How to stay protected from student loan scammers on the prowl

This Oct. 8, 2019, photo shows the Apple Pay app on an iPhone in New York. Experts warn that digital wallet services like Apple Cash and Venmo are prime targets for scammers.

By Ayana Archie

August 30, 2022

Updated August 09, 2023

The Biden administration announced last Wednesday that it would be forgiving up to $20,000 in undergraduate student loans.

Some borrowers have already seen their accounts updated, but others will have to apply for the benefit in October.

That amount may not clear the accounts for all, though, and scammers may be on the prowl promising to help eliminate any remaining debt.

Do not pay any up-front fees

It is illegal for student debt relief companies to charge you before administering a service, the Federal Trade Commission says.

Don't sign up for quick loan forgiveness

Anyone who guarantees your eligibility for student loan forgiveness or promises they can get your loans forgiven faster than the timeline the Department of Education has laid out is a scammer.

Don't always trust a Department of Education logo

Scammers may use logos, names and seals to persuade you of their legitimacy. But if you have questions about your federal loans, visit the Department of Education's official financial website at https://studentaid.gov/.

Don't be rushed into a decision

Scammers will often make requests that are supposedly time-sensitive — such as missing a deadline to qualify for repayment plans, loan forgiveness programs or federal loan consolidations — in an effort to make you act quickly.

Never share your Federal Student Aid ID

Scammers may ask for your FSA ID in an effort to steal your identity, but you should never share your account credentials.

How to get your money back if you paid a scammer

Scammers might urge you to pay them in ways that make it harder to get your money back, but there are some steps you can take depending on the payment method you used.

Debit or credit card: Contact your bank and report a fraudulent charge. Ask them to reverse the charge and refund your money.
Bank account transfer: If a scammer made a transfer from your bank account, report it to your bank.
Cash: If you sent cash through the mail, contact the U.S. Postal Inspection Service (877-876-2455) and see if they are able to intercept the package. If you used a different mailing service, contact that company as soon as possible.
Gift card: Contact the company that issued the gift card, report the fraudulent activity and ask for a refund. Hold on to the gift card and the gift card receipt if possible.
Wire transfer (i.e. MoneyGram or Western Union): Contact the company.
Money transfer app (i.e. Venmo or Cash App): Contact that company to see if they will issue a refund. If the account is linked to your bank account, call your bank, too.
Cryptocurrency: These payments are typically irreversible. The recipient would have to be willing to give you your money back. Though, it's still worth a try to contact the cryptocurrency company.

How to report a scam

You can report scams to the FTC at ReportFraud.ftc.gov or your state's attorney general.

What if my devices and personal information were compromised?

If you gave the scammer personal information, such as your Social Security number, visit IdentityTheft.gov. If you shared login information, update your passwords with a secure combination of uppercase and lowercase letters, numbers and symbols.

If a scammer has access to your computer, update the device's security software, run a scan and get rid of any files that could give away too much information.

If your cell phone is compromised, contact your provider and check your bank statements for any unauthorized transactions.