Man In White

Cervical Warden
10+ Year Member
7+ Year Member
Aug 8, 2005
Resident [Any Field]
Regarding subsidized loans has anyone figured out what the bolded text is supposed to mean? said:
How does IBR treat interest? Does it still accrue?

If your reduced payment under IBR does not cover the interest on your loans, the government will pay that interest on your Subsidized Stafford Loans during your first three years in IBR. After three years, and for all other loan types, the interest will accrue but not compound. That means it will be added to your principal, but interest will continue to accrue only on the original principal amount. Anything you still owe after 25 years of qualifying payments will be forgiven.
How do we know if the "reduced payment" covers the interest or not?

Does this mean if your calculated IBR monthly payment is so low (ie. $0) then the govt will pay the interest (up to 3 yrs)?

So if your payment is around $300/month then you're just outta luck - ie. you'll be paying interest until it's all paid off?


7+ Year Member
Oct 14, 2009
New York
Medical Student
for any kind of loan, you have to pay interest until the principal balance is zero.

for simplicity, let's say you have $100,000 in loans and all of them are stafford loans at the fixed 6.8% interest rate. now each lender has slightly different formulas for calculating this stuff, but generally you can take your total loan balance times your interest rate divided by 12 and get an idea of how much your monthly interest will be. you can then multiply this by the proportion of your loans which are constituted by subsidized stafford loans and see the specific interest on the subsidized portion is. if this is greater than your IBR payments (which it almost certainly will be unless you took out very little in loans, in which case you won't even be eligible for IBR) then yes, the gov't will cover your SUBSIDIZED interest payments.

but to answer your last question, it all depends on how much you actually owe. as a resident you should expect your IBR payments to be roughly 380 or so a month then you would only need around $70,000 or so in loans for the gov't to cover the subsidized interest for 3 years.

however, seeing as how the max subsidized stafford loans you can take out each year is 8500, even if you max out on them over 4 years, it means the gov't is only paying around $193 a month for interest and its only for 3 years so it's not that much.