What Is the Extended Repayment Plan for Student Loans?

More than half of undergraduate students leave college with debt, with repayment typically beginning six months after graduation. If you're starting out with an entry-level salary, managing the standard 10-year repayment plan may be a strain on your budget. The Extended Repayment Plan offers a way to lower your monthly payment by spreading out your loan term, but it's not right for everyone.

This guide breaks down how the Extended Repayment Plan works, who qualifies, its benefits and drawbacks, and other repayment plans that might better fit your needs.

What is the Extended Repayment Plan?

The Extended Repayment Plan lets you stretch your loan term from the standard 10 years to as long as 25 years, lowering your monthly payment in the process. Compared to the Standard or Graduated Repayment Plan, this can make it easier to manage your budget. While the lower monthly payment provides relief, the tradeoff is a longer repayment period and higher overall interest costs.

For example, if you owe $30,100 at a 6.53% interest rate, the Standard Repayment Plan's 10-year term results in a $342 monthly payment. By switching to the Extended Repayment Plan, your monthly payment drops to $204 — but you'll stay in debt for 25 years and pay approximately $20,000 more in interest.

There's also an Extended Graduated Repayment Plan, which combines the longer 25-year term with payments that start low and increase every two years, similar to the Graduated Repayment Plan. This option may work for borrowers who expect their income to grow over time.

Current student loan refinance rates

Who is eligible?

The Extended Repayment Plan is available to federal student loan borrowers with more than $30,000 of federal student loan debt. This plan can be used for both Direct Loans and loans issued through the Federal Family Education Loan (FFEL) program, but eligibility depends on when your loans were disbursed:

• Direct Loan borrowers must not have had any loans before October 7, 1998, or must have taken out a new Direct Loan after that date.
• FFEL program borrowers must not have had any loans before October 7, 1998, or must have taken out a new FFEL loan after that date

Pros and cons

One of the extended plan's major benefits is that it can make your monthly payments more manageable, offering some relief if you have a tight budget or large debt balance.

“Extended repayment plans can offer certain advantages to borrowers, such as lower monthly payment amounts and reduced financial stress in the short term,” says Jonathan Feniak, former financial advisor and General Counsel at LLC Attorney.

While this flexibility can help borrowers avoid default by easing immediate financial strain, Feniak points out that the plan comes with notable tradeoffs, “specifically, significantly higher interest payments over time, potentially making the loan more expensive in the long run.”

For example, if you have $30,100 in Direct Loans at a 6.53% interest rate, the Standard Repayment Plan would cost $10,969 in total interest over 10 years. Extending the term to 25 years increases total interest charges to $31,041 — more than a $20,000 difference.

Another drawback is losing access to federal loan forgiveness programs. To qualify for options like Public Service Loan Forgiveness (PSLF) or forgiveness through income-driven repayment, you must be enrolled in an income-driven repayment plan.

Is extended repayment right for me?

Extending your repayment term to 25 years can significantly lower your monthly payments, but it often results in paying more in total interest over time. Before choosing this plan, consider whether the short-term relief of smaller payments outweighs the long-term cost.

The Extended Repayment Plan could be a good fit if you need to lock in lower monthly payments and don't qualify for or prefer not to use an income-driven repayment (IDR) plan. IDR plans, which adjust payments based on income and family size, also offer forgiveness after 10 to 25 years, depending on the plan. However, they require annual recertification, and payments may increase as your income grows.

For higher-income borrowers or those expecting their salaries to increase, the stability of fixed payments under the Extended Repayment Plan may provide better peace of mind compared with the fluctuating payments of an IDR plan.

Check Out: Guide to Income-Driven Repayment Plans

How to enroll

If you've decided the Extended Repayment Plan is the right choice, start by confirming your eligibility. To qualify, you need at least $30,000 in federal Direct Loans or FFEL Loans.

Once you've verified your eligibility, contact your loan servicer to request the Extended Repayment Plan. You'll have the option to choose a fixed or graduated payment structure based on your financial needs. If you're unsure who your servicer is, log into StudentAid.gov and check your Dashboard for their contact information. Alternatively, you can call the Federal Student Aid Information Center at 1-800-433-3243 for help.

More repayment options

Before committing to the Extended Repayment Plan, use Federal Student Aid's loan simulator too to compare your options. Depending on your financial situation, one of these plans might be a better fit:

• Standard Repayment Plan: With fixed monthly payments over 10 years, this plan helps you pay off your loans quickly and with the least interest. It's ideal if you can afford the higher payments.
• Graduated Repayment Plan: Payments are stretched over 20 years and start lower, increasing every two years. This plan may help you pay off your loans faster than the Extended Repayment Plan, while keeping initial payments manageable.
• Income-Driven Repayment (IDR) Plans: Multiple IDR plans exist to help borrowers with low incomes. Generally, IDR plans involve lower monthly payments and offer potential loan forgiveness at the end of the term.