If you are repaying Nelnet student loans, you may be wondering what your options are for Nelnet student loan consolidation and refinancing. Both options can simplify repayment, and refinancing your loans can save you a lot of money. Read on to learn the differences between consolidating and refinancing Nelnet student loans so you can decide which strategy, if any, would be most effective for you.
One of nine federal student loan services, Nelnet does not directly offer consolidation or refinancing options. But you can consolidate your federal loans managed by Nelnet through a Direct consolidation loan with the federal government.
Alternatively, you can choose to refinance your Nelnet student loans into a brand new loan with a private lender. Taking either action might be wise if you’re looking to streamline your repayment, lower your monthly dues, or avoid a disorganized agent.
If you are not happy with Nelnet, this is one of the the most criticized servers – you will be happy to see that you can change maintenance agent thanks to federal consolidation and refinancing. That said, you don’t have to change if you consolidate, as you can choose to stay with Nelnet and keep your maintenance functions.
Consolidation and refinancing also come with similar eligibility requirements, ranging from having a college degree to tracking your debt repayment.
Let’s explore the pros and cons of each reimbursement strategy.
Federal Student Loan Consolidation won’t directly save you money, but it could put you in a better position to pay off your debt. This is because consolidating your student loans gives you a loan and a monthly payment.
You could also reduce your monthly payment by consolidating and switching to a longer repayment term – if you don’t mind that your interests run.
Having said that, there are some drawbacks to a direct consolidation loan. On the one hand, your interest rate will increase slightly, because it will be an average of your previous rates, rounded to the nearest eighth of a percent.
On the other hand, taking out the new consolidated loan could reset your progress towards a loan cancellation program, such as Public service loan remission, if you have been in repayment for a while.
But if you are in the early stages of repayment, perhaps even taking advantage of your grace period, you might consider a direct consolidation loan to be a fresh start.
Like direct consolidation, refinance your Nelnet student loans with a private lender allows you to combine multiple loans into one. Plus, you can switch to a new lender and loan manager and say goodbye to Nelnet.
Refinancing also has an advantage over consolidation if you are looking to save money – it often allows you to reduce your interest rate by several percentage points. In fact, major refinancing companies offer fixed and variable rates below 3.00% to borrowers with strong credit histories and low debt-to-income ratios (DTIs).
If you can significantly reduce your rate, you could save money over the life of your student loans. In addition, refinancing allows you to choose new terms, generally between 5 and 20 years, and adjust your monthly payments accordingly.
But even with all of these advantages, there are some disadvantages to know, too much. Refinancing federal student loans makes them private, which would cost you access to federal repayment plans and forgiveness programs.
Also, it can be difficult to qualify for refinance because you need to have good credit and sufficient income (or apply with a co-signer which meets this criterion). So, before choosing to refinance Nelnet student loans, make sure you understand both the advantages and disadvantages.
And most importantly, make sure you don’t miss out on the opportunity to qualify for a loan forgiveness, change your loan repayment plan, or use deferment and abstention options, because private lenders usually do not check these boxes.
You have all kinds of options to manage your Nelnet student loan consolidation. Chances are, one is better for you than the others.
If you are looking for the convenience of a single loan but dislike private lenders, you can apply for a Direct Consolidation Loan. You would be sorry for not wanting to give in to the government’s more extensive repayment protections.
But if you won’t miss out on the benefits of federal loans, consider refinancing your Nelnet loans with a private lender. A lower interest rate could offset any fees you might see as a result of the change, especially if you can find a lender that offers repayment protections.
SoFi, for example, offers help if you lose your job while you pay off your debt. You might come across U-fi Student Loan Refinancing while browsing the Nelnet website because the companies are partners. Keep in mind that you don’t have to refinance with U-fi.
Check Out These Refinance Lenders before choosing the right one for you.
Rebecca Safier contributed to this article.