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Understanding the Extended Repayment Plan

By Pam O’Brien · November 01, 2023 · 6 minute read

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Understanding the Extended Repayment Plan

Graduating from college and starting a career is exciting. But for many people, graduation also triggers new financial obligations, including paying off student loans.

With the average student loan debt at $37,338, it’s no wonder many people have trouble staying on top of their student loans.

There are 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.

Extended Repayment Plans reduce the dollar amount of monthly payments because they spread the cost out over a much longer time period.

For some individuals, these longer-term loans might be a helpful way to balance their financial obligations and their other expenses, such as rent or mortgage, food, and savings.

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.

There is also an Extended Graduated Repayment Plan in which monthly payments start low after the borrower leaves school but then gradually increase every two years over the lifetime of the loan.

Like the Extended Repayment Plan, the loan payments are spread out over up to 25 years instead of 10. Using the above loan example, payments 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.

The federal student loans eligible for the Extended Repayment Plan are:

•   Direct Subsidized Loans

•   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, 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 can be even more pronounced with the Extended Graduated Repayment Plan, in which monthly payments slowly increase over the life of the loan. 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 Extended Graduated Repayment Plan 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.

Some income-driven repayment plans have slightly shorter terms than the Extended Repayment Plan (20 years vs. 25), which may also reduce the total interest paid over the life of the loan. The SAVE Plan, the newest addition to the income-driven repayment plan lineup, will provide the lowest payments for low-income borrowers, who may see their loan balances forgiven after as little as ten years in the program. Borrowers who plan to apply for the Public Service Loan Forgiveness Program (PSLF) will want to consider income-driven repayment plans, as they are one of the requirements for qualifying for the program.

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. However, refinancing means forfeiting benefits and protections that come with federal student loans — like income-driven repayment. And you may pay more interest over the life of the loan if you refinance with an extended term.)

The Takeaway

With potentially lower rates and flexible repayment terms, refinancing your student loan can be an attractive option that could save you money each month — or allow you to pay off your loan faster. SoFi offers loans with low fixed or variable rates, flexible terms, and no fees. And you can find out if you prequalify in just two minutes.

Learn more about student loan refinancing with SoFi.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.


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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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