Key Points
- The FTC has forever banned multiple businesses and individuals in order to carry out fake student loan debt relief projects that promise forgiveness and charge illegal fees.
- These scams often target borrowers by claiming they are affiliated with the Ministry of Education and using false testimony to promote false promises.
- Officials warn borrowers of caution and only seek assistance through official resources such as dusttantaid.gov.
Federal regulators stepped in to close one of the biggest student loan scams in recent memory. May 2025, The Federal Trade Commission announced that some businesses and individuals are permanently banned from the debt relief industry.
The entities, including Florida-based LLC and Columbia-based Start Start SAS, which runs business as a student debt relief for USA, have been accused of misleading thousands of student loan borrowers with illegal promises of forgiveness and fixed payments.
The operator misguided to work with the US Department of Education and used fake reviews. Borrowers were fascinated by the promise of permanent relief from high loan balances. The reality is that businesses have collected millions of illegal advance fees, sent large sums of money to call centers overseas, and borrowers are nothing but additional stress and confusion.
The FTC recovered more than $1 million in personal and business assets from the company’s operators and imposed a $7.3 million suspension ruling. If it turns out that the parties are lying about their finances, they will be paid in full.
This case reminds us that student loan fraud will rise as student loan disruption continues.
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False promises and fake reviews
The FTC enforcement action cited several forms of fraud. in Complaint A regulator filed in US District Court said the defendant:
- It is claimed to be affiliated with the Ministry of Education
- Promised loan exemption or fixed low monthly payment
- Tens of thousands of consumers listed in the Don’t call the registry
- We sold the service using fake testimony and fake social evidence
These businesses often relied on confusion about the possibility of changing student loan repayment rules. They used changing terms, program names, and loan waiver options to make them seem legal. But instead of supporting borrowers, businesses simply pocketed upfront fees and were unable to register anyone with the actual federal repayment plan.
If there is something called a Trump Loan forgiveness option or a Biden Loan forgiveness option, remember that it should be a red flag.
In one of the worse scams, borrowers were told that monthly payments were going directly to student loans. However, the money never applied to the loan balance. Instead, it was routed through the Shell Business network and moved abroad.
The terms of the settlement currently prohibits the appointed individual from working in a future debt relief business, charging prior fees, or making deceptive claims about their affiliation or services.
Things borrowers should be careful about
The crackdown comes when federal student loan payments are reopening after years of suspension and court agenda. Confusion over eligibility, payment timelines, and policy changes has created the perfect environment for fraud operators to thrive.
Federal officials are urging borrowers to be cautious. If someone contacts you claiming you can eliminate your loan or reduce your payments with fees, it is probably a scam. The Ministry of Education and its official loan servicers do not apply for forgiveness or charge a fee to consolidate the loan.
Furthermore, when you see social media posts from what you can best describe as random individuals, moms, or other people saying how they helped others, they DM to get away or report. The Ministry of Education will not DM you via social media. And the real news organizations that report to students do not run that way.
Borrowers can visit StudentAid.gov Free for official help. You can also report suspicious activity to the FTC Reportfraud.ftc.gov.
Here are some red flags to avoid:
- Request for advance payments to “qualify” for forgiveness
- Promises to cancel or register immediate debt to a secret program
- Claims for special access to government relief
- Pressure to act quickly or risk losing benefits
- Email or phone to mimic federal agencies without verifiable contact information
- Ask for DMs on social media to avoid public comments and contact information
Finally, the official loan servicer can be found at [loanservicername].studentaid.gov. For example, Mohela is mohela.studentaid.gov – Please note the official DOT Gov web address.
The Loan Servicer website has the “Official Federal Student Aid Servicer” next to its logo.
Final Thoughts
Scammers thrive when student loan policies change. The horizon has potential changes, slowing public communication. This is especially true for recent college graduates and borrowers who have little experience navigating the federal system.
More fraud attempts could continue as repayment programs continue to evolve, including changes proposed under the RAP plan.
Don’t miss these other stories:
Congress will advance changes to student loans and more
How to get student loan forgiveness [Full Program List]
Can Trump cancel Harvard’s tax-free status?
Editor: Colin Graves
FTC posts fake student loan company crackdown first appeared in university investors.
