The Complete Guide to Understanding Nelnet Student Loans

Student loans can be complex to navigate. As one of the biggest student loan servicers in the U.S., Nelnet has been involved in servicing millions of student loan accounts. 

An Overview of Nelnet

Nelnet is a publicly traded company headquartered in Lincoln, Nebraska. Founded in 1978, it began as a nonprofit firm helping students pay for college. In the 1990s, it transitioned to becoming a federal student loan servicer. Today, Nelnet services over $300 billion in student loans for over 12 million borrowers.


Nelnet services both federal and private student loans. On the federal side, it works with the U.S. Department of Education to service Direct Loans and FFEL loans. For private loans, it works directly with lenders and schools. In addition to loan servicing, Nelnet also offers income-driven repayment plans, default prevention services, and financial literacy tools.

As one of the “big three” federal student loan servicers, Nelnet is a major player in the student loan industry. However, its role and responsibilities are different than a lender. Servicers handle billing, payment processing, enrolling borrowers in repayment plans, providing customer service, and more. Nelnet does not actually issue or provide the funding for any loans – it just oversees account maintenance and borrower support on behalf of loan holders.


Types of Loans Nelnet Services

There are two main types of student loans Nelnet services – federal and private. Understanding the differences is important for repayment and borrower rights.

Federal Student Loans

  • Direct Loans are issued directly by the U.S. Department of Education. This is now the primary originator of federal loans.
  • FFEL Loans were previously issued by private lenders but guaranteed by the federal government. These have largely been phased out, but Nelnet still services existing balances.

Key things to note about federal loans serviced by Nelnet:

  • Eligible for benefits like income-driven repayment, loan forgiveness, and potential cancellation in cases of borrower defense or disability discharge.
  • Interest rates are typically lower than private loans and are fixed for the life of the loan.
  • Reach out to Nelnet with any federal loan issues to ensure proper handling and protection under federal servicer regulations.

Private Student Loans

  • Issued directly by private lenders like banks, credit unions, or state agencies. Terms and benefits vary more widely between lenders.
  • Interest rates are usually higher and can be variable. No federal loan benefits or cancellation programs apply.
  • Contact the private lender directly for account access, payment arrangements, or disputes rather than Nelnet.

Understanding the loan source is important for determining applicable benefits and rights during repayment with Nelnet. Always check loan paperwork or your Nelnet account for details.

Repayment Plans Available

Once loans enter repayment, Nelnet can enroll eligible borrowers in various repayment plan options. Choosing the right plan based on your financial situation is crucial for long-term affordability and savings potential.


Standard Repayment

  • Fixed monthly payments for up to 10 years for loans less than $30,000 and up to 30 years for higher balances.
  • Pays off the loan the fastest but with the highest monthly payment.

Graduated Repayment

  • Payments start lower and gradually increase every two years for 10-30 years based on balance.
  • It extends repayment, but interest builds up over time since smaller early payments go more toward interest.

Income-Driven Repayment (IDR) Plans

For Direct Loan borrowers, these base payments on income and family size:

  • PAYE/REPAYE – Payments capped at 10% discretionary income for 20-25 years of qualifying payments.
  • IBR – Payments capped at 15% (10% for some) discretionary income for 20-25 years.
  • ICR – Payments are capped at 20% discretionary, or what it would take to pay off in 25 years.

IDR plans offer long-term affordability but interest still accrues, which increases total costs over time if not paid off earlier. Apply annually to recertify income.

Private loan options vary by lender and may not offer these income-based programs. Discuss alternatives like hardship forbearance with your lender.

Nelnet can enroll you or discuss your options in depth since repayment planning requires individual consideration based on factors like a degree program, current income, family size, total debt, and future earning potential. Be sure to consider costs and benefits thoroughly.

Understanding Billing Statements

Nelnet sends monthly billing statements to track loan statuses and amounts owed. It’s important to understand the key components:

  • Payment Due Date – The date by which at least the minimum amount is due.
  • Minimum Payment Due – The lowest amount required to avoid delinquency if paying monthly. It may not cover accruing interest.
  • Interest Charges – The amount of interest added to your balance this month is due to your average daily balance. Interest accrues daily.
  • Principal – The remaining amount borrowed has not yet been paid off, not including accrued interest.
  • Fees – Any applicable late fees, collection fees, or other penalty costs. Federal loans have few fees.
  • Total Amount Due – Minimum payment plus any additional amount needed to pay off interest still accruing each month or make faster progress.
  • Past Due – The amount is overdue if you miss a payment. Contact Nelnet immediately if it is past due.

Always carefully check statements and make at least the minimum payment on time each month to stay in good loan standing. Paying more when able can save on long-term interest costs.

Understanding Loan Status Categories

It’s also helpful to understand how Nelnet categorizes loan statuses:

  • Current – No missed payments in the last 30-90 days based on loan type.
  • Grace Period – The short period after leaving school before repayment begins on federal loans. Interest still accrues.
  • Forbearance/Deferment – Authorized periods of reduced/postponed payments available during certain situations. Interest still accrues on most loans.
  • Delinquent – Missing payments but less than 90-270 days past due depending on loan type. Late fees likely accruing.
  • Default – Over 120 days without payment on federal loans or 270+ days for private loans. Serious credit damage and collections actions can begin.

Make payments on time to maintain current or cured status whenever possible to avoid negative consequences. Contact Nelnet promptly if unable to pay for help assessing available short-term relief options.

Understanding Interest Accrual

It’s critical to understand how interest accrues on student loans since it’s what drives up the total repayment costs over time, even when payment amounts are low or deferred.

  • Daily Interest Accrual – Student loans continue accumulating daily interest charges based on the principal balance and interest rate.
  • Capitalization – Unpaid interest may be added to the principal balance periodically, such as when leaving deferment/forbearance or entering repayment. This increases the balance.
  • Subsidized vs. Unsubsidized – Only Direct Subsidized loans do not accrue interest during authorized non-payment periods like in-school. All others accrue the entire time.
  • Avoid Extra Costs – Pay accruing interest monthly if possible, even a small amount, to prevent it from capitalizing and increasing your balance. Apply for any payment over the minimum due to interest first.

Take stock of cumulative interest charges to understand total costs compared to your principal balance. Strategize repayment to minimize interest accrual over time for long-term savings.

Loan Consolidation Basics

Consolidating loans means combining multiple existing loans into a single new loan. Nelnet offers this option as a potential way to simplify repayment if you have several loans. However, consolidation is not always advantageous and requires careful consideration of pros and cons:

  • Pros: Single monthly payment, loan term reset to extend repayment period up to 30 years, potentially lower interest rate.
  • Cons: Interest accrues on the total balance, extending term increases costs, loss of benefits of original loans like forgiveness eligibility.

Not suitable for everyone based on individual factors. Conduct thorough analysis using Nelnet’s calculator comparing existing vs. consolidated payment/cost amounts to determine if it makes financial sense in your case. Remember, federal loans can only be consolidated into the Direct Loan program.

Another option for federal loans is Direct Consolidation, which occurs through the federal government vs. Nelnet. This maintains federal benefits, but interest capitalizes on consolidation. Carefully weigh which consolidation path aligns best with your goals.

Understanding Loan Forgiveness, Cancellation, and Discharge

In some special situations, federal loans serviced by Nelnet may qualify to be forgiven, canceled, or discharged in full, which is beneficial to explore if eligibility requirements apply.

Public Service Loan Forgiveness (PSLF)

For Direct Loan borrowers working full-time for a qualified public service employer (government or nonprofit) for ten years while making 120 on-time income-driven payments, any remaining loan balance may be fully forgiven. Contact Nelnet to ensure qualifying employment and payment tracking.

Teacher Loan Forgiveness

Full-time teachers at low-income schools may receive up to $17,500 in forgiveness after five years of service, $5,000 for the first and second year.

Permanent Disability Discharge

If you are completely and permanently disabled, your loans may be discharged tax-free. Apply directly or work with Nelnet.

Borrower Defense to Repayment

If your school engaged in misconduct potentially warranting full or partial loan cancellation, you can apply for this discharge.

Carefully review and track your eligibility for these programs. Nelnet can advise but you must take direct action as well. Only federal loans are eligible – there is no private student loan forgiveness.

Understand Nelnet Servicer Transfers

On occasion, your loan servicer may change even though payments continue uninterrupted. The U.S. Department of Education assigns federal student loans to eligible non-profit or for-profit services.

Should your loans be transferred from Nelnet to another company:

  • Your loan terms and balances remain the same.
  • Your new servicer will send your first statement and handle billing/payments going forward.
  • Update contact and auto-debit info on file with your new servicer for a seamless transition.
  • Follow new servicer guidelines going forward but still eligible for forgiveness programs with the original holder.

Transfers help keep loan volumes manageable for servicers. Even during transfers, continue prompt payments and contact both servicers with any issues to ensure smooth transitions.

Using Nelnet Tools and Resources

Beyond servicing your loans, Nelnet’s web portal and mobile app provide many additional tools:

  • Account Access – Check balances, payment history, document uploads, and profile edits.
  • Payment Options – Auto-debit, check, money order, one-time/recurring online.
  • Repayment Calculators – Compare standard, graduated, and IDR plan costs over periods for your profile.
  • Financial Literacy – Videos, articles, and calculators for budgeting, credit, and saving for school.
  • Document Portal – Tax records, forms, correspondence storage/download.
  • Repayment Simulator – Project loan payoffs and costs over periods with “what if” scenarios.
  • Alerts & Notifications – Stay on top of due dates and account activity.

Leverage self-service tools when possible to empower yourself and easily manage your loans on your own schedule with Nelnet’s digital resources.

Common Nelnet FAQs

Here are answers to some frequently asked questions:

When do monthly Nelnet payments process?

Automatic payments are posted on your due date each month. Check/money order payments take 5-7 business days to post from the date received. Ensure mailing early to avoid late fees.

How can I change my address/bank account on file?

Log in to your Nelnet account online or call their customer service line to update your contact and/or payment information securely. Changes take 1-2 billing cycles to take effect.

What number should I call for Nelnet customer service?

Nelnet’s main customer service number is 1-888-486-4722. You can also access account representatives by logging into your online account and clicking “Contact Us.”

What are my options if I’m struggling to pay my Nelnet loans?

Nelnet can discuss lowering payments through an income-driven plan, applying for economic hardship deferment/forbearance, or loan consolidation possibilities. Be proactive by calling before becoming delinquent.

How does Nelnet calculate interest on my loans?

Student loan interest accrues daily and is compounded based on your loan’s fixed interest rate and your outstanding principal balance. Refer to your monthly billing statement for more details on interest charges.


Leave a Comment