Q: What is extended student loan repayment, and what are the pros and cons to extending student loan payments?
A: The Extended Repayment option is one of four student loan repayment options offered for federal student loans. The Standard Repayment option is a 10 year repayment term, while the Extended Repayment option can be a 12-30 year repayment term.
Borrowers that have more than $10,000 in federal student loans are eligible for an Extended Repayment Plan up to 15 years.
Borrowers that have more than $20,000 in federal student loans are eligible for an Extended Repayment Plan up to 20 years.
Borrowers that have more than $40,000 in federal student loans are eligible for an Extended Repayment Plan up to 25 years.
Borrowers that have more than $60,000 in federal student loans are eligible for an Extended Repayment Plan up to 30 years.
The benefit to an Extended Repayment Plan is that the borrowers monthly student loan payments will be reduced. However, an Extended Repayment Plan will also increase the amount of interest the borrower will pay over the lifetime of the loan. For example, on an unsubsidized Stafford loan, extending the repayment term from 10 years to 20 years will reduce the monthly payment by around one third, but the interest paid on the loan will double.
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