Extended Repayment Plan for Student Loans: The Pros and Cons

Extended Repayment Plan: The majority of federal student loans are initially enrolled in the typical 10-year repayment plan, although this is not a requirement. If you need more time to settle your student loan debt, you should choose the Extended Repayment Plan.

You could have up to 25 years to pay off loans totalling $30,000 or more if you qualify for the Extended Repayment Plan. Either a set sum or a graded amount that gradually rises from a starting point could be paid.

However not every borrower is a suitable fit for the Extended Repayment Plan. It also has disadvantages. This is all the information you need to understand how the Extended Repayment Plan for student loans operates.

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Pros of Extended Student Loan Repayments

People with more debt can benefit from the extended payback plan because it lets them pay less each month and spread out their payments over 20 more years. If a student has more than $30,000 in government student loans, they may be able to get a longer repayment plan. People who join this plan can choose between set or graduated monthly payments and lower monthly costs.

Also, every couple of years, graded payments go up by a small amount. Additionally, unlike income-driven programs, participants do not need to reapply for this plan annually.

Repayment based on income has several advantages. First, by changing the monthly payments on these plans to reflect a percentage of your discretionary income, you can make them more manageable. The SAVE plan, which offers the lowest monthly payment schedule of any Income-Driven Repayment Plan, was developed by President Joe Biden in 2023.

Cons of Extended Student Loan Repayments

If you are thinking about the longer plan, give them serious thought.

Increased interest rates

Federal student loans have daily interest accruing. You will therefore pay higher interest rates the longer you have debt. In the long run, you will have to pay more for your student loans, even if the longer plan makes your monthly payment easier to handle.
The Extended Graduated payback Plan will have much higher loan payments than the set extended payback plan. Interest costs will rise even further because you’re making tiny payments at the start of your term when your balance is at its highest

Stay in debt for a longer period

You will repay your student loans over a further 15 years with the Extended Repayment Plan, but your monthly payments will be less expensive than the regular 10-year plan.

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Not Qualified for Forgiveness of Public Service Loans

The Public Service Loan Forgiveness (PSLF) program, which forgives the remaining debt on your Direct Loans once you’ve made 120 qualifying monthly payments while working for an eligible company, does not accept payments made on the extended repayment plan. You must apply for an income-driven repayment plan instead if you’re pursuing PSLF.
Not able to benefit from income-driven payback