The extended and graduated plans are both less common than income-driven plans and the standard plan, but they still can have some advantages for some federal loan borrowers. The extended plan is a good option if a parent PLUS borrower is having difficulty paying for loans and needs an extended period to afford monthly payments. The graduated plan has been largely replaced by income-driven plans, but can still be an option if the borrower is scared of tax implications of loan forgiveness.


The extended plan allows a borrower with over $30,000 in federal loans to extend the repayment term to 25 years if you are a new borrower as of October 7, 1998 or later. The $30,000 cannot be a combination of FFEL and Direct though. If you have $40,000 in FFEL loans and $10,000 in Direct loans, only the FFEL loans are eligible because they are kept separate when determining Extended plan eligibility.

The extended plan has minimal usage if you are having trouble paying your loans because you will end up paying a lot more interest over time. Income-driven plans are usually better options unless you are a parent PLUS loan borrower because these are unavailable for the more popular income-driven plans. You are going to be paying a lot more interest over the life of the loan if you extend from 10 to 25 years, but this could provide a relief from excessive payments if necessary.


Graduated plan payments start out low and gradually increase until the balance is paid off. The graduated plan resets payments every two years so that the increase is not too much of a shock. This can be applied to the standard 10 year plan for individual loans and over the course of a consolidation loan with a longer term. The payment will never be less than accruing interest under this plan, so the balance will never increase. This makes it easier for you earlier on by keeping payments low, but you will end up paying more interest than under the standard plan. Finally, the entire balance is repaid so there is no loan forgiveness and thus no tax bill at the end like what could happen with income-driven plans.