Mar 25, 2025
Shiloh Garcia was blindsided when her bank alerted her that her credit score had dropped from 720 to 620. After looking into further, she found the culprit: she was more than 90 days delinquent on her $16,000 student loan, a debt she believed was still in suspension.
“I’m devastated,” Garcia told the Wall Street Journal. “It’s like having your whole life put in limbo over a simple mistake.”
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Pandemic-era relief on federal student loans ended this past October, starting a 90-day countdown before missed payments could impact borrowers’ credit scores. That time is up and many, like Garcia, are feeling the financial strain.
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A Wall Street Journal analysis of government data by credit score provider VantageScore found that, as of the end of February, about 43% of borrowers with federal student loan payments due had yet to resume making them, highlighting a widespread struggle as repayments resume.
Saying goodbye to relief
For millions of Americans with student loans, the return to repayment has gotten even tougher.
The Biden administration initially pushed for widespread student loan forgiveness, but the Supreme Court struck down the plan a year later. As a compromise, the administration granted borrowers an additional year before missed payments would be reported to credit bureaus.
Another hurdle has emerged. In a memo obtained by the Washington Post in February, the U.S. Department of Education directed student loan servicers to temporarily halt the acceptance and processing of all income-driven repayment (IDR) and loan consolidation applications for three months.
This pause blocks borrowers from enrolling in IDR plans, which adjust monthly payments based on income and family size while also offering the possibility of loan forgiveness after 20 to 25 years. Without access to these options, many borrowers could face higher payments — and fewer pathways to long-term relief.
For borrowers like Garcia, who was already confused about when repayment resumed and the status of her loan, navigating repayment options just got even harder.
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Bad credit woes
Aside from Americans finding a student loan repayment plan that works for them, many who may have missed a payment are now also dealing with the struggles of a bad credit score.
A strong credit score is in the 700 to 800 range. About a third of American consumers fall between 600 and 750. While Garcia still falls within this ‘good’ range, her mortgage broker advised her that this new lower credit score would have consequences.
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For one, the broker estimated that it would add $400 to the monthly payment for the new home she wanted to buy. That’s because lenders rely on credit scores to determine the risk of lending money, meaning a lower score can translate to higher interest rates on loans, credit cards and even car payments.
But, it’s not just big-ticket items that are impacted.
A lower credit score can also mean higher premiums on car and homeowners insurance. As Bruce McClary, spokesperson for the National Foundation for Credit Counseling (NFCC), explained to CNBC, insurers often use credit-based scoring to assess risk, which can result in higher costs for those with poor credit.
“A history of timely payments is the single biggest factor in determining your credit score according to FICO,” McClary advised.
“Bringing past-due accounts up to date and keeping them there should be a priority for anyone who has been struggling because of delinquent accounts.”
Ultimately, restoring a good credit score doesn’t just make borrowing easier — it can also save you thousands of dollars over time.
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Victoria Vesovski is a Toronto-based staff reporter at Moneywise covering personal finance, lifestyle and trending news. She holds degrees from the University of Toronto and New York University, and her work has appeared on platforms including Yahoo Finance, MSN Money and Apple News.
