After A 4-Year Pause, Student Loans Are Destroying Credit Scores — One Borrower Says It Cost Her 137 Points In Weeks

After a nearly four-year break, federal student loan payments have resumed — and for millions of Americans, the financial aftermath has been swift and painful. Borrowers are now facing steep drops in their credit scores, with some seeing declines of more than 100 points in just a matter of weeks.

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Loan Delinquencies Are Now Showing Up on Credit Reports

Student loan payments officially resumed in October 2023, but thanks to a one-year "on-ramp" period, missed payments weren't reported to credit bureaus right away. That protection ended in October, and now borrowers who've fallen behind are starting to feel the full impact.

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In the first quarter of 2025, 2.2 million federal student loan borrowers became newly delinquent and saw their credit scores fall by more than 100 points, according to the Federal Reserve Bank of New York. More than 1 million of those borrowers saw drops of at least 150 points.

A 100-point drop in a credit score can be extremely damaging. According to LendingTree's chief credit analyst Matt Schulz, recovering from such a hit could take years. "It can literally cost you tens of thousands of dollars over the course of your life in the form of higher interest rates, bigger fees and more," Schulz told Fox News. 

One Borrower Lost 137 Points in Just Weeks

Kayla Quinones, a 26-year-old borrower from Florida, saw her credit score drop 137 points between January and March — and she didn't even realize she was behind on her payments.

Quinones told CNBC that although she received emails from the U.S. Department of Education, she thought they were general updates, not action items. It wasn't until she checked her credit score while preparing to move that she discovered the drop.

"I went back into [my loan servicer] website, took a peek, and was just kind of figuring out what is going on," she said.

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Quinones used her savings to pay off the overdue amount and worked with her servicer to set up a payment plan. But the damage to her credit had already been done.

A Delinquency Can Derail Big Financial Plans

For borrowers like Mervelline Aflata of Dallas, falling behind wasn't just about confusion — it was about survival.

Aflata earned her master's degree in 2023 and planned to resume payments in early 2025. But after undergoing surgery and losing her job, she wasn't in a position to pay. By the time she started working again and attempted to make a payment, her credit score had already dropped 154 points.

"Maybe I could have looked into more options with the loan servicer, but in that moment, I was just worried about living," she told CNBC.

Aflata eventually worked with her servicer to bring her account current and filed a dispute with TransUnion. Within a week, the missed payments were removed from her report and her score rebounded — a relief, since she hopes to buy a home soon.

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Is Recovery Possible?

While some borrowers have been able to bounce back, others may face a long road to recovery. Schulz told Fox News that rebuilding a credit score after a major hit is "a marathon rather than a sprint."

Still, there are steps borrowers can take:

• Check credit reports for errors.
• Request goodwill removals of missed payments from servicers.
• Become an authorized user on someone else's credit card.
• Ask for higher credit limits, but avoid using the new credit.
• Above all, making consistent, on-time payments is key.

Final Thoughts

The end of the pandemic-era student loan pause has created confusion and financial stress for many. Whether due to a misunderstanding or tough circumstances, falling behind on student loans now has real consequences.

Credit damage from student loan delinquency doesn't just affect borrowing; it can influence housing, insurance rates, and job opportunities. Checking in early and often with loan servicers may help avoid surprises down the road.

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