Why Does Interest Keep Growing On Your Student Loans

Are you wondering why the interest on your student loans seems to keep growing even though you're making payments? It can be confusing, but don't worry; I'm here to help you understand how interest is calculated on student loans and what happens when it capitalizes. This is especially important if you're planning to buy a home soon.
By the way, I've also explained this in the video above, so feel free to check that out too! ⬆️
⚡️Let's break it down:
Income-Driven Repayment Plans (IDR): When you sign up for an IDR plan, your monthly payments are adjusted to be more affordable based on your income. However, there's a catch. Sometimes, the new monthly payment might be so low that it only covers some of the interest that's adding up each month.
⚡️Different IDR Plans: PAYE, REPAYE, and IBR are other IDR plans. They all have rules for handling interest building up, but they all provide some form of interest subsidy. This means the government might help you pay some of the claims.
⚡️Interest Capitalization: This is a fancy term for what happens when the interest that has added up gets added to your total loan balance. This can happen if you fail to re-certify for your IDR plan. When this happens, your loan balance increases and future interest is calculated on this new, higher balance. That's why it's essential to re-certify your IDR plan on time!
Understanding how interest works on your student loans can help you make better decisions and pay off your loans faster. If you have any questions, feel free to let me know. I'm here to help you make sense of it all!

Reviews

"I have worked with a good number of lenders personally and professionally over the years, and our experience with Walt and his team was by far the best experience I have had. For the refinance of our home mortgage, I had obtained quotes from other lender relationships, but no one could commit to closing any faster than 45 days. And, no one beat Waterstone Mortgage's fees and rates. Walt committed to closing within 30 days, and his team delivered: Walt spent the time needed to understand our needs and recommend loan options to meet those needs (and the options exceeded our expectations); Mayra pleasantly and efficiently walked us through the application process; and Ann worked closely with us to expeditiously move through underwriting to closing. All in roughly 3.5 weeks. They communicated with my wife and me effectively throughout the process so that there were no surprises. In addition to our genuine appreciation for the speed and results of their services through closing, we are also grateful that we can continue to turn to them as our primary contact over the life of the loan. We could not have asked for a better experience and would recommend Walt and his team at Waterstone without hesitation."

brian moore

"We used Walt and his team when we purchased our new home in Salem. We had a short close, but it was no problem for them. They were very responsive and were available when we called. We were very impressed with their professionalism and we appreciated Walt meeting with us for the Discovery Consultation. This was a great opportunity to ask questions and learn more about the process. We highly recommend Walt and his team!"

eyes503

"Walt and his team are an actual delight to work with! At the beginning of my process I was disappointed with a lender, switched to Walt and holy smokes he exceeded my expectations right off the bat! He brought me to the office and laid out everything that was going to happen and multiple options to go about it. Everything was step by step, as a first time homebuyer your have many questions and he is well aware of that. He closed my house in 30 days and got me great rates! He responded in a timely manner to every question I had and I couldnt of been luckier to have such a informative, supportive and professional team to help me through this crazy process. I have to give a huge thank you to Walt and Lenda from the very bottom of my heart!"

katie braff