Clearing Up Student Loan Debt Confusion

Learn why your balance may be higher than the original amount you borrowed, why your repayment is stretched out for so long, and steps you can take to manage your loan debt.
Woman learning about Student Loan Debt Confusion

One of the most pressing and talked about issues over the past few years has been the rising cost of higher education and, in relation to that, student loan debt. It seems as though every week there is a story about young adults living at home with their parents, unable to afford to move out because of the cost of their student loan payments. We receive a lot of calls at MEFA from students and parents who are confused about various aspects of their student loan debt. Below are some of the common questions that students have. 

Why is my balance higher than the original amount that I borrowed?

Here are some of the factors that contribute to a high loan balance:

  • If you have borrowed an Unsubsidized Federal Direct Loan and have not been paying the interest quarterly, the interest has been building on the original amount that you borrowed. If you are able to make interest payments while in school, that will help keep the balance of the loan from growing from year to year. This same concept holds true for private alternative loans as well - whenever interest or payments are deferred, the loan balance will grow.
  • Some federal student loan borrowers may face difficulties in making the monthly repayment amount due to an economic hardship, military service, illness, or other factors. In some of these cases, the loan servicer (the company to whom you make your loan payments) may grant a deferment or forbearance, during which the interest will continue to accrue (build), but you may not be required to make a payment. In these situations, your total loan balance will grow. These federal repayment programs are available to help students manage their repayment and avoid defaulting on their loans. If you would like to see if you qualify for a modified repayment, do your research and then contact your servicer.
  • Are you making regular payments or have there been any gaps or inconsistencies? If regular, consistent payments aren't made, whether due to deferment, forbearance, or delinquency, you can get behind in paying the interest. You will then have more interest to pay before you can start paying down the principal.

Why is my repayment schedule stretched out for so long?

It isn't just about the balance total—options you've taken may be contributing to the lengthy repayment schedule:

  • Did you take advantage of federal repayment plans such as Pay As You Earn, Income-Sensitive, Income-Contingent, or Income-Based? These are all examples of non-standard repayment plans that are offered to qualifying individuals who cannot afford the required monthly payments. In exchange for lowering your monthly payment, these plans extend the payment terms of the loan, in some cases up to 25 years. It's likely that you will end up paying more overall with one of these plans because you will be making lower payments and therefore accruing interest for a longer period of time. For more information on all federal repayment plans, check out
  • You may have chosen to  consolidate your federal or private alternative loan. Most students need to re-apply for a new loan every year, meaning they will end up with at least four different student loans. It is possible to consolidate one or more of your loans together, averaging the interest, lowering the monthly payment, and extending the repayment term of the loan. So it's not uncommon for four ten-year repayment loans to become one thirty-year loan.

What can I do to help manage my loan debt?

Here are some additional tips and resources to help you manage your loans:

  • If you are able and want to make larger monthly payments , you can. A lower monthly payment is typically based on a longer repayment term, but you don't have to take 25 or even 10 years to pay off a loan if you're in a position to do so more aggressively.
  • Over the past years, the federal government has expanded the loan forgiveness options offered for federal loans. Click here to explore the various scenarios under which you may be able to get some of your loans forgiven. Yes, that's "forgiven" as in "don't worry about paying that back."
  • There are some debt management services out there designed to help students. One free resource you may want to look into is offered by American Student Assistance (ASA). Their division for debt management is known as SALT. You can check it out here.

Most importantly, if you are a student or parent struggling with student loan payments, there is help available. Our strongest piece of advice at MEFA, whether you're repaying a federal student loan or a private alternative loan, is to pick up the phone and call your loan servicer to work with them to get your loans into a modified repayment schedule.