How are people paying their school loans for 5-10 years and still able to actual owe more than their principle loan amount?

Question

I see this from time to time on social media about people saying they graduated college a long time ago with X-amount of school loans, and they’ve been paying it but then still owe more then the original loan amount. How is this even possible? Don’t all loans calculate the monthly bill for interests and enough principle for it to not increase?

In: 2

Answer 1

Some student loans will let you make an income-based minimum monthly payment that totals less than the interest that accumulates in that time. This means you’re “current” with your payments and won’t get sent to collections, but you’re not paying enough to decrease the amount you owe (because of the interest). This is why many people who believe in some amount of student debt relief will often ask that interest rates be lowered, at least.