When Paying Student Loans Feels Like Running in Place

Imagine this: You borrow $18,000 for school. Fourteen years later, you have already paid back $37,000, yet your statement says you still owe $23,000. At first glance, that seems impossible. How can someone pay back more than double what they borrowed and still not be debt free?

Unfortunately, this is a very real situation that thousands of borrowers face.

How It Happens

High interest rates
Many loans issued in the early 2010s carried interest rates of 7 to 8 percent. At 7.9 percent, the balance can nearly double every nine years if unpaid, because of compounding. Even if you make payments, a large portion may go toward interest instead of reducing the principal.

Capitalized interest
If you ever paused payments through forbearance or deferment, unpaid interest does not just disappear. It gets added to your loan balance, and from then on you pay interest on interest.

Long repayment timelines
Borrowers who enter income-driven repayment plans often pay less each month, but sometimes the payments are not even enough to cover interest. Over time the balance can grow, even while making payments for years.

What the Numbers Show

Let’s break down this scenario:

• Borrowed: $18,000
• Repaid so far: $37,000
• Balance remaining: $23,000
• Lifetime cost: $60,000 (37k paid + 23k owed)

This means the borrower has already paid more than double the original loan amount, yet the debt is still not gone. Sadly, the math adds up once you consider interest and capitalization.

What You Can Do Now

1. Review your loan history

   • Log in at studentaid.gov for federal loans. Review each disbursement, accrued interest, and any capitalization events. This will show how much of your payment went toward interest versus principal.

2. Reevaluate your repayment plan

   • Standard repayment pays off the loan fastest, but the monthly payment is higher.
   • Income-driven repayment may make payments manageable, but can result in paying much more overall.

3. Explore forgiveness or settlement programs

   • Federal loans may qualify for Public Service Loan Forgiveness, income-driven plan forgiveness, or other relief depending on your situation.
   • Private loans may allow for negotiation or settlement, but options are more limited.

4. Consider refinancing

   • With strong credit and income, refinancing may lower your interest rate and total cost. Be cautious: refinancing federal loans into private loans removes protections like forbearance, forgiveness, and flexible repayment.

You Are Not Alone

If your student loans feel like an endless treadmill, you are not imagining it. Many borrowers are trapped in the cycle of high interest, capitalization, and complex repayment rules. The good news is that you have options and strategies to break free.

At Lionhood Financial Coaching, we help clients understand their loan history, build a repayment strategy, and create financial systems that work. You do not have to keep running in place.

👉 Schedule your financial coaching session today and take control of your student loans.