally, reach out to your student loan servicer if you shared any of your student loan information, such as your FSA ID and password. CNBC also recommends checking your credit report for any unusual activity.

What to Do If a Scammer Contacts You

If you receive a suspicious call, hang up immediately, and if you receive a suspicious email or letter, do not respond or provide any information. By not engaging with the scammer, you can often avoid the need for immediate action. However, reporting potential scammers to the authorities is a helpful step. You can contact the Federal Trade Commission or your state attorney general to file a complaint with detailed information about the situation.

Understanding Loan Forgiveness Amounts and Important Dates

Under President Biden’s student loan forgiveness program, individuals earning less than $125,000 and married couples earning less than $250,000 are eligible for up to $20,000 in debt cancellation. Pell Grant recipients may have their entire $20,000 forgiven, while non-Pell Grant recipients are eligible for up to $10,000 in debt relief.

For those who will still have federal student loan debt after the cancellation, it’s essential to note that the pause on federal student loan repayment is scheduled to end on December 31, 2022. Loan payments will resume in January 2023.

Steps to Prepare for the Application

Although the application for the Biden administration’s student loan forgiveness program will not be available until October, borrowers can take proactive steps to get ready to apply:

  • Sign up for Department of Education email updates to receive notifications when the application becomes available.
  • Verify that your student loan servicer has your current contact information.
  • Collect your 2020 and 2021 tax returns to determine if you meet the income eligibility requirements.
  • Investigate the possibility of receiving refunds for any payments made on your federal student loans during the repayment pause.

Education Secretary Miguel Cardona recommends submitting your application four to six weeks before November 15 to ensure relief before the payment pause concludes.

Other Legitimate Loan Forgiveness Programs

The upcoming student loan relief program announced by the president is not the only legitimate debt cancellation initiative available. Borrowers may also qualify for programs like Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Perkins Loan Cancellation. These programs cater to teachers, government employees, and non-profit workers who may be eligible for additional loan forgiveness. Be sure to rely on secure government websites to learn about the application process for each program.


Millions of Americans stand to benefit from the forthcoming student loan forgiveness program introduced by President Biden. However, borrowers must remain vigilant to protect themselves from potential scams. Avoid responding to unsolicited requests for personal information via calls and emails. Verify any information regarding debt cancellation from secure government websites, and promptly report any suspicious individuals you encounter. By staying informed and cautious, you can shield yourself from criminals seeking to exploit unsuspecting student loan borrowers as the program is rolled out.

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