Investing

House Republicans have advanced a key piece of President Donald Trump’s spending package, which could include a bigger child tax credit.
If enacted, the House bill would make the $2,000 tax break permanent and raise it to $2,500 from 2025 through 2028.
That change would primarily benefit middle- and higher-income families, according to policy experts.

Jacob Wackerhausen | Istock | Getty Images

House Republicans’ child tax credit plan

The Tax Cuts and Jobs Act, or TCJA, of 2017, temporarily boosted the maximum child tax credit to $2,000 from $1,000, an increase that will expire after 2025 without action from Congress.
If enacted, the House bill would make the $2,000 credit permanent and raise the cap to $2,500 from 2025 through 2028. After 2028, the credit’s highest value would revert to $2,000, and be indexed for inflation.
However, the plan does “nothing for the 17 million children that are left out of the current $2,000 credit,” said Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities’ federal fiscal policy division.

Typically, very low-income families with kids don’t owe federal taxes, which means they can’t claim the full child tax credit. 
Plus, under the House proposal, both parents must have a Social Security number if filing jointly and claiming the tax break for an eligible child.
“This bill is taking the child tax credit away from 4.5 million children who are U.S. citizens or lawfully present,” Cox said.

How the 2025 child tax credit works

For 2025, the child tax credit is worth up to $2,000 per qualifying child under age 17 with a valid Social Security number. Up to $1,700 is “refundable” for 2025, which delivers a maximum of $1,700 once the credit exceeds taxes owed.  
After your first $2,500 of earnings, the child tax credit value is 15% of adjusted gross income, or AGI, until the tax break reaches that peak of $2,000 per child. The tax break starts to phase out once AGI exceeds $400,000 for married couples filing together or $200,000 for all other taxpayers.   
“Almost everyone gets it,” but middle-income families currently see the biggest benefit, said Elaine Maag, senior fellow in the Urban-Brookings Tax Policy Center. 

A bipartisan House bill passed in February 2024 aimed to expand access to the child tax credit and retroactively boosted the refundable portion for 2023, which would have impacted families during the 2024 filing season. 
The bill failed in the Senate in August, but Republicans expressed interest in revisiting the issue.
At the time of the vote, Sen. Mike Crapo, R-Idaho, described it as a “blatant attempt to score political points.” Crapo, who is now chairman of the Senate Finance Committee, said in August that Senate Republicans have concerns about the policy, but are willing to negotiate a “child tax credit solution that a majority of Republicans can support.”
Although House Republicans previously supported the expansion for lower-earners, the current plan “shifts directions and focuses the benefits on middle and high-income families,” Maag said.  More

The price of spot gold has surged more than 20% this year, with most of those gains coming in the first quarter.
Einhorn told CNBC’s Scott Wapner that his long-term case for gold is still intact and that the commodity can continue to go higher.
The comments came on the sidelines of the Sohn Investment Conference in New York, where Einhorn had earlier unveiled his new investment in a German chemical company.

A hot streak for gold helped fuel a strong start to the year for Greenlight Capital, and hedge fund manager David Einhorn said Wednesday he still sees more upside for the yellow metal.
The price of spot gold has surged more than 20% this year, with most of those gains coming in the first quarter. Einhorn, the president of Greenlight, told CNBC’s Scott Wapner that his long-term case for gold is still intact and that the commodity can continue to go higher.

“Gold is about the confidence in the fiscal policy and the monetary policy. And since we bought gold in 2008 or so, it’s been very clear to me that the U.S. fiscal and monetary policies are both too aggressive and create a risk,” Einhorn said.

Stock chart icon

Gold has outperformed stocks in 2025.

Einhorn pointed to the meager cost-cuts from the so-called Department of Government Efficiency, relative to the size of the federal government’s budget, as a sign that the fiscal situation is unlikely to change any time soon.
“There’s a bipartisan agreement to do nothing about the deficit until we actually get to the next crisis,” Einhorn said.
The hedge fund manager said that gold and other defensive positions have helped Greenlight have a strong start to the year. Reuters reported in April that Greenlight gained 8.2% in the first quarter, citing an investor letter. The S&P 500 fell more than 4% during the same period.
Einhorn did clarify that he does not view gold as an inflation bet. However, in a related trade, Einhorn said he has positions on long-duration inflation swaps, which serve as a bet that prices will rise faster than the market expects.

“All of these behaviors ultimately lead to inflation, and higher inflation,” Einhorn said.
The comments came on the sidelines of the Sohn Investment Conference in New York, where Einhorn had earlier unveiled his new investment in a German chemical company. More

House Ways and Means Republicans on Wednesday advanced trillions of tax breaks as part of President Donald Trump’s economic package.
But the battle over the deduction for state and local taxes, known as SALT, remains in limbo.
The text released Monday afternoon would raise the SALT cap to $30,000 for most Americans. But some lawmakers want a higher limit before the full House vote.

Rep. Jason Smith, R-Mo., speaks during a House Oversight and Accountability Committee impeachment inquiry hearing into U.S. President Joe Biden on Sept. 28, 2023.
Jonathan Ernst | Reuters

House Republicans have advanced trillions of tax breaks as part of President Donald Trump’s economic package.
After debating the legislation overnight, the House Ways and Means Committee, which oversees taxes, passed its portion of the legislation on Wednesday morning in a 26-19 party-line vote.

But the battle over the deduction for state and local taxes, known as SALT, remains in limbo.
The text released Monday afternoon would raise the SALT cap to $30,000 for those with a modified adjusted gross income of $400,000 or less. But some House lawmakers still want to see a higher limit before the full House vote.
While the SALT deduction is a key priority for certain lawmakers in high-tax states, the current $10,000 cap was added to help fund the Tax Cuts and Jobs Act, or TCJA, of 2017.
More from Personal Finance:How college savers can manage 529 plans in a turbulent marketSocial Security COLA for 2026 projected to be lowest in yearsHere’s the inflation breakdown for April 2025 — in one chart
Following the vote, House Ways and Means Committee Chairman Jason Smith, R-Mo., said in a statement that Ways and Means Republicans will “continue to work closely with President Trump and our House colleagues to get the One, Big, Beautiful Bill that delivers on the President’s agenda to his desk as soon as possible.”   

The full House vote may come as early as next week. But the legislation could see significant changes in the Senate, experts say.

House Republicans’ proposed tax cuts

The House Ways and Means Committee legislation includes several of Trump’s campaign priorities, including extensions of tax breaks enacted via the TCJA.
If enacted as drafted, Republicans could also deliver no tax on tips and tax-free overtime pay. But questions remain about the details of these provisions.  
Rather than cutting taxes on Social Security, the plan includes an extra $4,000 deduction for older Americans, which may not fully cover Social Security income, according to some experts.
The $4,000 deduction costs $90 billion over 10 years, compared with $1 trillion for exempting Social Security income from tax, Garrett Watson, director of policy analysis at the Tax Foundation, wrote in a post Tuesday on X.
“Tax filers with no other income sources outside of Social Security would typically see little benefit, while others may see bigger gains from this idea,” he wrote in that thread. 

The House Ways and Means bill also extends the maximum child tax credit of $2,000 enacted via the TCJA, and temporarily raises the tax break to $2,500 per child through 2028.
However, some policy experts have criticized the proposed credit design since lower earners typically can’t claim the full amount.
The proposed legislation “did nothing for the 17 million children that are left out of the current $2,000 credit,” Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities’ federal fiscal policy division, told CNBC.

Don’t miss these insights from CNBC PRO More

Social Security beneficiaries are at risk of receiving a smaller benefit if they’ve fallen behind on their student loans.
The Trump administration has resumed its collection activity on federal education debt, and appears to be providing less notice to borrowers than the Education Department historically has.

Vgajic | E+ | Getty Images

Social Security beneficiaries are at risk of receiving a smaller benefit if they’ve fallen behind on their student loans.
The Trump administration recently announced it would move to offset defaulted student loan borrowers’ federal benefits, and warned that payments could be garnished as soon as June.

That involuntary collection activity could have serious consequences on those who rely on the benefits to pay most, if not all, of their bills, consumer advocates say.
More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all
There are some 2.9 million people age 62 and older with federal student loans, as of the first quarter of 2025, according to Education Department data. That is a 71% increase from 2017, when there were 1.7 million such borrowers, according to the data.
More than 450,000 borrowers in that age group are in default on their federal student loans and likely to be receiving Social Security benefits, the Consumer Financial Protection Bureau found.
Here’s what borrowers need to know.

Up to 15% of Social Security benefits can be taken

Social Security recipients can typically see up to 15% of their monthly benefit reduced to pay back their defaulted student debt, but beneficiaries need to be left with at least $750 a month, experts said.
The offset cap is the same “regardless of the type of benefit,” including retirement and disability payments, said higher education expert Mark Kantrowitz.
The 15% offset is calculated from your total benefit amount before any deductions, such as your Medicare premium, Kantrowitz said.

Little notice provided

Student loan borrowers facing offsets of their federal benefits seem to be getting less notice under the Trump administration, Kantrowitz said.
While a 65-day heads-up used to be the norm, it seems the Education Department is now assuming borrowers who are in default were already notified about possible collection activity prior to the Covid-19 pandemic, he said.
“The failure of the U.S. Department of Education to provide the 65-day notice limits the ability of borrowers to challenge the Treasury offset of their Social Security benefit payments,” Kantrowitz said.

Still, borrowers should get at least a 30-day warning, Kantrowitz said. The notice should be sent to your last known address, so borrowers should make sure their loan servicer has their most recent contact information.
The Education Department provided defaulted federal student borrowers with the required notice, a spokesperson told CNBC after collections efforts resumed May 5.
“The notice may be sent only once, and borrowers may have received this notice before Covid,” the spokesperson said.

You can still contest offset

Once you receive a notice that your Social Security benefits will be offset, you should have the option to challenge the collection activity, Kantrowitz said. The notice is supposed to include information on how you can do so, he said.
You may be able to prevent the offset if you can prove a financial hardship or have a pending student loan discharge, Kantrowitz added.
“Borrowers who receive these notices should not panic,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program. “They should reach out for help as soon as possible.”

Getting out of default

The best way to avoid the offset of your Social Security benefits is to get current on your loans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
You can contact the government’s Default Resolution Group and pursue several different avenues to get out of default, including enrolling in an income-driven repayment plan.
“If Social Security is their only income, their payment under those plans would likely be zero,” Mayotte said. More

As some Washington lawmakers look to slash federal spending, Medicaid cuts could be on the table.
But proposals to implement work requirements for coverage eligibility should be off the table, Democratic Sen. Raphael Warnock tells CNBC.com.
“What we see is that this is a good way to kick a lot of people off of their health care — hardworking everyday Americans who are struggling,” Warnock said.

U.S. Senator Raphael Warnock speaks at the Capitol on April 10 in Washington, D.C.
Jemal Countess | Getty Images Entertainment | Getty Images

Republican lawmakers may be looking at substantial cuts to Medicaid in upcoming reconciliation legislation.
But one method of restricting access to coverage — work requirements — could have disastrous results for Americans, based on efforts in Arkansas and Georgia to implement such policies, according to a new report issued by Sen. Raphael Warnock, D-Ga. Those rules typically require people to meet certain thresholds, such as a set number of hours of work per month, to qualify for Medicaid coverage.

While labeled as “work requirements,” they would be more correctly called “work reporting requirements” because they involve so many rules, forms and other red tape that they can prevent working Americans from accessing coverage, according to Warnock.
“These work reporting requirements are not incentivizing work; there’s no evidence of that,” Warnock said in an interview with CNBC.com.
“What we see is that this is a good way to kick a lot of people off of their health care — hardworking everyday Americans who are struggling,” Warnock said.

A Republican House budget resolution included about $880 billion in spending cuts through 2034 from the House Energy and Commerce Committee. In a March report, the Congressional Budget Office found Republicans cannot achieve their budget goals without cutting Medicaid.
House Republicans on Sunday released draft legislative language of the reconciliation bill. Work requirements are among the eligibility policies on the table.

Based on the current proposal, 9.7 million to 14.4 million people would be at risk for losing Medicaid coverage in 2034 if they are unable to show they meet the work requirements, according to a new report from the Center on Budget and Policy Priorities.
Rep. Brett Guthrie, R-Ky., who is chairman of the House Committee on Energy and Commerce, wrote an op-ed for The Wall Street Journal in support of the work hurdles.
“When so many Americans who are truly in need rely on Medicaid for life-saving services, Washington can’t afford to undermine the program further by subsidizing capable adults who choose not to work,” Guthrie wrote in the op-ed published on Sunday.
“That’s why our bill would implement sensible work requirements,” Guthrie wrote.
Those requirements would be in line with current policies, according to Guthrie, where working adults, seniors on Medicare and veterans have all worked in exchange for health coverage eligibility.

However, Warnock argues that thinking is backwards. By providing health care coverage without those requirements, that will then help encourage people to work because they are getting the care they need to be healthy, he said.
“If you provide basic health care to the people who are eligible, you actually have more people working,” Warnock said. “You have a stronger economy.”

Expanding ‘failed experiment’ is a ‘bad idea’

Two states — Arkansas and Georgia — have tested work reporting requirements for Medicaid, with subpar results, according to Warnock’s report.
“These are two cautionary tales, and the idea of now expanding a failed experiment nationwide is a bad idea,” Warnock said.
Georgia, Warnock’s home state, is currently the only one in the country that has Medicaid work reporting requirements in place. The state’s program, Georgia Pathways to Coverage, lets adults qualify if they have 80 hours of qualifying work per month, have income below the federal poverty line and pay mandatory premiums.
The program, which was implemented on July 1, 2023, has lackluster enrollment, according to Warnock’s report. Twenty months in, the program has only enrolled around 7,000 people, while nearly 500,000 people need health care coverage in Georgia, according to Warnock.
“It gets a big fat ‘F,'” Warnock said of the program. “It’s failed.”
Georgia Gov. Brian Kemp and some other state Republicans have spoken about the program as a success.
Georgia is among the states that opted not to expand Medicaid, and therefore make coverage more accessible, following the passage of the Affordable Care Act.
Meanwhile, Arkansas did implement Medicaid expansion in 2014 and subsequently put work requirements in place from 2018 to 2019. However, those efforts failed, with 18,000 people losing Medicaid coverage in the first seven months and only a small share of people able to get coverage back the following year, according to a 2023 report from the Center on Budget and Policy Priorities.
More from Personal Finance:Two key issues to watch in House Republican tax debateAs student loan collections resume, credit scores tumbleStagflation is a looming economic risk. What it means for your money
Low compliance with work requirements may come from a variety of factors that have nothing to do with employment, according to research from the Urban Institute. That may include limited access to the internet or transportation, health limitations or disabilities and low education levels.
Others may simply not quite meet the requirements their states have set out.
That is the case for Heather Payne, 52, of Dalton, Georgia, who suffered a series of strokes in 2022. As a result, Payne can no longer work as a traveling nurse and has opted to enroll in graduate school to become a nurse practitioner, a role that will be less physically grueling.
“I really do love nursing so much, and I cannot continue to do it the same way that I used to do it since my strokes,” Payne said.
While Payne is considered a full-time student, she is just short of the hours to qualify for Medicaid under Georgia’s work requirements. As a result, she is paying for private health care coverage with her tuition, which is adding to the debts she will have to pay off once she graduates.
Because her health insurance plan doesn’t cover all her care, she estimates she’s incurred “tens of thousands of dollars” in medical debt.  
Payne, who said she is “not very savvy on politics,” attended President Joe Biden’s 2024 State of the Union Address in Washington, D.C., as Warnock’s guest in an effort to draw attention to the coverage gap.
The U.S. is one of the few industrialized countries without universal health coverage, which is “really kind of embarrassing,” Payne said.
“And instead of trying to go toward that, we’re trying to yank it away from everyone possible,” Payne said. More

New government data shows the pace of inflation has subsided from pandemic-era highs.
Consequently, Social Security beneficiaries may see a smaller annual cost-of-living adjustment in 2026.
But experts say two developing factors — tariffs and prescription drug prices — may impact seniors’ budgets.

Customers shop for produce at an H-E-B grocery store on Feb. 12, 2025 in Austin, Texas.
Brandon Bell | Getty Images

The Social Security cost-of-living adjustment for 2026 is on pace to be the lowest annual benefit increase in five years, according to new estimates.
But that may change depending on the pace of inflation in the coming months.

The COLA may be 2.4% in 2026, according to new projections from both Mary Johnson, an independent Social Security and Medicare policy analyst, and The Senior Citizens League, a nonpartisan senior group.
If that increase goes into effect next year, it would be lower than the 2.5% boost to benefits Social Security beneficiaries saw in 2025. It would also be the lowest cost-of-living adjustment since 2021, when a 1.3% increase went into effect.
More from Personal Finance:Here’s the inflation breakdown for April 2025 — in one chartWays to save on groceries amid food price inflationHow to land a new job in a ‘low firing, low hiring’ market
The Social Security COLA provides an annual inflation adjustment to all of the program’s beneficiaries, including retirees, disabled individuals and family members.
The annual adjustment for the next year is calculated by comparing third-quarter inflation data for the current year to the previous year. The year-over-year difference determines the annual increase. However, if there is no rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, from year to year, the COLA may be zero. 

The CPI-W, used to calculate Social Security’s COLA, increased by 2.1% over the past 12 months, according to data released Tuesday by the Bureau of Labor Statistics.

In the months ahead, two factors may affect retirees’ cost of living, experts say.

Tariffs may push inflation higher

Inflation, as measured by the broader consumer price index, sank to its lowest 12-month rate at 2.3% in April since 2021.
Yet tariffs may push the inflation rate higher in the months ahead, if those taxes imposed on imported goods go into effect.
Tariffs would prompt higher consumer prices and inflation. If that happens in the months ahead, the Social Security cost-of-living adjustment estimate for 2026 may move higher.
“This year will be a closer year to watch because of the tariffs,” Johnson said of the 2026 COLA estimate, which is recalculated every month with new inflation data.
The official COLA for the following year is typically announced by the Social Security Administration in October.

Prescription drug costs

President Donald Trump on Monday issued an executive order taking aim at high prescription drug costs in the U.S. The White House hopes to bring those prices in line with other countries.
The policy would apply to Medicare and Medicaid, in addition to the commercial market, according to the White House.
Changing drug prices would be unlikely to impact the COLA estimate, according to Johnson. But retirees would see an impact to their personal budgets if drug prices came down, she said.
Many details of the executive order still need to be fleshed out, noted Leigh Purvis, prescription drug policy principal at the AARP Public Policy Institute. Yet the nonprofit organization, which represents Americans ages 50 and up, praised the Trump administration’s efforts to curb big drug companies’ ability to charge retirees high prices for necessary prescriptions.
“A lot of people are aware that prescription drug prices are too high, and I think a lot of people are aware that we’re paying a lot more than other countries,” Purvis said.
“So any efforts moving us in the direction of paying less and paying something that’s more comparable to the rest of the world, I think is something that people could probably get behind,” she said.

Don’t miss these insights from CNBC PRO More

The House Republican debate over President Donald Trump’s tax agenda has kicked off.
An early version of the House Ways and Means tax bill would cost about $3.7 trillion over 10 years, according to estimates from the Joint Committee on Taxation.
With a $4.5 trillion limit, there could be significant changes, including for the cap on the deduction for state and local taxes, known as SALT, among other provisions.

President Donald Trump waits for the arrival of Canadian Prime Minister Mark Carney at the White House in Washington, DC, on May 6, 2025.
Jim Watson | Afp | Getty Images

Debate for the House Republicans’ tax bill is underway — and experts are watching to see which of President Donald Trump’s priorities make the final cut.
The House Ways and Means Committee, which has jurisdiction over tax, released the full text of its portion of the bill Monday afternoon, and started to debate over provisions on Tuesday.

GOP lawmakers included several of Trump’s campaign priorities, including tax cut extensions, no tax on tips and tax-free overtime pay. Rather than cutting taxes on Social Security, the plan includes an extra $4,000 deduction for older Americans.
The early bill did not include a higher tax rate on some of the wealthiest Americans or plans to end the so-called “carried interest loophole,” which are both ideas that Trump supported.  
However, the final bill could change significantly before the committee vote.
More from Personal Finance:House GOP tax bill calls for ‘SALT’ deduction cap of $30,000 for most taxpayersStagflation is a looming economic risk—here’s what it means for your moneyHere’s how to save on groceries amid food price inflationThe early version of the GOP tax bill would cost about $3.7 trillion over 10 years, according to estimates from the Joint Committee on Taxation. That’s under the Republicans’ $4.5 trillion limit, which could leave room for other priorities to be added or increased during Tuesday’s negotiations, experts say. 
“It’s really important for any additional tax cuts to be paid for,” which will impact individual provisions, said Shai Akabas, vice president of economic policy for the Bipartisan Policy Center.

As the debate heats up, here are two key areas to watch.

The battle over the ‘SALT’ deduction

With a slim House Republican majority, the limit on the deduction for state and local taxes, known as SALT, has been a key issue in tax package negotiations. 
Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, the current $10,000 cap will expire after 2025 without action from Congress.    
The House text released Monday would boost the SALT deduction limit to $30,000 for most taxpayers. This would phase out once modified adjusted gross income exceeds $400,000.   
Some lawmakers have already pushed a higher SALT deduction cap, which could still be possible with wiggle room in the budget, experts say.    

Child tax credit boost

Republican lawmakers also want to expand the child tax credit, a change that was passed via a bipartisan House bill in February 2024.
TCJA temporarily increased the maximum child tax credit to $2,000 from $1,000 per child under age 17, and boosted eligibility. These changes are scheduled to sunset after 2025.
The preliminary House GOP text calls for raising the credit to $2,500 per child through 2028, as long as both parents have a Social Security number. The $1,400 refundable portion, which is available without taxes owed, would be indexed for inflation.
However, the proposal “does nothing for the 17 million children who currently don’t get the full $2,000 child tax credit because their families’ incomes are too low,” said Chuck Marr, vice president for federal tax policy for the Center on Budget and Policy Priorities.   More

The delinquency rate for student loan balances spiked after a nearly five-year pause due to the pandemic, according to a new report from the Federal Reserve Bank of New York.
Now, millions of borrowers face steep declines in their credit standing.

Between their credit card balances, mortgages, auto loans, home equity lines of credit and student debt, Americans owe a record $18.2 trillion, according to a new quarterly report on household debt from the Federal Reserve Bank of New York.
Still, for the most part, borrowers are managing that debt relatively well — with one exception.

“Transition rates into serious delinquency have leveled off for credit card and auto loans over the past year,” Daniel Mangrum, research economist at the New York Fed, said in a statement. “However, the first batch of past due student loans were reported in the first quarter of 2025, resulting in a large jump in seriously delinquent borrowers.”
The delinquency rate for student loan balances spiked after a nearly five-year pause due to the pandemic, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% a year earlier.
More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all
Although the student loan delinquency rate is “likely to go up a little bit more,” it is “still comparable to what it was in 2020,” the New York Fed researchers said on a press call Tuesday.
However, in a blog post, the researchers noted that “the ramifications of student loan delinquency are severe.”

Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the U.S. Department of Education. Another 4 million borrowers are in “late-stage delinquency,” or over 90 days past due on payments.
Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found.  
“For many, this had grave consequences for their credit standing,” the New York Fed researchers said.

The Education Department restarted collection efforts on defaulted student loans on May 5, which includes the garnishment of wages, tax returns and Social Security payments.
Until last week, the Education Department had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024 and delinquencies began appearing on credit reports in the first quarter of 2025.

As collection activity restarts, credit scores tumble

“This has been like a car crash unfolding in slow motion,” said Ted Rossman, senior industry analyst at Bankrate. Now that those collections are resuming, “the clock is running out.”
Both VantageScore and FICO reported a drop in average scores starting in February as early- and late-stage credit delinquencies rose sharply, driven by the resumption of student loan reporting.

The Federal Reserve Bank of New York also cautioned in a March report that student loan borrowers who are late on their payments could see their credit scores sink by as much as 171 points as collection activity resumes. 
A separate analysis by TransUnion found that consumers who faced default in recent months have seen their credit scores fall by 63 points, on average. For super prime borrowers — or those with credit scores above 780 — who were seriously delinquent, scores sank as much as 175 points. Credit scores typically range between 300 and 850.
“The impact that it showed to these people’s credit scores is pretty staggering,” said Matt Schulz, chief credit analyst at LendingTree. 
“That is something that is going to make things harder for people for a long time,” he said. “There is very little in life that is more expensive than having crummy credit.”
Subscribe to CNBC on YouTube. More