There are a couple of reasons:
So, what can you do?
Interest is added to your principal on a daily basis. This means that if you are making minimum payments or no payments to your student loans, you will ultimately paying interest on interest.
To get ahead of this, pay more on your monthly payments. If you let the lender know that you want anything you’ve paid extra to go towards the principal, the amount being calculated for interest will be lower.
The best way to thwart off student loan interest in to pay it fast and pay it hard! Student loan interest adds to your total every day. Why take little steps when you can leap?
What shouldn’t you do?
Refinancing and consolidating a loan may seem like a good idea, but usually the best interest rate you can get with this will be a variable interest, not fixed. Variable interests are calculated with the market in mind. This means that if the market does well, you could have a lower interest according to your contract. But if the market is doing badly, you could be screwed.
Stick with your original contract.
Forbearing or deferring your payments is also a big no-no. Any time you are not paying on your student loans, the amount is going to get higher, meaning more debt is getting added to the principal.
Also, don’t rely on the government for help. Both Bernie and Hillary have said that interest rates are too high for graduates and should be fixed lower. Even if the rate does get lowered, it will take time. While you’re waiting for such a law to be passed, your interest will get added to your principal.
The struggle is real. I get it. I, too, have climbed the mountain of student loan. Keep chipping away at it, pay big chunks when you can, and soon, you’ll see the mountain isn’t so high.