As student loan delinquencies reappear on credit reports, millions of consumers are being reclassified as subprime, despite staying current on their auto loans.
Cox Automotive Chief Economist Jonathan Smoke, in collaboration with Shams Blanc, vice president and head of scores for the auto industry at FICO, analyzes this trend in the article “End of Student Loan Relief Reshapes Auto Lending.”
The federal forbearance on student loans ended in October 2024. Blanc points out approximately 2 million auto loan borrowers had a student-loan delinquency added to their credit in the first quarter of 2025.
“One in five of these consumers saw their score drop by 100 points or more overnight,” Blanc said.
But the lower scores do not directly reflect their ability or willingness to fulfill obligations on vehicle loans. Blanc said many of these new subprime consumers are still current on car loans and are “four times” more likely to make car payment than student loan payment.
“Cars remain essential and auto payments continue to come first,” Blanc said.
Lenders and dealers are encouraged to look beyond the score and analyze why consumers’ credit has slipped.
“For lenders, the opportunity – and the risk – lies in understanding why a score dropped, and knowing how to manage this larger, more complex subprime pool,” Blanc said.
See the full article here.
