Updated June 2026guide

How to Spot a Student Loan or Debt-Relief Scam

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Why Scams Target Student Borrowers

Confusion about changing federal programs creates an opening for scammers. After interest resumed on September 1, 2023 and collections resumed on May 5, 2025 (including Treasury Offset and wage garnishment), fraudulent "debt-relief" operators ramped up — promising to erase loans for a fee. The Federal Trade Commission has cracked down: in 2025–26 it permanently banned multiple student-loan debt-relief operators from the industry, obtained $743,230 in consumer restitution in August 2025, and secured a temporary restraining order against an operation in April 2026 (ftc.gov; ed.gov).

Red Flags

Treat any of these as a warning sign (ftc.gov):

An advance fee. Legitimate federal programs are free; the FTC's Telemarketing Sales Rule bans charging up-front fees for debt-relief services before any result is delivered.

Guarantees. No one can promise or guarantee that your loans will be forgiven or discharged — eligibility depends on federal rules and, in bankruptcy, on a court.

Claims of special access. No company has insider access to a "government program" or a relationship with the Department of Education that you don't have at studentaid.gov.

Pressure and urgency. "Act now or lose your spot" pressure, or claims of a limited-time program, are classic scam tactics.

Requests for your FSA ID password. The Department of Education and its servicers will never need your studentaid.gov password to act on your behalf.

"Pay us instead of your servicer." Routing payments to a third party rather than your official loan servicer is a red flag.

How to Protect Yourself

Apply directly and for free at studentaid.gov for PSLF, IDR, TPD discharge, Borrower Defense, and closed-school discharge — you never need to pay a company to submit these. Confirm your loan servicer at studentaid.gov, never share your FSA ID password, and report suspected fraud to the FTC at reportfraud.ftc.gov and to the Department of Education. For bankruptcy questions, work only with a licensed bankruptcy attorney (ftc.gov; studentaid.gov; uscourts.gov).

How People's Justice Works

People's Justice is not a law firm and does not provide legal advice; we are not a government agency. We connect you with licensed attorneys for a free, confidential case review, and we never charge advance fees for student-loan or debt assistance. Legitimate federal programs are always free to apply for at studentaid.gov.

Methodology

How We Gathered This Data

Compiled from Federal Trade Commission enforcement records and consumer guidance (ftc.gov), the U.S. Department of Education (studentaid.gov; ed.gov), and the U.S. Courts (uscourts.gov), verified June 2026. The $743,230 restitution figure, the 2025–26 industry bans, the April 2026 TRO, and the advance-fee prohibition under the Telemarketing Sales Rule are FTC findings. Informational only; not legal advice.
Sources & Attribution

Data Sources

  • •Federal Trade Commission (ftc.gov) — student-loan debt-relief enforcement actions 2025–26; $743,230 restitution (Aug 2025); April 2026 TRO; Telemarketing Sales Rule advance-fee ban
  • •U.S. Department of Education — Federal Student Aid (studentaid.gov) — free federal applications; avoiding scams
  • •U.S. Department of Education (ed.gov) — interest resumed Sep 1, 2023; collections resumed May 5, 2025
  • •FTC consumer reporting — reportfraud.ftc.gov
  • •U.S. Courts (uscourts.gov) — work with a licensed bankruptcy attorney

Last updated: June 19, 2026