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Glossary of Terms

nelnetAdmin — Thu, 03 Feb 2022 15:08:21 +0000

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Unique Ways to Pay Back Your Student Loans

nelnetAdmin — Fri, 18 Jun 2021 20:32:01 +0000

As with any tough problem or challenge, creative thinking can help you find a solution – or several of them – to help you more easily manage the situation. We searched for ideas to get you thinking about how you can more quickly pay off your student loans. You’re smart, and can figure out which strategies match your skills and situation to help you make your student loans vanish more quickly than if you did nothing but make your minimum payments.

First, let’s break it down. There are three basic ways you can pay down your loans more quickly. You can enlist outside help in making your payments. Or, you can either cut your expenses or boost your income to free up more money to put toward paying down your loans more quickly.

Enlisting Help

There are several ways you can get other organizations or communities to help pay back your educational costs.

Find communities in need of your profession/degree and take advantage of student loan repayment incentives they offer. Look for student loan repayment assistance or student loan forgiveness programs for these occupations in your state.
Be willing to take jobs that employers find difficult to fill and keep filled; these employers may offer student loan forgiveness. An August 13, 2019 simpledollar.com post shared some helpful links to learn more about these jobs and programs.

Some companies offer student loan repayment assistance as a competitive benefit to help with recruitment. Check with your HR department to see if similar benefits are available. The opportunities available for those working in your field are constantly changing, so research what’s available to you and consider the possibilities. It may be worth it to you to make a commitment to a company, organization, or location for a certain amount of time to get your loans paid down. Be realistic, though, and do your research before making commitments!

Cutting Expenses

You’ve heard of a budget and other smart financial moves you can make? If so you’ve already considered the usual suggestions of moving back home for a while, cutting out Starbucks runs, and taking a lunch rather than eating out. Great start – but there are other things you can do!

Get creative: What jobs can you work where some of your expenses are covered? What utilities can you do without? Can you get by without a car (and the insurance, gas, and maintenance costs that go along with it)? Can you get by with just one streaming service and no cable?

Boosting Income

Taking on a second (or third job) gives you more money to put toward student loan payments – and less time to miss the streaming services you’ve cut to reduce your expenses.

But before you add other jobs and sources of income, you could do one simple thing like use a spare change automated savings app, such as one of the apps suggested in this Forbes article. These round up apps help you save money by putting the extra pennies leftover on all your purchases toward an account or payment you’ve designated. This way, you have a forced savings or payment plan that’s not very noticeable. For most people, using this alone won’t put your loans in your rear view mirror fast enough.

So then, what does a second (or third) job or source of income look like? Here are a few ideas.

Sell stuff you don’t need or use (online, in a resale shop, or yard sale) or become a sales rep of cosmetics or nutritional products, for example
Participate in medical research and/or clinical trials, focus groups, and online surveys
Participate in mock jury trials; learn more in this article about online mock jury sites
Make and sell products and services you can provide (e.g., give piano lessons, take photos, sell handiwork like arts, crafts, knitting, or sewing)
Work as a tutor or translator, or provide freelance services for other skills you have
House sit or pet sit, or provide child care or dog walking services
Be a personal attendant overnight; this sometimes includes free housing
Start a blog and monetize your traffic
Teach a class
Be a driver, run errands for people, or make deliveries

The list goes on. As you explore these options, keep in mind that when you’re looking for ways to make extra money, you become a magnet for scammers. Just beware and do your research as you evaluate your opportunities.

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.

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Understanding Your Student Loan Grace Period and How to Make the Most of It

nelnetAdmin — Fri, 18 Jun 2021 20:27:59 +0000

Grace Period for Federal Student Loans

For most federal student loans, you aren’t required to pay on those loans until you graduate, leave school, or drop below half-time enrollment. When your enrollment changes to one of those statuses, you’re said to be in grace, and the clock starts ticking on when your first monthly loan payment will be due. For many federal loans, the typical grace period ranges from six to nine months; however there are exceptions.

Grace Period for Private Student Loans

For private student loans, you’ll need to check with your lender to see if you have a grace period, and find out the details around grace. While some private loans may be in deferment while you’re enrolled full-time in school, others may have payments due beginning shortly after the loan is disbursed.

Use Your Grace Period for These Things

Compile a list of all of your federal and private student loans to understand your upcoming budget.
Your list should include all of your loans, amounts, estimated monthly payments (if known), due dates, interest rates, and servicer contact information. Use the Financial Aid Review on the National Student Loan Data System (NSLDS) to locate your federal student loans. You’ll find your private student loans on your credit report (available at annualcreditreport.com). From this list, create a budget that prioritizes your monthly loan payments and other essential living expenses.
Seriously search for that first good job right away.
. It may take longer than you think, and once you’ve established your budget (in #1 above), the need for a “real job” will be apparent. Get a side hustle or at least some sort of job if it becomes clear it’s going to take a while to find the right role for you.
Keep your debt low
Don’t run up additional debt buying things while your student loans are in grace. The point of this time is to get ahead on your student loans, find a job, figure out your plan, and also…
Stockpile money.
This may mean living at home while you save up and pad your emergency fund (ideally six months of expenses, but at least three months’ worth). The longer you can do this and cushion your savings, the better off you’ll be when your loans are in repayment.
Choose your repayment plan(s).
With your federal loans, you’ll have many repayment plan options that result in different monthly payment amounts. Use a repayment estimator such as the U.S. Department of Education’s to estimate payments for different plans – and choose the highest monthly payments you can confidently afford to make.
Take advantage of job benefits.
If your new employer offers a student loan repayment assistance program, find out about it, get enrolled, and start taking advantage of it as soon as you can.

To Make Payments or Not in Grace

There are some reasons you may want to make payments during your grace period, but there are also instances in which it may make sense not to. Let’s review a few of them.

Focus on Interest First

Your student loans accrue interest during school and/or during grace. When your loans accrue interest and it capitalizes, the interest is calculated and added to your loan amount before your first payment comes due. In those cases, interest for your payments is calculated on top of the new total. While some of your loans may have the interest subsidized, or covered by the federal government, others will not – and you will have to pay that capitalized interest. Essentially, you’ll be paying interest on top of interest. If you have an option to make interest-only payments toward these loans while you’re in school or in grace – or can even make partial or occasional payments – you’ll save yourself lots of money in the long run.

Consider Consolidating or Refinancing for Maximum Impact

Consolidating your loans applies mainly to federal student loans, and refers to combining your federal loans with various servicers and at different rates into a single loan with one payment at one interest rate to just one servicer that you choose from among federal loan servicers. You can retain some of the borrower benefits of federal loans such as income-driven repayment.

Things to keep in mind if you consolidate? You may pay more interest over the life of the loan, and you can’t include private student loans in your consolidation loan. You’ll lose the remainder of your grace period once you consolidate, although you can apply for consolidation and ask for them to hold your application until close to the end of your grace period to process it. But once you’ve combined your loans, you can’t target the highest loan rate for quicker repayment.

Refinancing your loans generally applies to private student loans. It may be done to simplify repayment for you by reducing the number of monthly payments you have and servicers you work with – but a significant advantage it can offer is if you qualify for a student refinance loan with a lower interest rate than the student loans that you currently have. Our calculator makes it easy for you to see the impact refinancing – and the interest you save – may have on your monthly payments and the overall amount you pay.

It may make sense to also include some or all of your federal student loans in a private student refinance loan if you have a steady job you can rely on and solid income that’s substantial enough to cover your payments – and you feel confident you won’t need federal loan borrower benefits such as income-driven repayment. For any federal loans you include in your private student refinance loan, you lose the borrower benefits you had with them prior to refinancing.

Keep in mind that a cosigner can help you qualify for a low interest rate on refinancing – and Nelnet Bank offers cosigner release on qualifying loans after 24 on-time monthly payments. This can greatly increase the odds of your qualifying for a competitive rate that may make refinancing your student loans appealing.

If refinancing during grace doesn’t make sense for you at this point, you may want to set a calendar reminder for next year to check and see what your income, credit score, and current student refinance loan interest rates are doing. Evaluating those factors can help you make a decision that may end up saving you hundreds a month or thousands over years – or allow you to pay down your debt much more quickly.

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How to Consolidate Student Loans: A Complete Guide

nelnetAdmin — Fri, 18 Jun 2021 20:05:22 +0000

If you have student loan debt, you have most likely heard the terms “student loan consolidation” and “student loan refinancing”. Although they sound similar and are often used interchangeably, they are actually two different programs. Therefore, understanding these programs and their key differences can help you make better student loan repayment decisions, especially if you are wondering how to consolidate student loans effectively.

Student Loan Consolidation

Student loan consolidation lets you combine one or more eligible federal student loans into one new Direct Consolidation Loan. As a result, the U.S. Department of Education becomes the new lender. As the administrator of the program, they use companies to originate and service the loans.

Student Loan Refinancing

Student loan refinancing is offered by private (non-federal) lenders to allow student loan borrowers to refinance one or more federal and/or private student loans into a new private student loan. Consequently, the lender of the new private student loan will be a bank, credit union, or other financial institution

Which is Better?

Both programs offer many benefits. These benefits include simplifying your monthly student loan payments, locking in a fixed interest rate, and lowering your monthly payments. However, there may be some drawbacks as well. For example, if you extend your repayment term, you could increase the total cost of your loans. Therefore, you may forfeit current and potential future federal student loan benefits. Also, any incentives attached to your current loans,

Comparing Options

The table below provides a side-by-side comparison of several important features of student loan consolidation and student loan refinancing.
	Student Loan Consolidation	Student Loan Refinancing*
Lender	U.S. Department of Education	Banks, Credit Unions, and Financial Institutions
Credit check required	No	Yes
Upfront fees	None	Most lenders do not charge any upfront fees
Interest rate type	Fixed	Fixed and variable rate options are offered by most lenders
Interest rate	Weighted average interest rate of the loans being consolidated, rounded up to nearest one-eighth of 1%	Varies. Factors may include the borrower’s and/or cosigner’s credit history; repayment term; interest rate type; highest level of education; and current market conditions
Repayment plans	Standard, Graduated, Extended, and various Income-Driven Repayment plans	Standard Repayment
Repayment term	10 to 30 years depending on the amount being consolidated	5 to 20 years
Allowable loans	Most federal student loans are eligible. Private loans are not eligible	Federal and private student loans are allowed by most lenders
Interest rate reduction	Rate reduction for automatic payments	Rate reduction for automatic payments. Some lenders offer an additional rate reduction to existing customers with a qualifying account
Ability to consolidate or refinance multiple times	Generally no, unless additional federal loans are included	Yes
Loss of federal benefits	Some benefits may be lost	Yes, including potentially qualifying for Public Service Loan Forgiveness on federal loans
When you can consolidate or refinance	After graduation, leaving school, or dropping below half-time enrollment	After graduation, leaving school, or dropping below half-time enrollment. Some lenders allow refinancing while in school

* Features represent those of the largest and/or most common private student loan refinancing programs. A specific lender’s features may differ, so be sure to read the program details carefully.

Choose the Right Option for You

While there are similarities between student loan consolidation and student loan refinancing, they are different programs with unique features. Firstly, if you are interested in consolidating or refinancing your current student loans, determine what you want to accomplish. Your goal may be to lower your monthly payments, lock in a low fixed interest rate, and/or lower your overall cost of repaying your loans. Next, compare the federal government’s Direct Consolidation Loan program to Nelnet Bank and other private lender programs once your goal has been set. Then, decide if consolidation or refinancing is right for you based on your financial goals and circumstances.

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Student Loan Refinance: Choosing Your Private Student Loan Repayment Options – Part II

nelnetAdmin — Fri, 18 Jun 2021 19:52:54 +0000

With the numerous private student loan repayment options available, selecting the right one can seem a bit overwhelming. However, with a little bit of knowledge, you can make a more educated decision. In Part I of this article, we covered repayment plan options. Now, we’ll review interest rate types and repayment terms to find the best student loan option for you.

Interest Rate Type

Borrowers taking out private student loans or refinancing their current student loans have a few interest rate options.

Variable: Variable rate loans have an interest rate that can fluctuate over time as the rate index, such as the Prime Rate, goes up or down. Variable rate loans typically come with lower starting interest rates than comparable fixed rate loans. However, they come with greater risk, since rates may rise in the future. Most variable rate loans have a cap that places a limit on how high the rate can rise.
Fixed: With a fixed rate loan, once the rate is set, it does not change for the entire repayment period. Fixed rate loans normally have higher starting rates than variable rate loans. This is because the lender takes on the risk of interest rates fluctuating over time.
Hybrid: Another less popular option is a hybrid rate loan. With a hybrid rate loan, the interest rate is usually fixed for a period of time. It then switches to a variable rate for the remainder of the loan period.

Tip: If you intend to pay off your loans in a short period of time, consider a variable rate loan. If you plan to take longer to pay off your loans or prefer stable, predictable payments, a fixed-rate loan may be the best choice. When deciding which type of rate to choose, use the lender’s loan repayment calculator to estimate the savings between a variable rate and a fixed rate loan. Also decide whether the estimated savings is worth the additional risk of a variable rate loan.

Repayment Term

Another important item that determines the interest rate you will be charged is the repayment term you select. Most lenders offer private student loans and refinance loans with repayment terms between 5 and 15 years. Some lenders offer repayment terms as long as 20 years.

When determining interest rates on private student loans, remember that the shorter the repayment term, the lower the interest rate. This is because the lender takes on additional risk by allowing you to repay your loan over a longer term.

Tip: Your monthly payment amount is determined by several factors. These include the principal balance of the loan when you start making payments, the interest rate, and the repayment term. Shorter repayment terms come with lower interest rates, but higher monthly payments. Choose a repayment term with a monthly payment you can afford, especially when you are first starting out.

Choosing Your Best Option

Choosing the repayment option that best fits your current and future needs can be a bit tricky. But, with a little planning and thought, you can zero in on the loan terms that are best for you. If you find your financial situation changes down the road, and your current repayment terms no longer meet your needs, you may be able to work with your lender to modify your repayment terms. If that isn’t an option, then you can look at refinancing your student loans and replace them with a new loan that is a better fit.

Tip: Most private student loans do not have any pre-payment penalties or fees. If down the road you can afford to pay more than the minimum each month, you can pay down your loan faster without being charged any pre-payment fees. This reduces your overall cost of borrowing in the end.

Understanding the nuances of private student loans can make a big difference when deciding which one is right for you. Making the right choices when taking out student loans can have a strong impact on positioning yourself for a bright financial future.

Nelnet Bank does not provide legal, investment, tax, or financial advice. This page and the information contained herein is for educational purposes only. For specific advice about your unique circumstances, consult with a qualified professional.

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Student Loan Refinance: Choosing Your Private Student Loan Repayment Options – Part I

nelnetAdmin — Fri, 18 Jun 2021 19:50:25 +0000

Taking out private student loans or refinancing current student loans is a popular option for students. When considering loans or loan refinance, many borrowers initially focus on either the interest rate of the loan or how much their monthly payments will be. This makes sense because they determine how much a borrower pays back over the life of a loan. However, the interest rate and expected monthly payments are determined by several factors. These factors include credit history, current financial situation, future earnings potential, lender costs and desired profit margin, and selected loan repayment options.

Let’s take a look at the repayment options available. Knowing your options can help you when deciding to take out a student loan or to refinance your existing loans.

Repayment Plans

When it comes to private student loans and student loan refinancing, lenders may offer more than one repayment plan. Below are the most common plans you will encounter:

Standard

Standard repayment is far and away the most common repayment plan for private student loans. In Standard repayment, your monthly payments are a set amount. That means you pay off your loan in equal installments over the remaining term of the loan.

Interest Only

With an Interest Only repayment plan, you begin making interest-only payments over a short period of time. Later, you revert to Standard repayment. With interest-only plans, you pay more in interest than with a Standard repayment plan. Also, your monthly payments are higher than a Standard repayment plan when your loan reverts to full principal and interest payments.

Partial

With a Partial repayment plan, your initial payment amount is set for a period of time. It then reverts to Standard repayment for the remainder of the loan term. The total cost of a Partial repayment plan will also be higher than with a Standard repayment plan.

Deferred

Deferred repayment is when you start making payments at a specified time in the future. Most lenders let you defer payments while you are in school and for six months after you leave school. Deferred repayment is the most costly, since interest accrues while you are deferring your payments. That interest is then added to the principal balance of your loan before you enter your repayment period.

Graduated

While not very common for private student loans, Graduated repayment starts with lower monthly payments that increase over time. With Graduated repayment, you pay more for the loan than with Standard repayment. This is because interest accrues on a higher principal balance over a longer term.

Tip: When lenders offer a choice of repayment plans, they generally charge lower interest rates for Standard and Interest Only repayment. They charge a higher interest rate for Deferred repayment to compensate for the added risk. Choosing to make full principal and interest payments under a Standard repayment plan is the least costly repayment plan available. If you cannot afford to make full principal and interest payments, consider paying at least some amount each month. Whether you make interest-only payments or partial payments, it reduces your overall cost of borrowing.

By exploring your repayment plan options when considering loan refinance, you can find the best option for your financial situation. In Part II of Choosing Your Private Student Loan Repayment Options, we’ll discuss interest rates and repayment terms. These also affect your total amount paid.

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Student Loan Consolidation vs. Refinancing: What’s the Difference?

nelnetAdmin — Fri, 18 Jun 2021 19:44:58 +0000

When it comes to student loans, you’ve likely heard the terms consolidation or refinance. You may have thought they mean the same thing. While they’re similar, they are actually two different options for combining your student loans.

Student Loan Consolidation

Direct Loan consolidation is a program offered by the Federal government. This program allows you to combine all of your federal student loans into a single loan. The interest rate for your consolidation loan is a weighted average of all the loans you are consolidating. It is not based on credit, like student loan refinancing. You can also switch your variable interest rate loans to fixed interest rates to avoid paying more interest if variable rates rise. Typically, student loan consolidation doesn’t save you money, but it simplifies your payments into a single monthly payment. You also get to keep your federal student loan benefits, such as income-driven repayment plans and loan forgiveness.

Student Loan Refinancing

Student loan refinancing is a program offered by private lenders. This program combines your federal and private student loans into a new loan with a new term and interest rate. The interest rate of the loan is based on creditworthiness, unlike student loan consolidation. With student loan refinancing, you can pick a term that fits your financial needs and may save you money. However, extending the term of any loan to lower monthly payments means paying more interest in the end. Many lenders offer borrower benefits with student loan refinancing, such as interest rate reductions for auto-debit payments and cosigner release. Keep in mind, if you refinance federal student loans, you no longer have the federal benefits associated with those loans. Find out if student loan refinancing is for you by asking yourself these six questions.

Student loan consolidation or refinance can simplify your student loans into one monthly payment. Just remember there are additional unique benefits to both options. Weigh the benefits of each program to decide the right option for your situation. As with any loan, make sure you fully understand all the terms and conditions.

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Student Loan Refinance: How to Look Beyond the Numbers

nelnetAdmin — Fri, 18 Jun 2021 19:39:31 +0000

You’ve made your decision. You’re going to refinance your student loans. You’ve done the research. You’ve compared a number of student loan refinance programs. You’ve completed side-by-side calculations. You know which ones have the lowest interest rates, best repayment options, and the most generous borrower benefit programs. You’ve read the fine print and narrowed your choices down to your top three. But do you know your loan servicer?

Making the Choice

So which one is it going to be? Is it the lender who lists the lowest interest rate? Or perhaps the lender with the repayment plan that allows you to lower your monthly payment the most? How about the lender that offers those tantalizing borrower benefits? The ones that allow you to save hundreds of dollars more when you refinance with them?

Choosing which student loan lender to refinance with can be a difficult decision. While you should definitely consider the overall cost, monthly payment, and borrower benefits offered, there is another very important factor. You need to know who the lender and loan servicer will be after making your new refinance loan; the one you will start making your new monthly payments to.

Who are Loan Servicers?

You may be wondering why this is important. Once you refinance your student loans, many lenders have agreements to sell, or package their loans into financial securities. They often go to the highest bidder. The proceeds from the sale then make more refinance loans, which the lender subsequently sells. This happens over and over again. Rinse and repeat.

Lenders Decide

Ok, so the lender sells their loans, but the loan servicer the lender contracts with to manage your account and accept payments has a good reputation, which means you’re good to go, right? Maybe. That’s because the holder of your student loans (either the original lender or the buyer if the loans are sold) gets to decide where the loans are serviced. And once your refinance loan is made, the loan servicer is most important to you, since this is who you will be interacting with. It’s similar to when you buy a TV from a large retailer. The retailer sets the price and sells you the TV, but once you own it, you must contact the manufacturer with any questions or if you need customer support.

Tip: The lender and loan servicer information can usually be found on the lender’s website, in the Application and Solicitation Disclosure every lender is required to present you before you apply for a loan, or on the actual promissory note you must sign. If you don’t recognize the lender or loan servicer, you should call the financial aid office at your school to ask them if they are a reputable organization.

What if the lender doesn’t sell their loans, or package them into financial securities. Everything is fine then, right? If the lender doesn’t sell their loans, or sells them to a buyer that uses the same loan servicer, then you can feel pretty good about things. While there are no guarantees, if the lender uses a reputable loan servicer, then you can feel fairly confident your customer satisfaction is very important to them. The chances that they would jeopardize this by cutting corners with a low-cost, low-quality servicer just to save a few dollars is less likely.

Know Your Lender and Servicer

Knowing who the holder and loan servicer of refinanced student loans are after the loan is made is extremely important. If the lender sells their loans, be sure you know who the buyer is and which loan servicer they use. If you’ve ever had to deal with a company that provides poor customer service, chances are you wouldn’t buy from them again if you didn’t have to. With student loan refinancing it’s even more important, because if you’re unhappy with your loan servicer, the only way to switch is to refinance your loans again.

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When to Consider Refinancing Student Loans

nelnetAdmin — Fri, 18 Jun 2021 19:33:06 +0000

Should I consolidate or refinance my student loans? At Nelnet Bank, we get this question daily and it’s one every person with student loan debt should ask themselves. Of course, the answer depends on your specific situation and is not always clear cut. In many cases it makes total sense, while in others it may not, or at least not right now.

Before thinking through the different options available, you should understand the difference between consolidate and refinance.

Consolidating your student loans through the federal government’s Direct Consolidation Loan program means combining several loans into one new loan. The new interest rate is the weighted average of the interest rates from the loans you are consolidating. With refinancing, you are actually paying off your federal and/or private student loans with a new private loan. This new loan has a different interest rate and loan terms.

Now that you understand the basic difference between consolidation and refinancing, here are some things you should carefully consider:

Do you want to save money by lowering your overall costs?
Many people know loans with lower interest rates generally cost less than loans with higher interest rates. But many don’t realize students who borrowed between 2006 and 2013 could substantially lower the interest rate on those loans. They may be eligible if they have good credit and refinance their loans during today’s historically low interest rate environment. Even if you’re comfortably making payments, lowering your interest rates can save on your total loan costs.
Are you making multiple monthly payments?
Are you making more than one monthly payment and want to simplify your life? Loan consolidation or refinancing can help. However, if you have federal and private student loans and want only one monthly payment, your only option is refinancing. You cannot consolidate private loans through the Direct Consolidation Loan program.
Do you want to switch your interest rate from a variable to a fixed rate (or vice versa)?
When you took out your student loans, each loan had either a fixed or variable interest rate. Understanding what type of interest rates you have is important. It affects whether or not your monthly loan payments will fluctuate over time. If you have fixed rate loans your monthly payments will remain constant. With variable rate loans your monthly payments may change over time.

Do you plan to pay off your loans in a short period of time? A variable rate loan could be a good option. The initial interest rate on a variable rate loan is typically less than on a fixed rate loan. However, the longer the repayment term, the greater the opportunity for variable interest rates to fluctuate. If rates rise, your monthly payment and total costs will rise as well.
Do you want to lock in a fixed monthly payment with a low interest rate?
If you prefer predictable payments that won’t change over time, then a fixed rate loan may be your best choice. With the current low interest rate environment, you could lock in a low fixed interest rate by refinancing. Your rate depends on several factors. These factors include your credit, income, education level, repayment term, and whether or not you have a cosigner.
Are your monthly payments weighing you down?
Are you having trouble making your monthly student loan payments? Do you just want to free up some extra cash? Refinancing your loans can be a great option. Most private loan lenders offer repayment terms up to 20 years, with some like Nelnet Bank offering a 25-year option. By increasing the length of your repayment period, you can lower your monthly payments. However, loans with longer repayment terms typically have higher interest rates than loans with shorter terms. You will likely end up paying more in total interest over the life of the loan.
Will you lose any features or benefits if you refinance or consolidate your loans?
Refinancing or consolidation means you are replacing your loans with a new loan. It’s important to understand you might lose benefits tied to your original loans. For example, federal loans offer a variety of deferment, forbearance, and repayment options. These benefits assist borrowers who cannot afford their monthly payments. Federal loans also offer benefits to military service members that may not be available with private loans. Your current loans may also have borrower benefits such as an interest rate discount. Be sure to compare the features and benefits of your new loan with any you might be giving up.

If the time is right to refinance your student loans, take a moment to review several lender websites. Create a short list of top candidates. Call each candidate and ask them any questions you have, including what you will need to apply. Make sure you are speaking to the actual loan servicer. This is who you will interact with over the entire life of your new loan.

The post When to Consider Refinancing Student Loans appeared first on Nelnet Bank.

Are You Ready for Student Loan Repayment?

nelnetAdmin — Fri, 18 Jun 2021 19:13:37 +0000

Don’t let your student loan statement be a surprise in the mail. Be prepared for student loan repayment by asking yourself these three questions:

Who are your loan servicers?
When you take out student loans from the federal government, you will be assigned a student loan servicer by the U.S. Department of Education. If you have private student loans, the servicer will be assigned directly by the lender. Your student loan servicer is who you will work with to make payments on your student loans. They can also help you understand your student loan repayment options, and answer any other questions you may have. If you have multiple student loans, you may have multiple loan servicers. Visit nslds.ed.gov to look up your federal student loan servicers if you don’t know them. For private loans, contact your lender.
How much are your monthly payments and when are they due?
Now that you know who your loan servicers are and where to send payments, you need to know how much to send and when. For federal student loans, there’s generally a six-month grace period after graduation before your first student loan payment is due. By this point, your servicer already put together a student loan repayment schedule. This schedule shows you how much your monthly payments are.

You should receive a statement from your servicer three to four weeks before your payment is due. Make sure your servicer receives your payment by the due date. If you don’t make a loan payment by the due date, the loan is delinquent until you make a payment. Depending on your servicer or lender, this delinquency may be put on your credit report and negatively affect your credit score. Most servicers and lenders offer auto debit, meaning your monthly payment is taken directly from the account you specify on the due date. By doing this you can ensure your payments are never late. Some lenders even offer incentives, like interest rate reduction, for this type of payment.
What are my repayment options?
Your federal loans are automatically in a standard, 10-year repayment plan if you have not specified otherwise. If you find that the payments are more than you can afford, there are other options to explore. Federal student loans have several repayment options to help you repay your student loans. Call your student loan servicer and they will help you work through your options.

You can also consider refinancing or consolidating your student loans into one payment. If you have more than one servicer or lender, you will be making multiple payments every month. By consolidating or refinancing, you can make one monthly payment to one servicer. Consolidation will combine your federal student loans into a new loan so you have a single monthly payment. Refinancing can combine both your federal and private student loans into a new loan, with a new interest rate and term. Student loan consolidation and refinancing is not for everyone, so make sure you understand the pros and cons of each.

Following the basic steps outlined above will set you up for successful student loan repayment. Remember that your student loan servicer is there to help, so never hesitate to reach out if you have questions.

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