The New York Federal Reserve has a warning for people who have student loans that are delinquent -- your credit score may take a big hit this quarter.

The agency said the reason was that the U.S. Department of Education started reporting delinquent payments to credit firms.

The New York Federal Reserve said that about nine million borrowers will see “significant drops in credit score once delinquencies appear on credit reports in the first half of 2025.”

The group said that the pandemic forbearance on federal student loans helped boost credit scores 11 points on average. It was higher for those who were delinquent before the pandemic. The forbearance marked all delinquent, but not defaulted, loans current.

After that point, scores continued to rise.

Now with forbearance gone, and the period called the “on-ramp,” a 12-month timeframe where late or missed payments did not affect scores, came to an end in September, the results of the missed or late payments are beginning to show up.

Before the pandemic, the New York Federal Reserve said there was a 14.8% delinquency rate. The group estimates that it is at a record 15.6% at the end of the “on-ramp.”

That accounts for about $250 billion in delinquent payments.

Other issues, such as the cutting of the Department of Education and stopping income-driven repayment applications, may have also contributed to the delinquencies.

Those with higher credit scores will see the biggest drop.

For example, someone who has a 760 score or above, and who has late or no student loan payments, will see an average decline of 171 points, the New York Federal Reserve said. A person with a credit score of 620 or less will see an average drop of 87 points.

© 2025 Cox Media Group