Aiming to pay off your loans is a great financial goal. But sometimes, you might feel like you’re paying down month after month without seeing any progress.
Most new borrowers understand that taking on a loan means committing to monthly payments. What tends to catch people by surprise is seeing their
loan balance go up, even when they make those monthly payments on time.
So what increases your total loan balance, and what can you do to keep your repayment plan on track?
What’s a loan balance?
Before we get jargony with phrases like “accrued interest” and “principal balance” and “interest capitalization,” let’s make sure you’re clear on the meaning of “loan balance”: the total amount you owe on a loan at a given time, or whatever amount still needs to be paid off.
To fully understand your loan balance, you need to know the difference between the original loan amount (principal) and the interest charges that make it grow.
The day you take out the loan, all you owe is the principal balance (and maybe a bit extra if the lender charges an
origination fee). Over time, interest accumulates based on the terms of your loan. That interest gets added to your principal balance, which means the amount you repay will be more than what you initially borrowed.
Now that you have a handle on the basics, let’s look a little more closely at some of the reasons that the principal balance you started with can quickly feel like a fantasy.
6 factors that could make your total loan balance go up
Maybe you’re on an income-driven repayment plan for your federal student loans, or you’re trying to repay a
consolidation loan you took out to clear up your credit card debt. Whether it’s a federal or
private loan, there’s a good chance you’ll wind up with the same question many borrowers ask: I’m making my monthly payments, so why is my loan balance increasing instead of decreasing?
Here are six charges that commonly get added to a borrower’s principal balance.
1. Accrued interest
When you make a loan payment, a portion of it goes toward interest and the rest goes toward your principal balance. If your payment doesn’t cover all the interest that accrued during that month, the unpaid interest gets added to your total loan balance. Over time, this can create a snowball effect, making it harder to chip away at the principal.
2. Late or missed payments
Missing a payment or paying late isn’t just stressful — it’s also expensive. Many lenders charge late fees or penalties when you don’t make your monthly payment on time. These fees are added to your balance, increasing the total amount you owe. Plus, unpaid interest from a missed payment continues to accrue, making it even harder to catch up.
3. Loan fees
Some loans come with built-in charges like origination fees, annual fees, or prepayment penalties (yes, you read that right — some lenders charge you for paying off a loan early). Depending on the
type of loan, these fees can be added to your loan balance upfront or over time.
4. Deferment, forbearance, and interest capitalization
Pausing payments through deferment or forbearance can provide relief when money is tight, but it comes at a cost. Most loans (except subsidized federal loans) accrue interest during the pause. Once repayment begins, the accumulated interest is added to your principal balance — a process called interest capitalization. This means you’re now paying interest on a higher loan balance than the principal you started with, which makes repayment more expensive.
5. Variable interest rates
If you have a variable-rate loan (common with private student loans), your interest rate can change based on market conditions. When rates go up, so does the amount of interest you’re charged each month, which can lead to a higher overall balance, even if you’ve been staying on top of your monthly payments.
6. Income-driven repayment plans
Income-driven repayment plans base your federal student loan payments on your income, which can make repayment more manageable in the short term. But if your reduced payment doesn’t cover the monthly interest, the unpaid portion will still accrue. Even though you’re making consistent monthly payments, these interest charges will cause your student loan balance to grow over time.
Tips for making your monthly payments go further
Taking control of your loan balance isn’t just about making payments — it’s about being strategic and proactive. Here are some tips to help you successfully manage your loan balance and avoid letting it spiral out of control.
Make on-time monthly payments
This might sound obvious, but paying on time every month is one of the most important steps in keeping your loan balance in check. Late payments can result in fees, penalties, and even damage to your credit score. To make things easier, set up automatic payments or reminders so you never miss a due date.
Make more than the minimum payment
If you can swing it, paying more than the minimum payment will keep your interest charges from getting out of control. Extra payments go directly toward your principal balance, reducing the amount of interest accrued over time. Even an additional $20 or $50 each month can make a big difference in how much you pay overall.
Loan calculators,
like EarnIn’s, can help you estimate how much your loan balance will change if you start paying more than the minimum.
Keep track of your loan balance
Staying informed about your balance helps you spot changes early, like unexpected fees or rising interest charges. This is especially important for understanding the proportion of all your loan balances to loan amounts — a key factor that can affect your credit score and ability to qualify for future loans. The closer your loan balance is to the original amount you borrowed, the higher your debt load appears to lenders.
Most lenders offer online portals or apps where you can see what you owe, and the loan balance you see there usually does include interest. Reviewing statements regularly will give you a clearer picture of your progress and keep you motivated.
Consider refinancing or getting a consolidation loan
If you have private student loans with high interest rates or you’re juggling multiple monthly payments, refinancing or consolidating loans might help you repay faster. Refinancing allows you to secure a lower interest rate, while consolidation combines multiple loans into a single payment, often with better terms. Just be sure to research the pros and cons before making the switch.
Create a budget — and stick to it
A realistic budget helps you prioritize loan payments while covering other expenses. Track your income and spending to spot opportunities for cutting back so you can put that money toward your loans. The more intentional you are about budgeting, the faster you’ll be able to chip away at your debt.
What to do if you’re struggling to repay what you owe
If you’re finding it hard to keep up with your loan payments, don’t panic — there are steps you can take to get back on track. Here are a few actions to consider.
Contact your lender. Many lenders might work with you if you ask, and could offer options like temporary payment reductions, deferment, or alternative repayment plans.
Seek financial counseling. Nonprofit organizations and local community resources often provide free or low-cost counseling services that can help you create a plan to manage your loans, budget more effectively, and explore options like loan consolidation.
Refinance your loan. Refinancing works best if you have
good credit or if interest rates have dropped since you first became a borrower. Just note that if refinancing extends your loan term, you may pay more in interest over time.
Explore loan forgiveness or assistance programs. Check out programs that can help. If you work for a nonprofit, for example, your federal student loans may be forgivable under the
Public Service Loan Forgiveness program.
Keep your repayment plan on track with EarnIn
Whether you’re dealing with federal or private student loans, a
401(k) loan, or any other type of lending, EarnIn has the tools to help you stay on top of what you owe.
Our
Cash Out tool helps provide you the flexibility to cover expenses without relying on high-interest loans. Cash Out lets you access your pay as you work — up to $150 a day with a max of $750 between paydays
— helping you stay on track with monthly payments and helping you avoid late fees.
Want to make more than the minimum payment but don’t know how to fit it into your budget? EarnIn’s
Financial Calculators help you plan smarter by providing insights into budgeting, loan repayment, and savings goals.
Download EarnIn to make your monthly payments count.
Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
The calculations provided are based on estimates and should be used for informational purposes only. Please be aware that comparisons may not be 100% accurate. The insights and data presented do not constitute financial advice, and we recommend consulting with a qualified financial advisor for personalized guidance.
EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out.
A pay period is the time between your paychecks, such as weekly, biweekly, or monthly. EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the
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Cash Out User Agreement EarnIn reserves the right to adjust the Daily Max and Pay Period Max at its discretion. Your actual Daily Max will be displayed in your EarnIn account before each Cash Out. EarnIn does not charge interest on Cash Outs or mandatory fees for standard transfers, which usually take 1–2 business days. For faster transfers, you can choose the Lightning Speed option and pay a fee to receive funds within 30 minutes. Lightning Speed is not available in all states. Restrictions and terms apply; see
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The calculations provided are based on estimates and should be used for informational purposes only. Please be aware that comparisons may not be 100% accurate. The insights and data presented do not constitute financial advice, and we recommend consulting with a qualified financial advisor for personalized guidance.
