Student Loan Forgiveness Scams You Need to Know About

Abigail Eun
Abigail Eun

Abigail Eun is a freelance writer and personal finance expert. Through diligent research and continuous learning, she has honed her knowledge in budgeting, saving, investing, and debt management. Abigail is passionate about helping people get their finances in order. She believes that everyone should have access to the information they need to make sound financial decisions. Her goal is to provide clear and concise information that is easy to understand.

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August 10, 2022

While student loan forgiveness scams have been deceiving borrowers for as long as we can remember, Biden’s pending decision regarding student loan debt relief has created a new opportunity for scammers to take advantage of more borrowers. 

As borrowers, we want to keep you and your families safe from student loan forgiveness scams. When looking online to find out which federal student loan forgiveness programs you qualify for, be sure to trust information that is offered by the U.S. Department of Education or reputable sites. 

While real student loan forgiveness programs do exist, such as Public Service Loan Forgiveness and Borrower Defense to Repayment, there are a variety of common tactics used to convince you of other student loan forgiveness programs that ultimately don’t exist. 

To avoid falling for student loan forgiveness scams, here are the red flags to look for and what to do if you’re a victim of one. 

Common Student Loan Forgiveness Scams

If you receive a call, email, or text message with one of the following messages, you are dealing with a student loan forgiveness scam:

  1. “Act immediately to qualify for student loan forgiveness before the program is discontinued.” Note the aggressive language of the student loan forgiveness scam. Urgency is a major red flag and a straight giveaway of being a scam.
  2. “Your student loans may qualify for complete discharge. Enrollments are first come, first served.” To avoid falling for these student loan forgiveness scams, conduct your own research on the federal Department of Education’s website to see which student loan forgiveness programs you qualify for. Most student loan forgiveness programs require a certain number of loan payments and employment in specified fields for your debt to be wiped out. There is no broad federal student loan forgiveness program, meaning that not all borrowers’ student loan debt will be cleared.
  3. “Student alerts: Your student loan is flagged for forgiveness pending verification. Call now!” An urgent message is a dead giveaway that the solicitor is trying to conduct a student loan forgiveness scam.

The federal government will never ask you for an upfront or monthly fee to cancel your student loans in whole. It just doesn’t work like that. 

You will also never be asked to provide personal information, like your FSA ID and FSA password, over the phone.

If the person reaching out to you says anything akin to what was mentioned above, end contact immediately.

Red Flags to Look Out For

Calling from Reputable Locations

Scammers may call you from Washington, D.C. to create a false impression that the call is coming from a federal agency. 

One borrower reported that they received a call from Washington, D.C. from a scammer who made an exciting 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 had even provided a name and agent number and emphasized the urgency of the loan discharge, saying it would be served on a first-come, first-served basis (red flag!).

Betsy Mayotte, president of the Institute of Student Loan Advisors, notes the location from where the call “came” from: “What’s interesting is that this number came in as a D.C. number, which I’m sure just adds credibility to their scam.”

If you receive a student loan forgiveness call from D.C. that doesn’t seem right to you, hang up.

Asking for an Upfront Fee

This is the number one giveaway of a student loan forgiveness scam. The federal government cannot and will not ask you to pay an upfront fee to cancel your student loan debt.

Saying You Need to Make a Choice Quickly

Scammers employ the scare tactic of urgency to pressure borrowers into giving up their personal information or paying nonexistent fees quicker. Time-sensitive phrases like, “First-come, first-served,” “Act immediately” or “[We need this] now” are major red flags to look out for. If the federal government is contacting you, they will not urge you to do anything.

Asking for Access to Your Account

If a scammer asks for access to your FAFSA account or any other personal information, do not give it to them. This is the easiest way to have your identity stolen or be robbed of your money.

By accessing your sensitive information, scammers put themselves in between you and your student loan servicer, making it more difficult for you to decipher the scam before it’s too late.

Promising Immediate Loan Forgiveness

Hearing that all your federal loan debt will be discharged in a short amount of time sounds too good to be true. This is another tactic that scammers employ to encourage borrowers to pay any upfront fee or give up information about themselves. 

If anything sounds too good to be true, it’s likely a scam. Your loan provider will be able to tell you whether or not you qualify for loan forgiveness, so reach out to them directly to obtain the correct information and not fall prey to scams.

Asking for your FSA ID Password

Your FSA ID password is on the same legal status as a legally binding signature. If you share your FSA ID or a Power of Attorney, you are giving the petitioner the power to take any actions they choose and act on your behalf. Never give your FSA ID password to anyone except yourself and family members that you trust. 

What to Do If You Were a Victim of a Student Loan Forgiveness Scam

If you were a victim of a student loan forgiveness scam, take the following steps as soon as possible. 

Contact Your Federal Loan Servicer

If you were a victim of a student loan forgiveness scam, contact your federal loan servicer as soon as possible. Make sure that no unauthorized actions were taken on your loans, and request to annul any authorization agreement that’s on file. 


Contact Your Bank or Credit Card Company

If you provided any banking or credit card information to the student loan forgiveness scammer, contact your bank or credit card company immediately. You’ll want to dispute any payments that have been made to the company that is scamming you and cancel any payments that are scheduled to process.

Submit a Complaint to

Report the scam to the U.S. Department of Education so you can prevent any more scams from happening. You can submit a complaint at and manage your cases through the portal they provide.

File a Complaint with the Federal Trade Commission

If you believe that your identity has been stolen by a student loan forgiveness scam, report this immediately to the Federal Trade Commission at Identity theft is a dangerous, scary thing, so you’ll want to remedy the issue before matters worsen.

File a Complaint with the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau is in charge of handling all complaints about questionable financial products and services. You can submit a complaint at

Closing Thoughts From the Nest

At Sparrow, we want to help protect you from becoming a victim of student loan forgiveness scams. 

With scammers taking advantage of people every day, it’s crucial to stay informed and take the necessary steps to prevent any student loan forgiveness scams from happening to you or your family members.

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