Person choosing between graduated and graduated extended repayment plan

What is the Difference Between a Graduated and a Graduated Extended Repayment Plan?

TL;DR: A Graduated Repayment Plan starts with lower payments that gradually increase every two years, helping borrowers manage early financial constraints. The loan term typically lasts up to 10 years. In contrast, a Graduated Extended Repayment Plan also begins with low payments that increase over time but extends the repayment period to up to 25 years, resulting in smaller monthly payments and higher interest costs over the life of the loan.


If you’re repaying student loans, you may have come across different repayment options, each with unique structures designed to ease the financial burden. Two options, Graduated Repayment and Graduated Extended Repayment Plans, share some similarities but differ significantly in their terms and long-term impact. Here’s what you need to know about each.

Graduated Repayment Plan: Key Features

The Graduated Repayment Plan is designed to help borrowers manage early-career income challenges by offering lower payments that increase over time. Here’s how it works:

  1. Payment Structure: Payments start low and increase every two years. This structure assumes that the borrower’s income will rise over time, making higher payments more manageable.
  2. Term: The loan is typically paid off within 10 years, making it a shorter-term option compared to extended plans.
  3. Interest Costs: Because the loan is repaid over a shorter period, borrowers will pay less in interest overall than they would with an extended repayment plan.
  4. Eligibility: Most federal student loan borrowers are eligible for this plan. However, private loans may not offer the same flexibility, so check with your lender.

The Graduated Repayment Plan can be a good option for borrowers who expect their earnings to increase and are comfortable with the idea of payments rising every few years.

Graduated Extended Repayment Plan: Key Features

The Graduated Extended Repayment Plan shares the gradual payment increase but is designed for borrowers with higher loan balances who need a longer repayment timeline. Here’s what makes it different:

  1. Payment Structure: Like the standard graduated plan, payments start low and increase every two years. However, the overall repayment period is extended.
  2. Term: The term can extend up to 25 years, providing more flexibility for those with higher loan balances.
  3. Monthly Payments: Payments are generally lower than those under the Graduated Repayment Plan due to the longer term. This may provide immediate relief but will lead to higher interest over time.
  4. Eligibility: Typically available to borrowers with larger federal loan balances (e.g., $30,000 or more). Private loans may not offer an equivalent option, so borrowers should verify with their lender.

The Graduated Extended Repayment Plan can benefit those with high balances who want lower monthly payments, even if it means paying more interest over time.

Which Plan is Right for You?

Both plans can offer relief, but your choice will depend on your financial goals and future earning expectations:

  • Choose Graduated Repayment if you’re comfortable with a 10-year timeline and can manage increasing payments as your income grows.
  • Choose Graduated Extended Repayment if you need more flexibility with lower payments and are okay with a longer, more interest-heavy repayment period.

Both repayment plans offer flexibility for borrowers whose earnings are likely to increase, but the main trade-off lies in the repayment term and the total interest paid. If you’re unsure which plan to choose, consider speaking with a loan advisor to weigh your options and select the plan that best aligns with your financial future.

Disclaimer: The information provided in this post is for general informational purposes only and should not be considered financial advice. Student loan situations can vary significantly based on individual circumstances, and decisions around deferment or forbearance can have lasting financial impacts. Before making any changes to your loan repayment plan, consult a qualified financial advisor or your loan servicer to understand the best options for your unique situation.

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