Millions of Americans have seen their credit scores plummet after missing student loan payments, severely limiting their ability to rent apartments, secure loans, and find employment, compounding economic pressures nationwide, The Washington Post reported.
According to a recent Federal Reserve Bank of New York analysis, millions of Americans are grappling with significantly lower credit scores due to delinquent student loans, complicating their financial lives at a time when borrowing costs remain historically high.
The study found that in the first three months of 2025, about 2.2 million borrowers experienced credit score drops of more than 100 points, while more than a million saw their scores decline by at least 150 points—a decrease comparable to the impact of personal bankruptcy filings. Approximately 2.4 million borrowers previously held favorable credit ratings, enabling access to affordable loans or mortgages before these delinquencies were reported.
The administration resumed mandatory student loan payments in late 2023 after a pandemic-related pause began in March 2020. Although a one-year grace period ended Sept. 30, many borrowers remained unaware that payments had resumed.
Tina Johnson, a 44-year-old DoorDash driver from Fleming County, Kentucky, experienced firsthand the consequences of missed loan payments. Johnson’s credit plunged from 650 to 418 after missing a $440 payment she claimed she was never notified about. “Nothing, no email, no phone call, no letter — I could’ve avoided all this if I had known,” Johnson said.
“It’ll take me years to get those 200 points back,” she said.
As borrowing becomes more challenging, rejection rates for auto loans, credit cards, and mortgage refinancing are also rising sharply. Federal Reserve data indicates that auto loan rejections increased from 2% to 14% compared with a year earlier, while credit card denials jumped five percentage points to 22%. Mortgage refinance application rejections surged to 42% in February, up from 27% a year earlier.
Destiny, a 30-year-old from Georgia, starting a new tech job, saw her credit score fall from the high 700s to the low 400s. Now, securing housing near her employer has become nearly impossible. “Every property manager looks at me and says, ‘Your credit score is too low,'” she said.
Economists warn that these widespread credit score drops may further strain consumer spending and reduce economic growth. Moody’s Analytics estimates that student loan delinquencies could shave approximately 0.13% off overall economic growth in 2025, intensifying fears of broader economic slowdowns.
Borrowers aged 40 and older have been particularly impacted, suggesting inflation and rising living costs have made loan payments increasingly unaffordable.
Dominik Mjartan, CEO of American Pride Bank in Georgia, cautioned about the broad repercussions: “There’s a very high cost to having a low credit score in America. Your cost of living goes up — your cellphone bill, your utilities, your insurance payments, everything. And that trickles down through the economy.”
Nearly one in four borrowers were more than 90 days behind on their payments by the end of March, underscoring the growing urgency of the student loan crisis.
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