What Nelnet payment plans are and who uses them

Nelnet is a loan servicer — a company that collects your monthly student loan payments on behalf of the federal government or a private lender. When you have federal student loans, you do not choose Nelnet directly. Instead, the Department of Education assigns your loans to Nelnet or another servicer, and Nelnet then manages your account, processes payments, and helps you understand your repayment options.

Nelnet handles both federal and private student loans. For federal loans, Nelnet offers access to income-driven repayment plans, which adjust your monthly payment based on what you earn rather than the total amount you owe. For private loans, the payment structure depends on the terms of your specific loan agreement.

You interact with Nelnet through their website (nelnet.com), their phone line, or their mobile app. Most borrowers contact Nelnet when they need to make a payment, change their payment plan, or understand what they owe.

Key Takeaways

  • Nelnet is assigned to your loans by the Department of Education; you do not choose them, but you can request a transfer to another servicer.
  • Federal loans serviced by Nelnet can use income-driven repayment plans that lower your monthly payment if your income is low or you are unemployed.
  • You can set up automatic payments through Nelnet's website or app, and automatic payments typically reduce your interest rate by 0.25 percent.
  • If you fall behind on payments, Nelnet will contact you about options like deferment or forbearance before your loan goes into default.
  • Nelnet charges no fees to borrowers for payment processing or plan changes.

Federal loan payment plans available through Nelnet

If your federal loans are serviced by Nelnet, you have access to four income-driven repayment plans: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). Each plan calculates your monthly payment as a percentage of your discretionary income — the difference between your annual income and 150 percent of the federal poverty line for your family size.

REPAYE is the most commonly used plan because it typically results in the lowest monthly payment. Under REPAYE, you pay 10 percent of your discretionary income, and the plan is open to borrowers with any loan type or loan age. PAYE and IBR are similar but have stricter may be able to access rules — for example, PAYE is only open to borrowers who took out their first loan after October 1, 2007.

All income-driven plans require you to recertify your income every year. Nelnet will send you a reminder when recertification is due, and you can recertify online through their website by uploading your tax return or other income documentation. If you do not recertify, your payment may jump to the standard 10-year repayment amount.

You can also choose the Standard Repayment Plan, which has a fixed payment over 10 years and no income requirement. This plan costs more per month but results in less total interest paid over the life of the loan.

How to set up and manage payments with Nelnet

To make a payment, log into your Nelnet account online or use their mobile app. You can pay by bank transfer (ACH), debit card, or credit card, though credit card payments may carry a processing fee. Nelnet also allows you to set up automatic monthly payments, which are deducted from your bank account on a date you choose.

Automatic payments come with a 0.25 percent interest rate reduction on federal loans. This discount is small but permanent — it applies as long as you keep automatic payments active. You can cancel automatic payments at any time through your account settings, but you will lose the discount on future interest accrual.

If you want to change your payment plan, log into your account and select "Change Repayment Plan." Nelnet will show you what your payment would be under each available plan based on your most recent income information. The change takes effect the month after you submit your request. You can change plans as often as you need, though changing more than once per year may trigger a review of your income documentation.

Nelnet also allows you to make extra payments toward principal without penalty. Any payment above your monthly minimum goes directly to reducing the balance of your loan, which saves you interest over time.

What happens if you miss a payment or fall behind

If your payment is more than 15 days late, Nelnet will contact you by phone, email, or mail to remind you that payment is due. At this stage, you have not yet defaulted, and there is no penalty beyond standard late fees if your loan agreement includes them.

If you miss a payment for 90 days, your loan is reported to credit bureaus as delinquent. This damages your credit score and can affect your ability to borrow money in the future. If you miss a payment for 270 days (about nine months), your federal loan goes into default, and the government can take action to recover the debt, including wage garnishment or tax refund offset.

Before your loan reaches default, Nelnet can help you explore options like deferment (pausing payments temporarily) or forbearance (temporarily reducing or stopping payments). Both options keep your loan out of default, though interest may continue to accrue depending on the type of deferment or forbearance you use. Contact Nelnet as soon as you know you cannot make a payment — the earlier you reach out, the more options are available to you.

Private loans serviced by Nelnet

If you have a private student loan through Nelnet, your payment plan is determined by the terms of your loan agreement, not by federal rules. Private loans do not have income-driven repayment options, and Nelnet cannot change the terms of your loan unilaterally.

However, if you are struggling to make payments on a private loan, contact Nelnet to ask about forbearance or temporary payment reduction. Many private lenders offer these options to borrowers in financial hardship, though they are not required to do so. Nelnet can explain what options your specific loan agreement allows.

Transferring your loans away from Nelnet

You cannot choose which servicer handles your federal loans — the Department of Education makes that assignment. However, you can request a transfer to a different servicer. To do this, contact the Federal Student Aid office at 1-800-4-FED-AID or visit studentaid.gov. Explain that you want your loans transferred to a different servicer, and provide the name of the servicer you prefer.

The transfer process takes several weeks, and during that time your account may be in limbo. Your payment due date may shift, and you may receive notices from both Nelnet and your new servicer. Make a note of your current payment due date and continue making payments on time until you receive confirmation that the transfer is complete.

Transferring servicers does not change the terms of your loans or your repayment plan. It only changes which company collects your payments and manages your account. If you are unhappy with Nelnet's customer service or website, a transfer may improve your experience, but it will not lower your payment or reduce the total amount you owe.

Frequently Asked Questions

Does Nelnet charge fees for payment processing or plan changes?

No. Nelnet does not charge borrowers any fees to process payments, change repayment plans, or recertify income. If you pay by credit card, the credit card company may charge a processing fee, but Nelnet itself does not. Some third-party websites claim to help with loan management for a fee — do not use them. You can do everything Nelnet offers for free through their official website or phone line.

What if I have loans with multiple servicers?

You can have different servicers for different loans. Each servicer manages only the loans assigned to them. If you have loans with Nelnet and another servicer, you will need to log into separate accounts and make separate payments. You can request that all your loans be transferred to one servicer, but the Department of Education may not grant the request — servicer assignments are based on loan type and other factors.

Can Nelnet help me with loan forgiveness programs?

Nelnet can provide information about Public Service Loan Forgiveness and Teacher Loan Forgiveness, but they do not manage the forgiveness process itself. You must submit forgiveness applications directly to the Department of Education or your employer. Nelnet can help you understand whether your payment plan affects your forgiveness timeline and can provide documentation of your payment history if you need it for a forgiveness application.

What is the difference between deferment and forbearance?

Both pause or reduce your payments temporarily, but they work differently. With deferment, interest does not accrue on subsidized federal loans, though it does on unsubsidized loans and private loans. With forbearance, interest accrues on all loan types. Forbearance is easier to obtain — you can request it by phone or online — while deferment requires more documentation. Nelnet can explain which option applies to your specific loans.

Will paying extra toward my loan hurt my credit score?

No. Paying extra or paying early does not damage your credit. In fact, making on-time payments and paying down your balance improves your credit score over time. There is no penalty for paying more than your minimum monthly payment.