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College Students and Recent Grads, Pay Down My Debt, Reviews

Review: Nelnet, Inc. Student Loan Servicer

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According to Chairman Mike Dunlap, Nelnet’s overall mission is to “make educational dreams possible.” It’s headquartered in Lincoln, Nebraska, and more than five million borrowers have their student loans (federal and private) serviced by Nelnet.

Unfortunately, as a federal student loan borrower, you don’t get to choose the company that services your loans. While the U.S. Department of Education remains the owner of your loans, you’re assigned to one of ten federal student loan servicers when your loans are disbursed. Nelnet is one of those ten.

If your student loans are serviced through Nelnet and you’d like to get a better idea of what to expect in terms of customer service, information and services available through the website, and how to dispute an issue with Nelnet, read on.

Overview of Nelnet

Nelnet’s website is fairly easy to navigate, and all the important information is provided on the front page in a grid pattern. Pages worth a visit include:

  • Lower your payment with a new repayment plan: A large amount of federal student loan borrowers aren’t aware that they can apply for a different repayment plan and lower their minimum student loan payment. If you’re experiencing financial difficulty, you should check to see what options are available to you. Nelnet provides a chart that compares all the repayment options, and it also gives you instructions on how to change your plan.
  • Postpone your payments with deferment or forbearance: Similar to the page above, it’s useful to know when you’re eligible to hit “pause” on your student loan payments. Forbearance and deferment are temporary fixes, whereas repayment plans tend to be more permanent. Either one will help in the event you hit a rough spot with your finances. Nelnet breaks down the different types of deferment borrowers may be eligible for, and explains how you can apply.
  • Get financially fit: This is Nelnet’s library of financial knowledge that any recent graduate can benefit from. There are worksheets for budgets, tips on how to use credit responsibly, how to safeguard yourself from identity theft, a worksheet for your financial goals, and more.
  • FAQ: Every loan servicer has one, but it’s worth reviewing the popular questions so you know what to expect. For example, Nelnet covers making payments, how to opt-in to automatic debits, how payments are applied, payoff and tax information, and what happens when your loans become delinquent.

Many loan servicers offer knowledge centers that borrowers aren’t aware of. It pays to familiarize yourself with the site as you’ll likely be spending a lot of time there throughout your student loan payoff journey.

What Borrowers Are Saying

Nelnet has had 343 complaints closed with the Better Business Bureau in the last three years at the time of writing. The most common problem cited involves the product and service offered, as well as billing and collection services.

Some complaints are in reference to Nelnet reporting loans incorrectly to the credit bureaus, with loans showing as delinquent or default when they were paid. Other complaints are about the lack of customer service – borrowers have attempted to contact Nelnet several times, or have tried to submit paperwork, and Nelnet insists it hasn’t received anything from the borrower.

In a post on The College Investor about Nelnet, many people have commented that they’ve experienced difficulty in getting their loans paid down properly. Among their complaint were that Nelnet fails to acknowledge payments at times, doesn’t communicate clearly with borrowers when their loan is transferred, and sometimes drops the ball when borrowers apply for forgiveness, discharge, or forbearance.

This is not acceptable behavior from a student loan servicer. You shouldn’t have to jump through hoops to get a servicer to acknowledge that you’ve made a payment or a special request, and it shouldn’t be reporting false information to the credit bureaus (though that happens more often than you think – make sure you make a habit out of checking your credit report!).

First Steps to Take to Resolve Disputes With Nelnet

If you’ve been trying to contact Nelnet to no avail, you should be keeping a paper trail or detailed notes documenting each attempt.

If you haven’t tried contacting Nelnet yet, then you should. Despite some people having communication issues, it’s your job to alert Nelnet to the problem you’ve been experiencing. Have you been emailing Nelnet or submitting a secure form online? Then try calling instead. Different methods of communication may yield different results.

It can be a pain to go through this, but if your issue is severe (such as having false information on your credit report), you need to take every action possible to get Nelnet to fix it.

There are several ways to contact Nelnet:

You can email a representative by filling out a form.

You can call them 24/7 at 1-888-486-4722. The fax number is 877-402-5816.

Its general correspondence address is:

Nelnet
P.O. Box 82561
Lincoln, NE 68501-2561

Note that there are different mailing addresses for documents related to deferment, forbearance, repayment plans, and enrollment status changes, as well as loan discharge and forgiveness claims, and bankruptcy claims. Those can be found on the “Contact Us” page.

Nelnet also claims it answers any questions asked via Twitter or Facebook within 24 hours. It’s worth a try, especially as social media is much more public. Others might be experiencing the same troubles as you, too.

When All Options Are Exhausted, Get the Student Aid Ombudsman Involved

Studentaid.gov explicitly states that you must make an attempt to contact Nelnet before turning to the Student Aid Ombudsman Group. Do everything in your power to resolve the situation yourself, which will prepare you to get on the phone with the Ombudsman when the time comes.

You can also prepare by using this list provided by the Ombudsman Group to gather the necessary information for review. When you’re ready, you can call 1-877-557-2575, fax 202-275-0549, fill out the online dispute form, or write to them at the following address:

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144

If you choose any of the alternatives to filling out the form online, be sure to include all the information on that form in your correspondence. It will cut down on the back and forth while communicating with the Ombudsman Group.

Submitting a Complaint With the CFPB When You Have Private Loans

The Student Aid Ombudsman serves borrowers with federal loans, and the Consumer Financial Protection Bureau serves those with private student loans. Nelnet services both types of loans, so if you have private loans, you’ll want to file a complaint with the CFPB instead.

The CFPB has been getting very strict with private lenders on the matter of abuse. If you think you’ve been wronged by Nelnet, then it’s worth making the CFPB aware of it. All you need to do is go here and fill out the short student loan complaint form.

After you’ve submitted it, Nelnet will have 15 days to respond to your complaint, and the CFPB will help you and Nelnet reach a resolution. Most cases are resolved within 60 days.

Don’t Give Up

Resolving a dispute with a lender or loan servicer can be tiring, but it’s important not to give up. You have certain rights as a consumer, and loan servicers shouldn’t be trying to take advantage of you. Do what you can to get a Nelnet representative on the phone, and remember to write down names, dates, and what was discussed in the conversation in the event the representative doesn’t log it. This will help you if you need to escalate your efforts by bringing the issue to the attention of the Ombudsman Group or the CFPB.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at [email protected]

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College Students and Recent Grads

What Is a Private Student Loan? Here’s the Must-Know Info You Need

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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College is more expensive than ever, and most students cover costs with a mix of savings, scholarships and federal student loans from the Department of Education. But what is a private student loan, and how does it fit into this picture?

Private student loans offer a way to cover a gap in funding if you don’t have enough after maxing out your available federal loans. But these private student loans differ from federal ones in major ways, so it’s crucial to understand what you’re getting into before signing on the dotted line.

Here’s what you and your family need to know.

What is a private student loan?

A private student loan is money you borrow from a private lender (such as a bank or credit union) to put toward your education. Most lenders require you to be enrolled at an eligible school to qualify for a loan.

Each lender sets its own criteria, which you’ll have to meet in order to get the loan. Some will let you borrow up to cost of attendance of your school, while others set annual borrowing limits.

If you qualify, many lenders will send the funds directly to your financial aid office to cover your tuition bill. Any remaining money will get sent back to you to use for living expenses or, if you don’t need it, to return to your lender. Note, however, that some lenders will send the funds directly to you instead, meaning it becomes your responsibility to use them for your tuition bill.

When you borrow, you’ll choose repayment terms, typically between five and 15 years. You’ll also likely get to choose between a fixed interest rate, which stays the same over the life of your loan, and a variable rate, which can start lower but might also increase over time.

Each lender could offer different rates and terms, so it’s important to shop around before a private loan to find the best one.

What’s the difference between a private and federal student loan?

As a college or graduate student, you can borrow private student loans from a banking institution, or you can take out federal student loans from the government. Here are the main ways in which private student loans differ from their federal counterparts:

  • Private student loans require a credit and income check. While anyone who qualifies for federal aid can borrow federal loans, private loans have stricter requirements. To qualify, you’ll need to meet certain criteria for credit and income — or apply with a cosigner who can.
  • You’ll probably need a cosigner. You can borrow federal student loans in your own name, but if you’re an undergraduate, you’ll probably need a cosigner (such as a parent or guardian) to take out a private student loan. Because their name is on your loan, the cosigner becomes just as responsible for repaying the debt as you are.
  • Private student loans have less flexible repayment plans. Federal student loans come with a variety of repayment plans, including income-driven repayment, graduated repayment, deferment and forbearance. Private lenders, on the other hand, usually offer plans between five and 20 years, which you select at the time of borrowing. Some lenders will let you postpone payments through forbearance if you lose your job or go back to school, but this isn’t guaranteed.
  • You might be considered in default after three missed payments. Federal loans come with a 270-day delinquency period before your loan is considered to be in default, but private lenders might put your loan into default status after just three months of missed bills.
  • Private student loans can have a fixed or variable rate. While federal Direct loans to undergraduates have a fixed rate of 5.05% for the 2018-19 school year, private loans can have either a fixed or variable rate — usually, the choice is yours. Rates typically range from around 4% to 13%, depending on your (or your cosigner’s) credit.
  • You won’t get your interest subsidized. Students with financial need can qualify for subsidized federal loans, which don’t accrue interest until you graduate and your six-month grace period ends. Private lenders don’t offer subsidized loans, so interest will start piling up as soon as you get the money.
  • Private student loans aren’t eligible for federal forgiveness programs. Programs such as Public Service Loan Forgiveness only work for federal loans, not private ones. That said, private loans may be eligible for some loan repayment assistance programs, which could be offered by your state or a private organization.

So if federal student loans have more flexible repayment plans and better interest rates, why borrow private student loans at all? The most common reason is because federal loans come with annual borrowing limits, so you might not have enough funding to pay tuition.

Unless yours is a rare case — for instance, if you’re a graduate student who could get better rates on a private loan and don’t need the federal protections — you’ll want to turn to federal loans first. Unfortunately, however, more than half of students borrow privately before exhausting their federal options.

What are the interest rates on private student loans?

The interest rates on private student loans vary from lender to lender. As of April 2019, some of the most competitive lenders offer fixed rates starting at 3.89% and variable rates starting at 3.00%.

Although this beats the current rate on federal loans, you or your cosigner would be unlikely to score these lowest interest rates unless you have excellent credit. On the other end of the spectrum, fixed rates can go up to 12.68%, and variable rates as high as 12.22% among our recommended lenders.

And don’t forget that these figures do change — in September 2018, rates ran as high as 14.24%. Interest this high could be a real burden for the 15% of graduates who carry private student loans.

As for deciding between fixed and variable rates, remember that the variable rate exposes you to the risk that rates (and possibly your monthly payment) could rise. If you’re confident you can pay your debt off quickly, a variable loan might be worth the risk, while if you’re planning a 10- or 15-year repayment, you might be safer with a fixed loan.

That said, you could always refinance your student loans for new rates and terms if you have the credit to qualify or have a cosigner who can do so.

What about repayment terms?

When you borrow a private student loan, you’ll get to choose your repayment terms. A 10-year plan is standard, but some lenders also let you opt for five, eight or 15 years.

You can use our loan calculator to estimate what your monthly payments would be on each plan. It might be tempting to choose a five-year plan and get out of debt more quickly, but it’s not worth it if you can’t keep up with the higher monthly payments. Meanwhile, on the flip side, a long term with lower monthly payments might appeal to you, but consider how much you’ll have to fork over in interest over the years. The calculator can reveal how much you could expect to pay over time — that said, you can typically prepay your loan without penalty if you suddenly come into some money.

Before you borrow, it’s also crucial to go over your repayment agreement. Some private lenders let you defer repayment while you’re a student and for six months after you graduate, while others require immediate payments or interest-only payments while you’re still in school.

Also make sure you know when your first payment is due so you don’t fall behind or go into default.

Learn what private student loans are before you borrow

Private student loans have both pros and cons for you as a borrower.

On one hand, they can be useful tools for paying for college and earning your degree. But on the other, as a downside, you’ll probably have to enlist a cosigner to qualify, and sharing debt doesn’t always go smoothly.

Plus, you might have relatively high interest rates, meaning you could end up paying back a lot more than you borrowed.

Whatever you decide, make sure you understand what private student loans are before you borrow any. That way, you can make an informed decision about borrowing before it’s too late.

And make sure to compare offers with multiple lenders so you can find one with the best benefits, rates, and terms for your private student loan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

How to Get Rid of Private Student Loans: Forgiveness and Other Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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After maxing out their eligibility for federal student loans, many students and families turn to private student loans to pay for college. While private loans can help fill the funding gap, they can also become burdensome if you borrow too much or get saddled with high interest rates. That’s where private student loan forgiveness and other types of assistance come in handy.

If you’re wondering how to get rid of private student loans — and do it quickly — know that you do have options. And although none of them will wipe away your debt overnight, they could help you regain control of your finances. Here are eight different possibilities to explore:

1. Qualify for private student loan forgiveness programs

Although private student loans aren’t eligible for Public Service Loan Forgiveness, you can find some student loan forgiveness programs for private loans. National, state and private organizations will wipe away a large portion of your debt, or sometimes all of it, depending on your profession or location.

For instance, the National Health Service Corps Loan Repayment Program offers up to $50,000 in student loan assistance to healthcare professionals who work in an underserved area for at least two years. Likewise, the Herbert S. Garten Loan Repayment Assistance Program has a similar reward for eligible lawyers.

Many states, as well as some universities, also offer student loan repayment assistance for qualifying professionals. Some of the common eligible occupations include doctor, nurse, dentist, pharmacist and teacher. Check with your state to find out if it offers student loan forgiveness for private loans.

2. Find an employer with a student loan assistance benefit

Even if you can’t qualify for private student loan forgiveness programs, you might get a student loan assistance benefit from your employer. Some companies will match a percentage of your student loan payments to help you pay off that debt faster — for example, Fidelity and Aetna each offer up to $10,000 in student loan assistance to their employees.

According to Forbes, student loan matching was the hottest benefit of 2018. And with the student debt crisis continuing to weigh on the U.S., more companies might follow suit and introduce this benefit in the future.

If you are looking for a job or open to changing your employer, consider companies with this perk. They might help you make a bigger dent in your student loan balance than you’d be able to on your own.

3. Postpone payments through forbearance

While the government offers a number of flexible repayment plans for federal student loans, including income-driven repayment, private lenders don’t often have equivalent programs. On the other hand, some do allow you to pause payments through deferment or forbearance if you lose your job, return to school or run into financial hardship.

If you’re going through a financial rough patch, reach out to your lender to find out if you can put your loans on pause for a few months. This break from payments might offer the relief you need until you can get back on your feet.

Just remember that interest typically continues to accrue during a period of forbearance, so you might end up facing a bigger balance once repayment resumes.

4. Request a temporary interest-only payment plan

Along with temporary forbearance, some private lenders offer the option of interest-only payments. With this approach, you could postpone full repayment while still making small payments on interest from month to month.

Although you won’t be chipping away at your principal, you will pay down interest before it accumulates. These reduced payments could give you some breathing room until you’re able to enter full repayment.

5. Negotiate lower payments with your lender

Private lenders typically don’t offer income-driven repayment plans, but some might be flexible if you’re really struggling — after all, they don’t want you to default on your loan completely. So if you can’t keep up with payments, call your lender and find out if they can adjust your bills.

6. Refinance your private student loans for better terms

By refinancing your student loans, you can restructure your debt with new terms — typically between five and 20 years — and adjusted monthly payments.

You could opt for a short term, which might increase your monthly payments but will get you out of debt faster and save you money on interest. Or, if your bills are too burdensome, you could choose a longer term to lower your monthly payments.

You might also snag a lower interest rate, resulting in major savings over the life of your loan.

But while student loan refinancing has a number of major benefits, it’s not accessible to everyone. You’ll need to meet certain requirements for credit and income to qualify — or apply with a cosigner who can. And if you decide to refinance, make sure to shop around among multiple lenders to get the best deal available to you.

7. Discharge your private student loans through bankruptcy

Student loans are notoriously difficult to discharge through bankruptcy, but this route isn’t impossible. If you qualify for Chapter 7 or Chapter 13 bankruptcy, you could wipe away your private student loans.

You will have to prove your student loans are causing undue hardship, and the entire process could destroy your credit and cost you thousands in legal fees. But if bankruptcy is your only option, know that it could lead to wiping away your private student loans.

8. Apply for permanent and total disability discharge

Finally, experiencing a permanent and total disability might remove your obligation to pay back your student loans. Some lenders will wipe away your debt in this circumstance. If you’re unable to work due to a disability, reach out to your lender to find out if you could qualify for private student loan forgiveness.

How to get rid of private student loans

While options such as forbearance and interest-only payments can decrease your bills, they won’t help you get rid of your private student loans any faster. If you’re set on shedding your debt ASAP, your best bet (outside of private student loan forgiveness) is throwing extra payments at your student loans.

If you can find ways to increase your income or decrease your spending — or both — you can use the extra money to make additional payments on your debt. This will save you money on interest and move up the timeline on repayment.

But if your budget is too tight right now, lowering payments might be the best temporary solution to help you manage your private student loans without going into default.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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