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Graduating from college is exciting. But for borrowers, graduation also triggers new financial obligations, including paying off student loans.
With the average student loan debt at $39,075, it’s no wonder many people have trouble staying on top of their student loans.
There are currently a number of repayment options for those with federal student loans, including the Standard Repayment Plan, which gives borrowers up to 10 years to pay off their student debt, and the Extended Repayment Plan, which lengthens the repayment term for eligible borrowers up to 25 years.
The Extended Repayment Plan, which is available to borrowers with loans taken out before July 1, 2026, reduces the dollar amount of monthly payments by spreading the cost out over a much longer time period.
For some individuals, these longer-term loans might be a helpful way to balance their loan payments and their other expenses. However, borrowers on the plan will pay substantially more in interest over the life of the loan.
Key Points
• The Extended Repayment Plan lets eligible federal borrowers repay loans over 25 years instead of 10, lowering monthly payments but increasing total interest paid.
• Borrowers must owe more than $30,000 in either Direct Loans or FFEL loans (not combined) to qualify.
• Under the Extended Repayment Plan, a borrower’s monthly payments may be a fixed or graduated amount.
• Pros: lower monthly payments and flexibility for lower-income borrowers, especially early in their careers.
• Cons: repayment period more than doubles, and borrowers pay significantly more interest over the life of the loan compared to the Standard Repayment Plan.
How Does the Extended Repayment Plan Work?
Under the Extended Repayment Plan, eligible borrowers can spread out the repayment of their federal student loans over a 25-year period, compared to the Standard Repayment Plan’s 10 years.
Because student loans are subject to interest, the borrower will also pay more interest on their loan over a longer period of time. So the monthly payments may be lower, but the borrower will end up paying more over the full term of the student loan.
To see what this looks like in action, compare the costs of two repayment plans for paying back a hypothetical, but typical, federal student loan after receiving a four-year degree from a for-profit private college.
Let’s say you borrowed $34,722 four years ago at an average interest rate of 3.9%.
• Under the Standard Repayment Plan, monthly payments would total $350 over a 10-year term, for a total cost of $41,988.
• Under the Extended Repayment Plan, the borrower would only have to repay $181 a month — but over a 25-year term, the total cost would be $54,409.
On the Extended Plan, borrowers can opt to repay their loans with a fixed or graduated amount. If they choose the graduated option, monthly payments start low after the borrower leaves school but then gradually increase every two years over the lifetime of the loan.
Using the above loan example, graduated payments under the Extended Repayment Plan would start at $143 a month in the first two years after graduation and slowly increase to $251 by the end of the loan term. The total amount paid back would add up to $57,026.
Eligibility for Extended Repayment Plans
If the reduced monthly cost of an Extended Repayment Plan sounds appealing, the first step is to assess eligibility. Not all student loans or borrowers qualify for the program.
It’s important to be aware that as a result of the big U.S. domestic policy bill passed in the summer of 2025, the Extended Repayment Plan will be closed to new federal loans made on or after July 1, 2026. Borrowers who take out loans before that time are eligible for the plan as long as they meet the criteria below.
The federal student loans eligible for the Extended Repayment Plan are:
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans
Qualifying loans must have been obtained after October 7, 1998, and the outstanding loan balance must be more than $30,000 in either Direct Loans or FFEL program loans to be eligible.
Eligibility can’t be pooled across loan types, so if, for example, a student has $35,000 in Direct Loans and an additional $10,000 in FFEL program loans, the Direct Loan portion would qualify for the Extended Repayment Plan but the FFEL loan would not.
Weighing the Pros and Cons of Extended Repayments
The Extended Repayment Plan might be appealing to some federal student loan borrowers. After all, who wouldn’t want a lower payment each month?
But it’s not actually that simple. There are benefits and drawbacks to longer student loan repayment terms.
Pros of the Extended Repayment Plan
One benefit of the Extended Repayment Plan is an obvious one — lower monthly payments.
Typical monthly student loan payments, which are generally between $200 and $300 on average, according to the most recent data from the Federal Reserve, can eat up a significant amount of take-home pay for lower earners. The smaller monthly loan payments associated with the Extended Repayment Plan might free up vital funds for other essential expenditures.
This benefit may be even more pronounced for borrowers who choose the graduated monthly payment option on the Extended Repayment Plan. This means borrowers pay the least in the first years after graduating, corresponding with lower entry-level salaries, and more later on when they may be better able to afford it.
Cons of the Extended Repayment Plan
Although monthly payments may be lower, there are some cons to the Extended Repayment Plan.
For starters, the loan term can be more than twice as long as the Standard Repayment Plan, meaning borrowers have to keep making monthly payments for 15 years longer.
Not only does the Extended Repayment Plan mean more years of making student loan payments, those payments will also add up to more money paid over the lifetime of the loan term.
For example, based on the example described above, for a $34,722 student loan at 3.9% annual interest, the borrower would pay an additional $12,421 over the lifetime of the student loan under the 25-year Extended Repayment Plan than they would on the 10-year Standard Repayment Plan.
The option for graduated monthly payments costs even more over the life of the loan. Deferring the bulk of repayment to later in the loan term in order to allow for lower payments earlier on means borrowers carry a higher level of educational debt for a longer period of time.
Alternatives to Extended Repayment Plans
While the monthly savings may make the Extended Repayment Plan sound appealing, for some borrowers the added total cost may outweigh this benefit. But there are alternatives that can help meet various financial needs.
Income-Driven Repayment Plans
Monthly payments for income-driven repayment plans are based on a percentage of the federal student loan borrower’s discretionary income, and the amount increases or decreases as their income and family size changes during the lifetime of the student loan. This helps to ensure that payments remain affordable, even as the borrower’s income changes.
There are now three income-driven repayment plans borrowers can enroll in — Income- Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay As You Earn (PAYE). Current borrowers who plan to apply for the Public Service Loan Forgiveness Program (PSLF) can consider the IBR plan, which may allow them to have the outstanding balance of their loan canceled after 20 years.
However, for borrowers taking out their first loans on or after July 1, 2026, there will be only one income-driven repayment plan available — the Repayment Assistance Program (RAP). On RAP, payments range from 1% to 10% of adjusted gross income for up to 30 years. At that point, any remaining debt will be forgiven. If a borrower’s monthly payment doesn’t cover the interest owed, the interest will be cancelled.
Student Loan Refinancing
Some borrowers may choose to refinance student loans with a new loan from a private lender. Eligible student loan borrowers may qualify for lower interest rates or more favorable terms.
One benefit of student loan refinancing is that it could reduce monthly payments for some borrowers, especially those that qualify for a lower interest rate. If you choose a longer loan term, you could also lower your monthly payments. However, you may pay more interest over the life of the loan if you refinance with an extended term.
Just be aware that refinancing federal student loans means forfeiting benefits and protections that come with those loans — like income-driven repayment and federal forgiveness.
The Takeaway
With the Extended Repayment Plan, eligible borrowers can repay their loans over a period of 25 years, which reduces the amount of their monthly payments. However, because of the long repayment term, they will pay significantly more interest over the life of the loan. Other options borrowers may want to consider include student loan refinancing and income driven repayment plans.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
How does the Extended Repayment Plan work?
On the Extended Repayment Plan, eligible borrowers can reduce their federal student loan payments by spreading out the repayment over a period of 25 years. However, the longer loan term increases the amount of interest paid over the life of the loan.
What are the cons of the Extended Repayment Plan?
Drawbacks of the Extended Repayment Plan include a loan term that’s more than twice as long as the term of the 10-year Standard Repayment Plan, and also because of the long term, borrowers pay substantially more in interest over the life of the loan.
Is the Extended Repayment Plan going away?
While the Extended Repayment Plan will remain open for loans currently in the plan, it will be closed to new federal loans made on or after July 1, 2026, as a result of the big U.S. domestic policy bill that was passed in the summer of 2025.
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