Nelnet Bank Student Loan Refinancing Review: Familiar Name, New Offerings

November 21, 2020 Loans & Finance

Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.

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Pros of Nelnet Bank Student Loans:
Cons of Nelnet Bank Student Loans:
● Competitive interest rates
● Checks rates without harming your credit
● Combines industry experience with fintech-like features
● Strict eligibility requirements include a 680 credit score
● Limited economic hardship forbearance policy
● Mixed history as a federal loan servicer and private lender

Longstanding student loan servicer and originator Nelnet Inc. launched its online-only Nelnet Bank in November 2020 to provide student loan refinancing. Seeded with $100 million from its parent company, Nelnet Bank also plans to begin offering private student loans by 2021.

Nelnet Bank marks a new chapter for the publicly traded company, as its federal loan servicing contract with the Department of Education is set to expire in December 2021. Let’s review its refinancing options and have a look at what we know about the upcoming private student loan side of the business.

Nelnet Bank student loan refinancing review
Nelnet Bank private loans review
● The basics
● What to like
● What to keep in mind
● Competitor comparison
● Nelnet Bank announced in November 2020 that it would begin offering private loans for current students come 2021.
● Frequently asked questions about Nelnet Bank student loan

Nelnet Bank student loan refinancing review

If you thought Nelnet Inc. already offered student loan refinancing, you wouldn’t be wrong — Nelnet has a partnership with Union Bank and offers refinancing through U-fi. Unlike that arrangement, however, the separate entity Nelnet Bank operates like a traditional financial institution, funding and servicing its own consumer debt.

Nelnet Bank student loan refinancing is a good fit for borrowers with a bachelor’s degree or higher who want to repay private and/or federal student loans, including parent PLUS Loans, at lower interest rates and different repayment terms, without incurring fees.

Offering the ability to refinance up to $500,000 for health professional degrees, Nelnet Bank could also be a top option for medical workers with especially high debt loads. With a limited forbearance offering, however, the lender is less ideal for anyone with a shaky financial situation.

What to like:
What to keep in mind:
● Competitive fixed and variable rates
● Easy to prequalify and apply
● Various repayment term options
● Cosigner release program
● Parent PLUS Refinancing flexibility
● Restrictive eligibility requirements
● A bachelor’s degree or higher needed to qualify
● Underdeveloped forbearance program

Nelnet Bank student loan refinancing review: The basics

With a name like Nelnet Bank, it might seem like the kind of legacy financial institution that’s under competitive pressure from newer online lenders like SoFi. But in fact, Nelnet Bank has many cutting-edge features, such as:

Prequalifying without affecting your credit
Option to apply with a cosigner
Both fixed and variable interest rates available
0.25 percentage-point discount on your interest rate for enrolling in autopay
No application, origination or prepayment fees
Repayment terms spanning from five to 25 years
Refinancing offered for a wide range of loans, from as little as $5,000 to as much as $125,000 (for undergraduates), $175,000 (graduate degrees) or $500,000 (health professions degrees)
Parent PLUS Loans can be refinanced in the parent or child’s name

With that said, some aspects of Nelnet Bank student loan refinancing may be less welcome to borrowers. Here are a few product details to be aware of:

Spousal consolidation loans unavailable
Forbearance (the ability to postpone payments) available, but eligibility criteria is currently unclear
Cosigner release possible, but only after two years of prompt and full payments
Late payment fee of 5% of the payment amount or $25, whichever is less

What to like about Nelnet Bank student loan refinancing

When shopping around for a student loan refinance lender, your first question might be whether your new loan will save you money in repayment. Fortunately, Nelnet Bank could be a cost-cutting option for many borrowers. For others, it could provide much-needed flexibility, perhaps in the form of a shorter or longer repayment term.

Here are some of the benefits of Nelnet Bank student loan refinancing:

Competitive fixed and variable interest rates
Prequalification highlights seamless application process
Various repayment term options
Cosigner release program
Parent PLUS Refinancing flexibility

Competitive fixed and variable APRs

Your interest rate is significant because it determines how quickly (or slowly) your balance could grow over time, even as you’re making payments. The lower your rate, the less you’ll shell out to your lender.

For its part, the rates advertised by Nelnet Bank at its launch were competitive versus some reputable refinancing peers (as you can see by visiting our student loan refinance marketplace).

Fixed
Variable
2.99%* to 6.70% 2.02%* to 6.67%
APRs as of Nov. 4, 2020
*Includes autopay discount of 0.25 percentage points

Prequalification highlights seamless application process

The hallmark of a customer-first student loan refinancing company is that it allows you to check your eligibility — and see your potential interest rates — without subjecting you to a hard credit check. Nelnet Bank more than delivers on this front.

Three steps to apply for Nelnet Bank student loans

Complete a minutes-long online application that asks for contact information, loan amount and Social Security number
Review Nelnet Bank refinancing offers (if you’re approved)
To accept an offer, upload your debt payoff letters and proof of income (in the case of traditional employment, two recent pay stubs)

If you decide to move forward, it’s important to keep making monthly payments on your current student loans until your Nelnet Bank refinanced loan is fully disbursed. As easy as Nelnet Bank seems to make it, the process isn’t completed overnight.

Timeline of receiving a Nelnet Bank student loan
From approval to funding 10 to 14 days
First Nelnet payment due 45 days

To get started with Nelnet Bank, you’ll need to register:

Image from Nelnet Bank

Various repayment term options

With good credit — or a creditworthy cosigner — you could have a variety of options when it comes to your student loan term. (Your loan term is the amount of years you have to make monthly payments before your balance hits zero.)

Nelnet Bank promotes a menu of repayment terms spanning five to 25 years. Note the following:

A five-year repayment term is generally the cheapest option because it would call for higher monthly payments.
A 25-year term would be the most expensive because lower monthly payments would be offset by accruing and compounding interest
Many borrowers choose a term in between these extremes to balance the burden of monthly dues with interest costs

Be aware, however, that you may not have your pick of the litter. After you prequalify with Nelnet Bank, it might only share a few loan offers — say, just those with 10-, 15- or 20-year terms.

Cosigner release program

If you need a cosigner to qualify for Nelnet Bank student loans (or access better terms), you might appreciate the opportunity to eventually remove your cosigner from the loan agreement.

Fortunately, Nelnet Bank’s release program is fairly generous. If you’re a U.S. citizen or permanent resident with stable income and no student loans in default, you could send your cosigner on their way after two years of timely payments.

Parent PLUS Refinancing flexibility

Nelnet Bank is among those lenders that allow parents to use refinancing to transfer PLUS loans they took out into their child’s name — and if they choose, they could even become a cosigner on the new refinanced loan.

On the other hand, parent borrowers can also refinance with Nelnet Bank and keep the debt in their column, if they prefer.

Of course, refinancing federal loans (such as PLUS loans) is risky. If you want to group your federal education debt but retain government-exclusive safeguards like income-driven repayment, then you’re likely better suited to Nelnet student loan consolidation via the Department of Education.

What to keep in mind about Nelnet Bank refinancing

If you’ve even just casually scanned the market for refinancing lenders, you already know that no two lenders are exactly alike. Some banks, credit unions and online companies have features you may or may not find attractive.

Here are three potential downsides of Nelnet Bank loans:

Eligibility requirements are restrictive
A bachelor’s degree or higher is needed to qualify
Underdeveloped forbearance, deferment programs

Eligibility requirements are restrictive

Unfortunately, even if you like the idea of refinancing with Nelnet Bank, you might not be able to — at least not without the help of a cosigner.

Nelnet Bank’s student loan refinancing qualifications include:

Type
Requirement
Can a cosigner help?
Residency Citizenship or permanent residency with Social Security number Yes
Education At least a bachelor’s degree No
Age 18 years old (or the age of majority in your state) No
Credit score 680 Yes
Income $36,000 Yes

If you fail to meet one of the criteria in which a cosigner can’t help, don’t lose hope. You could always check in with a competing lender that has less-stringent underwriting standards. For instance:

Don’t have a 680 credit score? Earnest accepts scores of 650 (and above)
Don’t have a $65,000 income? LendKey sets its minimum income requirement at $24,000
Not a citizen or permanent resident? Prodigy Finance is among lenders assisting international borrowers

A bachelor’s degree or higher is needed to qualify

Unfortunately, a cosigner can’t always get you over the hump to qualify for refinancing at Nelnet Bank and other lenders.

In the case of Nelnet Bank, most notably, you (rather than your potential cosigner) need to have earned at least a bachelor’s degree to qualify — an eligibility requirement that many other lenders leave out.

Still, if you left school without a four-year degree and want to refinance, you could always look for an alternative to Nelnet Bank. EdVestinU, for example, works with borrowers who didn’t graduate or those who hold an associate’s degree.

Underdeveloped forbearance, deferment programs

Given that it’s a brand-new lender, Nelnet Bank could be forgiven for lacking a clearly defined forbearance program (for now at least). The lender does claim it will let you pause your monthly payment due to economic hardship in two-to-three month increments at least six months apart from each other. But they appear to approve forbearance requests on a case-by-case basis, leaving its customers with an unnecessary level of uncertainty.

Limited types of deferment may also be accessible on Nelnet refinanced loans, including for:

Returning to school
Taking on a postgraduate internship or residency
Serving in the military
Experiencing a natural disaster

Still, at this point some details of eligibility requirements for these are a little unclear, so Nelnet Bank’s policy is either less uniform or perhaps just still in development.

How Nelnet Bank student loan refinancing compares with competitors

Whether you’re just starting your hunt or are already well into the process of searching for the right lender, it’s wise to compare your options. This way, you can grab the best overall loan for you.

Here’s how Nelnet Bank compares with two other online lenders, College Ave and CommonBond.

Nelnet Bank
College Ave
CommonBond

Products ● Student loan refinancing
● Parent PLUS loan refinancing
● Student loan refinancing
● Parent PLUS loan refinancing
● Student loan refinancing
Eligibility requirements ● 680 credit score
● $36,000 income
● Citizenship or permanent residency
● Bachelor’s degree
● 680 credit score
● $65,000 income
● Citizenship or permanent residency
● Undergraduate or graduate degree from lender-selected group of colleges and universities
● 660 credit score
● No minimum income requirement
● Citizenship, permanent residency or eligible visa
● Undergraduate or graduate degree from lender network university
APRs Variable starting at 2.02%* and fixed starting at 2.99%* Variable starting at 3.24% and fixed starting at 3.74% Variable starting at 1.99% and fixed starting at 2.83%
Minimum loan amount $5,000 $5,000 $5,000
Repayment terms available 5 to 25 years 15 years (16 different options) Up to 20 years
Apply with a cosigner Yes Yes Yes

*APR as of Nov. 4, 2020

Is Nelnet student loan refinancing right for you?

Like some other federal loan servicers, Nelnet has been the subject of some criticism among borrowers, though not the most among its peers.

On the other hand, if you like that the company already has industry experience, consider that spinoff Nelnet Bank also offers more innovative service. Although its mobile apps are still in the works, the online lender gives borrowers the chance to test the waters by prequalifying without a hard credit check. There are also no fees to fork over.

If you can qualify for lower rates and a more preferable term with Nelnet Bank, it could be the right lender for your repayment — just make sure you meet its strict eligibility criteria and won’t miss a more expansive forbearance program found elsewhere.

Note also that you might find an even better lender option among our recommended student loan refinancing companies.

Nelnet Bank private loans review

The newly-formed subsidiary of Nelnet said in a Nov. 2, 2020, press release that it would begin offering private student loans in 2021.

In the statement, Nelnet Bank said its forthcoming private loan product would be an option for families that max out their federal loan borrowing. And like its student loan refinancing option, private loans offered by Nelnet Bank come with the promise of an eventual mobile app for seamless loan management.

Once Nelnet Bank launches its private loans, we’ll provide a full review.

Frequently asked questions about Nelnet Bank student loans

If you didn’t find your question answered in our Nelnet Bank review, see the following FAQs:

Is Nelnet Bank legit?

Yes, Nelnet Bank is a legitimate lender for student loan refinancing and, come 2021, private student loans.

Does Nelnet Bank offer federal or private loans?

Nelnet is a federal loan servicer, while the newly-formed Nelnet Bank originates and services private education debt, starting with refinanced loans.

Student Loan Hero has independently collected the above information related to Nelnet Bank student loans, which was current as of Nov. 4, 2020, unless otherwise noted. None of the financial institutions named has either provided or reviewed the information shared in this article.

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