Federal student loan borrowers can choose from a number of different repayment plans. If you’ve borrowed Direct Loans and have more than $30,000 in outstanding Direct Loan debt, you may be eligible to opt into Extended Repayment.
Below we answer all of the most common questions about Extended Repayment so that you can make a more informed decision about whether or not it is right for you.
What is the Extended Repayment Plan?
Under Extended Repayment, you increase the repayment term from 10 years to 25 years in exchange for lower monthly payments. These monthly payments can either be fixed, where you pay the same amount each month for all 25 years, or graduated, where you will make larger payments as time goes on.
What types of loans are eligible for the Extended Repayment Plan?
You must have at least $30,000 of outstanding Direct Loans in order to qualify for Extended Repayment. The following types of federal student loans qualify for this repayment plan:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Federal Stafford Loans
- Direct Parent PLUS Loans
- Direct Graduate PLUS Loans
- Direct Consolidation Loans
How much will I pay?
If you opt into Extended Repayment, then your monthly payments will be lower than what you would pay under either Standard Repayment or Graduated Repayment. If you choose Extended Repayment with fixed payments, then these payments will remain the same throughout your entire repayment term. If you choose graduated payments, then your monthly payments will increase over time, and be highest in the final years of repayment.
Exactly how large your payments will be will depend on how much you have borrowed and your interest rates.
Because of the lower monthly payments and the extended repayment term, you will ultimately end up paying more in interest under Extended Repayment than you would have under either Standard Repayment or Graduated Repayment.
That being said, you can always make additional payments in order to pay off your student loans faster, even under Extended Repayment. This can help you save money in the form of interest, and free you from your debt faster.
How long will repayment last?
Extended Repayment lasts for 25 years, or 300 consecutive monthly payments. This does not include any periods of deferment or forbearance.
Can my loan be forgiven?
Loans that are repaid under the Extended Repayment plan are not eligible for forgiveness under the Public Student Loan Forgiveness (PSLF) Program.
Pros and Cons of Extended Repayment
Pros of Extended Repayment:
- Monthly payments will be lower than under either Standard or Graduated Repayment
- Can choose either fixed or graduated payments
- Can be a good option for borrowers with low incomes other significant financial obligations
Cons of Extended Repayment:
- Must have at least $30,000 in outstanding Direct Loans to qualify
- You will pay much more in interest over the life of the loan due to the extended repayment term
- Your loans are not eligible for forgiveness under this plan
How to Apply for Extended Repayment
If you would like to opt into Extended Repayment, all you need to do is contact your student loan servicer. They will help you understand whether or not your loans are eligible for this repayment plan, and can answer any questions you may have.
Alternatives to Extended Repayment Plan
Not sure whether or not Extended Repayment is the right repayment plan for you? You have a number of other options to choose from. Depending on the specific types of loans that you have borrowed and your income, you may be eligible for:
- Standard Repayment
- Graduated Repayment
- Revised Pay as You Earn Repayment Plan (REPAYE)
- Pay as You Earn Repayment Plan (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Income-Sensitive Repayment