Fact Check: Credit Scores Have Steeply Declined Since Student Loan Payments Resumed
What We Know
The resumption of student loan payments in the United States has had a significant impact on the credit scores of millions of borrowers. Following a five-year pause on collections due to the COVID-19 pandemic, the federal government began reporting missed payments to credit bureaus. According to a report by the Associated Press, after 90 days of non-payment, servicers notify credit bureaus, leading to substantial drops in credit scores. The Federal Reserve Bank of New York reported that in the first three months of 2025, approximately 2.2 million borrowers experienced a drop of 100 points or more, and an additional 1 million borrowers saw declines of 150 points or more (AP News, Los Angeles Times).
The situation is exacerbated by the fact that only about one-third of the 38 million Americans who have student loans are currently making payments (New York Times). The Washington Post also noted that this trend of declining credit scores is not limited to borrowers with poor credit; even those with previously good ratings have seen significant drops, with over 500,000 borrowers losing an average of 128 points due to late payments (Washington Post).
Analysis
The evidence supporting the claim that credit scores have steeply declined since the resumption of student loan payments is robust and comes from multiple reputable sources. The Associated Press and the New York Times both highlight the alarming statistics regarding the number of borrowers falling behind on payments and the corresponding drops in credit scores. The Federal Reserve Bank of New York's data adds credibility, as it provides specific figures on the extent of the declines.
Moreover, the analysis from credit risk experts, such as Kevin King from LexisNexis, indicates that the aggressive collection tactics being employed by the government, including wage garnishment and tax refund seizures, are likely to further impact borrowers' financial decisions and credit scores (AP News). This suggests a systemic issue where borrowers are forced to prioritize payments differently, potentially leading to increased delinquencies on other debts.
However, it is essential to consider the credibility of the sources. The Associated Press and the New York Times are established news organizations known for their journalistic integrity, while the Federal Reserve Bank of New York is a respected financial institution. This lends a high degree of reliability to the information presented.
Conclusion
The claim that "credit scores have steeply declined since student loan payments resumed" is True. The evidence clearly shows that millions of borrowers have experienced significant drops in their credit scores due to the resumption of student loan collections. The reporting from multiple credible sources corroborates the extent of this decline, highlighting a concerning trend that could have broader implications for the economy and individual borrowers' financial health.
Sources
- Credit scores decline for millions as US student loan collections restart
- Millions of Student Loan Borrowers Are Behind on Payments
- Student loan missed payments causes credit score drop for ...
- Credit scores decline for millions as U.S. student loan collections ...
- Credit scores crash after student loan payments resume ...
- Student borrowers' credit scores are taking a hit. Here's why that ...
