Millions of Americans See Credit Scores Plunge
– The credit scores of millions of Americans have plummeted in the first quarter of the year as a result of rising student loan delinquency rates, following the end of a years-long pause on federal payments.
– According to a recent report by the Federal Reserve Bank of New York, nearly six million student loan borrowers—nearly 14 percent—were 90 or more days delinquent or in default between January and March 2025.
– This increase in delinquency rates across the country, accompanied by a drop in credit scores, represents not only a significant challenge for millions of Americans but also has the potential to have dramatic ripple effects on the U.S. economy.
Why It Matters
– Being delinquent on one’s student loan payments can have a damaging impact on borrowers’ credit scores, which in turn can make it much harder to make some big purchases, such as buying a home or a car.
– The new data in the New York Fed’s report suggest that millions of Americans will have a harder time getting auto and mortgage loans at a time when many are already struggling with historically high monthly payments and rising costs across the board or could face higher interest rates.
What To Know
– The student loan payment freeze, introduced at the beginning of the pandemic, was in place for an unprecedented 43 months. Payments officially resumed in October 2023, but the U.S. Department of Education granted borrowers an additional 12-month “on-ramp” period, during which they were shielded from most of the consequences of falling behind on payments, including reporting missed payments to credit bureaus.
– New data show that student loan borrowers have been struggling to keep up with payments after the “on-ramp” period ended in late 2024. According to the New York Fed, the delinquency rate for student loans surged from below 1 percent to nearly 8 percent over the first quarter of 2025.
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