Student Loans Are Tanking Credit Scores

Student loan debt is doing something that credit card debt and mortgages are not: it is actively pulling down the average American credit score.

FICO's Spring 2026 Credit Score Insights report — published by the company whose scores are used in more than 90% of U.S. lending decisions — found the average American credit score is now 714.¹ That's a continuation of a gradual decline that began in 2023 and has accelerated as student loan repayment resumed after years of pandemic-era pauses.

The data behind the headline: borrowers who had a student loan payment newly reported as delinquent saw their scores drop an average of 62 points since January 2025.¹ A 62-point drop can push a borrower from the "Good" range into "Fair" — a shift that raises interest rates on car loans by 2 to 4 percentage points, disqualifies applicants at some landlords, and can appear in employer background checks.

How the Delinquency Numbers Jumped

Severe student loan delinquencies — balances 90 or more days past due — sat at just 0.8% in October 2024. By April 2025, that number had reached 10.9%. It remained near 11% as of October 2025.¹

The spike maps almost exactly onto the end of broad federal student loan forbearance and the legal turmoil around the SAVE repayment plan. The SAVE plan was the Biden administration's income-driven repayment program that had enrolled millions of borrowers at low or zero-dollar payments. Courts blocked it, the Trump administration began dismantling it, and millions of borrowers were left in limbo — either in administrative forbearance with no interest accruing but no clear path forward, or suddenly required to make payments without a plan they'd agreed to or could afford.

Many borrowers simply didn't know what plan they were on, what their payment was, or where to send it. When that uncertainty meets a missed due date, a delinquency gets reported.

62 points — Average FICO score drop for borrowers with a newly reported student loan delinquency, since January 2025^{FICO Spring 2026 Credit Score Insights Report}

Gen Z Is Hit Hardest

Fortune reported in March 2026 that Gen Z credit scores have declined sharply under current student loan conditions.² That's partly because younger borrowers have shorter credit histories — making any negative item proportionally more damaging — and partly because recent graduates are entering repayment just as the repayment landscape has grown more chaotic.

The average student loan debt for recent bachelor's degree graduates runs about $30,000. Monthly payments under a standard 10-year plan on that balance come to roughly $300. That's not unmanageable for many borrowers — but only if they know what plan they're on and are actually enrolled.

What's Changed in Repayment (and What You Need to Do)

The SAVE plan has been effectively shut down. Borrowers who were on SAVE — many of whom had been making low or zero-dollar payments — are being moved to other plans. A new repayment plan called RAP replaces SAVE, PAYE, and ICR starting July 1, 2026. Payments under RAP may be higher than what borrowers were paying under SAVE.

The RISE Act final rule published in May 2026 makes additional changes to how income-driven repayment plans calculate payments and handle interest. These are not minor adjustments.

If you have not logged into studentaid.gov recently to confirm which plan you're on and what your payment will be starting in the fall, do that now.

Missing even one payment triggers a delinquency flag after 30 days — and that flag stays on your credit report for seven years. If you cannot make a payment, call your loan servicer before the due date to request a deferment, forbearance, or plan change. Acting before the missed payment keeps you out of delinquency.

If You've Already Missed a Payment

If delinquency has already been reported, the path forward is:

1. Bring the account current as fast as possible. The delinquency notation stays on your report for seven years, but its impact on your score diminishes once the account is current.
2. Enroll in autopay through your servicer. Most federal servicers offer a 0.25% interest rate reduction for autopay, and on-time payments begin rebuilding your score immediately.
3. Look at whether you qualify for an income-driven repayment plan that lowers your monthly payment to an amount you can actually sustain.
4. If you've gone past 270 days without payment, you are in default rather than delinquency. The student loan default data from Q1 2026 covers what default means and the steps out of it.

If You're Still in School

Enrolled students carrying at least half-time status have federal loans in deferment — no payments required, no delinquency risk. But the six-month grace period after graduation or dropping below half-time goes fast, and the average student loan payment can feel surprising if you haven't planned for it.

Knowing your loan types, servicer, and repayment options before you graduate — rather than during the grace period when you're also managing a job search — puts you in a better position. Our guide to federal student loan repayment plans covers every current option, including what changes July 1.

Footnotes

1. FICO. (2026). FICO® Score Credit Insights Report: Average FICO Score Dips to 714. FICO Newsroom. https://www.fico.com/en/newsroom/fico-score-credit-insights-report-average-fico-score-dips-714 ↩ ↩² ↩³

2. Fortune. (2026, March 26). Gen Z's credit score is in free fall as delinquencies rise under Trump's student loan crackdown. https://fortune.com/2026/03/26/gen-z-credit-scores-declining-under-trump-student-loan-crackdown/ ↩