When it comes to student loans, one of the names you often hear is Nelnet. They are loan servicers, meaning that it is one of the organizations that handles loans. These are the organizations you'll deal with as you borrow and pay the loan during its lifespan.
You may already know that federal and private loans offer distinct advantages which may lead you to choose one over the other. This is why it’s vital to know whether the loan servicer you’re thinking of is federal or private. This blog post will explore what Nelnet is, whether it’s federal or private, and whether it’s the right choice for you.
What is Nelnet?
Nelnet is a federal student loan servicer. It means that it is an organization closely tied to the US Department of Education. They act as the point of contact for the student loan, providing the service and helping borrowers during the process. To clarify, however, Nelnet itself is a different entity from the federal government. They merely have a close partnership with it.
While they are known for their federal student loans, they also offer private loans. They run a separate financial institution known as U-fi.
Working with Nelnet
Federal student loan borrowers don’t have control over the loan servicer provided to them. Instead, the government assigns them to companies like Nelnet. If you're under Nelnet, they will oversee your balance and payments. You can inquire to them about your account and make payments to them directly.
People’s experience with them varies. Since they are a loan provider, it’s not uncommon for them to get their share of negative reviews. Some people dislike Nelnet for its slow service and processing. However, many borrowers don’t have a choice.
These qualities are common among servicers, however, and Nelnet is considered one of the best among them.
Different types of federal loans are available through Nelnet. These include:
- Grad PLUS
- Parent PLUS
- Direct subsidized
- Direct unsubsidized
- Federal Loan Consolidation
You’ll know if Nelnet is your assigned provider as they’ll reach out to you as early as possible. You can also check your information through Federal Student Aid to check if they are the servicer listed.
The Future With Nelnet
Currently, the government has no plans to renew its contract with Nelnet. They are planning to move new loans to a different platform and a new set of providers. It means that most people under Nelnet will likely have their accounts transferred to another provider by 2022. When that time comes, you’ll receive prompts and information about your new provider.
It is likely that after 2021, Nelnet will no longer be a federal loan servicer. Instead, they’ll focus more on their private student loans through U-fi.