What is a student loan scam?
Student loan scams target borrowers with fake offers to forgive, reduce, or consolidate their student debt in exchange for upfront fees or personal financial information, ultimately stealing money or enabling identity fraud.
Last reviewed: 10 June 2026
Explanation
Student loan scams proliferate because loan forgiveness and repayment assistance programmes do exist through legitimate government channels, giving scammers a plausible hook. Fraudulent companies advertise aggressively to student loan borrowers, promising rapid forgiveness, reduced monthly payments, or zero-interest consolidation — often for an upfront processing fee or monthly subscription.
In some cases the scammer files real applications for existing public forgiveness programmes on the borrower's behalf — something the borrower could do for free — and charges hundreds or thousands of dollars for the service. In other cases, no application is ever made, the fees are simply pocketed, and the loan situation worsens as the borrower stops making payments believing forgiveness is imminent.
The most damaging variant involves the borrower surrendering their federal student aid login credentials to the scammer, who then changes contact details and diverts payments — essentially taking control of the account. This can result in loans going into default without the borrower's knowledge.
All legitimate federal student loan management in the US, UK, and most countries is handled directly through government portals at no extra charge. Repayment assistance programmes are accessed through the official loan servicer. Any third party charging a fee for these services is almost certainly operating a scam.
Common red flags
- An offer to 'eliminate' student debt quickly for an upfront fee
- A company asking for your student loan servicer login credentials
- A demand for a monthly fee to maintain loan forgiveness enrolment
- High-pressure sales claiming an offer expires imminently
- Claims of guaranteed forgiveness regardless of loan type, income, or employment
- Unsolicited contact by phone or social media about your student loans
What to do now
- Manage student loans only through your official government loan servicer portal
- Never pay a third party for services available for free through official channels
- If you shared your login credentials, change them immediately
- Report the company to the FTC (US), Student Loans Company (UK), or your national authority
- If you paid fees, dispute with your card company and file a fraud report
Frequently asked questions
Is student loan forgiveness real?
Yes. Various legitimate forgiveness and income-based repayment programmes exist in many countries, administered by government agencies through official loan servicers. They are free to apply for. No third party can accelerate or guarantee forgiveness beyond what the programme already provides.
What happens if I gave a scammer my loan servicer password?
Change it immediately through the official portal's password recovery process. Check that your contact email, phone, and mailing address have not been altered. Verify your payment history and contact your servicer directly to flag potential fraud on your account.