Millions of Americans hit with bad credit after missed student loan payments

The Washington Post ^ | May 25, 2025 6:00 AM EDT | Abha Bhattarai

[E. Pluribus Unum]

Millions of Americans are suddenly facing dramatically lower credit scores from delinquent student loans, making it tougher for them to secure housing, insurance, car loans, even employment at a vulnerable time for the U.S. economy.

Credit scores dipped by more than 100 points for 2.2 million delinquent student loan borrowers, and 150 points or more for more than 1 million in the first three months of 2025, according to an analysis by the Federal Reserve Bank of New York. It’s the kind of credit score drop that follows a personal bankruptcy filing. Roughly 2.4 million of those Americans previously had favorable credit scores and would have qualified for cars loans, mortgages or credit cards before these delinquencies were reported, researchers said.

The slide in credit scores could lead to pricier loans for millions as borrowing costs are near 20-year highs. The Federal Reserve has signaled that it doesn’t plan to cut interest rates right away.

Already there are signs that lower credit scores are making it harder for more Americans to get loans, with rejection rates for auto loans, credit cards and mortgage refinancing all ticking up in February, compared to a year earlier.

Tina Johnson was two days away from finalizing the purchase of a used Nissan Pathfinder when she got notice that her preapproved loan was no longer valid. Her credit score had fallen from 650 to 418 after she missed $440 worth of student loan payments that she didn’t realize were required again. Although the Department of Education said lenders would send borrowers a bill at least three weeks before it was due, Johnson said she was never notified that payments needed to resume.

[BenLurkin]

Millions of Americans are bad credit risks.

[fwdude]

Shouldn’t have majored in “transgender intersectional social justice.” That’s on you.

[BudgieRamone]

Their own fault. not my responsibility to feel sorry for them.

[Ex-Con777]

That’s what credit scores are for, to weed out those who welch on a debt. Why should everyone else pay higher interest rates to make up for the deadbeats?

I’m stuck at 845. I refuse to get another card to bring it up the other 5 points.

EC

[eyeamok]

Gold is the money of Kings, Silver is the money of Gentlemen, Barter is the money of Peasants and DEBT is the money of SLAVES.

[E. Pluribus Unum]

“I owe my soul to the company store.”

[lucky american]

I have no pity for these people. My niece and nephew have kept up payments though I believe they got a lower payment during covid.I remember talking about this and my brother said they’ll keep paying it off. I bet they’re happy they have.

[frank ballenger]

Ha.

Even with the accepted transfer of credits for majoring in folklore at another university. Go figure.

Woody Allen movie line:
“I was in black studies. If I had stayed in college I could have been black by now.”

[Mariner]

Garnish their wages and put liens on their property.

[econjack]

These people accrue the benefit of the education directly, so they should pay for it directly. There is NO reason why the American taxpayer should foot their bill. If they chose the wrong major and can’t get a job, that’s on them. I feel sorry for none of them.

[Lizavetta]

LOL, I'm stuck at the low 800s.

I seem to remember my student loan debt back in the day was quite reasonable.

But then, I DID NOT take out stupid ridiculous astronomical loans.

[allendale]

Most college students no longer work summer jobs to defray college costs. Instead many go travelling abroad with the trips financed by student loans.They are learning late that personal debt debilitates.

[thecodont]

I thought Biden forgave those student loans. What happened?

[Flaming Conservative]

I paid off my student loans when I really couldn’t afford to do so. I guess they’ll have to do without that new car or high end apartment.

[NorthMountain]

< shrug >

Miss your loan payments, get a bad credit score. That’s how it works. Welcome to reality, chickadees!

[MinorityRepublican]

Most college students no longer work summer jobs to defray college costs. Instead many go travelling abroad with the trips financed by student loans.They are learning late that personal debt debilitates.

To be fair, there's zero point in working that summer job which pays you a couple grand while you end up owning $100,000 after you graduate.

[dinodino]

Screw ‘em. They should have always paid their student loans on time.

[Tijeras_Slim]

They trusted Senile Joe. No sympathy from me.

[Jane Long]

The Whaaaaaaambulance business should be picking up, nicely.