After a years-long pause, federal student loan payments resumed in October 2023 with a transition, or ‘on-ramp,’ period of a year. Borrowers who had not yet started to repay their student loans had until October 1, 2024 to resume payments without loan servicing companies reporting missed payments.

As federal student loan borrowers are now likely aware, beginning on October 1, 2024, missing or avoiding their student loan payments could negatively impact their credit score.

With the On-Ramp period coming to an official end, borrowers need to understand the serious impact that missing a student loan payment can have on their overall credit score,” said Dr. Rikard Bandebo, EVP, Chief Strategy Officer and Chief Economist at VantageScore. “Missed payments could also have a layered effect, limiting consumers’ ability to meet other debt obligations as well as hindering future access to credit.

According to VantageScore research, borrowers who do not resume making federal student loan payments or who fail to make payments on time are at risk of significant credit score changes.

• MISSED PAYMENTS HURT SCORES MOST — Most of the estimated score decrease – varying between 49 and 82 points on average per consumer missing a payment – will likely be experienced by borrowers who will not be resuming their student loan payments, as the missed payment is reported as a new delinquency. Missed payments are considered delinquent immediately, and loan servicers may report them to the NCRAs anytime up to 90 days from their original due date.
• PAYING ON TIME BOOSTS SCORE — Student loan borrowers who resume their payments on time will likely experience a score increase of up to 8 points on average.
• AVERAGE SCORE FOR THE US CONSUMER COULD DECLINE — According to VantageScore’s analysis, the national average VantageScore could decline between 1 point and 9 points as a result of student loan borrowers not resuming payments when the On-Ramp comes to an end on September 30.

A fact sheet outlining the full study on the impact of missed payments on VantageScore credit scores is available here.

Student loan delinquencies aren’t without consequences. The potential negative impact of missed payments on credit scores can make it more difficult for consumers to purchase homes and cars or to access other types of financial products.

VantageScore has developed a landing page with educational resources designed to help borrowers navigate the federal student loan payment resumption. Visit Student Loans for more details.