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What to Do If You're a Victim of a Student Loan Scam

By Kailey Hagen – Updated Feb 4, 2020 at 5:25PM

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You can't undo the damage that's already been done, but you can stop scammers from ruining your life further.

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Image source: Getty Images

Student loan debt has become a $1.5 trillion crisis in our country, and where there's a crisis, there are scammers hoping to capitalize on people's need for assistance. Student loan debt relief companies often promise to reduce or eliminate your student loan debt for a small fee, but their "services" often leave you worse off than you were to begin with.

If you are one of the unfortunate victims of a student loan scam, take steps today to cut off the company, re-establish control of your financial accounts, and prevent yourself from falling prey to future scams. It can all feel overwhelming, but the following guide will walk you through it.

Signs of a student loan scam

Student loan scams can take many forms, but some of the most common signs include:

  1. The company promises to eliminate all your student loan debt.
  2. You receive phone calls or emails claiming to be from the Department of Education.
  3. The company charges upfront fees, which debt relief companies can't legally charge according to the Federal Trade Commission (FTC).
  4. The company encourages you to stop paying your loan servicer and pay it instead, so it can use your funds to negotiate with your loan servicer.

This isn't an exhaustive list, and not all student debt relief companies are purely out to steal your money and run. Some may indeed negotiate with your loan servicer on your behalf, but what they don't tell you is that they're more interested in their bottom line than in helping you. There's nothing these companies can do for you that you can't do for yourself, and if you give them the power to make decisions on your behalf, they can make changes to your repayment plan that you don't agree with. This can hurt your credit, or even push you into default if you follow the company's advice and stop paying your loan servicer.

If you fell for a scam, you may not be able to undo the damage that's already been done, but you can prevent further damage by taking the following steps.

Stop paying the student loan debt relief company

Contact the company and request that it cancel your account. It may try to pressure you into continuing to work with it by making big promises or trying to make you feel like it knows more about what's going on than you do. Stand firm and request that it stop charging you all fees associated with your account. Ask for a written confirmation of your account cancellation and make a note of the person you spoke to and the date you requested the cancellation.

If you're truly working with a scammer, you can't be sure that they'll actually stop charging your account. Double-check your bank or credit card statements to verify that the payments have stopped since you requested the cancellation. If not, contact your bank or credit card issuer and request that it stop your monthly payments to the debt relief company and report the charges as fraudulent. 

If you gave your Federal Student Aid ID password to the scammer, change it

Some student loan debt relief companies request your Federal Student Aid ID password so they can make changes to your student loan repayment plan on your behalf. This is dangerous because the company can make changes you don't authorize or agree with, and it may be difficult to undo once it's done. If you realize you've been the victim of a scam, change this password immediately to prevent the scammer from making further changes to your student loan account. 

Notify your student loan servicer

You can find your student loan servicer's contact information by logging into your Federal Student Aid account. Notify the company that you've been the victim of a student loan scam and discuss next steps. If you gave the scammer a power of attorney that enables it to make decisions about your student loans on your behalf, ask your loan servicer to revoke this immediately. 

Pull your credit reports and consider placing a fraud alert on them

Although most scammers are just interested in your money, there may be a few interested in getting at your personal information so that they can open up new credit accounts in your name and rack up thousands of dollars in fraudulent charges. If they gain access to your existing account information, they could also drain your bank accounts. This can further inhibit your ability to pay back your student loans and may make it more difficult to secure new lines of credit in the future.

You can check your credit reports for free once per year through Look them over for any accounts you don't recognize, or any information that appears incorrect. Notify the credit bureau and the financial institution associated with the account if anything looks out of place. Consider placing a fraud alert on your account as well. This tells lenders that your identity is at risk, and forces them to take extra steps to verify the identity of the person they're dealing with before they'll open up any new accounts in your name.

File a complaint with the Consumer Financial Protection Bureau (CFPB)

Submitting a complaint to the Consumer Financial Protection Bureau (CFPB) won't assist you in getting any lost money or your good credit back, but it can help prevent the scammer from hurting even more people. The CFPB investigates these claims and may shut down fraudulent companies, but it can't do that if it doesn't know they exist. That's where you come in.

File a complaint with your state attorney general

The more people in power that know about a scammer, the better the chances of stopping them. Contact your state attorney general's office and give them all the information you have on the scammer, including any names, email addresses, or phone numbers they used to contact you, as well as the details of the scam. 

How to get legitimate help with your student loans

You don't need a student loan debt relief company's assistance to negotiate with your loan servicer. If you're struggling to make payments, reach out to your student loan servicer to discuss your options. Consolidating or refinancing your loans, or switching to a different repayment plan, could make all the difference. If you've fallen on hard times, you may be able to request a deferment or forbearance, which will temporarily stop your student loan payments.

You don't have to pay anything for advice from your loan servicer, and unlike debt relief companies, you can trust that your loan servicer's advice is in your best interest. If you can't pay, it hurts their bottom line, so they want to find a way to work with you.

As long as there are student loans, there will be student loan scammers. If you're one of their unfortunate victims, follow the steps above to repair the damage as best as you can and prevent them from hurting even more people.


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