Hello Heather,

I just found your blog today and I just want to say thank you so much for sharing your knowledge. It’s a relief that I have some place to come and get good, clear information.

I owe $217,000 and it seems like each month the total increases by a couple of thousand dollars because of interest.

I’m on the IBR plan. I have a question, because no one at my lender understands my questions. These are also consolidated federal loans.

Each year, my payment is recalculated. Is it recalculated just to 15% of my discretionary income, and that’s it? The payment doesn’t take the balance into consideration? I’m asking this because with interest the total balance keeps ballooning and I’m afraid that one day this is going to be in the millions of dollars and I can afford a 15% payment and no more. Right now, it’s about $600 a month.

Thanks

Yes, the payment amount does not refer to the loan balance.  IBR does permit borrowers to pay less than the interest that is accruing and the balance to increase over time.  Do be aware that if a balance is owed after 25 years, it is forgiven and the forgiven amount is taxable.