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Changes to Student Loan Payments and Credit Scores



For the first time in nearly five years, missed student loan payments could now lower your credit score. This change follows the end of a suspension on loan payments that was in place during the COVID-19 pandemic. 

This pause, established under Donald Trump's administration, stopped the reporting of late payments to credit bureaus.

In September 2023, the pause on student loan payments ended. The Department of Education did offer a temporary period to help borrowers adjust, but this ended in October. Now, any late or missed payments will be reported to credit scoring agencies.

When a payment is missed and not made up for 90 days, the loan service provider reports it to national credit agencies as a "delinquency". 

Having delinquent status can badly hurt your credit score, making it tougher to get new credit or loans for things like houses or cars. This kind of mark can stay on a credit report for up to seven years.
 

How to Protect Your Credit


If you're behind on student loan payments or worried about future payments, there are a few ways to protect your credit score:
 
  • Income-Driven Repayment (IDR) Plans: The Department of Education offers IDR plans that base your monthly payment amount on your income, which can be much lower than the standard repayment amount.
  • Requesting Forbearance: If you can't afford any payments, even with an IDR plan, you might consider asking for a forbearance. This delays your payments for a time without harming your credit score, though interest might still accumulate.

Borrowers who haven't paid since October have until June 2025 before their loan is considered in default. Defaulting on a loan can lead to more severe consequences like wage garnishment and even more damage to your credit score.

Considering these options can help manage your loans and protect your credit as the post-pandemic payment adjustments take place.

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