Traditionally, this is the time of year when aspiring graduates plan their walk across the stage to claim their diplomas. Shortly after that, the student loan repayment process begins.
In April 2025, the U.S. Department of Education announced that there would be no mass loan forgiveness under the new Trump administration. Instead, starting May 5, 2025, the government will resume involuntary debt collection, targeting over 5 million borrowers in default. This ends the pandemic-era pause that halted collections since March 2020. Affected borrowers will receive email notifications within the next two weeks encouraging them to consider repayment options. Wage garnishment, tax refund seizures, and benefit withholding will begin after a 30-day notice. Another 4 million borrowers are at risk of default in the coming months.
Better Business Bureau encourages graduates to carefully research trustworthy sources related to federal repayment plans before giving personal information.
Watch out for companies promising to reduce debt by lowering payments through enrollment in student loan forgiveness or other programs. They may also falsely promise to apply monthly payments to consumers’ student loans and to improve credit scores- all you have to do is pay a small fee so they can negotiate with the lender on your behalf. In another version, dishonest collectors claim they can save money by consolidating loans - if a minimal fee is paid. Please keep your personal information private and never give it to an unsolicited source.
Due to the uptick in student loan forgiveness scams, the FTC has sent more than $4.1 million in refunds to borrowers who lost money to scammers.
Luckily, the U.S. Department of Education has provided borrowers with the following Do’s and Don’ts as they apply for student loan debt relief.
DO create an FSA ID at StudentAid.gov. You will not need it for the debt relief application, but having an FSA ID allows easy access to accurate information on your loan. It also makes sure FSA can contact you directly, helping you equip yourself against scammers trying to contact you. Log in to your current account on StudentAid.gov and keep your contact info updated. If you need help logging in, follow these tips on accessing your account.
DO make sure your loan servicer has your most current contact information. If you don’t know who your servicer is, you can log into StudentAid.gov and see your servicer(s) in your account.
DO report scammers to the Federal Trade Commission by visiting reportfraud.ftc.gov.
DON’T pay anyone who contacts you with promises of debt relief or loan forgiveness. YOU DO NOT NEED TO PAY ANYONE TO OBTAIN DEBT RELIEF. The application will be free and easy to use when it opens in October.
DON’T reveal your FSA ID, account information, or password to anyone who contacts you. The Department of Education and your federal student loan servicer will never call or email you asking for this information.
DON’T ever give personal or financial information to an unfamiliar caller. When in doubt, hang up and call your student loan servicer directly.
DON’T refinance your federal student loans unless you know the risks. If you refinance federal student loans eligible for debt relief into private loans, you will lose out on the one-time debt relief and flexible repayment plans for federal loans.
How to Protect Yourself from Student Loan Scammers:
• Research the lender. Check out companies before working with them. The FTC has consumer education related to student loan debt relief scams.
• Report it. If you have been a victim of a suspected scam, report it at BBB.org/ScamTracker.
• Empty promises lead to an empty wallet and more debt. Only scammers promise fast loan forgiveness. Scammers often pretend to be affiliated with the government. Scammers also promise loan forgiveness for a fee. Never pay a fee upfront for help. Never share sensitive information, such as your FSA ID.
• Find a reliable source. Consumers can apply for loan deferments, forbearance, repayment, and forgiveness, or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost and do not require a third party. For students in Canada, find more information about student loans and grants.
For More Information
Visit StudentAid.gov for federal student loan repayment options. Student loans can be forgiven only under specific circumstances, so contact your lender directly to see if any options are available to you.
If it seems too good to be true, it probably is. A company that claims it can erase student loan debt in minutes is not being honest. This type of scheme is similar to a government impostor scam; watch for the warning signs.
