April 14, 2018

Nelnet: What You Need to Know

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Is Nelnet your federal loan servicer? Read on for what you need to know. Learn how to avoid common problems.

What Is Nelnet?

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Nelnet is a federal student loan servicer. The Department of Education (DOE) uses several companies to help borrowers manage their student loans. They act as the middleman between you and the lender. Nelnet, along with Navient and FedLoan, are the largest loan servicers.

You don't get to pick your servicer. It is assigned by the DOE, so you have no say. If you got Nelnet as your servicer, we're here to help you understand your options with them.

Nelnet has recently acquired Great Lakes. Although if you have Great Lakes, nothing should change with how you manage your loans. If you have any questions, contact Great Lakes.

Always contact your servicer about your loans. Nelnet is there to assist you. Their services are free. A few things Nelnet can help with include:

  • Keeping track of your balances and assisting with billing
  • Switching repayment plans if you can't afford payments
  • Understanding your bills
  • Customer service
  • Loan consolidation
  • Applying for forgiveness programs

Nelnet services about 6.5 million borrowers, for both federal and private loans. With so many borrowers, there are bound to be support issues. We've highlighted some of the common problems in this article. You can avoid them if you know the right steps to take.

Have private student loans too? If you also have private loans, consider student loan refinancing. It can help make your payments more manageable because you can potentially get a lower interest rate and better term options. This could save you thousands in interest. You can refinance your federal loans together with private loans, but first, make sure you're not applying for loan forgiveness or federal income-driven plans.

When Should You Contact Nelnet?

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You should contact Nelnet anytime you have issues or don't understand a bill. They are there to help you with payments. Here are some situations when you should definitely contact them:

  • You see bill issues
  • Your contact information changes
  • You can't afford your payments
  • You need to change your payment due dates
  • You received a bill while still in school
  • You have not received a bill

Note: If you don't contact Nelnet, your loan automatically goes into the Standard Repayment plan. This occurs whether you can afford it or not. If you can't afford the monthly payments, contact them to set up a different repayment plan.

Any questions, you can reach Nelnet at 1-888-486-4722 or to log on to their website.

For questions Nelnet cannot help you with, call the Department of Education at 1-800-872-5327.

Navigating student loans rules is time-consuming and confusing. You don't want to miss out on grants and loan forgiveness opportunities that'll shave off debt. If you're unsure where to start, consider working with the Student Loan Planner. They create customized financial plans and can help borrowers save money.

Repayment Help from Nelnet

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All student loan borrowers begin repayment with the Standard Repayment Plan. The Standard Repayment Plan evenly divides payments over 10 years. This is the quickest way to repay with the least amount of interest.

If you can't make the monthly payments, Nelnet offers several repayment and postponement options.

  • Graduated Repayment Plan: This is still a 10-year plan, but the payments start out low and get bigger. Your payment will increase by 20% every two years. Your final two years of payments will never be more than three times your original payment.

    This is a great option if you know that your income will increase over the next decade. If you don't think you'll be able to afford the increase every two years, you may want to reconsider. You can always return to the standard repayment plan. Or you may want to enter one of the income-driven repayment plans.

  • Income-Driven Repayment Plans: Income-driven repayment plans (IDRs) are based on your current income. IDRs will extend your loans from 10 years to 20 years, allowing you more time to repay. There are four different plans: Pay As You Earn (PAYE), Revised PAYE, Income-Based, and Income-Contingent plans.

    Income-driven repayments are great if you can afford a payment now - just not the full payment. It is always better to make some sort of payment if you can instead of postponing loans.

  • Forbearance or Deferment: Forbearances and deferments both pause your payments temporarily. If you absolutely cannot make payments, these options prevent your loans from becoming past due or ending up in default.

    A deferment can be used for many options. During a deferment, the federal government covers the interest on your subsidized loans. You are still responsible for the interest on the unsubsidized loans. A deferment can be used during periods of unemployment or underemployment, economic hardship, and in-school. If you or your spouse are a member of the military, you may qualify for a deferment as well.

    A forbearance is valid for up to 12 months, with a cumulative maximum of 3 years. During a forbearance, interest will accrue on all your loans. Forbearances are used during unemployment, underemployment, large medical expenses, and for other reasons. For more information, read our article about forbearances and deferments.

  • Total and Permanent Disability Discharges: Only Nelnet can provide Total and Permanent Disability Discharges (TPD). Contact them if you are no longer able to work or use your degree because of a disability.

    If you are eligible for TBD, you are not required to pay back your loans. Also, any obligations towards a TEACH grant are no longer in effect. There are three ways to qualify for a discharge: through the VA (as a veteran, you have options), if you're receiving SSDI or SSI, or with a physician's referral.

    For questions about TPD, contact Nelnet at 1-888-486-4722 or at FSA's Total and Permanent Disability Discharge site.

Common Problems with Nelnet

  • Bad Information About Loans: Student loans are likely the largest debt in your life. Some borrowers reported problems because they received incorrect information. This may involve loan forgiveness programs, income-driven repayment plans, postponements, interest and more.

    What you can do: Receiving wrong information from your servicer? Try calling again. Or request that a manager help you. Sometimes a different person may provide different information. Another option is to log on to the website. See if you can determine an answer that way.

    If it still doesn't help, it may be time to call the DOE. They expect all issues to be handled by your servicer, so only call if your servicer isn't giving you answers. Having an issue with the servicer and the DOE? The Ombudsman Group is the last resort. They are a third-party dispute team to help with issues about student loans.

  • Trouble with Payments: If you're struggling with payments, the DOE provides many options, no matter your income or loan debt. However, some borrowers felt like Nelnet did not provide them all the options. They were told that their options were limited or that there were none. This is not true and very worrisome.

    Sometimes, borrowers' income-driven repayment plans were not applied on time. This is a problem because a forbearance will likely be applied to your account for longer than necessary. Interest accrues during that time, which will add more money to what you owe. In addition, a delay means that you will need to repay for a longer period of time.

    What you can do: If you notice that there is an issue with payments, call Nelnet immediately. They may not be able to edit a posted payment. But if you contact them, they can rectify the next payment. Sometimes a computer error may cause problems with a payment. If you are eligible for a repayment plan, you can complete the application online. Call often to follow up on the status.

Disputes: Who Do I Call?

Having an issue with your servicer? You should contact them immediately. If you are not getting the answers you need, the next step is to call the Department of Education at 1-800-872-5327.

If you find that there is still no resolution, contact the Ombudsman Group. They are a confidential resource to resolve student aid disputes. You should use them as a last resort.

Alternatives to Nelnet

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If you are no longer satisfied with Nelnet and want to leave, there are a couple of options.

  • Consolidation: If you have many federal loans, you may have multiple monthly payments. When you consolidate your loans, it becomes one big loan. You are given a new payment due date and only one payment per month. This can make it easier to pay. You'll need to enter an income-driven repayment plan. Doing so could save you hundreds of dollars a month.

    A consolidation is also useful if your loans have entered default. If default has happened on your loans, contact the DOE. You will then log on to StudentLoans.gov and complete the consolidation application.

    If you consolidate your loans, you can pick the servicer you want. You can choose from Nelnet, Navient, FedLoan, or Great Lakes.

  • Refinance Your Loans: If you have a mix of federal and private loans, refinancing may be the best option. Refinancing is through a private lender. They will combine both loans and give you an interest rate based on your creditworthiness. This will create one monthly payment.

    If your credit has improved since graduation, consider refinancing. You might get a better interest rate. This could save you thousands of dollars in interest over the years. Check out rates to see if it's better than what you're currently getting. See our favorite student loan refinance providers.

Bottom Line

If Nelnet is your loan servicer, make sure to maintain contact with them. They are there to help if you are having issues repaying your loans. If you ever feel like you're struggling, contact them. If you find they are not helping, then you should move on to the appropriate contact.

The best thing you can do is to keep records of your payments. Track your loans from the date of first disbursement. Be aware of any fees and questionable charges. Know your interest rates. Read through our other articles about student loans.

Write to Nicole S at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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Read Next:

How to Lower Student Loan Payments

Should I Consolidate My Student Loans

Student Loan Forgiveness

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