Home |Student Loan | I was approved for a $0 IDR repayment plan for 12 months plan. Will interest continue to accrue as usual under this plan while my monthly payment is $0?

I was approved for a $0 IDR repayment plan for 12 months plan. Will interest continue to accrue as usual under this plan while my monthly payment is $0?

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Abbey Johnson, Helping with Student Loan Documentation
Answered on September 25,2023

Yes. Interest accumulates as usual.

Interest accrues on student loans from the day they are disbursed to you. Subsidies mean someone else is paying that interest. A lack of a subsidy (e.g. unsubsidized loans) means you are responsible for that interest.

So with IBR, you have to have a partial financial hardship to get on it and if your payment does not cover the interest, then that interest is still your responsibility. It sits there until either you pay it or you reach the threshold for forgiveness (240 or 300 months of payments depending). I do believe IBR has a subsidy where for subsidized loans for the first 3 years of repayment (they will waive the interest that accrues in excess of your payment for the subsidized loans only).

PAYE does the same. ICR has nothing.

And SAVE will waive the interest that accrues in excess of your payment for all loans for all years on the plan (which is why many people are choosing SAVE)

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