Student loan consolidation and payment reduction program

Published October 18, 2022

Updated 10:24PM

Warning: Student debt relief letter offers help for a fee

Student loan debt relief is underway, but as borrowers begin filing applications online, some are getting official-looking letters in the mail.

MILWAUKEE - Student loan debt relief is underway, but as borrowers begin filing applications online, some are getting official-looking letters in the mail.

The letters offer assistance with their student loan forgiveness for a fee. The reality is, borrowers don’t need to pay anything to obtain their debt relief.

The one-time loan forgiveness of up to $20,000 is provided by the U.S. Department of Education (ED) as part of the Biden-Harris Administration student debt relief plan.

Lillian Rogers in Milwaukee believes the biggest trick to arrive on her doorstep this year came three weeks before Halloween. It was a letter outlining her "Student Loan Consolidation & Payment Reduction Program."

Student loan consolidation and payment reduction program

Lillian Rogers

"The main thing that got my attention [was that in] big, bold letters, it said "final notice." said Rogers.

Rogers is eligible for student loan forgiveness. At first glance, she thought the letter might be from the federal government.

Student loan consolidation and payment reduction program

"It looked like a very official letter," said Rogers. "You have to call this number and give your information. Otherwise, you’re gonna miss out," said Rogers.

The letter announces the student debt relief plan. It also includes Rogers’ exact loan balance and says by applying for consolidation, she "may automatically qualify." The letter advises that Rogers create a Federal Student Aid ID (FSA ID) and call a phone number before November 4th.

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The letter is actually an advertisement for application assistance and document preparation. At the very bottom, it says that the program comes with a fee and the sender is "not affiliated with the government." Borrowers are not required to include their FSA ID when applying for debt relief, and are advised against sharing that information.

"It’s really a private company looking to get your business," said Lisa Schiller of the Better Business Bureau (BBB) after reviewing the letter.

Student loan consolidation and payment reduction program

Lisa Schiller

Schiller says the BBB is hearing about similar letters, emails and texts in circulation, and the senders may also be after personal information. She says there are always people looking to cash in on the confusion surrounding new government programs. Schiller says Rogers’ letter includes a number of red flags.

"[The letter] says "final notice." There’s a lot of bold print. There’s a lot of information that’s a little vague and confusing," said Schiller.

Student loan consolidation and payment reduction program

Contact 6 reporter Jenna Sachs called the number listed in Rogers’ letter. Her phone call was transferred to a man who told her they are not a scam but a document preparation company. Soon after, Sachs got an email from Chase Palmer in the compliance department of Signature Processing Services (SPS).

"Signature Processing Services wants to make sure that everyone understands that we are not the government, and these are not our programs, which is why the information is included in the letter," wrote Palmer.

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Palmer did not respond to Sachs’ follow-up questions, including how SPS obtained Rogers’ loan information, and whether their letter was misleading.

Here’s what borrowers need to know about student loan debt relief:

Student loan consolidation and payment reduction program

The Department of Education is providing up to $20,000 in debt relief to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell recipients. Debt relief applies only to loan balances prior to June 30th, 2022. Borrowers have until the end of 2023 to apply online for debt relief.

If a borrower has loans not held by the federal government such as a Perkins Loan held by a school on an older Stafford Loan through a Federal Family Education Loan (FFEL), the loans may be eligible for debt relief if the borrower consolidates.

"Don’t pay anybody to do this," said Susan Teerink, Assistant Vice Provost for Marquette University Financial Aid and Enrollment Services. "This is free for former or current students with debt."

Student loan consolidation and payment reduction program

Susan Teerink

The announcement of the student loan relief program initially prompted several calls from former students to Marquette’s Student Financial Aid office. The average graduate leaves Marquette with about $35,000 in loans.

A test version is the application is now available: . Applications filed during the test period will be processed upon the program’s official launch.

"Doing the application is very simple," said Teerink. "It’s very short and very straight-forward."

Rogers’ debt relief should kick-in automatically, since the Department of Education has her recent FAFSA on file.

The Department of Education says, "You might be contacted by a company saying they will help you get a loan discharge, forgiveness, cancelation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with ED and our loan services, and never reveal your personal information or account password to anyone. Our emails to borrowers come from , , and . You can report scam attempts to the Federal Trade Commission by calling 1-877-382-4357 or by visiting"

What is student loan consolidation and payment reduction?

Essentially, previous qualifying payments made toward student loan forgiveness no longer count. Consolidation also provides borrowers a chance to change their student loan servicer, experts say. It can also lower monthly payments by giving borrowers up to 30 years to repay their loans.

Does consolidating student loans lower monthly payments?

If you consolidate loans other than Direct Loans—such as FFEL Program loans or Federal Perkins loans—consolidation may give you access to additional income-driven repayment plan options, which can lower your monthly payment amount. (Direct Loans are from the William D. Ford Federal Direct Loan Program.)

Can my student loans be forgiven if I consolidate?

How about consolidation loans? If you've refinanced your private and federal loans into a single one from a private lender, it is private and thus ineligible for forgiveness.

Is there a legitimate student loan forgiveness program?

Under Public Service Loan Forgiveness (PSLF), some federal loan borrowers can have their loans forgiven after 120 monthly loan payments. To qualify, you must work for an eligible non-profit organization or government agency full-time while making 120 monthly qualifying payments.