Many federal student loan borrowers could see missed payments negatively impact their credit scores for the first time in nearly five years, and the effects could linger for many years to come.

The federal student loan COVID-19 payment pause gave many borrowers a reprieve from payments. Once the pause ended in September 2023, the Department of Education provided an on-ramp to help borrowers prepare for repayments, but that program ended in October.

During that entire period, late or missing payments were not reported to credit reporting agencies, and wages were not garnished—until now. If a borrower has not made a payment since October, their credit report will likely take a hit this month.

Borrowers are designated as delinquent once they miss a payment, but only after 90 days of non-payment will a loan servicer report the late payments to the national credit bureaus. Once reported, delinquency will stay on the borrower's credit report for seven years. This could make it harder to receive a new credit card or mortgage and may raise interest rates on any other loans the borrower could try to take out.

"I encourage anybody who's past due or is struggling to contact their loan holder to talk about what those options are and figure out which one is best for their particular situation, both short-term and long-term," said Betsy Mayotte, president of The Institute of Student Loan Advisors.

What Borrowers Can Do To Avoid Hurting Their Credit

If borrowers find they are behind on payments or won't be able to afford their future payments, they can sign up for an income-driven repayment (IDR) plan for lower payments. The Department of Education recently re-opened two IDR plans that offer lower payments than the standard repayment plan.

Borrowers who still cannot afford payments under an IDR plan can request forbearance from their loan servicer. This will temporarily postpone loan payments until a borrower can afford them again.

"I think if you're on the most affordable plan, but you still can't afford your monthly payment at that point, you should consider a forbearance or a deferment as a way to make sure that you don't have payments for a few months and get back on your feet," said Sabrina Calavans, executive director at Student Crisis Center.

Most borrowers who haven't paid since October still have until June before their loan goes into default. If a loan goes into default, borrowers could face garnishments on tax refunds or wages, further damages to their credit records, and more.

"I talked to borrowers who, due to feeling overwhelmed or frustrated, they say, 'Well, I'm just not going to pay. I'm going to default. I'm fine with them garnishing my wages,'" Mayotte said. "That is such a poor decision. For borrowers who say, 'Well, I can't even afford the lowest income-driven plan'— the wage garnishment is going to be higher than what your income-driven plan would have been."