The resumption of debt collection by the U.S. government on delinquent student loan repayments precipitates a precipitous decline in credit scores for millions of Americans, wherein loan servicers, after a 90-day delinquency period, report these accounts to major credit bureaus, engendering ramifications on par with a declaration of personal bankruptcy, thus potentially precluding or significantly augmenting the cost of securing auto loans, mortgages, credit cards, and a panoply of other financial services.

The Federal Reserve Bank of New York has reported a precipitous decline in credit scores among over three million student loan recipients in the first quarter of 2025, a consequence of the resumption of repayments in 2023, following a year-long grace period, after the Department of Education's pandemic-induced moratorium on federal student loan obligations initiated in March 2020, exacerbated by the Trump administration's reinstatement of collection proceedings on delinquent student loans in late 2024.