The Federal Trade Commission (FTC) recently reached a settlement with a pair of companies accused of scamming victims out of more than $20 million by falsely promising to get their student loans reduced or forgiven. Those companies are far from the only ones suspected of operating student-loan scams. 

How these scams work: Victims read online ads (or receive phone calls or e-mails) promising access to programs that can reduce or eliminate student loan payments. The scammers might imply they’re affiliated with the government. In reality, these scammers usually do nothing more than fill out a simple online form for a US government repayment plan or loan-forgiveness program. Even though borrowers can easily complete this form for free on their own at the US Department of Education website ­StudentLoans.gov, these companies charge hundreds or thousands of dollars. 

Some scammers then instruct victims to make future loan payments to their companies rather than directly to lenders and claim that these payments will be used to pay down the loans. But they pocket some or all of the payments and even might allow the actual loan to go into default. Victims often don’t realize this has happened until months or years later, because scammers ­obtain victims’ Federal Student Aid ID (FSA ID) usernames and passwords, which lets them alter the contact information on victims’ loans. 

What to do: Ignore calls, e-mails, online ads and websites promoting help with student loans, and instead visit StudentLoans.gov and click the “Repayment & Consolidation” tab. The only application that’s at all tricky is the one for Public Service Loan Forgiveness. But rather than pay lofty fees for help, consult this free checklist—­SavingForCollege.com/article/checklist-for-public-service-loan-forgiveness

Never trust anyone who…

  • Requests payment in advance for help with student loans. It’s illegal to ask for advance payment for debt relief.
  • Promises to get your student loans forgiven. Legitimate loan-forgiveness programs have very low approval rates.
  • Requests your Federal Student Aid ID (FSA ID) username and password. Someone who gains access to this data could take out new loans using your name.
  • Mentions the “Obama Student Loan Forgiveness” program—no such program exists.