Federal Student Loan Borrowers May See Credit Score Impact in 2025

Millions of federal student loan borrowers could face a major financial shift this year as missed payments start affecting credit scores for the first time in nearly five years. This change follows the end of the federal student loan COVID-19 payment pause, which had previously shielded borrowers from negative credit reporting under Donald Trump’s administration.

What Does This Mean for Borrowers?

When the payment pause officially ended in September 2023, the Department of Education introduced a temporary on-ramp period to help borrowers adjust. During this time, missed or late payments were not reported to credit agencies. However, this program concluded in October 2024, meaning that any missed payments will now be reflected on borrowers’ credit reports.

The Impact on Credit Scores

• A single missed payment can classify a borrower as “delinquent”, potentially leading to a drop in their credit score.
• Consistent non-payment could make it harder for borrowers to qualify for loans, mortgages, or even rental applications.
• Borrowers who have not made a payment since the pause ended may soon see the consequences reflected on their credit reports.

What Can Borrowers Do?

To avoid financial setbacks, borrowers should:
• Check their loan status through their loan servicer.
• Set up a repayment plan that fits their financial situation.
• Explore income-driven repayment plans for lower monthly payments.
• Contact their loan servicer if they are struggling to make payments.

With this significant change in 2025, borrowers need to stay informed and take proactive steps to protect their financial health.