Many federal student loan borrowers could see a major change in 2025, as missed payments will now impact credit scores for the first time in nearly five years. This shift follows the end of the federal student loan payment pause, which had protected borrowers from credit consequences during the pandemic.
If you’ve been struggling to restart payments, hereโs what you need to know about the risks and the steps you can take to protect your credit.
Missed Payments
When the student loan payment pause ended in September 2023, the Department of Education introduced a temporary on-ramp period to help borrowers adjust. However, that grace period ended in October 2024, and now:
- Missed payments will be reported to credit bureaus
- One missed payment can lead to delinquency
- After 90 days of non-payment, loan servicers report delinquency to credit agencies
- Delinquencies remain on credit reports for up to seven years
This means borrowers who haven’t made a payment since the pause ended could soon see their credit scores take a hit.
Consequences of Loan Default
If a borrower goes six months (180 days) without making a payment, their loan enters default, leading to:
Consequence | Impact |
---|---|
Credit Score Damage | Lower credit score, harder to get loans |
Wage Garnishment | Government can take part of paycheck |
Loss of Financial Aid | No access to future federal aid |
Higher Loan Costs | Collection fees added to balance |
Borrowers who haven’t made payments since October 2024 have until June 2025 before they are considered in default.
How to Protect Your Credit
If youโre struggling with payments, there are several options to help prevent negative credit impacts.
1. Enroll in an IDR Plan
IDR plans lower monthly payments based on income and can reduce payments to as low as $0 for some borrowers. The Department of Education has reopened two IDR plans with lower payments than the standard plan.
2. Request Forbearance
If you still canโt afford payments under an IDR plan, you can request forbearance from your loan servicer. This temporarily postpones payments to help borrowers avoid default.
3. Make Partial Payments
Even if you canโt pay the full amount, making a partial payment can help prevent serious credit damage and keep your loan from being reported as delinquent.
4. Contact Your Loan Servicer
If you’re at risk of falling behind, reach out to your loan servicer to discuss options before your account is sent to collections.
With federal student loan repayments fully restarted, borrowers must act now to protect their credit scores and financial future. Whether it’s through an IDR plan, forbearance, or partial payments, there are options to help you stay on track and avoid default.
If youโre struggling, take action before June 2025 to prevent serious consequences like wage garnishment or long-term credit damage.
FAQs
When will missed student loan payments affect credit?
Delinquencies will be reported after 90 days of missed payments.
How long does delinquency stay on a credit report?
Up to seven years, affecting future loan approvals.
What happens if I default on my loan?
Default leads to wage garnishment, credit damage, and collection fees.
How can I lower my student loan payments?
Enroll in an income-driven repayment (IDR) plan for reduced payments.
Can I pause payments if I canโt afford them?
Yes, request forbearance to temporarily delay payments.