If you need money to help cover educational costs, and have exhausted your federal loan options, consider applying for private student loans. There are many things to learn about when exploring which private student loan options are the best fit for you, so Nelnet Bank is here to help you make sense of all the different options.

Private Student Loan Repayment Plans

First off, get familiarized with the different repayment plans offered by lenders and how each of them can fit your lifestyle.

Standard Plan

Standard repayment is the most common plan for private student loans, and it gives you a set amount to pay each month. In standard repayment, you pay off your loan in equal installments over the term of the loan.

Interest-Only Plan

With this plan, you make interest-only payments while in school and for the six month grace period after, and then you enter standard repayment. With interest-only plans, you will pay more in interest than with a standard repayment plan, and your monthly payments will be higher when your loan enters standard repayment.

Fixed Pay Plan

With this plan, you’ll make a small monthly payment (e.g., $25) while in school and during a six-month grace period following separation from school. Interest will be charged and any unpaid accrued interest will be capitalized (added to the principal loan balance) on the loan once the loan enters repayment. If the required payments of $25/month are not made, the loan can become delinquent or default. Since interest capitalizes, you may pay more overall on your loan.

Deferred Repayment Plan

Deferred repayment is when you can hold off on making payments up until six months after you leave school. Interest capitalizes during this period – it accrues and is then added to the principal balance of your loan before you enter the repayment period. For this reason, deferred repayment may cost more in the long run.

Choosing the best repayment plan option depends on your circumstances while you’re in school and when you graduate. In general, the more you can pay off sooner, the less you’ll pay overall.

Interest Rate Types

Another important factor in understanding your student loan options is the different types of interest rates available to you:

Variable Interest Rates

This option has an interest rate that can change over time as the rate index, such as the Prime Rate or SOFR, goes up or down. Variable rates usually come with lower starting interest rates than fixed rates; however, this is because the borrower is taking on the added risk that rates may rise in the future. Most variable rate loans have a cap that limits how high the rate can rise.

Fixed Interest Rates

Once your fixed interest rate is set, the interest rate won’t change for the entire repayment period. Fixed rate loans typically have higher starting rates than variable rate loans, because the lender takes on the risk of interest rates fluctuating over time.

Repayment Terms

Besides your repayment plan and your interest rate, your repayment term will also play a large part in your monthly payment and the amount you’ll pay in the long run. Your repayment term determines the length of your repayment and the monthly interest rate that you will be charged over that term. Typically, the shorter the repayment term, the lower the interest rate because lenders take on less risk if you repay your private student loans quickly. Most lenders offer repayment terms between 5 and 15 years.

Nelnet Bank offers more tips on interest rate types and repayment terms that you may find useful.

Other Options to Consider

There are other factors you should consider before deciding which type of private student loan is the best fit. Private loan lenders may provide competitive borrower benefits and cosigner options to help make repayment easier for you. Nelnet Bank offers borrower benefits like a discounted interest rate for auto-debit payments. Nelnet Bank also provides the option for eligible borrowers to release their cosigner after making 24 consecutive, on-time payments.

Being informed about your options is the first step in achieving your educational goals. Finding the right type of private student loan means you can focus on studying.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post Types of Private Student Loan Options appeared first on Nelnet Bank.

What is a cosigner?

A cosigner is a person who signs for a loan with a borrower. If the borrower misses payments or defaults on the loan, the cosigner takes responsibility for payments and the remaining balance. Since both the borrower and cosigner have equal obligations, missed payments and default affect both their credit.

How does having a cosigner help me?

Including a cosigner on a loan decreases the risk for the lender. That’s because the lender has another person obligated to repay the loan if the borrower defaults. Cosigners allow the lender to take on less risk. Less risk increases the borrower’s chances of getting approved for the loan. It may also lead to better loan terms. These include lower interest rate or shorter repayment length. Both could save considerable money over the life of the loan.

Even if you qualify for a loan without a cosigner, the loan terms are generally not as favorable. However, wanting a cosigner to improve your loan terms and needing one for approval are two different circumstances. You may need a cosigner if you have no income or too little income, have no established credit or poor credit, your debt-to-income ratio is too high, or if you are either unemployed or recently changed jobs and don’t have an employment history. If any of these scenarios apply to you, you should consider applying with a cosigner to qualify for the loan. Applying with a cosigner gives you time to fix any of the above issues. It can also mean you can take out future loans on your own.

Who should I ask to cosign?

The most difficult part of choosing a cosigner is finding someone who is willing to sign on a loan with you and also has strong credit. No matter who you choose, be sure your cosigner is financially stable. Other traits to look for in a credit-worthy cosigner include having a good job with a solid employment history and/or owning a home or other assets.

Asking someone to cosign on a loan with you is a big commitment, so make sure you are prepared. Tell your potential cosigner the reason you are asking them to cosign, your intentions to pay the loan back, and communicate to them that you can afford the payments. You can also ask your lender if there is a cosigner release option. Some loans will allow you to request that your cosigner be removed from the loan after a period of time if you meet certain requirements. Being prepared to answer any questions your potential cosigner has will show that you are serious about taking on the financial responsibilities of a loan.

Cosigning is a big commitment for both the borrower and the cosigner and should not be taken lightly. Make sure both you and your cosigner understand all terms and are clear on the responsibilities of the loan prior to signing.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post Is a Loan Cosigner Right for You? Navigating the Benefits of a Cosigner appeared first on Nelnet Bank.

Saving Money on Student Loans Step 1: Only Borrow What You Need

The first step is to only borrow what you need to cover your college costs. Many students over-borrow and end up with more student loan debt than they are able to pay back after graduation. Grants and scholarships usually don’t have to be paid back as long as you continue to meet their requirements. However, these forms of financial aid generally won’t cover all of your college costs. Looking at your federal loan options is your next step. Federal loans will have to be paid back with interest. However, they usually offer borrowers lower interest rates and more flexible terms. Make sure you take advantage of these options before considering a private student loan. Private student loans are a great option when you’ve exhausted all federal aid options and still have college expenses. As with any loan, make sure you understand the terms and conditions.

Saving Money on Student Loans Step 2: Make In-School Payments

The second way to save money on your student loans is to make payments while in school. Most loans will give you a deferred payment option. This means you don’t have to make any payments on your student loans while you’re in school or during your grace period. While it sounds like a good option, interest accrues on your loans during this time. That could mean a larger bill at repayment. If you budget to make full principal and interest payments while still in school, you’ll save the most money over the life of the loan, but that isn’t always feasible for everyone. Another great way to save money is to make interest-only payments while in school. This monthly payment will be much less than a full principal and interest payment, but will set you up for success when you get to repayment.

Entering Repayment

Once you graduate your loans will go into repayment following your grace period. That means you will start making payments toward your full principal and interest payments until the loans are paid off. Federal loans have several repayment options to fit your budget, but keep in mind the lower your payment and the longer your loan term the more interest you will pay over the life of the loan. Make sure you are aware of and take advantage of any borrower benefits your loan servicer offers, such as a lowered interest rate for auto-debit payments.

Refinancing or consolidating your student loans may also be a good option for you. Make sure you understand the risks of refinancing federal student loans.

These are a few of the main ways to save yourself money on your student loans while you’re in school and after you graduate. Knowing your options and paying what you can along the way will set you up for a successful future, free from student loans.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post How to Save Money on Your Student Loans appeared first on Nelnet Bank.

If you’re about to apply for private student loans, and you don’t have a credit history or a credit score, you’re not alone. And if you have a credit history, but not a great credit score, a cosigner may help you qualify for more competitive private student loans and interest rates than you thought possible.

What is a Cosigner?

A cosigner is a person who signs for a student loan with you. While a cosigner is not always required, if you apply with a cosigner, it is important you both understand that if you miss payments or default on your loan, the cosigner agrees to takes responsibility for payments and the remaining balance. Both you and your cosigner have equal responsibility to repay your loan. On-time payments made to your loan may positively impact your credit score and that of your cosigner. However, missed or late loan payments, unpaid balances, and default may affect both you and your cosigner’s credit negatively.

If you apply with a cosigner, your cosigner should be financially stable, with a good job and a solid employment history and/or own a home or other assets. You should be prepared to answer any questions your potential cosigner has that will show you’re capable of and serious about taking on the financial responsibilities of the loan. It’s important that both of you understand all terms of the loan and be clear on responsibilities before signing.

Using a Cosigner

Private student loans may be available to students without credit histories, but there can be advantages to adding an approved cosigner to your student loan. The better your cosigner’s credit score, the lower the interest rate you may qualify for, helping you to potentially qualify for lower payments and reduce the interest you pay over the course of your student loan.

If you will be able to make student loan payments and just need someone to give you a chance to prove you’re financially responsible, applying for a private student loan with a cosigner can be a great way to potentially build your credit and save money. Many lenders allow eligible borrowers to remove a cosigner from their loan after they meet certain requirements and have a certain number of consecutive, on-time monthly payments; with Nelnet Bank, that number is 24 consecutive, on-time payments.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post How Can a Student Loan Cosigner Help You? appeared first on Nelnet Bank.

Here are five things students wish they knew about the financial aid process while planning for college.

1. It’s Never Too Early to Start Planning and Saving for College

   College-bound students and their families often wait to think about the admissions process and financial aid options. Many times, they wait until the student’s junior or senior year of high school. However, students should research schools and possible career options early. Getting started in high school or junior high gives them an idea of which schools are the best fit. Heather, a junior in college, said she drastically underestimated all the costs associated with her education. She didn’t know she needed to rely on student loans as much as she did. Even if you expect a scholarship, keep in mind the total costs you and your family may incur. These costs can have an impact on your long-term planning and financing.

2. Know Your Deadlines and Don’t Miss Them

   Braxton is in his freshman year and says he missed out on some state grant money because he waited too long to complete his Free Application for Federal Student Aid (FAFSA^®) form. He said if he’d been more aware of his state deadline, he would have applied sooner and likely received money from his state grant program. He also said there were some scholarships that had very early deadlines that he missed. It takes some organization and research to be sure you know all the relevant deadlines for various scholarship and grant programs.

3. You Don’t Have to Figure It All Out on Your Own

   The financial aid process can often be confusing to first-time students. Rather than trying to do it all on your own, you can find help. Your high school counselors are great resources. If you have a college or university nearby, they may offer free FAFSA workshops or presentations. They can also help you understand the financial aid process better. If you speak with your high school counselor or someone from a financial aid office, don’t be afraid to ask questions so you’ll be certain you know what you need to do. Although you’ll be doing your first FAFSA as early as October of your senior year, it’s never too early to begin learning everything you need to know. Federal Student Aid at the U.S. Department of Education has a FAFSA4caster that you can use to understand your options for paying for college.

4. You Don’t Have to Accept the Full Loan Amount on Your Award Letter

   Once your financial aid application is finalized, your financial aid office sends you an award letter. Your award letter may show different types of financial aid, such as scholarships, grants, and student loans. Colleges usually provide award packages to cover your entire cost of attendance (COA). Your COA includes tuition, books, supplies, housing, etc. However, only borrow what you need, even if you were offered a higher amount. You don’t need to accept the full amount awarded.

   Another college student said she assumed she should take the amount offered. At first, she thought the extra money could be a cushion if needed. She admitted she spent frivolously on things she really didn’t need. She forgot her loan was unsubsidized. That means interest accrued on her loan while she was in school. Student loans are a great resource to help pay for school as long as you understand the terms and conditions and only borrow what you need.

5. Don’t Assume You Won’t Qualify for Financial Aid and Skip Completing the FAFSA

   Some students and families believe that their income may be too high to qualify for any type of financial aid and simply do not complete the FAFSA. Although you may not qualify for grants, you still need to complete the FAFSA to determine your eligibility for student loans and college work study. Some programs (such as unsubsidized student loans) are not need-based and do not have an income limitation. Also, the FAFSA is free to complete, and you could qualify for some other types of aid. One thing families forget is that if they happen to have a higher income, they may also have multiple children attending college, which is a big factor in determining financial aid eligibility. Factors such as your family income, household size, and the number in your family attending college all help determine your financial aid eligibility.By planning ahead and thinking about the cost of college early, many of these common scenarios can be avoided. By starting your planning early, you can avoid the “I wish I knew then what I know now” feeling down the road.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post Five Things College Students Wish They Had Known About Financial Aid appeared first on Nelnet Bank.

1. Federal student loans – Many of these student loans (e.g., Direct Loans) are owned by the U.S. Department of Education. Certain other federal loan types (commercially-held Federal Family Education loans) are owned by guarantee agencies and private companies; however, such loans are no longer being made. Federal student loans generally don’t require you to have a credit history, with some exceptions, or a cosigner. If you are allowed a grace period, you won’t have to repay these student loans until you graduate or change your enrollment status to less than half-time. Federal student loans first disbursed on or after July 1, 2006 have a fixed interest rate. Federal loans generally offer more repayment options than private student loans, with some of the benefits including deferment, forbearance, forgiveness, and Income-Driven Repayment (IDR) plans. They also may be included in temporary relief, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
2. Private student loans – Student loans that are offered by a variety of banks, credit unions, and state-based or state-affiliated organizations are referred to as private student loans. You can learn about these loan programs through your bank or credit union, your university or college’s financial aid office, a friend or relative’s recommendation, or online research. The terms and conditions of these student loans are set by the lender. Interest rates may be fixed or variable, and may be higher than interest rates on federal student loans, depending on your credit history and financial circumstances. These loans often require you to have an established credit history or a cosigner. Some private lenders, like Nelnet Bank, allow eligible cosigners to be released after a certain number of consecutive, on-time monthly payments. There are many differences in fees, penalties, policies, and options for repayment of your loans, so you’ll want to do your research to make sure you get options and protections for your situation.
3. Loan application – A document that provides the essential information about the borrower, or cosigner, on which the lender bases the decision to lend.
4. Promissory note (or Credit Agreement) – A promissory note (also called a credit agreement) is a document that you will sign agreeing to the terms and conditions, and promising to repay the loan.
5. Cosigner – A person who agrees to be responsible for repaying your student loan if you don’t make your monthly payments.
6. Disbursement – A distribution of funds from the lender for your loan.
7. Loan term – The length of time available for you to repay your loan.
8. Principal – The initial balance of your loan (the amount you borrowed and have to pay back). This term can also refer to the amount still owed on a loan.
9. Interest – What a lender charges for lending you the money. It is a calculation based on an interest rate and outstanding principal balance.
10. Fixed interest rate – Interest rate set at the beginning of the loan term and will not change over time.
11. Variable interest rate – The interest rate will change, on a recurring basis, throughout the loan term. With this type of program, it’s important to be aware that your monthly payments may fluctuate over time, which may increase the cost of borrowing.
12. Capitalization – The process of adding unpaid accrued interest to the principal balance of your loan. This may occur when your loan enters repayment after grace or the end of a deferment or forbearance. When loan interest capitalizes, it makes your principal balance larger.
13. Grace period – A period of time after you leave school when you aren’t required to make full monthly loan payments. While most lenders offer some sort of grace period, you will need to check the length of time and payments required.
14. Repayment – This is the period when you are required to repay the loan. Some student loans enter repayment immediately after disbursement, while others may not begin repayment until after a grace period.
15. Interest-only payments – Some student loan lenders offer periods of time that allow you to make interest-only payments. While the principal balance stays the same, you can prevent the interest from capitalizing and increasing your student loan balance.
16. Deferment – Allows you to temporarily postpone or reduce your monthly payment amount for a specified period. During this time on private student loans, interest may continue to accrue and may be capitalized at the end of the deferment.
17. Forbearance – Allows you to temporarily postpone or reduce your monthly payment amount for a specified period of time. During this time on private student loans, interest will continue to accrue and may be capitalized at the end of the forbearance.
18. Income-Driven Repayment (IDR) Plans – IDR plans are available for federal student loans and are designed to make repayment more manageable. These plans reduce monthly payment amounts based on your income, family size, and student loan debt. These plans may also result in a loan forgiveness option. If you have private student loans, check with your lender or servicer for alternative payment options.
19. Forgiveness – An opportunity to have some or all of your student loan debt forgiven, in particular, if you work for a nonprofit, certain low-income school districts, or some government sectors and make a certain number of on-time payments. This is generally only available with federal student loans. Loan forgiveness may be considered taxable income.
20. Student loan refinancing – The process of obtaining a new student loan to pay off an old student loan(s) with new terms. You may want to refinance one or more of your student loans into a new refinance loan when interest rates are lower, which may save you money and make it more convenient to pay off multiple loans. Refinancing your federal student loans into a private loan may cause you to lose certain benefits.

Phew! There are more terms, but that might be enough for today.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post A Guide to Important Student Loan Terms appeared first on Nelnet Bank.

The U.S. Department of Education Office of Federal Student Aid provides answers to your questions about federal student loans on studentaid.gov and is your best resource. We answer a couple of questions here that we hope may help you.

Why am I not eligible for a 0% interest rate?

Your loans with Nelnet Bank are private student loans, so they are not eligible for the COVID-19 relief. The CARES Act provides temporary student loan relief for student loans held by the U.S. Department of Education. Private student loans aren’t subject to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

What If I’ve Been Furloughed, or I’ve Lost My Job?

First, if you have federally held student loans, there are temporary student loan relief programs – automatic administrative forbearance and 0% interest – applied to those loans. Your federal loan payments are basically paused during this time, offering you relief on those loans while you get your bearings. For these federal loans, interest won’t accrue, and you won’t be required to make payments, until the payment pause is lifted. (Studentaid.gov provides all your answers to questions about this.)

The next step you take should be to contact your loan servicer for your federal student loans, and let them know you’ve lost your job. You’ll want to learn about different payment plans that may make it possible for you to stay current on your loans if you still are unemployed when the temporary forbearance is lifted. Contacting your loan servicer with questions or for help discussing your options is a good idea.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for informational purposes only. This content is not meant to address the circumstances of any particular individual. Nothing contained in this article constitutes a recommendation or endorsement by Nelnet Bank. For specific advice about your unique circumstances, consult with a qualified professional.

From time to time, articles may provide hyperlinks to web pages operated by third parties. When you click on these hyperlinks, you will be leaving Nelnet Bank’s website. Nelnet Bank has no control over such sites or their content, and is not responsible or liable for any such site or content. Nelnet Bank does not endorse or recommend the contents of the third-party sites. Your use of a third party website is subject to their terms of use and privacy policy.

The post Nelnet Bank Directs Borrowers in Need to Resources about COVID-19 and Student Loans appeared first on Nelnet Bank.