Blog Home /

Close this search box.

How do Student Loans Affect your Credit Score?

How Do Student Loans Affect Your Credit Score

According to the College Board, the average cost of tuition and fees in the US for the 2015–2016 school year was $32,405 at private colleges and $9,410 for state residents at public colleges. With the median yearly wage per person being $26,695, it comes as no surprise that most people cannot afford to pay for all their children’s college expenses. Know how do student loans affect your credit score?

This is especially true if children want to pursue higher studies in a private college. When families reach such a crossroads, there are only two options: quit college and get a mediocre, dead-end job or borrow money to pay for tuition. If you are one of the people who decided to borrow money and go to college, you may be looking at a wide array of loans to choose from. But, with loans comes a lot of complexity.

You may be worried about your credit history or anxious about how you are going to pay off the debt. However, if you are wondering how do student loans affect your credit score, luckily, we have it all broken down for you.

Credit Reporting

Your servicer will begin reporting on your loans immediately after disbursement of the amount to be borrowed. It is very important to make all the payments as agreed because your student loan payments are reported to all three nationwide consumer reporting agencies. While you are in school or during your grace period, your payment amount displays as zero dollars and your account status states that the debt is still current.

Overall, your account looks as if it’s in good standing. However, when it is time for repayment, things are not as simple. Your repayment plan determines how much and how often you should be paying back. These payments are displayed on your credit report. This means that if you are making the payments on time, the status would read “pays as agreed” or “current.”

However, if you are missing or delaying payments, they would be reported every 30 days. Once a payment is reported as “late”, it cannot be removed from your credit history. Keep reading on how do student loans affect your credit score?(Also read: How to build credit as a student)


There are some situations in which people cannot pay back their student loans. This is normally due to unemployment or other major reasons. But, no matter how serious the reason, defaulting on a student loan is the absolute worst thing that can happen to your credit score.

Your loan can go into default if you have missed too many payments. In this case, your lender changes your account status to “claim has been filed with the government, indicating the account was paid by a government claim” and the balance shows as zero dollars. If this happens, the student should contact his service and discuss the options he has to rehabilitate his loan.

This will help the student’s account go back into good standing. Even then, going into default can have some lasting negative effects on your credit score. Not only does it significantly lower your FICO score, but it also presents you as a highly risky borrower.

The missed payments will be recorded on your credit report for years to come, making it harder for you to be approved for new lines of credit. Hope you now get the complete idea how do student loans affect your credit score; keep reading on other valuable articles on “The Credit Pros” blog.

Share this Article


About The Credit Pros

Since 2007, TCP has been dedicated to Helping Consumers Get Accurate & Improved Credit Scores

Sign up for Credit Building
Tips & Helpful Information

Your privacy matters! We only uses this info to send content and updates. You may unsubscribe anytime.

Why wait? Get started today

It only takes 90 seconds to sign up. Start fixing errors on your credit report and get help to increase your credit score. Your information is safe with us. We treat your data as if it were our own.

Credit score ranges

Privacy and Cookies
We use cookies on our website. Your interactions and personal data may be collected on our websites by us and our partners in accordance with our Privacy Policy and Terms & Conditions