Student loans with 25-year terms

How do repayments work with a 25-year term?

A 25-year term comes with some of the lowest repayments available — if you’re on a standard or graduated repayment plan. That’s because it divides your loan up into 300 repayments — compared to 240 repayments for a 20-year term or 120 repayments on a 10-year term.

With a standard plan, this means you’ll pay off your loan in 300 equal repayments. Graduated plans come with 300 repayments that increase over time. However, if you’re paying off your loan with a 25-year income-driven repayment plan (IDR), your repayments are based on your monthly salary.

Am I eligible for forgiveness with a 25-year term?

You might be, depending on the forgiveness program you apply for. A 25-year term is generally long enough to qualify for most federal forgiveness programs, including:

• Public Service Loan Forgiveness (PSLF). The Department of Education can forgive all of your federal student loans after you make 120 repayments on an IDR plan while working at an eligible public service job.
• Teacher loan forgiveness. Teachers working at an eligible low-income school for five consecutive years can apply to get $17,500 of their federal loans forgiven.
• Revised Pay As You Earn (REPAYE) forgiveness. Borrowers with federal debt from graduate or professional school can get their loans forgiven after making 25 years of repayments on the REPAYE plan.
• Income-Based Repayment (IBR) forgiveness. Anyone paying off federal loans disbursed before July 1, 2014 can have their student loans forgiven after 25 years of repayments on an IBR plan. Newer loans are forgiven after 20 years of repayments.
• Income-Contingent Repayment (ICR) forgiveness. You can also get your loans forgiven after making 25 years of repayments on an ICR plan.
• Perkins Loan forgiveness. Perkins Loan holders in an eligible education or public service career might be eligible to have up to 100% of their federal student loans forgiven after four to seven years working at an eligible job.

Federal student loans with a 25-year term

Get the lowdown on federal student loan repayment plans

Can I get a private student loan with a 25-year term?

It’s possible, but not likely. Most private student lenders have maximum loan terms of 15 years, though some go as long as 20. U-fi is one of the only private student loan providers that offers loan terms as long as 25 years.

However, you might be able to refinance your student loans after you graduate for a 25-year term. But you might need to pay off your student loans for a year or two with a shorter term before you’re eligible for refinancing.

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What to consider when choosing a 25-year term

The main draws of a 25-year term are the low monthly cost and eligibility for repayment programs. But consider these factors before you sign up:

• Future monthly expenses. Can you afford to take on a shorter loan term? Consider the monthly costs before signing up — you might be able to save.
• Total cost. Choosing the longest available loan term means you’ll pay more in interest — a lot more. Depending on your loan amount, you could even end up paying more in interest than you borrowed.
• Eligibility for forgiveness programs. You might need to sign up for income-driven repayments to be eligible for some federal forgiveness programs. But you might also want to consider options with 20-year terms to find the best fit for you.
• Lack of options. Only a few federal repayment programs and almost no private student loan providers offer a 25-year loan term. You’ll have more choices if you’re open to a shorter repayment plan.

Cost of a 25-year term vs. a 10-year term

A 25-year loan term is one of the cheapest short-term and most expensive long-term options out there. But exactly how does this compare to other loan terms? Let’s see how it stands up against your standard 10-year student loan term.

Imagine you had $30,000 in student debt at an APR of 5.8% — the national average in 2017. Here’s how much your loan would cost in the short and long run on a 25-year and 10-year repayment plan.

As the table shows, a 25-year term can cut down your monthly repayments by almost half, compared to a 10-year term. But you’ll pay close to three times as much in interest overall. In fact, you’ll almost pay as much in interest as you borrowed.

In this case, the savings might not be worth it. If affordability is a factor, you might want to consider an IDR plan if you have federal student loans.

Bottom line

A 25-year loan term could make sense if you want to pay off a Parent PLUS Consolidation Loan on an IDR plan or want the lowest possible monthly repayments on a private student loan. But it might not be worth the short-term savings, and it seriously limits your private student loan choices.

Interested in learning more about how it all works? Read our guide to student loans.

Frequently asked questions

• Can I get a 30-year term on my student loans?

  You can if you consolidate your federal loans with a Direct Consolidation Loan and pay it off on a standard or graduated repayment plan. Otherwise, 30-year terms aren’t available for student loans.

• Do federal student loans expire after 25 years?

  No, federal student loans never expire. But you could have your loans canceled after making repayments on an IDR plan for 25 years — or even less with some IDR options.

• How do I find out what my student loan term is?

  If you’re unsure of your repayment term, contact your student loan servicer — that’s the company that collects repayments.

  Still in school? If you have federal loans, you likely haven’t picked a repayment plan yet — that happens when you leave or drop below half time. Private loan holders can read their loan contract or contact their lender to find out what repayment plan they’re currently on.

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