Consumers Are Vulnerable to Credit Score Changes as Student Loan “On-Ramp” Ends

On September 30, 2024, the Student Loan “On-Ramp” comes to an end. Student loan servicers under the Department of Education will resume reporting missed payments to the Nationwide Credit Reporting Agencies (NCRAs). The consequences of missing student loan payments may include late fees, delinquency notation on credit reports, and decreases in the consumer’s credit score.

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.

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.

The impacts of a missed student loan payment on a consumer’s VantageScore credit score include:

• 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 results of VantageScore’s study is available here.

To learn more about federal student loan payment resumption and its impact on VantageScore credit scores, please visit: https://www.vantagescore.com/consumers/student-loans/.

Members of the press who would like to speak with a VantageScore spokesperson about the end of the On-Ramp and its impact on credit scores can email press@vantagescore.com.