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How the federal Extended Repayment Plan works
Predictable and low monthly repayments for higher debt loads.
Extended Repayment Plan at a glance
|Eligible loans||How much you pay||Repayment term||Who it’s best for|
|You have the choice of:||25 years||Borrowers with more than $30,000 in debt who want predictable, low monthly repayments or repayments that slowly increase over time.|
How does the federal Extended Repayment Plan work?
The Extended Repayment Plan works by giving you the same monthly repayment over a 25-year term. This option, sometimes called the Extended Level Repayment Plan, is similar to the Standard Repayment Plan.
Its longer term means you pay less each month than with the Standard Plan. But it can cost a lot more in the long run, since there’s more time for interest to add up.
What about the Extended Graduated Repayment Plan?
The Extended Graduated Repayment Plan allows you to make repayments that slowly increase every two years. It’s one of the most expensive options in the long run. The long term and low monthly repayments in the beginning give even more time for interest to add up on a principal that you’re paying off at a slower rate.
But it can come with the lowest upfront cost for recent graduates who can’t or don’t want to sign up for an IDR plan.
Am I eligible for the Extended Repayment Plan?
You must meet the following requirements to be eligible for an Extended Repayment Plan:
- Direct or FFEL Loans
- No unpaid Direct or FFEL Loans issued before October 7, 1998
- At least $30,000 in either Direct or FFEL Loans
You must have $30,000 in Direct Loans or $30,000 in FFEL Loans — not a combination of the two. So, if you had $29,000 in FFEL Loans and $31,000 in Direct Loans, you could only sign up your Direct Loans for the Extended Repayment Plan.
Can I qualify for forgiveness on an Extended Repayment Plan?
It depends on the forgiveness program. Repayments you make on the Extended Repayment Plan don’t count toward the popular Public Service Loan Forgiveness (PSLF) program. But you can qualify for Teacher Loan Forgiveness and other private loan repayment assistance programs (LRAP).
In fact, this plan might be a good option if you’re waiting to meet work requirements for Teacher Loan Forgiveness or an LRAP that forgives a high amount of debt. The low monthly repayments mean you could qualify for more forgiveness than if you paid off a large chunk of your loan before you were eligible.
- Tip: The IRS considers loan forgiveness taxable income. You might be in a higher tax bracket the year your loans get forgiven.
Pros and cons of the federal Extended Repayment Plan
There are several benefits and drawbacks to this long-term repayment plan.
- Lower monthly cost than the Standard Plan. The main benefit of this plan is the low monthly cost. The only plan that might offer lower repayments is an IDR plan — and only with a low-enough salary.
- Less paperwork than an IDR plan. If you’re part of the gig economy or work overseas, the paperwork required for an IDR plan might be prohibitively complicated. And you might not be able to get approved.
- Only apply once. Unlike with an IDR plan, you only have to sign up for the Extended Repayment Plan once.
- Higher overall cost than the Standard Plan. You generally pay more than twice as much in interest than with the Standard Plan — even more if you opt for the Extended Graduated Plan.
- Minimum $30,000 in debt required. And that must be for Direct Loans and FFEL Loans separately — not a combination of the two.
- Not eligible for PSLF. You can’t qualify for this popular forgiveness program if you’re enrolled in the Extended Repayment Plan.
Is the Extended Repayment Plan right for me?
You might want to consider the Extended Repayment Plan in the following situations:
- You’re self-employed. When your income varies from month to month, an IDR plan might just be too complicated to apply for.
- You don’t want PSLF. Payments you make on this plan aren’t eligible for the popular forgiveness program.
- You work abroad. Applying for an IDR plan can be extremely complicated from another country — especially if you’re paid in a foreign currency.
- You don’t want to reapply each year. You only need to submit one application to sign up for this plan.
- You’re in a low-paying field. A low-paying job with over $30,000 in loans might make the Standard Repayment Plan prohibitively expensive on a monthly basis.
- You want something predictable. Even the graduated option comes with repayments that only change every two years.
How to apply for the Extended Repayment Plan
If it’s your first time signing up for repayments, your servicer should contact you with instructions on how to create an account and pick a repayment plan. Otherwise, you can usually switch to the Extended Repayment Plan online, over the phone or even by mail.
Here’s how you might sign up for a repayment plan online:
- Log in to your student loan account. Go to your servicer’s website and log in with the same credentials you use to make repayments.
- Select the option to view repayment plans. Often servicers have a Repayment Plan tab at the top or left side of the page.
- Follow the directions to change your repayment plan. You might have to answer a question or two on why you want to make the change.
- Select the Extended Repayment option you want. You can choose between the level and graduated option. If possible, review the monthly and total costs before making your decision.
- Review the change in cost. You might be paying more — or less — by switching to this plan. Make sure it fits your budget.
- Submit your request. Sure this is what you want? Follow your servicer’s instructions to submit your request for a new plan.
- Wait for approval. Continue making repayments on your current plan until your servicer gives you the OK.
3 alternatives to the Extended Repayment Plan
If you’re not sure the Extended Repayment Plan is right for you, consider one of these options instead:
- Standard Repayment Plan. Want to get out of debt quicker? This plan comes with a shorter term — meaning more savings on interest, but higher monthly repayments.
- Graduated Repayment Plan. Expect to rise quickly in the work force? This plan comes with repayments that increase over time with a 10-year term — or 30 years if you consolidate your federal loans.
- IDR plans. You might be able to pay less with an income-driven repayment plan — and have any remaining debt forgiven after the term is up.
Interested in refinancing instead? Compare your options
The Extended Repayment Plan could be a particularly good choice if you’re self-employed, work overseas or otherwise don’t want to apply for an IDR plan. But it can sometimes mean you pay as much in interest as you borrowed, which might not be worth those low monthly repayments.
You can find out how it compares to other options with our guide to student loan repayment programs.
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