Time’s nearly up for federal student loan borrowers to start repaying or else face credit score consequences soon.
“To protect the most vulnerable borrowers,” President Joe Biden last year offered a 12-month “on-ramp” to repayment “so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.”
That on-ramp is set to expire Sept. 30, and anyone who doesn’t begin making payments in October risks a hit to their credit score.
Good credit scores are vital because they determine whether you can get a loan and what you’ll pay in interest for that loan. They’re also used to determine many other things in your life. For example, insurers might use credit scores to set your premiums, landlords might use them to decide if they’ll rent to you, and banks can look at them to determine what sort of credit card you can get and on what terms.
Your wallet, explained. Sign up for USA TODAY’s Daily Money newsletter.
Learn more: Best personal loans
How many Americans are at risk of credit score hits?
About 10 million borrowers were behind on their repayments as of January, according to a Government Accountability Office report last month. Of those, 6.7 million were already at least 90-days past due, or seriously delinquent, but they were protected from negative credit reporting due to the on-ramp.
