After a pause of more than three years, student loan payments have resumed for more than 43 million Americans. For many, loan payments are a source of stress and financial hardship — making them ideal targets for scammers.
These fraudsters often make urgent unsolicited pitches via email, text or phone, promising to consolidate your student loans or wipe them out entirely.
CNBC Select explains how to spot the signs of a student loan scam and what to do if you've been targeted.
How to identify a student loan scam
While student loan scammers are always inventing new ways to try to trick people out of their money, there are a few common ploys to be aware of.
They require payment before they'll help
While there are legitimate companies that charge to assist with student loans, it's illegal to require any payment upfront.
"In some cases, they may even step in and ask you to pay them directly, promising to pay your servicer each month when your bill comes due," according to the Federal Student Aid (FSA) website.
They request sensitive information
An unsolicited business asking for your Social Security number or other sensitive information is a red flag. Never give out personal data if you can't confirm the person's identity.
In addition, the Department of Education and its agencies and partners will never ask for your FSA password or username. "If a company has access to your account information, they can make changes to your account without your permission," according to the FSA.
They claim to be affiliated with the Department of Education or your loan servicer
Double-check email addresses and URLs. Ones that look legitimate but have extra characters or misspellings are often fraudulent. Multiple typos or grammatical errors are another sign you're dealing with a scammer.
Emails from FSA will come from noreply@studentaid.gov, noreply@debtrelief.studentaid.gov or ed.gov@public.govdelivery.com.
They try to pressure you into enrolling
Another frequent indication you are dealing with a scammer is they attempt to create a sense of urgency — like claiming the offer will expire quickly or warning you'll face penalties if you don't sign up.
They ask you to sign over power of attorney
A scammer may tell you that you need to sign a third-party authorization form or power of attorney. These agreements allow them to make changes to your account and contact information.
"Beware of any company that cuts off communication between you and your servicer," the Consumer Financial Protection Bureau advises. "Make sure you're involved in any communications with your servicer, as well as in the completion of any paperwork to change your repayment plan."
Their offer sounds too good to be true
If someone is making unrealistic claims — that they can completely or immediately cancel your education debt — it's most likely a con. Typically it takes years of regular payments or employment in specific fields to qualify for loan forgiveness.
Debt relief companies can't negotiate a "special deal" with your federal loan servicer, according to the Department of Education, and payments through income-driven payment plans are set by federal law.
How to identify legitimate loan servicers
The Department of Education works directly with only six loan servicing companies.
You can locate your student loan servicer through your account dashboard on the Federal Student Aid website or by calling the Federal Student Aid Information Center at 1-800-433-3243.
If you are still in school, contact your financial aid office directly for any information regarding your loan status.
What to do if you've been targeted by a scammer
If you think you've fallen victim to a student loan scam, your first action should be to alert your student loan servicers and find out if there have been any changes to your account.
Contact any bank or credit card companies associated with your student loans. Make sure payments to the scammer are stopped and change your passwords. You'll also want to change the passwords associated with your student loan servicer and StudentAid.gov account.
A scam artist with access to your personal information could open a credit card or bank account under your name, so it's worth monitoring your credit. CreditWise® from Capital One is a free service that tracks your credit score and alerts you if your Social Security number or other personal data has been run by a creditor.
CreditWise® from Capital One
Cost
Free
Credit bureaus monitored
TransUnion and Experian
Credit scoring model used
VantageScore
Dark web scan
Yes
Identity insurance
No
Terms apply.
Lastly, file a report with the Federal Trade Commission or your state's attorney general. You can also register a complaint with the Consumer Financial Protection Bureau. Even if you're not sure a company is legitimate, you can submit suspicious activity to the Federal Student Aid website.
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Bottom line
With student loan debt totaling $1.6 trillion in the third quarter of 2023, there's ample opportunity for scammers to take advantage of overburdened borrowers. But there are ways to stay alert about suspicious activity.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
