What Is the Extended Repayment Plan for Student Loans?

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Seeing your student loan payment after college can be a big shock—especially if your career doesn’t start out like you thought it would or you graduated into a recession. Even if you do have a job and are in a good financial standing, it might not pay enough for you to be able to afford your student loan payments right away.

Of those who attended college, 43%—a whole 30% of U.S. adults—have incurred at least some form of debt from their education, with the most common form being student loans, according to 2019 data from the Federal Reserve. 

The Federal Student Aid Office offers several federal student loan repayment plans designed to help you repay your student loans after you graduate college. With the Extended Repayment Plan, you might be able to get a more manageable monthly payment. This plan is designed to help you repay your student loans over the course of up to 25 years, rather than the standard 10 years. But lower payments mean you’ll pay more over time than you would with other repayment plans, so it’s important to know what you’re getting into before you choose extended repayment.

What Is the Extended Repayment Plan?

The Extended Repayment Plan for student loans allows you to extend your repayment period up to 25 years, rather than the standard repayment timeline of 10 years. Borrowers must have $30,000 in student loan debt to qualify for this plan. Unlike an income-driven repayment plan, the Extended Repayment Plan doesn’t include any provisions for loan forgiveness, but the extra time to repay loans can make your monthly payments—averaging between $200 and $299 per month as of 2019—more affordable than they would be on the standard plan.

The Extended Repayment Plan doesn’t qualify you for Public Service Loan Forgiveness (PSLF). If you’re interested in PSLF, you need to choose a different repayment plan.

How the Extended Repayment Plan Works

Your monthly payments are usually lower with the Extended Repayment Plan than what you’d pay under the standard or graduated plan. With this plan, you pay a fixed or a graduated amount, depending on the arrangement with your servicer. Your monthly payments will stay the same throughout repayment under the fixed plan, and with the graduated plan, they’ll start low and then increase.

While monthly payments are lower, you’re likely to pay more in total than you would with a standard plan because you’re stretching your payments over a longer period of time—and paying interest for longer. So while your cash flow may be better with the Extended Repayment Plan, this may be the most expensive route overall for paying off your student loans. Carrying heavy debt for that long can also hamper your ability to meet other goals, like buying a house.

The Department of Education has a simulator that can help you review and compare different student loan repayment plans. Once you decide what works best for you, contact your student loan servicer to set up your repayment plan.

Who Can Qualify?

There are no income requirements for the Extended Repayment Plan; however, in order to qualify, you must have at least $30,000 in outstanding student loans. The plan is available for all loans within the William D. Ford Federal Direct Loan (Direct Loan) Program, as well as the Federal Family Education Loan (FFEL) Program, specifically PLUS Loans and Consolidation Loans.  

The FFEL Program, which was funded by private lenders, was discontinued in 2010, but some borrowers still have outstanding loans from the program.

Direct and FFEL Loans are evaluated separately, meaning you must have $30,000 in the appropriate program to qualify. For example, if you have an outstanding balance of $35,000 in Direct loans and $20,000 in FFEL Loans, you’d be able to apply the Extended Repayment Plan to your Direct Loans, but not to your FFEL Loans.

Pros and Cons of the Extended Repayment Plan

Pros
    • Available for both the Direct Loan and FFEL Programs
    • Monthly payments might be lower than with the standard or graduated plan
Cons
    • Pay more over time because of interest
    • Must have $30,000 in loans to qualify
    • Not eligible for PSLF

Other Student Loan Repayment Options

If you have student loans, there are several other federal student loan repayment programs available. For borrowers hoping to take advantage of PSLF, one of the income-driven repayment plans might be a better choice, such as the Revised Pay As You Earn Repayment Plan (REPAYE). Additionally, there are other plans that offer loan forgiveness after 20 or 25 years, or after you meet certain requirements, such as being a teacher or health care worker in underserved communities.

If you’re looking for a lower interest rate than what the federal government offers, you may be able to refinance student loans privately for a better interest rate. However, if you refinance privately, you won’t have access to the same deferral policies or to income-driven repayment options. 

Carefully consider your choices and your current situation, as there is no one-size-fits-all loan repayment plan. Figure out what is likely to work best for you and contact your federal student loan servicer to begin a repayment plan that fits your needs.