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Some student loan debt relief companies will lie and say they’re affiliated with the Department of Education when they’re not. They want their bogus claims of “guaranteed” loan forgiveness (for a fee) to seem more legitimate (they’re not).

And that’s what the FTC says Prosperity Benefit Services did when it sent out mailers promoting “complete” student loan forgiveness. If you called, telemarketers would try to convince you to enroll in one of the company’s programs by telling you it was affiliated with the Department of Education (they weren’t) and claiming it would make you eligible for quick loan forgiveness (they wouldn’t). 

To sign up, Prosperity Benefit Services asked for an (illegal) upfront fee, your FSA account data, and your signature to get you started on a monthly payment plan. What services would you get? Usually nothing. In the rare case it did submit your application, it was for free federal repayment programs you could've signed up for yourself.

Some student loan debt relief companies are scammers. Here are red flags to watch out for:

  • Scammers use official-looking names, seals, and logos to make them seem more legit. Make sure you’re working with a federal student loan servicer that’s listed on the Department of Education’s website. (And use the contact information listed there too — scammers can spoof the numbers and names of legit servicers.)
  • Scammers charge an upfront fee. It’s illegal for companies to charge you before they help reduce or get rid of your student loan debt.
  • Scammers say they need your FSA ID login information. Never give out this information. If a scammer gets your FSA ID, they could cut you off from your loan servicer — or even steal your identity.

Get free help managing your federal loans at StudentAid.gov/repay. If your loans are private, go straight to your loan servicer for help.

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Need FREE help with federal student loan forgiveness? Visit StudentAid.gov

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The purpose of this blog and its comments section is to inform readers about Federal Trade Commission activity, and share information to help them avoid, report, and recover from fraud, scams, and bad business practices. Your thoughts, ideas, and concerns are welcome, and we encourage comments. But keep in mind, this is a moderated blog. We review all comments before they are posted, and we won’t post comments that don’t comply with our commenting policy. We expect commenters to treat each other and the blog writers with respect.

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Arnie Caloca
June 28, 2024

Good for you!

A valuable public service.

Evelyn Steen
June 28, 2024

Currently, other students have stolen my Fafsa account making it both difficult to register and pay off loans

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