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Guide to Student Loan Extended Repayment Plans

The Extended Repayment Plan Explained
Rebecca Safier
Rebecca SafierUpdated August 17, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Most federal student loans automatically get placed on the standard 10-year repayment plan, but they don’t have to stay there. If you need more time to pay off your education debt, you could consider applying for the Extended Repayment Plan. If you have eligible loans totaling $30,000 or more, the Extended Repayment Plan would give you up to 25 years to pay them off. You could pay a fixed amount or a graduated amount that starts out smaller and increases over time. The Extended Repayment Plan is not a good fit for every borrower, however. And it does have drawbacks. Here’s what you need to know about the student loan Extended Repayment Plan and how it works.

What Is the Extended Repayment Plan?

The Extended Repayment Plan is one of several student loan payment plans. It gives you 25 years to pay back your federal student loan debt instead of the standard 10. By adding time to your repayment plan, the extended plan may make your monthly payments smaller and more affordable. This can be helpful if you’re struggling to pay your student loan bills. However, extending your repayment term also means you’ll pay more interest over the long term. Let’s say, for example, that you owe $30,000 in student loans at a 5% rate. Over 10 years, you’d pay a total of $8,184 in interest charges. But if you extend your term to 25 years, those interest charges increase to $22,613. As you can see, adding time to your student loan repayment plan requires a significant tradeoff. You might free up more of your budget from month to month, but you could more than double your costs of borrowing. 

How Extended Repayment Plans Work

As one of the federal student loan repayment plans, the Extended Repayment Plan gives you 25 years to pay back your federal student loans. Along with lengthening your term, this plan gives you two options for paying back student loans
  • Extended repayment with fixed payments: You make the same payment every month for 25 years. 
  • Extended graduated repayment: Your payments will start out smaller and increase over time, typically every two years. By extending your payment over time and reducing your payments, each of which result in you owing more interest, this option can lead to higher total interest costs. 
The chart below compares what your monthly payment would look like with fixed payments and graduated payments on a $30,000 loan at a 5% interest rate on the Extended Repayment Plan. The graduated payment approach leads to higher total loan costs because you end up accruing more interest on your loan. 
Extended fixed repayment planExtended graduated repayment plan
Initial payment $175$124
Final payment $175$289
Total amount paid over the life of the loan$52,613$57,583
To see what your own payments might look like on these and other repayment plans, you can use Federal Student Aid’s Loan Simulator tool.

Eligibility for the Extended Repayment Plan

To be eligible for the Extended Repayment Plan, you must have more than $30,000 in Direct loans or FFEL loans that you borrowed after Oct. 7, 1998. You cannot combine your loan balances. If you have $20,000 in Direct Loans and $20,000 in FFEL loans, neither would be eligible. But if you have $35,000 in Direct Loans and $20,000 in FFEL loans, your Direct loans would qualify. The following student loan types are eligible for the Extended Repayment Plan: 
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans
If you’re not sure if you qualify, speak with your student loan servicer for guidance. 

Pros of Extended Student Loan Repayments

While the extended repayment plan isn’t right for every borrower, it may have some benefits, including:

Lower monthly payment 

The main advantage of the Extended Repayment Plan is lowering your monthly student loan payments. Because this plan gives you 25 years to pay back your loans, you may pay less each month than you would on the standard 10-year plan. Take the example of the $30,000 loan with a 5% interest rate. On the 10-year plan, you’d have to pay $318 toward your student loans each month. But on the extended fixed plan, you’d pay $175 each month. Lowering your payments could be useful if you’re struggling to afford student loan repayment. However, there may be better options to help you with this, such as an income-driven repayment plan. 

Choice between a fixed and graduated payment plan

The extended plan lets you choose between a fixed monthly payment that stays the same over the life of your loan and a graduated payment that starts out smaller and increases over time. The fixed payment approach might be better if you want a predictable monthly payment that you can work into your budget. However, the graduated approach may be helpful if your income is low now but you expect it to increase in the future. Note that you can always make extra payments on your student loans at any time without penalty if you can afford to pay them off faster. Recommended: Your Guide to Choosing a Student Loan Repayment Plan

Cons of Extended Student Loan Repayments

There are a number of downsides to Extended Student Loan Repayment. Consider them carefully if you’re contemplating the extended plan. 

Higher interest charges 

Interest accrues on federal student loans on a daily basis. So the longer you’re in debt, the more interest charges you’ll pay. Even though your monthly payment may be more affordable with the extended plan, you’ll end up paying more on your student debt over the long run. The Extended Graduated Repayment Plan will increase your loan costs even more than the fixed extended repayment approach. Because you’re making small payments at the beginning of your term when your balance is at its highest, interest charges will increase even more.

Remain in debt for longer 

While the Extended Repayment Plan makes your monthly payments more affordable than the standard 10-year plan, you’ll be paying off your student loans for an additional 15 years. 

Ineligible for Public Service Loan Forgiveness 

Payments on the extended repayment plan do not qualify for the Public Service Loan Forgiveness (PSLF) program, which forgives the remaining balance on your Direct Loans after you’ve made 120 qualifying monthly payments while working for a qualified employer. If you’re pursuing PSLF, you’ll need to apply for an income-driven repayment plan instead. 

Can’t get the perks of income-driven repayment 

There are some benefits of income-driven repayment. For one thing, payments on these plans are adjusted to be a percentage of your discretionary  income, potentially making what you pay monthly more affordable. President Joe Biden in 2023 created the SAVE plan, which offers the lowest monthly payment plan of any Income-Driven Repayment Plan.Moreover, these plans can end in student loan forgiveness after 20 or 25 years as long as you’ve been making consistent payments. The extended plan does not offer this option.

Refinancing Extended Student Loan Repayment Plans

While the Extended Fixed Repayment Plan and Extended Graduated Repayment Plan are only available for federal student loans, you may be able to refinance them. When you refinance student loans, you exchange one or more of your existing loans for a new loan. You may be able to get a lower interest rate, which could save you money. You can also choose new repayment terms, which will impact your monthly payment. This is how refinancing works.Many lenders let you choose up to 20 years to pay back your loans. Some borrowers might even want a 30-year term. By choosing a long term, you can lower your monthly payment. But you’ll be in debt longer and pay more interest overall. That’s why you’ll want to find and compare student loan refinance rates.However, it’s very important to be aware that refinancing is done with a private lender. When you refinance federal student loans they become private loans, which means they are ineligible for federal repayment plans, forgiveness programs, and other protections. If you want to retain access to these programs and protections, it would not be wise to refinance your federal student loans. 

The Takeaway

The Extended Repayment Plan can give you more time to pay off your federal student loans if needed. But there are drawbacks, such as higher interest charges and the fact that you’ll remain in debt longer than you would on many other repayment plans.Refinancing student loans on the Extended Repayment Plan could be beneficial as long as you understand the pros and cons, don’t need access to federal programs and protections, and can qualify for a lower interest rate than you have now. Refinancing could also give you the chance to restructure your debt with new repayment terms. To help determine whether refinancing is the right move for your situation, you can use Lantern by SoFi to quickly and easily check your loan rates and terms with multiple lenders. Explore your student loan refinancing options with Lantern.

Frequently Asked Questions

What is an example of an extended repayment plan for student loans?
What are extended repayment student loans?
Is the Extended Repayment Plan a good idea?
Photo credit: iStock/miniseries

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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