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Dani Madson

3 Reasons to be Cautious of Student Loan Relief Agencies

Here are 3 reasons why you should be cautious of these student loan relief agencies.

If you’ve heard advertisements such as, “You qualify for Obama Loan Forgiveness!” or “Sign up for loan forgiveness before it’s too late!” you might be tempted to call and ask about these loan forgiveness programs. However, it’s important to know that many “student loan relief agencies” or “debt reduction companies” often charge students large fees for unnecessary help with their student loans, or for necessary help that could be obtained elsewhere for free. Plus, you may not even qualify for forgiveness.

Here are 3 reasons why you should be cautious of these student loan relief agencies:

Large fees

While these companies sound like they have your best interests at heart, that may not be the case. One tactic of such agencies is to advertise, “You Qualify for Forgiveness!” and then enroll you into an income-driven repayment plan for a “low fee.” The company might submit your income-driven repayment plan application to your loan servicer and then charge you monthly fees on top of your federal student loan payment. What these companies might not tell you is that you could do this yourself at or by working with your Department of Education Loan Servicer – for free! Other common advertisements will claim, “You Qualify for One Low Monthly Payment!” The loan relief company will submit a consolidation application on your behalf, even if a consolidation isn’t necessary. If you would like to consolidate your loans, you can also do so for free through the Department of Education.

Offering forgiveness without verifying eligibility

Students may receive a text message or voicemail claiming, “Your loan has been flagged for forgiveness,” but be careful. These phrases are used as marketing tactics to encourage students to apply for a forgiveness program. These companies can’t make you eligible and have no influence as to whether or not your loans will actually be forgiven. Some of them will file your application for you without verifying your eligibility for loan forgiveness. You get billed and you will have to pay for the service regardless of your eligibility. For eligible borrowers, student loan forgiveness is only available after you have made several years of qualifying payments. You can always call Herzing University’s Alumni Support Center or your loan servicer for help as well.

Failure to follow through with the service

Along with voicemails and text messages, students may see billboards, hear radio and TV ads, or receive social media messages regarding loan forgiveness plans. Before you call one of these companies, do some research. A quick Internet search of the company can bring up previous customer reviews. If you do choose to contact the company, ask how much the service costs. These companies are not affiliated with the Department of Education and some of them fail to follow through with the services you think you’re paying for. Even if the service was not performed, or was performed incorrectly, the student will still be charged a fee. Students should also be cautious of signing any contract, paperwork or releasing personal information to these so-called loan relief agencies.

Below are some examples of third-party advertisements:

  • Voicemail examples:
    • Trump is going to repeal the forgiveness plans. If you want this forgiveness, you must call immediately within 24 hours.
    • Your student loan payment can be cut in half or completely wiped away.
  • Text message examples:
    • Your student loans may be completely forgiven if you qualify. Find out by calling xxx-xxx-xxxx.
    • Your student loan qualifies for federal loan forgiveness! Call now at xxx-xxx-xxxx.
    • Your student loan has been flagged for forgiveness. Call now for forgiveness.

If you see one of these advertisements for loan forgiveness, it’s best to be careful and call your federal student loan servicer for free help. If you have questions about student loans, repayment plans, or forgiveness, feel free to contact Herzing University’s Alumni Support Center at 866-508-0748 ext. 01353 or

Dani Madson works in Herzing University’s Alumni Support Center. She graduated from St. Norbert College in De Pere, Wisconsin with a Bachelor of Arts Degree and is an expert in successful management of federal student loans.

* Bureau of Labor Statistics (BLS), U.S. Department of Labor, Occupational Employment and Wage Statistics 2023 / Occupational Outlook Handbook 2022. BLS estimates do not represent entry-level wages and/or salaries. Multiple factors, including prior experience, age, geography market in which you want to work and degree field, will affect career outcomes and earnings. Herzing neither represents that its graduates will earn the average salaries calculated by BLS for a particular job nor guarantees that graduation from its program will result in a job, promotion, salary increase or other career growth.

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