The Extended Repayment Plan is a student loan repayment plan that is offered to student loan borrowers through the Department of Education. The Extended Repayment Plan assists borrowers that can’t afford a Standard Repayment Plan by giving them a lower monthly payment.
Since the monthly payment is lower, it will take the student loan borrower a significantly longer period of time to pay off their loan compared to the Standard Repayment Plan.
Student loan borrowers entering the Extended Repayment Plan will have access to the following benefits:
- A fixed or graduated monthly payment amount
- A monthly payment that is lower than the Standard and Graduated Repayment Plans
- A 25 year repayment period
What types of loans are eligible for the Extended Repayment Plan
Student loan borrowers that have loans made under the Direct Loan Program or the FFEL Program can pay their loans under an Extended Repayment Plan. The loans need to be borrowed on or after October, 7 1998 and there needs to be an outstanding balance of $30,000 or more.
Here are the loans that are eligible for the Extended Repayment Plan:
- 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
Do you have Private Student Loans?
Private Student Loans are not eligible for the Standard Repayment Plan or any repayment plan offered through the Department of Education. Please contact your servicer to see what repayment options are available to you.
Who is the Extended Repayment Plan for?
A student loan borrower can benefit from the Extended Repayment Plan if they meet the criteria below:
- Struggling to make their full student loan payment each month
- Anyone with a low income compared to their student loan debt
- Your current monthly student loan payment is more than 10% of your income
- Borrowers willing to be in a repayment period for 25 years
Who is the Extended Repayment Plan not for?
The Extended Repayment Plan is not a one size fit all type of plan for student loan borrowers.
Here are some reasons why a student loan borrower might want to choose a different repayment plan:
- Student loan borrowers that have a high income and low family size
- Your current monthly payment does not exceed 10% of your income
- Anyone that can comfortably make their current Standard monthly payment
- Anyone that doesn’t want to make student loan payments for the next 25 years
- Student loan borrowers that are not considered to have a partial financial hardship
Am I eligible for the Extended Repayment Plan?
Not every student loan borrower is eligible for the Extended Repayment Plan. This program might even be the pickiest of repayment programs.
Here are the eligibility requirements:
- You can’t have an outstanding loan balance on a Direct Loan or FFEL made before October 7, 1998
- You need to have a total loan balance over $30,000 in Direct Loans
- You need to have a total loan balance over $30,000 in FFEL Program Loans
Note that you cannot combine the Direct Loan and FFEL Loan balances. You need to have over $30,000 in Direct Loans to pay them in the Extended Repayment Plan, and you need to have over $30,000 in FFEL Loans to pay them in the Extended Repayment Plan.
It’s likely that you don’t meet all of the specific requirements listed above. If you’re still looking for a lower payment, and a 25 year repayment plan doesn’t bother you, you might want to look at the income-driven repayment plans offered by the Department of Education.
How long will I be in the Extended Repayment Plan?
The repayment period for the Extended Repayment Plan is 25 years. Depending on your financial situation, making all 300 payments on time is the easiest and quickest way to repay your student loans in this plan.
If you start making payments in the Extended Repayment Plan and decide it’s not the right plan for you (or if you experience a financial crisis), you can choose to take yourself out of the plan.
It’s common for many student loan borrowers to enter an income-driven repayment plan after they realize an Extended Repayment Plan is not an affordable method to pay off their student loan debt.
Another reason borrowers may choose to leave the Extended Repayment Plan is because you can’t qualify for Student Loan Forgiveness through this repayment plan.
The Extended Repayment Plan is the same length of repayment period as the income-driven repayment plans. The huge difference with the income-driven repayment plans is you can have the remainder of your loan balance forgiven after 20 – 25 years of payments.
So if you plan on entering repayment program that lasts for 25 years, you might as well try to get a portion of your loan balance forgiven. There’s a good chance your monthly payment might be lower too!
Here is the list of repayment programs that offer Student Loan Forgiveness:
- Standard Repayment Plan
- Income-Based Repayment Plan
- Pay As You Earn Repayment Plan
- Revised Pay As You Earn Repayment Plan
- Income-Contingent Repayment Plan
Is the payment the same each month?
The monthly payment in an Extended Repayment Plan depends on which route you take. The price can be either a fixed amount or a graduated amount that increases over time.
- If your payment is a fixed amount, the payment will remain the same each month.
- If your payment is a graduated amount, the payment will start off low and gradually increase over the life of the repayment period.
Your loan servicer will help you in choosing the best option for your financial situation.
Note that the Extended Repayment Plan might not give you the lowest payment based on your current financial situation. In some cases, the plan can give you a higher payment than the Standard Repayment Plan. It’s important to look at all of your options to see what plan works best for you and your family.
What is an income-driven repayment plan?
An income-driven repayment plan is a repayment plan that can help student loan borrowers get a more affordable monthly loan payment based on income and the size of their family.
These repayment plans originated from the passing of the Health Care and Education Reconciliation Act of 2010.
While there are four income driven repayment plans, not all income-driven plans are built for everyone. Depending on your unique financial situation, there might only be one repayment plan that makes sense for you.
Sometimes borrowers qualify for multiple income-driven repayment plans and can’t decide which one makes the most sense.
Need help with that? Give us a call.
What factors come into play with the Extended Repayment Plan
Your monthly payment for the Standard Repayment Plan is calculated based on the following factors:
- Amount Of Student Loan Debt – your monthly payment is based off a fixed amount or a graduated amount that will pay off your loan balance in 25 years
- Type of loans – loans from the Federal Direct Loan Program and the Federal Family Education Loan Program (*Private Student Loans are not eligible)
- Loan Balance – your outstanding loan balance needs to be $30,000 or higher in Federal Direct Loans or Federal Family Education Loan Program ( you cannot combine the two loan types)
What other options are there for me to repay my student loans?
The Department of Education offers a variety of student loan repayment programs to assist student loan borrowers with different financial situations.
There are four income-driven repayment plans:
- Income Based Repayment Plan
- Income-Contingent Repayment Plan
- Pay As You Earn Repayment Plan
- Pay As Your Earn Revised Repayment Plan
There are four standard payment plans: