Sometimes the right loan repayment plan can totally revamp your ability to pay back your student loans and get rid of your student loan debt. Although you are required to select a repayment plan when you initiate repaying your student loan, you may change the repayment plan any time by contacting the borrower or by consolidating multiple student loans.
There are many repayment plans available for federal student loans such as standard plan, extended plan, graduated plan, income-driven plans, income-sensitive plans, and pay-as-you-earn plan. The selection of repayment plan depends on your income, type of loan, and personal preferences.
Extended Loan Repayment Plan
Extended repayment plan is very similar to standard loan repayment plan, except that the loan is paid back over a longer period, typically extending up to 25 years. The repayment period depends on the principal amount and borrower’s preferences.
With extended loan repayment plan, repayment is stretched over a longer period, which decreases the amount of monthly installments but increases the amount of interest paid over the lifetime of the student loan.
How does it Work?
Extended repayment plan is available to individuals who have $30,000 or more outstanding loans under Federal Family Education Loan (FFEL) program or Federal Direct Loan Program (FDLP). This repayment plan allows individuals to repay their loans over 25 years instead of 10 years.
There are two modes of extended repayment plans: extended fixed repayment plan and extended graduated repayment plan.
Extended Fixed Repayment Plan
In extended fixed repayment plan, the monthly installment amount remains same throughout the repayment term. However, small changes may occur if interest is capitalized due to any reason during the repayment period.
Extended Graduated Repayment Term
In extended graduated repayment term, individuals start with low monthly payments, which become larger over the repayment period. The monthly payments are revised usually every two years. This plan is suitable for individuals who have low income right now but they expect to earn more in the future.
Eligible Loans for Extended Repayment Plans
The following loans are eligible for extended repayment plan:
- FFEL PLUS loans
- Direct PLUS loans
- Direct and FFEL consolidation loans
- All subsidized and unsubsidized federal Stafford loans
- All direct subsidized and unsubsidized loans
In order to opt for extended repayment plan, your total outstanding balance should be a minimum of $30,000 or more. Also, you must have no outstanding balance on a Direct or FFEL loan as of October 7th, 1998, or on the date you acquired a Direct or FFEL loan after October 7th, 1998.
Why You Should Opt for Extended Repayment Plan?
Extended repayment plan allows you to pay back your student loan in smaller monthly payments as compared to those made under the standard and graduated repayment plans. High-income individuals can also opt for extended repayment plan if they want to reduce their monthly installment amount. However, with extended repayment plan, the overall interest paid on the loan will be higher as compared to other repayment plans because of a longer repayment term.
How TurboDocs Can Help You?
Loan borrowers must keep themselves updated with the repayment options available to them. Once they have chosen a repayment plan for their student loan, it does not mean that they cannot change it later on. You may opt for a different repayment plan depending on your changing financial circumstances to make sure that it best fits your current situation.
TurboDocs helps students to make a well-informed decision when choosing a repayment plan. We make sure that you do not miss out on a financial opportunity by helping you in selecting the best loan forgiveness and loan repayment plan. Our expert team can help you understand the ins and outs of managing student loan debts.
TurboDocs can help you in selecting the best loan repayment plan. We can provide you with a comprehensive repayment plan customized to your needs. Contact us at (855) 782-0744 to get rid of your debt obligations.