What Is the Extended Graduated Repayment Plan?

The Extended Graduated Repayment Plan is a federal student loan repayment option. This plan begins with lower monthly payments that gradually increase over time, offering a more manageable initial financial commitment. It aims to help borrowers who anticipate their income will rise over their repayment period, allowing them to start with smaller payments and adjust as their financial capacity grows. The fundamental purpose of this plan is to ensure that federal student loans are repaid in full within a defined timeframe, balancing affordability with the ultimate goal of debt resolution.

Understanding the Plan’s Payment Structure

Monthly installments begin at a lower amount and systematically increase over the life of the loan. Payments typically adjust upwards every two years, allowing borrowers to ease into their repayment obligations. This gradual increase ensures the loan is fully repaid within a maximum period of 25 years. The initial lower payments mean less of the principal is paid down in the early years, which can lead to more interest accruing during that time.

Interest continues to accrue on the outstanding loan balance throughout the repayment period. Because payments start smaller, a larger portion of the initial payments may go towards covering accrued interest rather than reducing the principal balance. This can result in a higher total amount paid over the life of the loan compared to a standard repayment plan, where payments are fixed and designed to amortize the loan more quickly. The “graduated” aspect signifies this incremental increase in payment amounts, which contrasts with other plans that might have fixed payments or payments tied directly to income.

The payment schedule is set at the outset of the plan and does not adjust based on changes in the borrower’s income, unlike income-driven repayment plans. While the initial payments offer relief, borrowers must be prepared for the scheduled increases, as these are predetermined and will occur regardless of their current financial situation at the time of the increase.

Eligibility for the Plan

One primary requirement is that the borrower must have more than $30,000 in outstanding federal student loan debt. This threshold applies to the aggregate principal amount of eligible loans, which includes both Direct Loans and Federal Family Education Loan (FFEL) Program loans. Borrowers with less than this amount of eligible federal student loan debt are not able to select this particular repayment option.

The types of federal student loans that are generally eligible for this plan include:
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct PLUS Loans made to graduate or professional students
Direct Consolidation Loans
Federal Family Education Loan (FFEL) Program loans, such as FFEL Stafford Loans (subsidized and unsubsidized)
FFEL PLUS Loans
FFEL Consolidation Loans

It is important to confirm that the specific type of federal student loan is included, as some older or less common federal loan types may not qualify. Private student loans, which are issued by banks, credit unions, or other private lenders, are not eligible for the Extended Graduated Repayment Plan. This plan is exclusively for federal student loans, as it is a program established and managed by the U.S. Department of Education. Borrowers should verify their loan type through their loan servicer or by accessing their federal student aid account on studentaid.gov to determine if their loans meet the necessary criteria for this specific repayment option.

Applying for the Plan

Before initiating the application, borrowers should compile their loan servicer account details, personal identification information such as their Social Security number, and precise details about their federal student loans, including current balances and interest rates. Information regarding federal student loans can typically be found by logging into the borrower’s account on studentaid.gov or directly through their individual loan servicer’s website.

The next step is to obtain the application form for the Extended Graduated Repayment Plan. This form is often available for download from studentaid.gov or directly from the borrower’s loan servicer’s website. Borrowers should carefully complete all informational fields on the form, cross-referencing with the previously gathered loan and personal details to prevent errors.

Once the application form is completed, it can typically be submitted through various channels. Many loan servicers offer an option to submit the application online through their secure portal, which is often the quickest method. Alternatively, borrowers may have the option to mail the completed form to their loan servicer or, in some cases, submit it over the phone. After submission, borrowers generally receive a confirmation of receipt, and processing times can vary, but usually range from a few days to a few weeks. Following processing, the loan servicer will typically send a notification of approval or denial, along with a new payment schedule if the application is approved, outlining the new monthly payment amounts and their effective dates.