There are various differences between each of the repayment plans, but one of the biggest differences is how interest is treated.
  1. IBR, PAYE, and REPAYE offer different levels of interest subsidies which means they all accrue interest differently.
  2. It is important to be aware of how interest calculates because in many cases, the payments you make when on an IDR plan will not cover the monthly interest accrual.
  3. Making errors in filing paperwork, not re-certifying your income to stay on your IDR plan, consolidating your loans, and refinancing could lead to your interest capitalizing which leads to a growing principal balance.

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