With tuition rates and overall cost of living climbing rapidly and showing no signs of slowing down, most students find it necessary to finance their higher education with loans such as Nelnet student loans. Nelnet is one of the ten student loan service providers that service federal student loans. You do not get a choice in this matter. Your loan provider is chosen at random. You do, however, have a choice in private student loan providers or who you refinance your loans with. Keep reading for a comprehensive review of four of the biggest players in the student loan industry and how they stack up.
What to Look for in Student Loans
If you cannot pay out of pocket for school, the first thing you need to do is get the maximum amount of money you can from scholarships, federal grants, and other financial aid, and then federal student loans. Once you have exhausted all these resources, seek private student loans such as those provided by Nelnet student loans.
Whether you are looking for Nelnet student loans or another student loan provider, make sure you can expect excellent customer service with multiple convenient communication options, flexibility to pay your loans back, and features such as forbearance, discounts, the ability to add or remove co-signers, unemployment protection, and the opportunity to make interest-only payments if you can prove financial hardship.
Product Specs
Headquartered in Lincoln, Nebraska, Nelnet services both federal and private students loans for over 5 million borrowers. Whether you take out Nelnet student loans or not, their website contains a wealth of information on personal finance that all students and recent graduates can use. This includes budgeting worksheets and strategies, financial wellness and credit card tips, how to protect your identity and more. Nelnet offers special features such as new repayment plans, deferment, and forbearance.
Pricing
How much you pay over the life of your student loan depends on the loan term, interest rate, and any fees such as an origination fee or early payment fee. The longer the loan term, the lower the monthly payment is. However, your interest rate will be higher to compensate for the greater risk to the loan provider. To pay the least over the life of your loan, choose the shortest loan term you can afford.
If you choose a variable interest rate, it may start lower than the fixed interest rate you could qualify for based on your credit, but it can increase to significantly more than the fixed rate quickly, causing you to pay more throughout your loan.
Origination fees are a onetime fee sometimes called an administrative fee and may be deducted from the cash you receive from your loan. Avoid companies with early payment fees at all costs. You should not be penalized for paying your loans off early. To save money on your student loans, make payments specifically to principal rather than pre-paying your next month's bill.
How It Compares
We picked a few similar loan options available on the market to see how they compare.
- FEES
- Interest Rate
- Loan Options
- Public Opinion
- Loan Terms
1 of 5 stars
Interest rates for federal student loans are readily available, but interest rates for Nelnet student loans are not clearly published.
PROS
CONS
Sallie Mae
Sallie Mae is one of the most recognized student loan providers in the country. But how do their loans compare to Nelnet student loans? Sallie Mae finances student loans for everything from private kindergartens to grad school. They have been around for 43 years, received an A+ rating from the Better Business Bureau, and their customer service is 100% US-based. There is no transparency regarding the minimum credit score required to qualify for a loan, but in 2016, approved applicants had an average credit score rating of 748 per FICO.
- Price
- Interest Rate
- Loan Options
- Public Opinion
- Loan Terms
3 of 5 stars
Sallie Mae offers loan repayment terms ranging from five to 15 years, but unlike most loan service providers, they assign the loan terms to you. You have no option to pick your repayment plan.
PROS
CONS
Laurel Road
Laurel Road is the best student loan provider for medical residents. Once you earn your MD, you can pay as little as $100 monthly during your fellowship or residency and remain current. To apply, you need to provide the school you attend, the degree you are working towards, your enrollment status and your graduation date. You also need to provide identification, citizenship or personal residency and other personal information for yourself and any cosigner you include in your application.
- Price
- Interest Rate
- Loan Options
- Public Opinion
- Loan Terms
5 of 5 stars
With Laurel Road student loans, you have the option to pay your loans back over the course of five to 20 years.
PROS
CONS
Discover Student Loans
Discover offers much more than credit cards. Besides revolving lines of credit, they also offer a variety of installment loans including student loans. Student loans can be financed for undergraduate and graduate students, MBA students, law students, bar exams, residency and health professions. You may also consolidate your student loans through Discover. You can apply in 15 minutes or less.
- Price
- Interest Rate
- Loan Options
- Public Opinion
- Loan Terms
1 of 5 stars
Discover offers a term of 15 years after the deferment period to pay your loans back for undergraduate students. For graduate students, the loan term is 20 years after the deferment period. There are no prepayment penalties, but we would have liked to see more term options such as five or seven years like you would get with Nelnet student loans.
PROS
CONS
Conclusion
Exhaust all other options before taking out private student loans. If you end up with Nelnet student loans because they are servicing your federal student loans, they are not a terrible company to work with. However, if you are looking for a private student loan provider, there are better options out there for you.
Overall, we give Nelnet a 3 out of a 5-star rating. Our biggest qualms about the company were the lack of transparency regarding key information such as interest rates you can expect to pay and approval qualifications. This is not an issue if you have a federal student loan because those interest rates are fixed, but when shopping around for a private student loan, this information is critical.
Remember when seeking a student loan provider to ensure there are no fees associated with your loans such as administrative or origination fees or early payment penalties. Look for a provider with excellent customer service, hardship forgiveness, and other flexibility to pay your loans back.
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