Nelnet Student Loan Review
You may be assigned to Nelnet if you have federal student loans. Nelnet has been the subject of some consumer complaints, but the rules for repayment with Nelnet are governed by the Department of Education.
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Nelnet is one of a select number of student loan servicers that have contracted with the United States Department of Education to manage federal student loans. This means if you have taken out a federal student loan, you could have Nelnet assigned to you as your servicer.
Nelnet may also manage some private student loans if the lender has outsourced management to Nelnet. With Nelnet as your servicer, you will submit your payments there instead of to your original lender, and you will contact Nelnet if you have customer service issues.
This Nelnet review will help you to understand what it means for you if Nelnet is your servicer, as well as the pros and cons that come with it.
In this review:
- Getting a Loan Through Nelnet Student Loan Services
- Basic Information: Rates, Terms, Fees & Limits
- Pros & Cons of Nelnet
Getting a Loan Through Nelnet Student Loan Services
Most student loan borrowers will not get a loan directly through Nelnet. Instead, Nelnet will service federal student loans that they obtain from the Department of Education.
You can become eligible for federal student loans by filling out a FAFSA. You will need to fill out the FAFSA for each school year that you hope to receive loans. You should complete the FAFSA as soon as possible, as some sources of federal aid are limited.
When you complete the FAFSA, you can become eligible for some need-based loans, such as Direct Subsidized Loans. Eligibility for these loans depends on your household income. You can also become eligible for Direct Unsubsidized Loans, which are not directly based on financial need.
>> Read More: Federal Direct Loans: Find Out How They Work
When you have borrowed through the Department of Education, you will be assigned to a loan servicer. That loan servicer could be Nelnet or another approved servicer contracted with the federal government, such as Navient or Great Lakes.
Some other student loan lenders besides the U.S. Department of Education also use Nelnet as their loan servicer or may sell their loans to Nelnet. In these cases, you will need to meet qualifying requirements for your chosen lender.
Once you have your loan, you may find that Nelnet will be servicing it, so you will need to go to Nelnet.com with monthly payments, questions, and customer service issues from that point forward.
Basic Information: Rates, Terms, Fees & Limits
Since Nelnet is a federal student loan servicer, the rates that apply to federal student loans will apply to your Nelnet loans. You will also have the flexibility that comes with any federal loan repayment plan and the limits that apply to federal loans will apply to your Nelnet loans.
Here’s what you need to know about the rates and terms you’re likely to see.
- Your credit score does not matter when applying for subsidized and unsubsidized Direct Loans from the Department of Education
- The current interest rate on Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduates is 4.53%. For graduate and professional students, the interest rate on Direct Unsubsidized Loans is 6.08%
- There is a 1.059% loan fee on Direct Subsidized Loans and Direct Unsubsidized Loans
If you obtain loans from other lenders that use Nelnet as their servicer, you will be subject to the rates and loan terms set by your lender.
Pros & Cons of NelNet
- Flexibility in payment plans, including the ability to choose an income-driven repayment plan where monthly payments are based on your income.
- Easy qualification for loans even if you don’t have a long credit history.
- The ability to get some of your loan balance forgiven for through the Public Service Loan Forgiveness (PSLF) program or after making a certain number of student loan payments on an income-driven plan.
- The option for loan consolidation with the Department of Education.
- Options to put loans into forbearance or deferment if you face financial hardship, return to school, are in a residency program for medical studies, or meet certain other requirements.
- You don’t get to choose your federal loan servicer. The Department of Education could assign you to Nelnet or to a different servicer—you can’t pick and can’t just change servicers if you are not happy with Nelnet or another servicer you have been assigned.
- Nelnet has been the subject of many consumer complaints—629 from just September 2016 to August 2017. Complaints related to a variety of issues, including Nelnet customer service representatives providing inaccurate information, failing to properly inform students about student loan forgiveness, or misapplying payments.
Bottom Line: Is Nelnet Right for You?
If you take out federal student loans, there is a chance you could be assigned to have those loans serviced by Nelnet. Nelnet is not the student loan servicing company with the highest number of complaints, nor has it been subject to as many lawsuits from disgruntled borrowers as some other federal student loan servicers.
Many borrowers do have a good experience—despite some complaints—so you just need to make sure you stay on top of your payments and research your payment plan options so you can be confident Nelnet is servicing your loan properly.
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Author: Christy Rakoczy