4 Student Loan Forgiveness Red Flags Scammers Don't Want You to Know

Avoid fraudsters by keeping any eye out for these warning signs.

Rae Hodge Former senior editor
Rae Hodge was a senior editor at CNET. She led CNET's coverage of privacy and cybersecurity tools from July 2019 to January 2023. As a data-driven investigative journalist on the software and services team, she reviewed VPNs, password managers, antivirus software, anti-surveillance methods and ethics in tech. Prior to joining CNET in 2019, Rae spent nearly a decade covering politics and protests for the AP, NPR, the BBC and other local and international outlets.
Rae Hodge
3 min read
Student loans
Catherine Lane

It's been nearly three months since President Joe Biden and the US Department of Education launched the initiative to forgive up to $20,000 of student loan debt. Although the plan is now caught in legal limbo, borrowers can still apply for relief. However, where there are government relief programs, there are almost always scammers looking to exploit relief-seekers.

The FBI issued a warning in October saying that scammers might be targeting people applying for student loan forgiveness. And in August, the Federal Trade Commission began issuing more than $822,000 worth of checks to borrowers who lost money in a debt-relief scam from a group called Student Advocates. The FTC advised the nearly 15,000 check recipients to reach out to the agency for verification if needed. 

"Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund should call the refund administrator, JND Legal Administration, at 877-540-0989. The commission never requires people to pay money or provide account information to get a refund," the FTC said in a release.

To avoid falling prey to the wave of scams emerging in the wake of Biden's announcement, we'll break down the biggest warning signs that point to a debt relief scam. For more information about student loans, learn how to apply for forgiveness and who gets debt automatically canceled.

How to spot a student loan forgiveness scam 

Here are the four red flags that the FTC says you should watch out for. 

  1. Beware of fast loan forgiveness promises. They're a common tactic of scammers who target people most in need of debt relief, and most likely to want a fast outcome. 
  2. Is the person contacting you presenting themselves as a government representative? Scammers can fake a government seal and sometimes even a government email address. It's unlikely you'll be contacted directly by a government representative with promises of a fast-turnaround on debt relief, so if you have federal loans you should go directly to StudentAid.gov
  3. Watch out for anyone who wants money up front. Neither the FTC nor any other government agency will ask for money before assisting you with student debt relief efforts.
  4. Don't give out your Federal Student Aid (FSA) ID. Because your FSA ID is considered a legal signature by the US Department of Education for use in all of its online systems, no one except you -- not even your parents, loan representative or school officials -- should have access to that number. If someone asks you for it, report them to the FTC by calling 1-877-FTC-HELP (382-4357). 
A graphic illustration divided into four columns with summarized points from the FTC. The text of each, in order reads as follows. Only scammers promise fast loan forgiveness. Never pay a fee up front for help. Scammers can fake a government seal. Don't share your FSA ID with anyone. The bottom of the graphic includes text reading as follows: Report scams to ftc.gov/complaint. Looking for help? Start with studentaid.gov.

Remember, any government programs that offer student loan debt relief through the Department of Education or FTC are always offered free of charge -- and no third-party company is distributing relief funds in partnership with them at this time. If someone claiming to be with your private student loan servicer contacts you, collect their name and contact number, then hang up and call your loan servicer directly to verify the caller's authenticity. 

If you've already fallen victim to a scammer, the FTC advises you to act quickly by reporting the fraud and following additional steps found in its guide. For more help avoiding scammers who target students, you can also check out the FTC's main Student Loan tip page