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‘It is costing more to survive now.’ I owe $109K in student loans, and the balance keeps going up as the loan servicer ‘continuously tacks on more money.’ With high inflation, how can I even cope with my student loans now?


Unfortunately, it is possible for a loan balance to increase, even as you are making payments.


Question: I have student loans in excess of $109k.  I am on an income-driven plan but my biggest problem is the amount continues to increase.  My understanding is that after you have been on the income-driven repayment for a certain number of years the rest is supposed to be forgiven. I am wondering if that is actually true.  My servicer seems to only find ways to continuously tack on more money so the balance will never go down. I will have this debt over my head for the rest of my life. I would be so thankful if there was a way that the lenders (both private and government) were limited to the total number of years they could collect, especially during COVID and inflation.  It is costing more to survive now. 

Answer: Unfortunately, it is possible for a loan balance to increase, even as you are making payments. Indeed, income-driven repayment plans like the one you are on can be negatively amortized, which means the loan payments are less than the new interest that accrues. “This can cause the loan balance to increase, which can be distressing for borrowers. But, if the loans will eventually be forgiven, the growing student loan balance does not matter much, other than increasing the amount of forgiveness in the end,” says Kantrowitz.  

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When enrolled in an income-driven repayment plan, your monthly payment is set to an amount that’s deemed affordable based on your income and family size. This will change each year if your income changes — if your income increases, so will your payment. If you work for a non-profit or in an approved government office, Public Service Loan Forgiveness discharges the remaining balance after the borrower has made 120 qualifying monthly payments while working full-time for a qualifying employer. 

“After you’ve made 240 or 300 payments under an income-driven repayment plan (20 or 25 years worth), depending on the specific income-driven repayment plan, the remaining debt will be forgiven,” says Mark Kantrowitz, author of Who Graduates From College? Who Doesn’t?  Even if you weren’t making payments during the pandemic forbearance, the clock will still move forward as if you did. 
“Your best option to pay less over time is to pay your monthly amount for as long as you need a lower income-driven repayment amount and try to make additional payments when you can. Eventually you’ll pay off the loan or have the remainder forgiven,” says  Anna Helhoski, student loan expert at NerdWallet. And note that the forgiveness is tax-free through December 31, 2025 and this tax-free treatment is likely to be extended or even made permanent, according to Kantrowitz.

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