If you have existing federal student loans, the upcoming expiration of the CARES Act student loan relief could impact your finances in a big way. This overview will help you understand what is happening with the CARES Act, and what steps you can take today to put yourself on the best path possible.

What is the CARES Act?
Standing for Coronavirus Aid, Relief, and Economic Security (CARES), the CARES Act is an economic relief package passed by Congress in March of 2020. It included a wide range of policies designed to help people and businesses that were struggling financially as a result of the Coronavirus pandemic.

How did the CARES Act impact student loans?
While the CARES Act included a handful of policies that affected student loans, the most significant was a portion of the law that allowed student loan borrowers to temporarily pause payments on federally held student loans without penalty. It also temporarily reduced interest rates on all federally-owned student loans to 0%. This means millions of borrowers have been able to postpone student loan payments since March 2020 without added interest, financial penalties, or a negative credit impact. This was designed to help borrowers who were struggling financially during the pandemic.

What’s changing with the CARES Act now?
Federally-held student loans have a suspension of payments and a temporary interest rate of 0% until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 – payments will resume 60 days after that. We will notify borrowers before payments restart. If you refinance these loans, you will no longer qualify for this relief or other federally-held loan benefits. Carefully consider your options before refinancing federally-held loans.

What can I do now to make this change easier?
Most borrowers have two options for how they can make this transition easier.

• If you’re employed (or generally have the financial capacity to make payments) refinancing your student loans before payments restart could be a smart idea. Depending on your current rate, there’s a good chance you could lower your monthly payment significantly and potentially save a lot of money over the life of your loan. This could lead to thousands of dollars of total savings over time.*
• If you’re still unemployed or struggling financially, you may be able to qualify for additional relief in the form of an income-driven repayment plan or temporary relief programs like deferments or forbearances. Learn more about these options from the U.S. Department of Education.

Regardless of your situation, making smart decisions could improve your outlook in a major way. So before the CARES Act student loan relief expires, make a forward-thinking plan for your student loan repayment.

GET STARTED

A Note About Student Loan Refinancing

Understand and evaluate the various features and benefits of your current loans, and any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. Learn more about what to take into consideration when refinancing federal student loans with private education loans.

*Your actual savings, if any, may vary based on interest rates, balances, remaining repayment terms and other factors. Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan.

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 CARES Act Federal Student Loan Relief: Here’s What You Need To Know. appeared first on Nelnet Bank.

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.

The post Unique Ways to Pay Back Your Student Loans appeared first on Nelnet Bank.

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

1. 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.
2. 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.
3. 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…
4. 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.
5. 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.
6. 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.

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 Understanding Your Student Loan Grace Period and How to Make the Most of It appeared first on Nelnet Bank.

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.

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 Student Loan Refinance: Choosing Your Private Student Loan Repayment Options – Part II appeared first on Nelnet Bank.

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.

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.

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 Student Loan Refinance: Choosing Your Private Student Loan Repayment Options – Part I appeared first on Nelnet Bank.

1. 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.

2. 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.

3. 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.

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 Are You Ready for Student Loan Repayment? appeared first on Nelnet Bank.

Deferment & Forbearance

Deferment and forbearance allow you to temporarily postpone making payments or can reduce your payment for a period of time. Sounds great, right? So, what’s the problem? Your student loans continue to accrue interest. That interest could cost you thousands of dollars a year, depending on your student loan debt. Don’t delay the inevitable. You will have to pay back your student loans whether you pay them now or pay them later. Deferment and forbearance are great options if you have no financial means when you enter repayment. However, you shouldn’t use them as a way to delay paying your student loans. If you do need to go this route, try to at least make interest payments on your loans. If you don’t, the interest will capitalize leading to higher student loan debt and higher monthly payments once your deferment or forbearance expires.

Don’t Miss Payments

Make your payments every month and on time. If a loan payment is not made by the due date, the loan becomes delinquent until payment is received. Depending on your servicer or lender, this delinquency can affect your credit report as a negative mark, therefore negatively affecting your credit score. In addition, when you miss monthly payments, your payment will double, then triple, and continue to snowball which may put you in a situation that’s difficult to catch up on.

Avoid Scams

We’ve all heard the saying, “if it sounds too good to be true, it probably is.” It may seem enticing to pay a company to handle the stress of your student loans and promise you low payments or loan forgiveness, which are why these companies exist, but you’ll be wasting your money. Student loan servicers and lenders will not charge fees for finding a repayment plan that fits your needs. The U.S. Department of Education offers several student loan repayment plans and loan forgiveness, cancellation, or discharge for certain circumstances, but all of their services are free of charge.

Being prepared for repayment and understanding what you should avoid are two big steps to successfully paying off your student loans. Just remember, your student loan servicer is there to help you. If you need to adjust your repayment plan or just have questions about your student loans, give them a call (800.446.4190).

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 3 Student Loan Mistakes to Avoid in Repayment appeared first on Nelnet Bank.

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.

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.