Over 9 Million Student Loan Borrowers Face Credit Score Drops as Delinquencies Resurface

The resumption of federal student loan payments has triggered rising delinquencies, with long-term financial consequences for millions of borrowers.

Federal Reserve Bank of New York projects over 9 million borrowers will experience significant credit score declines in early 2025 as loan delinquencies reappear on credit reports.
The effective delinquency rate for student loans is expected to surpass pre-pandemic levels, which were around 14% in 2019, highlighting growing financial strain.
Pandemic-era relief policies temporarily improved credit scores by marking delinquent and defaulted loans as current, but repayment resumption has exposed underlying financial challenges.
The share of borrowers with flat or growing balances remains elevated at 63% as of 2024, reflecting difficulties in reducing outstanding debt.
Delinquencies will remain on credit reports for seven years, reducing credit access and increasing borrowing costs for affected individuals.