How to Avoid Student Loan Scams

With scammers increasingly preying on student loan borrowers, people need to learn how to avoid student loan scams that can cost borrowers time and money. Meanwhile, unlike the legitimate student loan forgiveness programs available to certain borrowers, these scams don't provide any relief to help ease the financial burden of student loans.

Here's a look at how to spot a student loan forgiveness scam and where to find legitimate information on loan forgiveness programs.

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A person uses a magnifying glass to thoroughly examine financial documents. — Image source: Getty Images.

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Loan Default

When you stop making payments on a loan, the loan is in default. However, there can be other considerations depending on the type of debt.

Private Student Loans

Non-governmental loans used to fund education, provided by banks or lenders, often with varying terms and interest rates.

Scammers have started tapping into the growing desire of borrowers for relief by preying on people who aren't fully informed about legitimate student loan forgiveness programs. They promise borrowers fast relief for their student loan burdens. Instead, these scams are usually after one of two things:

An up-front payment: Many student loan forgiveness scams require an up-front fee to "help" borrowers file for loan forgiveness, consolidate their loans, get a lower interest rate, or apply for grants or scholarships. They'll take the money and never provide any assistance.
Sensitive information: Scammers often try to pry sensitive information from a borrower, like their Social Security number or Federal Student Aid (FSA) ID. The information can allow them to steal the borrower's identity and open credit accounts in their name.

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Instead of seeing relief from their financial burden, student loan forgiveness scam victims often see that weight grow heavier. Borrowers must be vigilant and skeptical when pursuing student loan debt relief.

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Unsubsidized Student Loans

Unsubsidized student loans are a form of student loan where the borrower is responsible for paying all interest that accumulates, even when in school or on a deferment.

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Teacher Loan Forgiveness

Teacher loan forgiveness programs let eligible teachers have some or all their remaining student loan balances forgiven.

Public Service Loan Forgiveness

Public Student Loan Forgiveness (PSLF) allows public servants to have their student loans discharged after 10 years of payments.

How Military Student Loan Forgiveness Works in 2025

Military student loan forgiveness programs can help those who have served reduce their loan balance, but not everyone qualifies.

How to Avoid Social Security Scams

Keep your money and personal information safe from imposters.

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Getting informed is the best way to avoid student loan scams

Scammers are increasingly preying on student loan borrowers who don't know where to turn for help. Borrowers can avoid falling for a scam by taking the time to learn about legitimate programs from official sources, like government websites and official partners. That knowledge can help borrowers apply for the right relief program and avoid making matters worse by falling for a student loan forgiveness scam that costs them more time and money to fix.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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