Can You Refinance a Student Loan to a 30-Year Term?

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This article first appeared on the Credible blog.

When you begin repaying your student loans, you’ll likely be put on a 10-year repayment plan. While you can refinance for a longer repayment term, there aren’t any private 30-year student loan refinance options available.

However, there are longer terms available for federal student loans.

If you’re looking for a 30-year student loan refinance, here’s what you need to know:

Extending your repayment term for federal loans

Generally, federal loans will start out on a standard repayment plan with a 10-year term. Here are your other options to extend your repayment term:

• Extended repayment term: If you have more than $30,000 in federal Direct Loans, you could opt for an extended repayment plan or an extended graduated repayment plan. Both options give you a 25-year term length. While this isn’t quite 30 years, it’s pretty close.

• Income-driven repayment: If you sign up for an income-driven repayment (IDR) plan, your payments will be based on your income. This can be especially helpful if you’re not earning very much or are unemployed. Plus, you could have any remaining balance forgiven after 20 to 25 years, depending on the plan.

The four IDR plans available:

• Income-Based Repayment (IBR)

• Income-Contingent Repayment (ICR)

• Pay As You Earn (PAYE)

• Revised Pay As You Earn (REPAYE)

Refinancing to a private loan term longer than 20 years

If you have private student loans, you could refinance your student loans and choose to extend your repayment term. There are several student loan refinance lenders that offer longer term lengths, such as 15 or 20 years.

Keep in mind: While you can also refinance federal student loans, you’ll lose your federal benefits and protections. These include access to IDR plans as well as eligibility for student loan forgiveness programs.

As of October 2021, there are only two lenders that offer term lengths longer than 20 years: Eastman Credit Union and U-fi from Nelnet.

Check out Credible to compare student loan refinance rates without affecting your credit score.

8 refinancing lenders that offer 20-year terms

A 20-year term is the longest you’ll find with most refinancing lenders. Keep in mind that while choosing a longer term like 20 years will likely help you get a lower monthly payment, you’ll also pay more in interest over time.

Pros and cons of refinancing to an extended term

Before you refinance, be sure to consider the pros and cons of extending your repayment term:

Pros

• Could reduce your monthly payments: One of the major benefits of extending your repayment term is that it could lower your monthly payments. This could make your student loan payment easier to afford.

• Could lower your interest rate: Although short-term loans tend to have lower student loan interest rates than long-term loans, you might still be able to get a lower rate than what you currently have.

• Might help your credit: Making your loan payments on time can help you build your credit. With an extended repayment term, you could enjoy the positive impacts on your credit for longer.

For example: The average student loan debt is $33,654, with the average student loan interest rate at 4.66% for undergraduates and 6.22% for graduates between 2006 and 2021. If you began repaying $33,654 on a 10-year standard repayment plan at 6.22%, your payments would be $377 per month. But if you refinanced to a 25-year term with 6% interest, your payment would be only $217 — saving you $160 each month.

Cons

• More expensive in the long run: Extending your repayment term will likely reduce your monthly payment. But because you’ll be paying your loan longer, you’ll have more accrued interest to repay over the life of your loan.

• More time to run into problems: The chances of having a financial problem that keeps you from making your payment is greater over the course of 25 years than, say, 10 years. If your income isn’t steady or goes through changes over time, you could be at a higher risk of student loan default.

• Could be harder to qualify for credit: Having an extended repayment term means your loan will be counted in your debt-to-income (DTI) ratio for that much longer. This could make it more difficult to be approved for a loan in the future, especially if you have a large balance.

• Might be difficult with bad credit: Although refinancing with bad credit is possible, it can be tricky. Convincing lenders to give you a longer repayment term might be harder as well. Having a creditworthy cosigner could help you get approved as well as qualify for better loan terms, though you still might not get the extended term you want.

But remember: A longer repayment term also means more interest charges over time. While you’d save on your monthly payment in the above example, you’d also pay $31,396 in interest over the life of the loan compared to $11,629 on the standard repayment plan. That’s $19,767 more in interest.

If you refinanced to a 15-year loan with 4% interest instead, you’d pay $249 per month and $11,154 in interest over time. This means you’d pay $128 less per month while also saving $475 on interest compared to the standard repayment plan.

Use Credible’s calculator to see how a long or short term would affect your repayment if you refinance your student loans — as well as how much you could possibly save.

Does refinancing make sense for you? Compare offers from top refinancing lenders to determine your actual savings.

5 other ways to lower your monthly student loan payments

If you’re having a hard time affording your student loan payments, you still have a few other options:

Consolidating federal student loans

If you have multiple federal student loans, you can consolidate them with a Direct Consolidation Loan. This will leave you with one federal loan and one payment.

Additionally, with this option, you can extend your repayment term up to 30 years.

Keep in mind: Private student loan consolidation is also available. Depending on your credit, this might help you get a lower interest. Just be careful — if you privately consolidate federal loans, you’ll lose access to federal benefits and protections.

Choose a graduated repayment plan

If you switch your federal student loans to a graduated repayment plan, you’ll still have a 10-year repayment term.

However, your payments will be start out lower in the beginning and will slowly increase over time.

Tip: A graduated repayment plan could be especially helpful if you expect your income to grow in the future.

Take advantage of lender discounts

Many private student loan lenders offer rate discounts. Two common types of discounts include:

• Autopay discounts: If you sign up for automatic payments, your lender might give you a rate discount — typically 0.25%, depending on the lender.

• Loyalty discounts: If you have an existing account with a lender, you could qualify for a loyalty discount if you also choose to refinance your loans with them.

Tip: Some lenders might provide other discounts, too. Check with your lender to see if there are any discounts you might qualify for.

For temporary relief, inquire about deferment and forbearance

Deferment and forbearance programs allow you to temporarily pause your payments if you experience financial hardship. Federal student loans provide both deferment and forbearance options, while private student loan options are up to the discretion of the lender.

If you’re considering deferment or forbearance, be sure to reach out to your servicer to see what programs you might qualify for.

Keep in mind: Interest might still continue to accrue on your loans during deferment or forbearance periods, depending on the type of loans you have.

Refinance to a lower rate

You might qualify for a lower interest rate if you refinance, which could reduce your monthly payments. Even if you refinance for the same term length, a lower interest rate means you’ll likely have slightly smaller payments overall.

Visit Credible to compare student loan refinance rates from multiple lenders.

About the author: Lindsay VanSomeren specializes in credit and loans. Her work has appeared on Credit Karma, Forbes Advisor, LendingTree, and more.