Why does my student loan balance keep going up?

By Sasha Bulatskaya | Published on October 21, 2025

)

Have you been paying your student loan bill every month only to watch the balance go up? It’s a common experience for thousands of borrowers. Like you, they’ve been responsible when it comes to paying their student debt. They pay on time and in full, thinking they’re chipping away at their loan. One day, they check their balance only to realize they owe more than the amount they originally borrowed.

This experience can be infuriating and discouraging. How could this happen? It all comes down to interest, how your loan is structured, and a few other factors. Let’s take a look at what they are, how to prevent it if you’re a new student, and what to do if you’re already paying off your student loans.

Why is my student loan amount increasing after paying my bill?

There are a few reasons why your student loan amount is going up. Here’s a list of possible contributing factors:

)

Accruing interest can make your loan balance go up

One of the biggest mistakes new borrowers make is thinking interest starts accruing after graduation when for many student loans, it begins immediately after the loan is disbursed to the school.

Accrual refers to how interest charges get added to your loan. Depending on the type of loan you have, whether federal student loans or private student loans¹, interest may start accruing from the moment you take out the loan or after you graduate. This interest gets added to your principal amount, meaning you end up paying interest on the interest, which can really add up over time.

Lower your loan amount with in-school payments

If you have a loan that accrues interest while you’re in school, any unpaid interest will be added to your balance when you graduate college. To keep this from happening, you should make interest-only payments, if you can afford to. Even paying a small amount like $25 a month could make a difference in the total interest you’ll pay.

Consolidate or get on a repayment plan

If you’ve already entered the repayment period with your student loans², your best approach will depend on the kind of loans you have. If you have federal loans, you can consolidate them or get an income-driven repayment plan. Private student loans have more limited options.

What’s student loan consolidation?

If you have multiple federal student loans, you can try student loan consolidation. Consolidation takes the weighted interest rate average on all your loans and gives you a new rate based on that. It could mean a lower interest rate, but it’s not guaranteed.

Refinance your student loans for a lower interest rate

Refinancing is a good option for private student loans. It is the process of taking out a new loan to repay an old loan. The goal of refinancing is to get a lower interest rate (and, ideally, a lower payment)³.

If you’re thinking of refinancing, go to several lenders and do a rate check to see who can give you the best rate. At Earnest, you can check your rate before you refinance without any credit impact. You can also use our refinancing calculator to see how much you could save over the life of the loan.

)

Deferred payments can also increase your principal balance

If you’ve opted to defer your minimum payments, perhaps due to being in school, going through a financial hardship, or being on a grace period after graduation, your loan balance can grow significantly. During deferment, interest continues to accrue, increasing the total amount you owe.

Opt for in-school student loan repayments instead

When it comes to managing your student loan balance, opting for in-school repayment can be a game-changer. Making payments while you’re still in school can prevent your loan balance from snowballing. Not everyone can afford this, but even a small payment can make a difference. At Earnest, we offer a $25 in-school payment⁴ option so students can make progress toward paying their loans.

Or work with your lender to switch payment plans

Exploring income-driven repayment plans can offer relief for federal loans by adjusting your monthly payments based on your income and family size. An income-based repayment plan (IDR) could help prevent your balance from ballooning while still keeping up with your payments.

While this may not actually lower your interest, it could lower your payments and open the possibility of loan forgiveness after you’ve made payments for 20-25 years.

For private loans, contacting your lender to discuss alternative payment options could provide some much-needed breathing room.

Missing payments could mean penalties and added fees

Life can throw curveballs, and sometimes, you might miss a student loan payment. Late or missed payments can lead to penalties and fees, which are tacked onto your loan balance. This can be frustrating, and it’s one of the reasons why we never charge our customers late payment fees or any other fees (such as origination fees or disbursement fees).

Sign up for automatic payments so you don’t miss a payment

By automating your payments, you’re less likely to miss a due date and won’t need to deal with any late fees. Plus, many lenders offer a small interest rate reduction as an incentive for enrolling in Auto Pay. At Earnest, we offer a 0.25% interest rate discount⁵ if you sign up for Auto Pay.

Reach out to your lender and ask to waive late fees

If you missed one or two payments, call your lender and see if they’d be willing to waive late fees. If you miss payments because you got sick or lost your job, you can ask for temporary forbearance or deferment on your loans.

Both of these options could pause your payments, but your loan will continue to collect interest and if you have federal loans, you won’t be able to make progress toward forgiveness.

Bonus tip: Make extra payments

Even small additional payments can help chip away at the loan principal balance, reducing the interest that accrues over time.

Take it one step at a time

Remember, lowering your student loan debt won’t happen overnight. By understanding the factors that can cause your balance to grow and taking proactive steps to reduce your costs, you’re already making great strides toward a debt-free life.

)

About the Author

Sasha Bulatskaya

Sasha is the Senior Manager of Brand and Content at Earnest. She has been writing for ten years and has been focused on educational finance and financial aid for over three. Her passion for mission-driven companies brought her to Earnest in 2020, and she's been helping make student finance more accessible ever since. She strives to demystify personal finance and student loans to help borrowers make the best decisions for their financial situation.

Disclaimer

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.