A student loan forgiveness scam charges upfront fees for enrolment in federal repayment or forgiveness programmes that are free, while claiming to be the Department of Education or your loan servicer. Advance fees for debt relief are illegal in the US under the Telemarketing Sales Rule, which settles it before any question of whether the promises are true.
Everything this scheme sells is free.
Income-driven repayment, consolidation, Public Service Loan Forgiveness, deferment, forbearance — all administered by the Department of Education and its servicers, all applied for at no cost, all available to anyone eligible with no intermediary.
The scam charges for them, and claims to be the institution that provides them.
The FTC’s complaints across three separate operations use almost interchangeable language: the defendants pretended to be affiliated with the Department of Education or consumers’ actual loan servicers, promised forgiveness or permanently reduced payments, and took upfront fees that borrowers were told would go towards their loan balances. $45.9 million in one case. $7.3 million in another. $8.8 million alleged in a third, restrained in April 2026.
And there is a rule that ends the conversation before any of that has to be evaluated: in the United States it is illegal to charge an advance fee for debt relief.
The FTC alleges calls to tens of thousands of people on the Do Not Call Registry in two separate cases. The registry does not stop them; it identifies people who did not want to be called.
Or with your servicer. In the most effective versions the caller quotes your real balance — which is why the FTC’s April 2026 complaint cites the Gramm-Leach-Bliley Act, covering the obtaining of customer information from a financial institution under false pretences.
Note the second one. Income-driven repayment varies with income by design, so a permanently fixed payment is precisely the thing the real programme cannot promise. What is being sold is certainty.
Hundreds to thousands of dollars, described as going towards the loan balance.
Where it could have stopped
An advance fee for debt relief is illegal in the United States under the Telemarketing Sales Rule — before any question about whether the promises were true. If money is wanted before the loans have actually been renegotiated, a rule has already been broken, and no assessment of the offer is required.
Payments go to the company rather than to the loan. Some operations take over the borrower’s StudentAid.gov login “to handle the paperwork”, which is how contact from the real servicer stops reaching them.
The FTC’s complaints say the defendants pocketed them. The balance sits exactly where it was, and frequently grows.
The borrower learns from the real servicer, in arrears, having paid twice for nothing — once to the company and once in accrued interest.
The underlying confusion is real. Federal loan programmes are genuinely complicated, eligibility rules genuinely change, and policy on forgiveness has genuinely shifted several times. Somebody offering to navigate it is offering something people actually want.
Servicers genuinely change without warning. Millions of US borrowers have had their loan transferred to a company they had never heard of. An unfamiliar organisation calling about your loan is therefore not, by itself, strange.
The caller often has your real data. A balance, a servicer name, a graduation year. Nothing feels more like authority than being told something about yourself that is true.
The offer is aimed at people already under pressure. Someone behind on payments will take a call that a comfortable person would ignore, and will pay a fee that seems small against a balance that feels unpayable.
The fee looks like a payment. Framed as going towards the loan, it does not feel like a purchase at all — which removes the moment where someone asks what they are getting.
And the harm is silent for months. Nothing bounces. The borrower believes their loan is being handled, and only discovers otherwise when default paperwork arrives.
Largely domestic, with offshore call centres, and organised as a template rather than as a series of independent operations.
The FTC’s complaints in three separate cases describe the same four elements: a claim of affiliation with the Department of Education or the real servicer; a promise of forgiveness or a permanently fixed payment; an upfront fee described as going to the loan balance; and the fee going nowhere near it. Those are not four coincidences.
Offshore where it is convenient. Start Connecting SAS operated from Colombia while Start Connecting LLC sat in Florida, trading together as USA Student Debt Relief.
And it regenerates. BCO Consulting and SLA Consulting were banned in October 2023; USA Student Debt Relief in May 2025; Superior Servicing’s operators in September 2025 and July 2026; NERD Solutions and ED REF restrained in April 2026. The FTC keeps winning, and the template keeps reappearing, because the confusion it exploits is permanent.
On 16 April 2026 the FTC announced it had obtained a temporary restraining order against NERD Solutions and ED REF, alleging they cold-called borrowers — thousands of them on the Do Not Call list — while posing as the Department of Education or their loan servicers, and collected at least $8.8 million. These are allegations and the case will be decided by the court.
The FTC settled with the operators of Nevada-based Superior Servicing in September 2025 over allegations that they posed as the Department of Education or its loan servicers, promised forgiveness, and pocketed the upfront fees borrowers believed were going to their loan balances. More than $45.9 million was taken; a further operator was banned in July 2026.
In May 2025 the FTC banned the operators of Start Connecting LLC and its Colombian affiliate, trading as USA Student Debt Relief, from the debt relief industry. They allegedly took more than $7.3 million in illegal advance fees, promised permanently fixed payments and full forgiveness, and cold-called tens of thousands of people on the Do Not Call Registry.
Before you pay anything. Go to StudentAid.gov yourself and log in. Everything a paid company can do for you is there, free. Find out who your servicer actually is and call them on the number listed on that site.
If you want help, your servicer’s staff will walk you through repayment options at no cost, and so will a non-profit credit counsellor. Neither charges an advance fee, because neither is allowed to.
If you are already paying a company.
On getting money back. Expect little, and late. The FTC’s August 2025 distribution was about $119 per person, nearly two years after the ban. The permanent ban is the part of enforcement that works; restitution is not.
Into an ordinary US business. That is the whole answer, and it is what makes this scheme different from most on this site.
Fees are paid by card or bank debit to a company with a real name, a real merchant account and a real bank. There is no mule, no crypto and no laundering step at the point of collection — the money looks exactly like revenue, because structurally it is.
What the enforcement record shows is where it goes afterwards: nowhere recoverable. Judgments of $45.9 million and $7.3 million were both partially suspended because the defendants could not pay, yielding about $2.16 million and just over $1 million in surrendered assets respectively.
That gap — between what was taken and what still exists — is why the FTC’s real remedy here is the permanent industry ban rather than the money, and why a temporary restraining order against an operation still running, as in April 2026, is worth more per dollar than a judgment years after collapse.
The other half of this story
Our sibling site Clean on Paper explains the companies that collect the fees — and why an entity with a genuine merchant account is the most efficient way to take money that will never be found again.
No agency publishes a line item for most of the schemes on this site, so these charts show the official categories that contain this scheme. Each series is labelled with the agency's own category name. See how the mapping works.
Yes. In the United States it is illegal under the Telemarketing Sales Rule to charge an advance fee for debt relief — before any of the loans have actually been renegotiated, consolidated or reduced. If money is wanted upfront, a rule has already been broken, and you do not need to evaluate anything they said.
That is the most persuasive part of the call and it is not evidence of anything good. The FTC's April 2026 complaint cites the Gramm-Leach-Bliley Act, which covers obtaining customer information from a financial institution under false pretences — meaning the allegation is that they got it, not that they were entitled to it.
No. Every federal forgiveness, consolidation and income-driven repayment programme is free to apply for and is administered through the Department of Education and its servicers. There is no expedited channel, no special access and nothing a paid intermediary can do that you cannot do at StudentAid.gov.
Log in to your actual loan servicer and check your balance and payment history — that tells you immediately whether anything reached your loans. Then stop the payments, revoke any third-party authorisation on your account, and change your StudentAid.gov password.
Some of it, sometimes, years later. The FTC distributed $743,230 to 6,269 people in August 2025 — about $119 each — for an operation banned in October 2023, against fees the FTC describes as hundreds to thousands of dollars. That is the realistic answer for this category.
Because the underlying confusion is real and permanent. Federal repayment programmes are genuinely complicated, servicers genuinely change without warning, and policy genuinely shifts. The FTC settled two of these in 2025, banned another operator in July 2026, and restrained a new one in April 2026.
Report it
Reporting is what produces the enforcement data on this page. Find the right agency and phone number for your country on the report page. If money moved in the last few hours, call your bank first.