VantageScore® Analysis Finds Benefits for Borrowers Who Resume Student Loan Payments, While Many Will See Lower Credit Scores

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Feb 27, 2025, 14:53 ET

SAN FRANCISCO, Feb. 27, 2025 /PRNewswire/ -- After a five-year hiatus, the resumption of reporting on educational debt will have both positive and negative impacts on many credit scores, according to a new analysis published today by VantageScore. Borrowers who continue to make student loan payments after forbearance will likely see their VantageScore credit scores go up, a silver lining for those who are able to keep up with these obligations. Conversely, some of the more than 9 million Americans who are behind on federal student loans could see credit score declines of up to 129 points.

VantageScore® Analysis Finds Benefits for Borrowers Who Resume Student Loan Payments, While Many Will See Lower Credit Scores.

Currently, 22 million student loan borrowers are out of forbearance, according to the U.S. Department of Education. Approximately 9.2 million of these borrowers are expected to be reported as delinquent between now and June 2025. A recent court ruling blocking the Saving on a Valuable Education (SAVE) Plan will likely impact an additional 8 million borrowers also in forbearance, resulting in growing potential delinquencies by the end of 2025.

"For the first time in five years, federal student loan delinquencies will start to reappear on credit files," said Dr. Rikard Bandebo, EVP, Chief Strategy Officer and Chief Economist at VantageScore. "The majority of borrowers who continue to make student loan payments are already seeing positive impacts to their VantageScore credit scores."

Key conclusions from the VantageScore study include:¹

SCORES MAY INCREASE BY UP TO 8 POINTS FOR BORROWERS RESUMING REPAYMENT — Student loan borrowers who are making their payments on time are already benefitting, potentially seeing credit score increases of up to eight points, according to VantageScore's analysis.

22 MILLION STUDENT LOAN BORROWERS OUT OF FORBEARANCE — Starting in mid-February 2025, federal student loan servicers will start reporting delinquencies to the three Nationwide Consumer Reporting Agencies (NCRAs). 43% of the 22 million borrowers with payments due – about 9.2 million consumers – were behind on their payments due as of February 2025. A recent court ruling against the Saving on a Valuable Education (SAVE) Plan may push approximately 8 million more borrowers out of forbearance in the coming months.

AVERAGE SCORE FOR THE U.S. POPULATION EXPECTED TO DECLINE SLIGHTLY — According to VantageScore's analysis, the national average VantageScore 4.0 credit score is expected to decline by two points, from 702 to 700 by the summer of 2025, as student loan delinquencies begin to appear on credit files.

These findings are in line with VantageScore's earlier research on the impact of student loan delinquencies. VantageScore's original research study on federal student loan reporting resumption estimated that 41% of student loan borrowers were likely to default, while other borrowers would experience a positive impact from the resumption of reporting.

These key findings are being made available for educational purposes only. They are not intended to provide any credit or financial advice or guidance or to recommend the taking of any specific action. Importantly, an individual's credit profile is unique, and the exact impact on an individual's credit score will vary depending on various factors.

For more information on VantageScore's research and to download a fact sheet, visit our website.

To learn more about federal student loan payment resumption and its impact on VantageScore credit scores, visit https://www.vantagescore.com/consumers/student-loans/.

About VantageScore^®
VantageScore is the fastest-growing credit scoring company in the U.S. and is known for the industry's most innovative, predictive, and inclusive credit score models. In 2023, usage of VantageScore increased by 42% to more than 27 billion credit scores. More than 3,400 institutions, including eight of the top 10 banks, use VantageScore credit scores to provide consumer credit products including credit cards, auto loans, personal loans and mortgages. The VantageScore 4.0 credit scoring model scores 33 million more people than traditional models. With the FHFA mandating the use of VantageScore 4.0 for Fannie Mae and Freddie Mac guaranteed mortgages, the company is also ushering in a new era for mortgage lending and helping to close the homeownership gap.

VantageScore is an independently managed joint venture company of the three Nationwide Consumer Reporting Agencies (NCRAs) – Equifax, Experian, and TransUnion.

¹ For this study, VantageScore estimated the potential credit score impact of the student loan reporting resumption by analyzing anonymized consumer credit information from all three Nationwide Consumer Reporting Agencies (NCRAs).

SOURCE VantageScore