Student loan borrowers are facing additional financial stress since payments resumed and changes were made to loan repayment programs. Some borrowers have seen their credit score drop, while others are expecting their wages to be garnished.

Student loan payments were put on a nearly four-year pause during the COVID-19 pandemic. Although payments resumed in October 2023, loan services started reporting accounts that are over 270 days late on payments in January 2025, according to CNBC.

Why are some student loan borrowers seeing a drop in their credit scores?

Some borrowers weren’t aware of the change and saw their credit score drop as a result. 

Kayla Quinones received an associate degree in 2020 and wasn’t required to start paying back her loan until February 2023. The 26-year-old said she noticed her credit score had dropped 150 points between January and March after she made plans to move.

“I was kind of unsure as to how that [student loan] process went,” she said, according to CNBC. “It could have been a bit of naiveness [sic], but I wasn’t really sure who I was supposed to pay back. I just feel like I would receive emails from the Department of Education like, ‘Hey, make sure your payment plans are all set up.’”

Quinones relied on her savings in order to pay the overdue sum but said she could have avoided the issue if she had made monthly payments. She pointed to a lack of understanding about the whole process as a reason for the ordeal.

She isn’t the only one. Over five million student loan borrowers are currently in default, according to the Department of Education and as reported by CNBC. This number could go up to 10 million borrowers over the next few months.

Some borrowers could get 15% of their wages garnished

On April 21, the Trump administration announced it would seize part of borrowers’ wages, tax refunds and Social Security benefits in order to repay their loans. The Department of Education can garnish up to 15% of borrower’s income, it said. 

“In an environment where the cost of living remains stubbornly high, this kind of withholding from your income can pose real problems when trying to make ends meet, and force people into choosing between vital expenses,” Nancy Nierman, an assistant director of the Education Debt Consumer Assistance Program in New York, told CNBC.

Jason Collier, a special education teacher in Virginia, is in this situation. He said raising two children and medical bills from a cancer diagnosis had already created financial hardship and made it difficult to pay back his student loans.

“It would just be more of a pinch,” the 46-year-old said about his wages being potentially garnished. “If I need a car repair, or something comes up, I might not be able to do those things.”