FTC Returns Funds to Consumers Victimized by Student Loan Forgiveness Scam
Washington D.C. – July 24, 2025 – The Federal Trade Commission (FTC) announced today that it is sending payments totaling more than $1 million to consumers who were defrauded by a deceptive student loan forgiveness operation. The FTC took action against a company that falsely promised student loan debt relief and charged consumers advance fees for services they never received.
The FTC’s Bureau of Consumer Protection, in conjunction with its enforcement partners, successfully shut down the fraudulent scheme, which preyed on individuals seeking legitimate assistance with their student loan obligations. The company at the heart of the scam made false and misleading claims, including guaranteeing forgiveness of student loans, offering significant debt reduction, and assuring consumers that their loans would be paid off entirely. To facilitate these promises, the company routinely charged upfront fees, often on a recurring monthly basis, from unsuspecting victims.
However, the services advertised were never provided. Consumers who paid for these promised benefits found themselves no closer to resolving their student loan debt, and in many cases, their financial situation worsened due to the illicit charges. The FTC’s investigation revealed a pattern of deception, where the company collected fees without delivering the promised debt relief, leaving victims with both their original student loan burdens and financial losses from the scam.
The funds being returned to consumers represent amounts collected by the fraudulent operation that were ultimately recovered by the FTC through its legal action. These payments are part of a redress program designed to compensate those who suffered financial harm as a direct result of the company’s unlawful practices.
“The FTC remains steadfast in its commitment to protecting consumers from fraudulent schemes, especially those targeting vulnerable individuals seeking help with significant financial challenges like student loan debt,” said [FTC Spokesperson’s Name/Title – if available in the original release, otherwise omit or use a general title like ‘an FTC official’]. “We are pleased to be able to return these funds to the victims of this student loan forgiveness scam and urge all consumers to be wary of any company that guarantees loan forgiveness or asks for advance payment for debt relief services.”
Consumers who believe they may have been targeted by similar scams are encouraged to report their experiences to the FTC at ReportFraud.ftc.gov. This information is vital in helping the FTC identify and combat ongoing fraudulent activities.
The FTC advises all consumers seeking student loan relief to exercise caution and to remember that legitimate student loan servicers and government programs will not ask for upfront fees for assistance. Official information and resources for managing student loans can be found through the U.S. Department of Education’s website.
FTC Sends Money to Consumers Harmed by Student Loan Forgiveness Scam
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