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How to avoid a student loan debt relief scam

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It’s a big problem. Companies promising to help with student loan debt advertise widely, using misinformation and high-pressure sales.

However, consumers need to know that there’s nothing a student loan debt relief company can do for them that they can’t do for themselves for free. And some of the companies that promise relief are scams.

Here are some ways to avoid a student loan debt relief scam, according to the Federal Trade Commission:

  • Never pay an up-front fee. It’s illegal for companies to charge you before they help you. If you pay up front to reduce or get rid of your student loan debt, you might not get any help – or your money back.
  • Don’t sign up for quick loan forgiveness. Before they know the details of your situation, scammers might say they can get rid of your loans. They might promise a loan forgiveness program – that most people won’t qualify for. Or they might say they’ll wipe out your loans by disputing them. But they can’t get you into a forgiveness program you don’t qualify for or wipe out your loans.
  • Don’t trust a Department of Education seal. Scammers use official-looking names, seals, and logos. They promise special access to repayment plans, new federal loan consolidations, or loan forgiveness programs. It’s a lie. If you have federal loans, go to the Department of Education directly at
  • Don’t be rushed. To get you to act fast, scammers say you could miss qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you don’t sign up right away. Take your time and check it out.
  • Don’t give away your Federal Student Aid ID. Some scammers claim they need your FSA ID to help you, but don’t share your FSA ID with anyone. Dishonest people could use that information to get into your account and steal your identity.

FTC takes action against a student loan debt relief scheme

The FTC is banning a payment processor involved a fraudulent student loan debt relief scheme from processing payments. It also requires the company and its owner to provide $500,000 to the FTC to return to consumers.

The FTC’s lawsuit against Automatic Funds Transfer Services Inc. and its owner, Eric Johnson, alleges that AFTS processed at least $31 million in consumer payments for a fraudulent student loan debt relief scheme sued by the FTC in 2019. The debt relief scheme used many names, including The Student Loan Group.

AFTS and Johnson processed payments from tens of thousands of consumers deceived by SLG into paying illegal upfront fees with false promises to lower the consumers’ monthly student loan payments.  

The FTC alleges that the company and Johnson received complaints from consumers and banks; were aware that SLG had high return rates and was collecting illegal upfront fees from consumers; and knew that SLG kept changing company and brand names to reduce negative publicity.


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