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If you’re behind on your federal student loans, this year is pivotal.

It’s the first year since the pandemic began – including the three-plus years when all loan bills were suspended — that not paying counts against your credit score. And borrowers who are 90 days or more overdue on payments could see a significant hit, researchers from the New York Federal Reserve Bank said this week.

In some cases, delinquent borrowers risk a drop of more than 150 points once their missed payments appear on their credit reports, they estimated.

Why now? Because after an unprecedented 43-month reprieve triggered by the pandemic, the government resumed billing in October 2023, but gave borrowers a year’s notice before reporting missed payments to the major credit bureaus. Add to that 90 days for delinquencies to roll through to those credit reports, and here we are.

“We expect to see more than nine million student loan borrowers face substantial declines in credit standing over the first quarter of 2025,” the New York Fed’s Daniel Mangrum and Crystal Wang wrote on their Liberty Street Economics blog Wednesday, implying that some borrowers may have already seen the hit.

“Although some of these borrowers may be able to cure their delinquencies – either through making up missed payments or by entering an administrative forbearance with their loan servicers – the damage to their credit standing will have already been done and will remain on their credit reports for seven years,” they wrote.

The study estimated the potential for credit score damage using delinquency and credit score data from prior to the pandemic. Once a delinquency of 90 days or more is reported, those with higher credit scores could see a bigger average drop than those with lower scores, the researchers said.

Borrowers with a credit score of 760, for example, could see it decline to 589, while those with a score of 620 may see it fall to 477, according to their estimates.

(Worth noting: Borrowers who were already behind or had fully defaulted before the pandemic were granted a clean slate during the payment break, which lifted median credit scores significantly, according to the research. This means any declines that may be coming are relative to those inflated scores.)

So what? It’s been a strange and turbulent few years for people with government student loans, and the Trump administration is pursuing more changes. If you’re struggling financially — or your payment obligation has suddenly increased — you’re not alone. As of September 2024, 9.7 million borrowers were delinquent on more than $250 billion in loans, the researchers estimated.

But now is a critical moment to stay current with your payments. Having a lower credit score can increase the cost of borrowing and make it more difficult to even get a credit card, car loan or mortgage.

So give your next steps careful consideration by taking stock of all of your options and staying on top of any developments. The online application for income-driven repayment plans just became available again Wednesday. Or you may want to consolidate or refinance your loans, find ways to lower your other expenses, or even pursue forbearance.

Related Reading

•   U.S. Department of Education Opens Revised Income-Driven Repayment Plan and Loan Consolidation Applications for Borrowers (U.S. Department of Education)

•   Student Loan Balance and Repayment Trends Since the Pandemic Disruption (Liberty Street Economics)

•   Moving Student Loans to the SBA Could Create Problems for Borrowers, Experts Say (Investopedia)

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

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We’ve helped members like these pay off over $33B in debt with a SoFi Personal Loan.

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BTW it’s a soft inquiry, so it won’t affect your credit score.^†

† To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/21/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

Fixed rates from 8.74% APR to 35.49% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 12/15/25 and are subject to change without notice. The average of SoFi Personal Loans funded in 2023 was around $33K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.

Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.

⁵ Autopay: The SoFi 0.25%autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.

⁷ Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.

§ Awards or rankings are not indicative of future success or results. Neither SoFi Bank, N.A. nor its employees paid a fee in exchange for ratings. Awards and ratings are independently determined and awarded by their respective publications.

‡ Same-Day Personal Loan Funding: 83% of typical SoFi personal loan applications, excluding Direct Pay personal loans and personal loan refinance, from January 1, 2023–January 1, 2024 that were signed before 6pm ET on a business day were funded the same day.

^ Direct Pay: Terms and conditions apply. Offer good for new personal loan customers with credit cards in their name only and subject to lender approval. To receive the offer, you must: (1) register and/or apply through this landing page; (2) complete a loan application with SoFi within 90 days of your application submit date; (3) meet SoFi’s underwriting criteria; (4) apply 50% or more of your loan proceeds directly to your creditors. Once conditions are met and the loan has been disbursed, the interest rate shown in the Final Disclosure Statement will include an additional 0.25% rate discount. Offer good for new customers only. Cannot be combined with other rate discounts with the exception of the 0.25% autopay rate discount, 0.25% direct deposit discount. SoFi reserves the right to change or terminate the Rate Discount Program to unenrolled participants at any time with or without notice. It takes about 3 business days for your credit card lender to receive payment after your loan is signed. You will be responsible for making all required payments to avoid credit card fees.

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How long do I need to wait to reapply after my Personal Loan application has been declined?
You will need to wait at least 30 days before re-applying for a Personal Loan with the same borrower(s). You are welcome to retry at any time with a co-borrower, if the previous application was as a single borrower. If you initially applied with a co-borrower, you can retry as a single borrower or with a different co-borrower.

Returning Borrower Pricing: Former SoFi Personal Loan customers who have paid their previous personal loan in full may be eligible for Returning Borrower special pricing on another personal loan if they meet the eligibility criteria and any other applicable terms and conditions. The pricing special does not apply to new Personal Loan customers or existing Personal Loan customers who are currently in repayment. To receive this offer you must (1) apply for a new personal loan and submit your application; (2) complete a loan application with SoFi within 90 days of your application submit date; (3) and meet SoFi’s underwriting criteria. A 0.50% interest rate reduction will automatically be reflected in the rate offered at time of application. SoFi reserves the right to discontinue or modify the Returning Borrower Rate Discount at any time and without notice. Such changes or modifications will only apply to applications begun after the effective date of the change.