The "SAVE is Ending—Go Private" Scam
Scammers are exploiting real news about the SAVE plan ending to push borrowers into private loan consolidation. This decision is irreversible and permanently eliminates all federal forgiveness eligibility. Here's how the scam works and how to protect yourself.
If you consolidate your federal student loans into a private loan, you become permanently and irrevocably ineligible for ALL federal forgiveness programs—PSLF, IDR forgiveness, Borrower Defense, TPD discharge, and any future programs. This cannot be undone. Ever.
How the Scam Works
This scam is particularly insidious because it starts with true information:
- The scammer contacts you (phone, email, text, or mail) with accurate news: the SAVE plan is enjoined, no new enrollments are happening, and borrowers are stuck in forbearance.
- They present this as a crisis. "The federal system is collapsing." "Your options are disappearing." "You need to act now before it's too late."
- They offer a "solution": consolidate your federal loans into a private loan with a "lower rate" or "fixed payment."
- You sign the paperwork, thinking you're escaping chaos for stability.
- Your federal loans are paid off by the private lender. Your federal protections are gone. Forever.
Example Scam Script
"Hi, I'm calling about your federal student loans. You may have heard the SAVE plan was shut down by the courts. Unfortunately, this means your loans are in limbo and the government can't help you anymore. But I have good news—we can consolidate your loans into a private program with a lower fixed rate, and you'll have stable payments again. Can I get some information to see if you qualify?"
Reality: Everything in this script is designed to create fear and urgency. The "solution" they're offering destroys your eligibility for all federal forgiveness programs.
Why This Matters: What You Lose
When you convert federal loans to private loans, you permanently lose access to:
| Federal Benefit | What It Provides | After Private Consolidation |
|---|---|---|
| PSLF | 100% forgiveness after 120 payments in public service | Gone forever |
| IDR Forgiveness | Forgiveness after 20-25 years of payments | Gone forever |
| Income-Driven Payments | Payments capped at % of income; $0 if income is low | Gone forever |
| Borrower Defense | Discharge if your school defrauded you | Gone forever |
| TPD Discharge | Discharge if you become totally disabled | Gone forever |
| Death Discharge | Loan canceled upon borrower's death | May still be owed by estate |
| Forbearance/Deferment | Temporary payment pause for hardship | Limited or none |
Private lenders offer none of these protections. If you lose your job, get sick, or can't afford payments, you have no safety net. And there is no path to forgiveness—ever.
The Truth About Your Options
Yes, the SAVE plan is ending. That's real. But here's what the scammers don't tell you:
IBR (Income-Based Repayment) and PAYE (Pay As You Earn) are still active and accepting applications. Both qualify for PSLF. IBR will survive the 2028 terminations. You are not trapped—you just need to apply to switch plans.
The federal system is chaotic, but it's not collapsing. And the protections you have with federal loans are irreplaceable.
How to Spot This Scam
- Unsolicited contact. Legitimate servicers don't cold-call you with consolidation offers.
- "Federal program" language for private loans. If they're vague about whether this is a federal or private consolidation, it's a red flag.
- Urgency and fear. "Act now before the program closes" is a manipulation tactic.
- Requests for upfront fees. All federal applications are free. Period.
- Promises of lower rates. Private lenders may offer lower rates, but you're trading away protections worth potentially hundreds of thousands of dollars.
The Critical Question
If anyone offers to "consolidate" your loans, ask directly: "Will this be a federal Direct Consolidation Loan, or a private loan?" If they say private, or if they dodge the question, hang up.
What to Do If You're Contacted
- Don't engage. Hang up the phone. Delete the email. Don't click any links.
- Never share personal information—especially your FSA ID, Social Security number, or bank details.
- Go directly to official sources. If you want to change your repayment plan, go to studentaid.gov/idr yourself.
- Report the scam. File complaints with the FTC, CFPB, and your state Attorney General.
What If You Already Fell for It?
If you've already consolidated into a private loan, there is unfortunately no way to undo this. You cannot convert private loans back to federal loans. The protections are gone.
Your options now are:
- Pay off the private loan as aggressively as possible to minimize total interest paid
- Explore private loan refinancing for potentially better rates (though you're still in the private system)
- Consult a student loan attorney if you were misled or defrauded into the consolidation—you may have legal recourse against the company
Need to Switch Federal Plans? Do It the Right Way
The official IDR application is free, secure, and the only legitimate way to change your repayment plan.
Go to StudentAid.gov