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Why Does Interest Keep Growing on your Student Loans?

Why Does Interest Keep Growing on your Student Loans?

Understand how interest is calculated and how it can capitalize. There are different implications for your interest in an income-driven repayment plan.

Written by Lady Caballero
Updated on August 10, 2021

Not understanding how interest is calculated on your student loans could prevent you from paying down your balance.

• When you file into an IDR plan, your monthly payments become more affordable but it’s possible that the payment doesn’t cover the interest.

• PAYE, REPAYE, and IBR all treat accumulating interest differently, but all have some form of interest subsidies.

• Once enrolled into an IDR plan, failure to re-certify will result in all accrued interest to capitalize.

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Tags: direct loans subsidized loans unsubsidized loans consolidated loans FFEL loans interest capitalise interest capitalization ibr repaye paye idr subsidy subsidies interest subsidy

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Why Does Interest Keep Growing on your Student Loans?

Not understanding how interest is calculated on your student loans could prevent you from paying down your balance.

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