Scam dealing with federal student loan debt making rounds

FRANKFORT, Ky. (KT) – State officials are warning Kentucky students who owe money on federal student loans that they should watch out for scamming loan repayment companies, who may charge large fees for services that are available for free.

Some third-party companies claim to offer document preparation services and act as though they can help students qualify for a loan forgiveness program, but they may want upfront fees and personal and financial information. The Federal Trade Commission says it is illegal for companies to charge upfront fees before providing debt relief services.

“My administration will always put education first,” stated Gov. Andy Beshear, “and part of that means protecting Kentucky students after they’ve graduated, from predatory companies trying to take advantage of them, as they pay back the loans that helped them pursue their education goals.”

Interestingly, the governor’s 2020 tax returns, which he released on Thursday, show that his family, like many others across the state and nation, is still paying off student loans.

“To avoid falling victim to a scam, start with the servicer the Department of Education has assigned your loan to,” said Gene Hutchins, executive director of the Kentucky Higher Education Assistance Authority.  “Your servicer can tell you what your options are and can help you with the forms you need.  And unlike these scam companies, your servicer will never charge you a fee for their assistance.”

The governor and KHEAA warn borrowers to be skeptical about companies that do any of the following:

– Ask for payment up front and for monthly fees to monitor an account.

– Promise immediate loan forgiveness.

– Ask for a student’s FSA ID password and a power of attorney.

If a student doesn’t know what his or her servicer is, go to

Any students who believe they have been contacted by a scammer, they should report it to the Consumer Financial Protection Bureau here and the Kentucky Attorney General’s Office here.

KHEAA’s sister agency, the Kentucky Higher Education Student Loan Corporation, offers low-cost Advantage Loans to help students and parents pay for college or refinance student loans. For more information about Advantage Loans, visit

Many of KHEAA’s student aid programs are funded by Kentucky Lottery receipts.

For more information about Kentucky scholarships and grants, visit;