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7 Types of Student Loan Scams and How to Avoid Them

7 Types of Student Loan Scams and How to Avoid Them (2024)

Student loan scams cast a long shadow over the chaser of higher education.

These scams target your aspirations and financial vulnerabilities by promising funding and debt relief while often leaving you in financial ruin.

According to the report of Forbes, after the announcement of debt forgiveness by the Biden administration in 2022, around 700 million robocalls about student loan scams are recorded by RoboKiller each month.

As the number is setting new records day by day, here we are to shed light on student loan scams and their tactics and deliver guidance on how you can protect yourself from their deceptive traps.

So, without further ado, let’s get started.

7 Types of Student Loan Scams

Student loan scams mainly refer to fraudulent activities performed by individuals aimed at deceiving and defrauding current students or graduates.

There are different types of scams related to student loans. From impersonation scams to identity theft, every scam is targeting financially vulnerable students like you who are actively seeking funds for their education.

However, let’s have a look at manifold types of scams—

1. Student Loan Repayment Scams

Student loan repayment scams target vulnerable individuals who are seeking relief from the financial burden of student loans. 

Scammers use deceptive offers promising quick and easy solutions such as lower monthly payment and low interest for any unsubsidized loans to get personal information or bank accounts while preying on the desperation of the non-privileged students. 

Though legitimate loan service assistance is available, before you process, you must verify the credibility of any service. 

2. Impersonation Scams

Fake Loan Servicers

Some scammers impersonate legitimate loan servicers. They often use official-sounding names and logos.

Then, they contact you while claiming to manage your payments and loans. But in reality, they don’t have any affiliation with any loan servicers.

Government Impersonators

This type of scam takes place when scammers pose as government officials and promise loan forgiveness or assistance in exchange for upfront fees. They may use official-sounding titles to make their schemes authentic looking.

3. Advance Fee Scams

In general, Advance fee scams are pretty common in terms of student loan scams. Here, the scammer offers you quick loan approval or consolidation; in return, he asks for an upfront fee. You often lose your money and find yourself without the promised assistance if you fall for this scam.

4. Promises of Loan Forgiveness

Loan forgiveness is particularly offered by scammers to students who are seeking federal student loans. They charge fees for navigating you through the forgiveness programs, which are often free.

These scams often involve fraudsters promising quick and guaranteed forgiveness of student loans which exploits the desperation of borrowers. 

Scammers can be disguised as government officials or organizations, offering official sounding programs and demanding upfront fees and personal info for the forgiveness loan navigation process.  

5. Phishing Scams

Deceptive emails, websites and social engineering techniques are the tools of phishing scams.

Scammers use these tools to mimic any legitimate institutions and request personal and financial info or entice you to click on malicious links, documents, or even pictures.

To give you an example, according to a TTP report in July, more than 1 in 10 Google ads for searches on student loan forgiveness were found fraudulent. 

6. For-profit Schools and Deceptive Practices

For-profit schools, some scammers use aggressive and deceptive tactics like guaranteeing job placements and promising high-paying jobs and career prospects to enroll you.

They often exaggerate employment statistics and the earning potential of their programs to make the scheme more tempting for you.

At the end of the day, you may graduate with significant debt and limited job opportunities if you enroll in these programs.

7. Identity Theft and Fraudulent Loan Applications

Stolen Personal Information

Your personal information, like Social Security numbers, can be stolen by scammers.

And what do these scammers do with this number?

They apply for student loans using your name and number, which ultimately leads you to an unknown significant debt burden.

Falsified Student Loan Applications

Sometimes, scammers submit fraudulent student applications on behalf of you, which mostly consist of fabricated financial details.

This may secure a loan, but you may not be eligible for this. As a result, you can suffer from financial distress if you remain unaware of the debt.

Learn about legitimate student loan options here: Student Loan Options for Returning Students

Warning Signs and Red Flags

You can avoid student aid scams if you know how they lay their traps. To identify possible loan scams, you must be aware of the warning signs and red flags. Here are the possible signs of student loan scams—

Unsought Communications

One of the most familiar signs of a student loan scam is receiving unsolicited communication. In this case, scammers use aggressive marketing tactics such as emails, phone calls, or text messages to lure you.

For example, you might receive calls claiming that you have qualified for a special loan consolidation program, even though you haven’t asked about it.

Requests for Personal or Financial Information

Remember this: legitimate loan servicers will never ask for your personal or financial information without any secure channel.

On the other hand, loan scammers will often ask for your SSN (Social Security Number), bank account details, or credit card Information. Whenever they email you, their email may include the following types of requests—

  • To verify your eligibility for the loan program, share your SSN and bank info.
  • Provide your credit card details for a processing fee.
  • For an exclusive low-interest rate, email us your recent tax returns with SSN.
  • To expedite the consolidation process, provide your student loan account login credentials.
  •  Email your DOB and address to claim your desired scholarship.

Pressure to Act Quickly

Employing high-pressure tactics to make you rush during your decision-making process is a common strategy for student loan scammers.

What they do is insist that the offer is time-sensitive and pressure you to commit immediately. For example, they use the following tactics-

  • Once in a lifetime offer! Expires in 24 hours! Act now, or you will miss out on the best loan consolidation deal ever!
  • Our special repayment plan is available for the first 60 students. So, don’t wait, enroll now, or you will lose your chance!
  • Announcement of a limited-time program by the government! Apply within the next two days to secure your spot.

Too Good to Be True Promises

Offers that sound too good to be true are possibly scams. Scammers sometimes make extravagant promises to attract more financially vulnerable students. For examples,

  • A company claims to eliminate your entire student loan debt, regardless of your financial situation.
  • Or, a text message advertisement that says loan forgiveness with no strings attached.

Lack of Transparency

Every legitimate loan provider has specific rules, regulations, and transparent terms and conditions.

Be aware of those offers that lack in providing detailed information about the loan consolidation programs.

To be more specific, it can be a trap if a website offers you loan consolidation services without disclosing the conditions, such as interest rates, fees, or repayment terms.

No Physical Address or Contact Information

Look, a reputable financial institution or government program always has a physical address, customer support contact information, and a clear online presence.

So, if a potential lender doesn’t come up with this basic information, it could be a scam.

Breaking it down for you, a website that is promoting student loan services but doesn’t have contact numbers or details other than an anonymous email address on it is a fraudulent scheme for sure.

To be more precise, Federal Student Aid, an office of the U.S. Department of Education, has particular emails for loan services.

●   [email protected]

Plus, they only text you from two numbers (51592 & 227722).

How do you protect yourself from student loan scams?

Protecting yourself from these scams mostly depends on your awareness. However, follow the following steps to ensure your security and prevent yourself from being scammed—

Step 1- Verify the Legitimacy of Loan Servicers

Always verify the legitimacy of any loan service provider. Check their credentials, licenses, and reviews from reputable sources.

If you feel anything fishy about any company, check it out with your local Better Business Bureau.

Remember, federal loan servicers work on behalf of the government while performing the following tasks usually—

  1.  Give feedback on any inquiries you may have regarding your loans
  2.  Collect your student loan payments
  3. Reduces your loan payment per month
  4. Assists you through the repayment plan selection process
  5. And if you are willing to change your repayment plan, they will help you at no cost

However, if you have further questions regarding this, you can always reach out to the Federal Student Aid Information Center at their number (1-800-433-3243).

Step 2 – Be Cautious with Personal Information

Never ever share your sensitive personal or financial information with unsolicited callers or any kind of unsecured channels.

Rather, provide this kind of information to trusted entities if it is required. But in most cases, the loan provider will not ask for your personal details like login info, bank details, and so on.

Remember, no legitimate loan provider or government officer will ask for your pins or OTPs. If someone does so, even for verification, that is a scam for sure. 

Step 3 – Do Your Homework on Loan Forgiveness Programs

Must research legitimate government-approved loan forgiveness and repayment programs.

Understand what are the requirements and find out the application process and terms of these programs as well.

It is very important because according to abc27 report, a group of scammers stole almost $8.8 million while promising students of “Biden Loan Forgiveness” in exchange for large upfront payments.

Luckily, they were apprehended by the Federal Trade Commission (FTC) in August.

However, here are some legitimate forgiveness programs and resources offered by the U.S. Government.

●   Federal Direct Consolidation Loan Program

●   Biden Loan Forgiveness

●   Public Service Loan Forgiveness

●   Teacher Loan Forgiveness

Step 4 – Utilize Official Government Resources

For any kind of accurate and reliable information on federal student loans, repayment plans, or forgiveness programs, rely on official government websites, such as—

Never solely trust third-party sources that lack official government backing for information related to your student loans.

Understanding financial aid protects you from scams. Scammers exploit lack of knowledge, so knowing how it works empowers you to identify and avoid them.

Step 5 – Maintain a Healthy Skepticism

Be skeptical of any unknown numbers, anonymous emails, or unsolicited communication, especially if it includes high-pressure tactics and promises that are too good to believe.

Keep in mind authentic loan providers and government programs do not use aggressive marketing tactics or push you to do something or make quick decisions.

Step 6- Report Suspected Scams

If you feel like you are being scammed, report it immediately to the relevant authorities. You can report scams to the following places—

You can also contact your state’s Attorney General’s Office to file your complaint.

Reporting scams will not only help you but also help protect others from falling victim to the same fraudulent schemes.

Step 7- Stay Informed

Keep yourself up to date about the latest scams and fraudulent activities related to student loans.

Read news, press releases, articles or blog posts related to loan scams on different news portals or Federal Trade Commission websites.

As scammers keep changing their tactics, staying updated is essential to protect yourself.

Plus, be aware about the FAFSA or Free Application for Federal Student Aid release date which is October 1 for most of the year. Fill it out as soon as possible after it goes live. 

Have a comprehensive idea about the possible amount that the government may grant you as student loans.

For instance, Direct Subsidized loans for undergraduate students range from $3500 to $12500 per year. 

So, if someone says they can get you the money before the release date, or offers you more money than what Govt. declared for a particular student aid then it is a scam. Be careful and stay informed about the release date and the aid amount.

Step 8 – Consult with Trusted Advisors or Loan Servicers

To avoid scams, seek advice from trusted financial advisors, loan servicers, counselors, or organizations that have expertise in student loan assistance.

They will help you navigate the complex process and other activities related to loan programs.

To make your job even easier, here is a short list of federal student loan servicers who have official government backing—

Loan ServicerPhone Number
Fedload Servicing (PHEAA)800-699-2908
VSAC Federal Loans800-642-3177
Sallie Mae800-472-5543
OSLA Servicing866-264-9762
Maximus Federal Services Inc800-621-3115

Learn about scholarships and grants for adults students here: Scholarships for Adults

What Should You Do If You Become a Victim of a Student Loan Scam?

In case you become a victim of student loan scams, take quick action to minimize the damage and rectify the situation.

Here’s what you should do—

  1. Stop all kinds of communication with the scammer, do not respond to their calls, messages, or emails.
  2. Inform your loan servicer about the scam and discuss any unauthorized changes or actions.
  3. Change your password and PINs for all your financial accounts and emails if you provide any login details or sensitive information.
  4. Review your bank and credit card statement and transaction history to suspect any suspicious unauthorized activities.
  5. Get a free credit report from credit reporting bureaus like Equifax, Experian, etc, through
  6. Place a fraud alert or credit freeze to prevent new accounts from being opened in your name.
  7. File a Complaint with the relevant authorities. Here, you can contact the Federal Trade Commission (FTC) to report a fraud.
  8. Lastly, keep a record of all the communication that has been done between you and the scammer.

Can Student Loan Scams be Disputed?

Disputing fraudulent activity may be challenging if you have fallen victim to a student loan scam. But, you can always minimize the impact by taking some specific steps such as contacting your bank or credit card company, reporting to law enforcement, filing complaints with consumer protection agencies, monitoring your accounts, and keeping documents of the scam that you have faced. 

While these steps may help you mitigate the impact of student loan scams, you need to realize that getting your lost money back is not easy at all. Therefore, prevention and awareness are crucial to avoid scams. 

How Do I Recover Money from a Scammer?

You may recover your money by contacting your bank or working with law enforcement. In this case, you need to collect all the documents that are related to the scams first. This is because you will be more reliable with detailed information about the scam. 

Then, contact your credit card company or bank through their customer service number explain what exactly happened and ask if they will give you a refund. 

If you have transferred money because of the scam, your bank should give you a reimbursement as most banks do.   

However, if your bank is obligated to refund your money despite of giving them proper evidence of the scam, do contact government agencies like the Consumer Finance Protection Bureau (CFPB) which protect consumer rights and file a complaint.  

Final Thoughts: Student Loan Scams 2024

Student loan scams are a rising threat to students who are willing to do higher study and hoping for financial stability. However, if you remain vigilant and aware of these predatory schemes, you will be safe.

Just follow all the instructions that have been given above and take immediate action on any deceptive traps.

Remember, the sooner you take action after being scammed, the better your chances of minimizing the legal and financial consequences.


  • Student Loan Debt Relief Do’s and Don’ts (2022 May) by Department of Education
  • What are the Signs of a Student Loan Scams (2023 May) By Consumer Financial Protection Bureau
  • How to Avoid Student Loan Forgiveness Scams by Federal Student Aid
  • Learn about common student loan assistance scams and how to avoid them by Office of the Attorney General
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