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Published: Oct 10, 2022 7 min read
College student looking worried at his laptop
Money; Getty Images

Federal student loan forgiveness should soon improve the finances of tens of millions of Americans. But if borrowers aren’t careful, they could fall into the trap of fraudsters out to steal their money with scam relief offers.

In the weeks since the Biden Administration announced its plan for loan forgiveness back in August, scammers have had ample time to prey on borrowers eager for their loans to be canceled. The scammers often promise early approval for the program or try to charge unsuspecting borrowers for access to a free relief program.

The Education Department is expected to release an application this month for the forgiveness program, which will cancel up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 and up to $20,000 for qualified borrowers who received a need-based Pell Grant in college. But several lawsuits questioning the legality of the plan could further delay the timeline, ultimately leading to more confusion for borrowers and more opportunities for scammers.

In deep corners of the web, scam artists are selling tutorials that give instructions on how to dupe borrowers into thinking they can access loan forgiveness by sending payment or sharing their bank account credentials, according to fraud expert Kevin Lee at Sift, a digital trust and safety company.

Lee’s team keeps tabs on the backend of fraud schemes, monitoring messages between criminals on encrypted messaging platforms like Telegram. In these chats, fraudsters exchange guides that map out exactly how to execute scams. Recently, more and more student loan schemes are cropping up, he said.

Even before the details of the forgiveness program were announced, state consumer protection agencies were reporting an uptick in related scams based on campaign trail promises from Biden about canceling student debt.

With the release of an application now imminent, the Federal Trade Commission (FTC) warned borrowers about student loan forgiveness scams last week, asking people to be on the lookout for suspicious calls or messages offering “special access” to help with student debt. The Education Department, meanwhile, is working with multiple federal agencies to hold scammers accountable, Richard Cordray, chief operating officer of the Federal Student Aid office, told NPR recently.

One of the most common fraud techniques is buying up ads in internet search results, so when borrowers who are curious about student loan forgiveness search for details online, the first results they see can be from fraudulent companies.

And even as search engine companies try to address the fraud schemes, new scams continue to appear from different websites, says Katie Paul, director of the Tech Transparency Project, which released an investigation in July finding that student loan scams were being promoted in Google search ads.

“Any time you have people who are desperate about their finances, whether it is seeking relief for something or seeking payment, we see scammers take advantage of those opportunities to ride on the big news and insert themselves with these advertisements that can really throw people off,” she says.

Scam artists capitalizing on loan forgiveness

Fraudsters are good at pouncing on major news events by creating scam schemes, which they promote on platforms like Google, where confused Americans turn when they want more information about programs that could help their financial situation, Paul says.

“When you're dealing with people who are facing crushing debt from student loans, especially in the wake of job losses after the COVID lockdowns, it's the perfect opportunity to take advantage of those vulnerable people who are seeking relief,” she says.

The Tech Transparency Project’s research on recent student loan scams found that Google ads for student loan fraud schemes were appearing in searches above real results from the government. She says there’s been progress removing scam ads from the fraud sites they identified, but it’s a game of whack-a-mole.

There are legitimate companies that charge borrowers for helping to manage their student loans and that can include help applying for some federal relief programs. But borrowers never need to pay for access to federal programs.

Some of the fraudulent websites ask for upfront payment to help with forgiveness applications. Other types of loan forgiveness scams focus on collecting personal information, which might include your Social Security number, credit card and bank info, or Federal Student Aid IDs.

Warnings from state officials

From Oregon to New York, government officials are cautioning residents about the increase in student loan scam activity related to the federal forgiveness program.

“We're putting scammers on notice: We will not let you take advantage of hard-working New Yorkers,” New York Gov. Kathy Hochul said in a recent news release.

The Oregon Department of Justice said the scams have hooks like, “Pre-enrollment for all loan forgiveness,” or urgent calls to action: “You must apply within the next 24 hours.” Those are tells that they’re fake.

“Nobody can get you in early, help you jump the line, or guarantee eligibility. Anybody who says they can or tries to charge you money, is a scammer,” Oregon Attorney General Ellen Rosenblum said in a release.

To spot scams, pay close attention to the URLs you click and the account info of anyone who contacts you with an offer. Keep in mind that the Education Department is not going to call you about your student loans, and even if you receive a call where the person knows details about your student loan balance, that doesn't mean it's an official call.

According to the FTC, the government’s emails to borrowers come from the following addresses:, or Legitimate government websites also end in ".gov."

The FTC and state agencies are encouraging people to report scams if they see them.

To learn how to apply for loan forgiveness, you can find everything we know so far about the process here.

More from Money:

Biden Administration Changes Student Loan Forgiveness Eligibility

How to Apply for Biden’s Student Loan Forgiveness Program

4 Facts That Show Who Benefits Most From Student Loan Forgiveness

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