Home » Living with Student Loans » Scam Alert » Scam Alert: Student Loan Payment Reduction, Consolidation and Forgiveness by Mail

Scam Alert: Student Loan Payment Reduction, Consolidation and Forgiveness by Mail

One of the latest student loan scams involves letters by mail. It has certain information to make it look legitimate, but it isn’t.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

I recently received two letters offering to provide me with “total student loan forgiveness,” reduce my interest rates, and make my monthly payments to $0. This made me wonder if there were student loans scams being sent through the mail now.

At first glance, the companies that sent these letters seemed legitimate. They knew exactly how much I owed in federal student loans and had my name and address correct. Everything appeared to be the usual stuff you get about student loans. However, when I looked closer, I noticed several warning signs that something wasn’t right.

Sherpa Tip: Sometimes it is challenging to separate a scam from legitimate information.

For example, the recent major expansion of PSLF that requires some borrowers to consolidate might seem like a scam because it is both confusing and sounds too good to be true.

If you find verification on studentaid.gov or through your federal loan servicer, you can be certain it isn’t a scam.

The Red Flags – Signs the Letter Might be a Scam

No Company Name Listed – One letter didn’t mention the company’s name at all. Instead, it just referred to itself as “The Company” in the small print, never revealing its actual name. If a company really wants to work with you, they should clearly state their name. The fact that you can’t find the company’s name probably means they’re hiding it on purpose.

Instructions to create your Federal Student Aid ID – Another letter gave me steps on how to set up my Federal Student Aid (FSA) ID. The only reason they’d want me to do that is so they could ask for it later. However, you should never share this ID with anyone.

The Department of Education warns that your username and password are as legally binding as your written signature. Giving someone your FSA ID is like letting them sign documents for you, which could let them make unwanted changes to your account without your permission.

New Laws – Talking about new laws is a common trick scammers use. They might tell you about a “new law” that supposedly only they know about. It is unlikely, however, that there is a new student loan law that you haven’t heard about from watching the news, reading a newspaper, or visiting sites like this. If you cannot verify any new student loan law from a trustworthy source, the odds are very high that you are looking at a scam.

Document Preparation and Application Assistance – The fine print on both letters I received made it clear that the only thing they were actually offering was to help submit applications or process paperwork. If I contacted them, they’d likely compare their service to hiring an accountant for tax returns. But, this is misleading.

These document preparation companies charge hundreds of dollars, hoping you won’t realize they’re just filling out a 20-minute form. They almost certainly will not offer helpful insight for your specific financial circumstance.

Important Deadline – If a letter mentions an important deadline on your student loans, be wary. Your student loan servicer would inform you directly of any important deadlines for your student loans. If the first you hear about this “deadline” is from an advertisement or letter from an unknown company, there probably isn’t a real deadline at all.

Protecting Yourself

If you get a letter and question its legitimacy – If you receive a letter and are unsure if it’s real, a useful first step is to look up the company’s name online. Be aware, however, searching online might not catch all the scams. Some companies are skilled at creating fake positive reviews and hiding the very real complaints. The Consumer Financial Protection Bureau has some additional advice for evaluating these companies.

If you think they took or are about to take your money – If you’re worried that a scam company has taken your money or is about to, getting your money back can be tough.

If you already paid them, demand they return your money immediately. Inform them that you will be submitting a complaint to the Consumer Financial Protection Bureau and your state’s attorney general if it isn’t promptly returned. These scammers go to great effort to stay off law enforcement’s radar. The threat of reporting their scam is the threat they are most likely to take seriously. Please be aware that, while law enforcement is often good about pursuing these companies, they are usually slow to respond because they need time to build a case.

If you wrote them a check that hasn’t been cashed yet, you can ask your bank to stop the payment. If you paid by credit card, you can tell your credit card company it was a fraudulent charge and ask them to reverse it.

No matter what happens, keep an eye on your credit report. Scammers might have your personal info and could try to steal your identity.

Getting Back at the Scammers

You might feel a strong urge to get back at these dishonest individuals and companies.

You might think about calling them to waste their time as a way of getting even. Doing so, however, would end up wasting your own time and might even make you more of a target for them.

The most effective step you can take is to file a complaint with the government. The attorney general in most states is responsible for protecting consumers from scams. By reporting to your state’s attorney general, you help law enforcement become aware of the scam.

One person’s complaint might not change things overnight, but if enough people report these scams, it could help prevent others from becoming victims.

Bottom Line – Don’t Take Anything at Face Value

Student loans can be overwhelming and impact a lot of people. Scammers have been exploiting the student loan issue in the United States for a long time.

Generally, a good rule of thumb regarding student loans is to double-check everything you are told, regardless of the source. It’s possible that you misunderstood something, a student loan servicer might have told you something in error, or someone could be trying to take advantage of you.

In essence, if something feels off to you – even if you can’t pinpoint exactly why – it’s important to trust your instincts.

For additional information about student loan scams, read here.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

26 thoughts on “Scam Alert: Student Loan Payment Reduction, Consolidation and Forgiveness by Mail”

  1. Thank you for this post! Answered all my questions about a similar FINAL NOTICE letter I received. Was suspicious, and just googled, since I’m scheduled to received a return call. Which I won’t answer. I didn’t give any information including login info, except they did ask for my driver’s license number, which I gave. Can they do anything with that information? I usually do not fall for things like this, but like many others above, I did. Just read the fine print (duh, how did I miss that?) that indicates “fee based application assistance”.

    • I’d be concerned about them getting driver’s license info, so I’d suggest being extra vigelent about watching out for identity theft, but to be honest, that isn’t an issue I’ve dealt with personally, so I’m not sure of the best solution. I’m glad to hear that you caught the issue before things got worse.

  2. Signature Processing Services
    Senior Loan Advisor

    A phone call with her and everything happened so quickly. Wish I would’ve looked here before providing all of my info. I already contacted my bank. Please provide me with tips.

    Thank you!

  3. I received a FINAL NOTICE letter on 09/19/2022 titled Student loan consolidation & Payment Reduction Program Prepared for:—
    It had the benefit id#. It was written to go to https://nslds.ed.gov
    I hit a road block after hitting “Financial Aid Review” and “Accept”. That seemed weird. I called 888-307-6901 and spoke with a rep. I gave them the benefit Id# on the letter but was told that it did not pull up anything. STRANGE!!! Why include that in the letter and it’s not working? He asked for my email address. I provided that but was told the email did not go. STRANGE!!! He asked me to provide my name and home address. I was skeptical. I asked why? He said it was to confirm what they have. But he said he couldn’t pull up anything with the benefit id???? He also asked for my last four ssn and then account/routing number to collect payment. I wasn’t comfortable with that. I said I will call back later. My fear is that I gave my last four ssn. Am I in danger? He sounded so convincing and he even mentioned the correct name of my lender and my student loan amount. I did not give him that information. It sounded so good to be true and I felt something wasn’t right. Now I have to setup fraud alerts 🙁


  4. I received a letter stating, “Final Notice” and in bold letters “Student Loan Consolidation & Payment Reduction Program Prepared For:”

    It stated I had until 07/16/2021 to respond. It knew my total student loan amount and stated I may quality for student loan forgiveness.

    The letter directed me to create a FSA ID (Federal Student Aid ID) at that point I received an email stating my password was changed. The representative stated I qualified for Income Driven Payment program which it would total $77.58. She stated $38.58 will go directly to the principal of my student loan and $39 will go to Student processing center. She stated I qualify for the 25-year student loan program. Nonetheless, I provided her with my routing and checking account number. She was charging me $799 for the consolidation fee and stated it will be taken out in 2 sections. Upon doing my research, I immediately called my bank and changed all my information and changed my email address on my FSA account.

    **BE CAREFUL**

    • The same happen to me… I received the same letter, but I did not call or make any type of contact with them.. I know this was a scam. Just be careful

    • I just received the “Final Notice” letter announcing “new laws discounting federal student loans” with no company name listed anywhere on the letter. Thanks for offering this info to those who receive letters like this to help us avoid the frustration and financial ruin of scammers.

  5. So happy I found this site. This scam needs to be made more aware of especially to us poor students who want all the reductions we can get. I was nearly sucked in, but I didn’t have my information on me and told them I would call them back (I’m not going to now thanks to you all). The phone number listed was 866-375-1264. I spoke with a Nichole and she gave me her direct line of 714-503-0497. Do not contact them or give them your information.

  6. The letter I received said final notice for loan forgiveness. I called them yesterday hoping I could get help with my student loan before the new year. All they got from me was my new address and email, I dont know what damage they can do with that information. I called the number 866-448-0216 and talked with Erica. Luckily I did not have all my FSA information ready and she said someone would call me back from a (714) area code. My wife noticed all the red flags on the letter and we started looking into them.

  7. OMG! I got the same kind of scam regarding student loan payment reduction and/or forgiveness! I called them and they made it seem totally legit until they asked me to give them access to my FSA ID and password so that they can access my info, in order for them to pull the loan data for the software to calculate. I knew it was something sketchy when they asked me for my FSA user info. Be Very Careful of this SCAM! I am so glad that I did not fall for this scam!- they ALMOST got me!

  8. I get two or three of the no company name student loan consolidation letters a year. They drop the name US Dept of Education and that you can get a federally backed consolidation with a lower interest rate but there is no way to contact them other than by telephone number, 866-220-6454. I have reported them to the FTC as of today but is there another place to report them? The CFPB would need the company’s name and address so it can’t be reported to them. I wish the real dept of Ed could inform all borrowers of these scams posing as them.


Leave a Comment