5 Min Read | Last updated: September 13, 2024
Do Late Student Loan Payments Hurt Your Score?
Late student loan payments will taint your credit score once they’re reported to the credit bureaus, but deferment or forbearance programs can help mitigate damage.
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At-A-Glance
If you’re 30 days late with your payment, your student loan status may shift from current to delinquent.
Your credit score is affected once your lender reports your late payment to the major credit bureaus — for private loans, that may be after 30 days; for federal ones, it’s 90 days.
After 270 days, you’re in default, which usually damages your credit score as well as future financial aid eligibility.
For many students, loans are a necessary part of getting an education. But as with any financial undertaking, late or missed payments will hurt your credit score, and your chances of getting any future student aid or loans may also suffer. If you’re a young adult or recent college grad who has hit a major financial speed bump, there are plenty of options may help you put student loan payments on pause.
If you have a large amount of student debt, you’re not alone. In fact, U.S. borrowers owe over $1.7 trillion in student debt — over $1.6 trillion in federal loans1 and over $128.8 billion in private student loans.1
Here’s a look at the ways late student loan payments affect your credit score, student loan forgiveness programs, the ways deferment and forbearance impact your credit, the long-term consequences of defaulting on your student loan, and tips for removing late payments.
What Happens if You’re Late with a Student Loan Payment?
Since your payment history accounts for 35% of your credit score, late payments have a large impact.2 For federal loans, if you’re one day late, your student loan status goes from current to delinquent and won’t revert back until you make a payment or contact your loan servicer to discuss hardship and options like deferment or forbearance.3 You may be able to avoid this situation by signing up for autopay.
After 90 days, your lender reports your delinquency to one or all three of the major credit bureaus. Your credit score will likely decrease.3 With a private loan, lenders may report late payments after just 30 days.4 If you do not correct the delinquency, it may stay on your credit report for seven years, which may hinder your ability to get a new credit card or cause your interest rates to rise on current cards.5,6
For come federal loans, if a payment lapse lasts 270 days, loan status moves from delinquent to default.3 Defaulting means that the entire balance of the student loan becomes due, plus any interest. Here’s what else could happen in default situations:
- The government could legally seize the wages of the debtor or take the borrower’s tax return as payment.3
- If there’s a cosigner on the loan, the cosigner’s credit could also be affected.7
Conversely, if you make your loan payments on time, it helps lay the groundwork for a strong payment history, which, again, is 35% of your credit score. If you also have a credit card, your student loan helps diversify your credit mix, something that accounts for 10% of your score.8 Since some student loans come with a 10-year payment plan, you may be able to build up a solid credit history.9 Length of credit history typically makes up 15% of your credit score.10
Payment Plan Options for Hardship Situations
Deferment, forbearance, and income-driven repayment (IDR) plans such as those discussed below may be able to help students out of a sticky financial situation. While noted on your credit score, they typically won’t hurt it.11,12
- Student loan forgiveness. If you’re eligible for a student loan forgiveness program, you may ultimately pay less than the amount you actually owe on your student loans. But usually only federal student loan borrowers are considered, and you must qualify through your chosen career, your current financial situation, or a student loan discharge.13 For more, read “What Is Student Loan Debt Forgiveness.”
- Income-driven repayment plans. IDRs establish affordable monthly payments — generally a percentage of discretionary income based on your income and family size. Regardless of the IDR plan you choose, if you have not repaid your federal student loans by the time the repayment period ends — usually either 20 or 25 years — they’ll be forgiven. Under some programs, you may qualify for forgiveness after 10 years of payments.14
- Forbearance. Should financial adversity strike, the government may grant you a forbearance, which temporarily suspends or decreases your loan payments for a certain period, usually 12 months. The interest still accumulates, however, so you’ll end up owing more in the long run.15
- Deferment. If you’re unemployed, experiencing hardship, going back to school or military service, or serving in the Peace Corps, your lender servicer may relieve you from making payments for a set period of time by granting you a deferment on your loan.17
Removing Student Loan Defaults from Your Credit Record
If your loan is in default, you may discuss rehabilitating your loan with your lender. This option is a one-time arrangement that involves making nine consecutive payments toward your loan, on time. After loan rehabilitation, the default classification is expunged from your account, and any wage garnishment or tax offset ceases.17 However, federal student loan rehabilitation is paused until September 2024.18
The Takeaway
Late payments on student loans may harm your credit. If you’re 30 days late, your student loan status goes from current to delinquent and once your lender reports your late payment to the major credit bureaus, your credit score could fall. After a 270-day lapse, student loans are considered in default, a serious situation that hurts your credit for up to seven years. However, various payment options might help mitigate the damage to your credit score or prevent damage in the first place.
1 “Student Loan Debt Statistics [2024]: Average + Total Debt,” Education Data Initiative
2 “How Payment History Impacts Your Credit Score,”FICO
3 “Student Loan Delinquency and Default,” Federal Student Aid
4 “Do Student Loans Help Build Credit?,” Experian
5 “What Happens if You Default on a Student Loan?,” Experian
6 “What Does “Derogatory” Mean on a Credit Report?,” Experian
7 “If I co-signed for a student loan and it has gone into default, what happens?,” Consumer Financial Protection Bureau
8 “Types of Credit and How They Affect Your FICO Score,” FICO
9 “Federal Student Loan Repayment Plans,” Federal Student Aid
10 “How the Length of Your Credit History Impacts Your FICO Score,” FICO
11 “Do you have questions about the different types of income-driven repayment plans?,” Federal Student Aid
12 “Credit Reporting,” Edfinancial Services
13 “Student Loan Forgiveness,” Federal Student Aid
14 “Income-Driven Repayment Plans,” Federal Student Aid
15 “Student Loan Forbearance,” Federal Student Aid
16 “Federal student loan deferment,” Federal Student Aid
17 “Loan Rehabilitation,” National Consumer Law Center
18 “Getting Out of Default,” Federal Student Aid
Randi Gollin is a freelance writer, editor, and content strategist who’s covered topics including travel, shopping, and dining for tech and media brands and digital publications.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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