I have a single lender that has loans for me where some are Direct Stafford, some are FFEL Stafford, some are subsidized and some are unsubsidized, and a mix of each for every year I borrowed.

I noticed in some of my loans that there has been over a year’s worth of subsidized interest payments made by the government, all going to interest, and like .01 or .02 cents going to principal each month. I have qualified for IBR every year since graduating, and for the year in question I literally had $0 min payment. Plus once each year, a large amount of interest capitalizes, according to my lender, when I reapply for IBR approval.

Once my income increased and I started having a substantial minimum payment (still under IBR) and I began making an actual payment to these loans, I noticed my interest that is accruing each month has tripled over what the govt was paying in interest.

For example, for all of 2013, the gvt paid roughly $25 in interest payments (per subsidized loan), and my balances never changed.
When I started paying payments in 2014, the portion going to interest has been like anywhere from $80 to $100 a month on those same loans and only a few dollars goes to principal.

So, my question is, how much of my monthly interest did the govt pay per month…was it 30% or 25%, and is that why I still had a good size amount of interest capitalize each year - because the govt did not pay ALL of the subsidized interest per month?

Or was my capitalized interest likely only my unsubsidized interest? Im confused.

Thanks!

As I understand it the government only pays the interest on subsidized loans while your in school, during your grace period, or while you’re in deferment.

Well, yes, that’s what all the websites say. I did find this information: that if your IBR payment is not enough to cover monthly interest, the government pays the difference for the first three years of IBR. http://www.ibrinfo.org/what.vp.html

But that is exactly why I am confused. While I had $0 minimum payment IBR, the govt paid $25 or so in interest for me each month and the balance never changed until once a year, a large amount capitalized. Then when I had an income increase, and my IBR minimum became $150, then the interest I have to pay is now like $100. So why the $75 difference in interest per month now that I am paying it?