Short answer: Federal Student Aid says: “You never have to pay for help with your federal student aid (including federal student loans).” A company that asks for a fee up front, promises fast and total forgiveness, or asks for your FSA ID password is showing the signs Federal Student Aid lists for a scam. Your federal loan servicer can help with repayment plans, consolidation, pauses, forgiveness and default at no cost. If you already paid or signed something, contact your servicer and your bank or card issuer, and report it. This is general information, not legal or financial advice.
What you can do for free
Federal Student Aid says that “At no cost, the U.S. Department of Education and our federal loan servicers can help you” (StudentAid.gov, read October 30, 2026):
- Lower your monthly loan payment.
- Change your repayment plan.
- Consolidate multiple federal student loans.
- Postpone monthly payments while you are in school or unemployed.
- See if you qualify for loan forgiveness or other programs.
- Get your loans out of default.
It adds that the Department and its federal loan servicers “will never charge fees to help borrowers with their student loans”. If you are in default, it lists the Department’s Default Resolution Group at 1-800-621-3115. For your options in default, see federal student loan default: your options.
Signs of a scam, as Federal Student Aid lists them
- They ask for up-front or monthly fees for help. Federal Student Aid calls a fee before any work “a huge red flag”, especially with a request for your card or bank account number, and warns that some ask you to pay them directly with a promise to pay your servicer.
- They promise immediate and total forgiveness or cancellation. “No one can promise immediate and total loan forgiveness or cancellation.” Federal Student Aid also says these companies cannot negotiate a “special deal” with your servicer, and that payments under income-driven plans are set by federal law.
- They ask for your FSA ID username and password. “ED or its partners will never ask you for your FSA ID password.” Your FSA ID signs legal documents and has the same legal status as a written signature.
- They ask you to sign a third-party authorization or a power of attorney, which lets them talk to your servicer, make decisions for you and change your contact information.
- They say the offer is limited and push you to act now, citing “new laws” or programs that are ending.
- Their letters, emails or texts have spelling and grammar errors.
Federal Student Aid also says these companies sometimes claim to “work with the U.S. Department of Education”, and some include your loan balance to look real (StudentAid.gov).
What the Telemarketing Sales Rule says about up-front fees
The FTC’s Telemarketing Sales Rule makes it an abusive practice to request or receive a fee for any debt relief service until the company has renegotiated, settled, reduced or otherwise changed the terms of at least one debt under an agreement you signed, and you have made at least one payment under it (16 CFR 310.4(a)(5)(i), eCFR, text up to date as of October 28, 2026, read October 30, 2026). Its scope, in the words of the rule:
- A debt relief service is one represented to change the terms of payment or other terms of a debt “between a person and one or more unsecured creditors or debt collectors”, including a lower balance, interest rate or fees (310.2(o), eCFR).
- Telemarketing is a plan or campaign to sell goods or services “by use of one or more telephones and which involves more than one interstate telephone call” (310.2(ii)).
- Calls you make in response to an ad are exempt from parts of the rule, but that exemption does not apply to ads for debt relief services (310.6(b)(5)(i), eCFR).
Whether the rule covers a given company depends on the facts. You do not need the rule to protect yourself: the free route through your servicer costs nothing. For how fees work under this rule with other debts, see debt settlement companies: what can go wrong.
What a monthly fee adds up to, only for the math
This example is only for the math, and the fee is an example figure, not a price from any company. A company that charges $49.00 a month for 12 months collects $49.00 x 12 = $588.00, for help Federal Student Aid says you can get at no cost. If you stopped paying your loan while paying the company, Federal Student Aid warns your credit could be damaged and your balance could grow (StudentAid.gov).
If you already paid or signed something
Federal Student Aid lists these steps (StudentAid.gov):
- Contact your federal loan servicer to revoke any power of attorney or third-party authorization on file, and check that no unwanted changes were made to your loans.
- Contact your bank or credit card company and ask that payments to the company be stopped.
- File a complaint with the FTC (ReportFraud.ftc.gov).
- Report the activity through the Federal Student Aid Feedback Center.
- Log in and change your account password, and do not share the new one.
For stopping recurring card or bank payments, see how to stop automatic loan payments. You can also send a complaint to the CFPB (consumerfinance.gov/complaint); see how to file a loan complaint.
Related scams
A fee before you get any help is the same pattern as in advance-fee loan scams. Calls and texts that push you to act now are covered in fake loan texts and calls.
Questions to ask before you pay anyone
- Is this something my federal loan servicer would do for free?
- Do you want a fee before you have done anything?
- Why do you need my FSA ID or a power of attorney?
- Will my loan payments go to you instead of my servicer?
Checklist
- Help with federal student loans is free through your servicer.
- Never share your FSA ID username or password.
- No fee up front, no promise of instant total forgiveness.
- Do not sign a third-party authorization or power of attorney for a debt relief company.
- Already paid? Servicer, bank or card issuer, FTC, Feedback Center, new password.
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Sources
- Federal Student Aid: Avoiding Student Aid Scams
- FTC Telemarketing Sales Rule, 16 CFR 310.4(a)(5): debt relief advance fee ban and dedicated accounts
- eCFR: 16 CFR 310.2, Definitions (Telemarketing Sales Rule), current text up to date as of October 28, 2026
- eCFR: 16 CFR 310.6, Exemptions (Telemarketing Sales Rule), current text up to date as of October 28, 2026
- FTC: ReportFraud.ftc.gov
- CFPB: Submit a complaint
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.