How Student Loans Affect Credit In 2020


Americans owe more than $1.53 trillion dollars in student loan debt. That debt is spread across 44.7 million people. Divided evenly, that means each person owes over $34,000. Of course, it isn’t divided evenly and some people owe much more than that.

That’s a lot of debt to take on when you’re just starting out.

The early twenties is a critical period for most people financially. This is when they begin building their career and start saving for a house and starting a family. This is also when they typically begin building their credit history — which is important for everything from buying a cell phone plan to buying a house.

So how do student loans affect credit? Let’s find out.

How Student Loans Affect Credit

Student loans affect your credit in much the same way any other type of loan affects your credit. If you make your payments on time, they help you build good credit. If you miss payments frequently or default on the loan altogether, they can have a seriously negative impact.

However, student loan lenders tend to be more forgiving. They won’t report your delinquencies as quickly to the credit reporting agencies. If you make your payment within their grace period, they may never report your late payment.

Federal student loans give you a generous grace period of 90 days. Private lenders can report your missed payment in 30 days, but not all of them do so promptly.

Use Student Loans to Boost Your Credit

If you handle your student loan debt well, it can actually help you boost your credit score. Part of your credit score, about 15% of it, comes from your credit history. This means that having no credit history pulls down your score.

Other than credit cards, student loans are often the first type of official debt that young people carry. This is important to start building your credit score from a young age.

The more years of (good) credit history that you have the easier it will be to take out a home loan when you’re ready to make a big purchase like buying a house. Not to mention that you’ll save money on your mortgage by qualifying for better interest rates with a higher score.

Student Loan Repayment Programs

There are also many programs aimed to help. Student loan refinancing companies can help you repay your loan faster by providing you with the lowest interest rates.  Some of them even let you put payments on pause if you’re in a tight financial situation. You can:

  • Apply for a federal loan income-driven repayment plan
  • Apply for a modified payment plan with your private lender if allowed
  • Apply for deferment or forbearance (put your payments on pause)

Missed payments or defaulted loans are what hurt your credit. Signing up for one of these programs doesn’t negatively affect your credit. So if you are struggling to make your payments, look into one of these programs sooner rather than later. Keeping your credit score intact will ultimately save you money by allowing you to qualify for better rates and have more lending options in the future.

For more information on refinancing programs, you can check out Credible’s low interest rates to get a sense of the what’s available to you when it comes to student loan refinancing. With their low interest rate options, they may even be able to help you save money while giving you a more affordable repayment schedule.

Student Loans Forgiveness in 2020

Student loans have become a hot topic for the 2020 election, especially among the Democratic party candidates. Candidates are proposing solutions ranging from canceling student debt for households under a certain income to making college tuition-free for either students under a certain income limit or for everyone.

Other candidates understand the tremendous cost that these programs would incur. Thus, they are offering more conservative, practical ideas like lowering the cost of college (but not making it free) and expanding access to less expensive college alternatives such as community college, trade schools, and apprenticeships. Other ideas include offering options to refinance loans through the government at a lower interest rate and revamping the income-driven repayment programs.

Others look to expand current student loan forgiveness programs. These are incentive programs that will forgive student loan debt for people who take lower-paying but greatly-needed occupations. For example, people who accept positions as teachers in areas with great need.

Handling Your Student Loans

Whatever the future holds for student loans, there are plenty of options available to help you with your student loans right now. You don’t have to feel like you are buckling under the weight of your student loan debt.

Check with your current lender to find out what repayment programs they may offer. And continue browsing our blog for more resources and advice on how to handle your student loan debt.


  1. This is great information, thanks for posting. I have student loan debt and am interested in what options I have for consolidating or refinancing the debt and how it will impact my credit when I do. Keep up the good work!


Please enter your comment!
Please enter your name here