Student Loan Scams: Upfront Fees and Your FSA ID

Help with student loans is free from the official source. Anyone demanding a fee first is a red flag.

By Siddharth ShankarUpdated October 24, 2026

Student loan borrowers are a target because many are looking for help and lack time to compare options. This guide follows the FTC’s June 2025 consumer alert on student loan scams.

What the scams look like

Typical pitches include:

• promises of loan forgiveness, cancellation or much lower payments;
• claims that you must act now or lose a “limited-time” programme;
• requests for a payment or monthly fee before any work is done;
• demands for your FSA ID, the login for federal student aid accounts.

The rules the FTC highlights

• Upfront fees are illegal. The FTC says it is illegal for companies to charge upfront fees for student loan debt relief.
• Never share your FSA ID. It lets someone log in as you, change your account details and see your records.
• Help is free. The free route to federal student aid information, including repayment options, is StudentAid.gov.

The FTC pointed to its case against Panda Benefit Services, which involved more than $16.7 million in upfront fees.

Warning signs

• A company contacts you unexpectedly and offers to fix your loans.
• It asks for fees before it does anything.
• It claims to be affiliated with the Department of Education.
• It asks you to sign a power of attorney or hand over your FSA ID.
• It tells you to stop talking to your loan servicer.
• It guarantees results.

What to do instead

1. Go to StudentAid.gov yourself by typing the address into your browser.
2. Contact your loan servicer and ask about repayment plans and options.
3. Keep your FSA ID private, and use a strong, unique password with two-factor authentication.
4. Be sceptical of urgent offers, especially by phone, text or social media.
5. Check your records. Use your free credit reports to see all your loans; see how to get your free credit reports.

If you have already dealt with a scammer

• Change your FSA ID password and review your account for changes.
• Contact your loan servicer and tell it what happened.
• Contact the bank or card issuer if you paid.
• Report it at ReportFraud.ftc.gov.
• Watch for identity theft. If you shared personal details, read what to do if your identity is stolen, and how to prevent it.

Protecting your details

Scammers may buy or find your contact details and loan information in leaks. Check your exposure with an email exposure check, and learn how they reach you in how scammers get your phone number and email.

Students and families

Young borrowers also benefit from managing their online profile; see the guide for students, and for school records, FERPA. Another scam that targets younger people is the fake job offer.