IBR Question

[MarissaNicole]

We are doing Income Based Repayment for now... and have been doing so since about February of this year. When I look at our account it still looks like we are accruing interest. I thought that for the first three years of IBR any interest in excess of your payments was forgiven. The whole reason we are trying to do IBR is to keep the interest under control. Anyone else know how to try and figure out if we are accruing interest?

My other thought is that perhaps its something that is adjusted at the end of the year in relation to your 1098e? Anyone have any experience on this?

[Chrisada]

Interest accrues, but the interest is not capitalized. As DH has explained it to me, we will still save thousands of dollars in interest by doing IBR because of the interest not being capitalized. His loans are all subsidized through Direct Loans.

[MissCrabette]

Marissa, are these subsidized or unsubsidized loans?

[MarissaNicole]

Okay that makes sense, although the interest is still rediculously painful.

All loans are federal, but a combo of sub and unsub.

[MissCrabette]

If your monthly payment is not sufficient to cover accrued interest, the federal government will pay any remaining accrued interest on subsidized loans for the first three years.

http://www.ama-assn.org/resources/do...ssue-brief.pdf

[MarissaNicole]

Thanks MC, now I just have to make sure that's actually happening.