Is that student loan relief company a scam?

If a company wants money to enroll you in a repayment plan, consolidate your loans, get you out of default or apply for forgiveness, it’s selling you something you can get free. The Department of Education and your loan servicer do all of it at no cost, and studentaid.gov says so plainly: “You never have to pay for help with your federal student aid (including federal student loans).”

That doesn’t make every paid service a crime. But the FTC’s student loan cases follow the same pattern, and you can check a company against it quickly.

The warning signs

The first five are on studentaid.gov’s list of warning signs; the last comes from the FTC’s rules. What each one means:

• Up-front or monthly fees. Under the FTC’s Telemarketing Sales Rule, a company selling debt relief by phone can’t take a fee until it has actually changed the terms of at least one debt and you’ve made a payment under the new terms. An “enrollment fee” or a “monthly maintenance fee” before anything changes is the classic violation.
• A promise of immediate or total forgiveness. Forgiveness comes from specific programs with specific rules (PSLF after 120 payments, RAP after 360, discharge for disability or school closure). Nobody can promise it on a sales call.
• They ask for your FSA ID password. The Department and its partners never ask for it. Once someone has it, they can change your plan, your contact details and where notices go.
• They want a power of attorney or third-party authorization signed. That lets them talk to your servicer as you, and sometimes cut you out of the loop.
• Pressure to sign up on the spot. “This program closes Friday” is a sales line. Real deadlines, like your SAVE notice, come from your servicer in writing.
• They say they’re affiliated with the Department of Education, or use names, seals or wording that suggests it. The FTC’s Impersonation Rule, in force since April 1, 2024, makes it illegal to falsely claim a government affiliation, directly or by implication.

What the FTC has found

These are recent federal cases, each described in the FTC’s own announcement. The allegations in pending cases are not findings.

Date	Case	What the FTC alleged
June 2024	Panda Benefit Services (Prosperity Benefit Services)	More than $20.3 million taken from borrowers; the first case under the Impersonation Rule. Court orders entered from October 2024 to May 2025 permanently banned the defendants from the debt relief business.
December 2024	Superior Servicing	Illegal advance fees of up to $899, and claims of affiliation with the Department of Education.
April 2026	NERD Solutions and ED REF	Monthly up-front fees as high as $1,400, at least $8.8 million collected, and cold calls to people on the Do Not Call list. A court issued a temporary restraining order.

The FTC also keeps a list of companies and people banned from debt relief work.

Check a company in two minutes

1. Did they contact you first, by phone, text or a letter that looks official? That alone is a reason to stop.
2. Do they charge anything before your payment actually changes?
3. Do they need your FSA ID, or want you to sign a power of attorney?
4. Can they name the specific federal program and the rule that makes you eligible?
5. Search the company name with “FTC” and look at the banned list.

A yes to any of the first three, or a no to the fourth, is enough to walk away.

If you already signed up or paid

Studentaid.gov gives these steps:

1. Log in to studentaid.gov and change your password. If the company changed your email or phone, call the Federal Student Aid Information Center at 1-800-433-3243 for account recovery, which takes 7 to 10 days once you send documents.
2. Call your servicer and revoke any power of attorney or third-party authorization. Ask what’s changed on your account recently: plan, address, forbearance requests.
3. Ask your bank or card company to stop payments to the company.
4. Report it to the FTC at ReportFraud.ftc.gov, to Federal Student Aid through its Feedback Center, and, where federal aid fraud or identity theft is involved, to the Department’s Office of Inspector General hotline.

Then apply for the plan you want on studentaid.gov, which is free. The calculator shows what each plan would cost you.

Where we fit in

This site is independent and isn’t affiliated with the Department of Education, Federal Student Aid or any servicer. It’s free, the calculator runs in your browser, and we never ask for your FSA ID, Social Security number or account numbers. If you send us a question, a person replies by email; it isn’t passed to anyone else. We don’t send anyone to relief companies and we take no payment from anyone named on this page. About the site.