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A 20-year term on a student loan translates into 240 repayments on your student loan. While this allows more time for interest to add up, a 20-year term gives you some of the lowest repayments you can qualify for.
How it works depends on what type of repayment plan you have:
You might be if you have federal loans, depending on your career and repayment plan. Generally, you need to be on an IDR plan to qualify, meaning you won’t be able to take advantage of lower repayments.
You might be eligible for the following types of forgiveness if you sign up for a 20-year loan term:
Private loan holders could qualify for additional forgiveness or loan repayment assistance programs (LRAPs) depending on their careers, and often before a 20-year term is up.
Most types of federal loans are eligible for a 20-year repayment term — it generally depends on the repayment plan you choose. Let’s take a look at the repayment plans with a 20-year term available for different types of federal loans.
Federal loan | Repayment plans | Maximum annual amount | Current interest rate |
---|---|---|---|
Direct Subsidized Loan |
| $3,500 to $5,500 — depending on your year in school | 2.75% |
Direct Unsubsidized Loan |
| $9,500 to $20,500 — depending on your year in school and including subsidized loans |
|
Graduate PLUS Loan |
| 100% of cost of attendance | 5.3% |
Direct Consolidation Loan |
| None | Weighted average of your current interest rates |
As you can see, unless you consolidate your loans with a Direct Consolidation Loan, the only repayment plans that offer a 20-year term are based on your income. While this means your loans can be forgiven after 20 years of repayments, it also means you won’t be able to take advantage of lower repayments from a longer term.
Get the lowdown on federal student loan repayment plans
A handful of private student lenders offer 20-year repayment terms — it’s often the longest loan term available, if at all. However, sometimes this term is only available for larger loan amounts. Let’s take a look at some top private providers that offer 20-year loan terms.
Private student loan provider | Maximum annual amount | Interest rate | |
---|---|---|---|
EDvestinU | to | ||
iHelp | $150,000 | 5.18% to 9.63% | |
U-fi | Read review | ||
Prodigy Finance | Varies by school | to | Read review |
Considering a 20-year term? You might want to take these factors into account first:
Let’s take a look at how a 20-year and 10-year loan term compare. Say you had $30,000 in student debt with an APR of 5.8% — the average rate for student loans in 2017. Here’s what you could expect with these two loan terms:
Loan term | Monthly repayment | Total interest paid |
---|---|---|
20 years | $211.48 | $20,755.75 |
10 years | $330.06 | $9,606.77 |
While a 20-year loan term shaves about $120 off your monthly cost, it more than doubles what you pay in interest in the long run. Unless you’re seriously struggling to make the 10-year term repayment, a 20-year term might not be worth it.
A 20-year student loan might cost less monthly. But total cost of the loan might not make the immediate savings worth it. On top of this, most federal loan holders won’t be able to take advantage of lower repayments unless they consolidate their debt.
You can learn more about paying off student debt by reading our guide to student loans.
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