If you have loans through NelNet, you might have considered refinancing as an option to get a lower interest rate or monthly payment.
Technically, you can't refinance your loans directly through NelNet, but that doesn't mean that refinancing is off the table—you'll just have to do it through a private lender. Here's what you need to know.
What is refinancing?
Refinancing is when you take out a new loan with new loan terms to pay for your existing loan.
Why take out a brand-new loan? Because doing so can get you out of debt a lot faster.
When you replace your old loan (or loans) with a new one that has a lower interest rate, you can lower your monthly payment or save money over the life of your loan.
Borrowers who choose to refinance can often lower their payments by $253 a month, or save $16,183 over the life of the loan. You can see how refinancing can impact your monthly payment with our Student Loan Refinancing Calculator.
What are the benefits of refinancing?
It's easy to see why people choose to refinance.
With a lower interest rate, more of your monthly payment will go towards the principal, allowing you to pay down your debt faster. You can also choose to extend or reduce your repayment term to either pay off the loan faster or lower your monthly payments.
One important thing to note is that if you do choose to refinance, you'll lose the benefits of your federal loans, like deferment, forbearance, and student loan forgiveness, if those were things you were hoping to take advantage of.
See also: Quiz: Should You Refinance Your Student Loans?
Am I eligible to refinance?
Each lender has its own eligibility requirements. Generally, you'll need to have a solid employment history and credit score in order to refinance. If you can't qualify on your own, look into getting a cosigner. (And even if you can qualify on your own, having a cosigner may snag you a better interest rate.)
Both federal and private student loans can be refinanced through a private lender, so if you have NelNet loans and other loans, you can refinance all of these loans together.
See also: Quiz: Do You Need a Cosigner to Refinance Your Student Loans?
Can I refinance my NelNet loans?
As a servicer of federal loans, NelNet does not offer refinancing directly.
In order to refinance your loans, you need to apply through a private lender.
Borrowers who are looking to refinance typically choose their lender based on:
All of these factors will play a role in determining which lender is the best fit for you.
Your new lender will offer you specific loan terms, like a new interest rate and repayment term, and will pay off your existing debt. After refinancing, you'll no longer make your monthly payments to NelNet. Instead, you'll work directly with your new lender. Just be sure to verify that your old loan is zeroed out before you stop making payments.
Can I consolidate student loans with a private lender?
Yes, consolidating is another option if you're just looking to manage your debt.
By consolidating, you're able to combine several student loans into one monthly payment. This simplifies debt repayment and usually lowers your monthly payment by extending the time you have to pay.
Just be sure to be aware of the difference between refinancing and consolidation.
When people refer to consolidation, they're typically talking about federal loans, which are consolidated as a Direct Consolidation Loan.
If you go through federal consolidation with the U.S. Department of Education, you'll get a single, and usually lower, monthly payment but not the benefits of a lower interest rate or reduction in debt.
Rather, the interest rate on your Direct Consolidation Loan is the weighted average of all the interest rates on all your old loans. Since this new interest rate isn't based on your credit score, this may be the way to go if you have less-than-great credit.
Refinancing with a private lender affords you the same benefit of combining multiple loans into a single, more affordable payment—but you usually get the added bonus of a lower interest rate, especially if you have good credit. This allows you to pay off your debt quicker.
See also: Should I Consolidate My Student Loans?
Where can I find the best deals on student loan refinancing?
Here are a few of the lenders we're currently recommending:
Many people choose CommonBond for its low rates (on average, customers with this lender save about $24,046 over the life of their loan) and its unique loan options. For example, the company offers a hybrid refinancing option that offers a fixed rate for five years and then a variable rate for the following five.
CommonBond customers also have the opportunity to attend networking events, panel discussions, and dinners hosted by the company and designed to connect borrowers with industry professionals.
Learn more about CommonBond.
Unlike other private lenders, SoFi goes beyond credit scores and debt-to-income ratios when considering whether to approve a refinancing application. It considers factors like your estimated cashflow, career prospects, and education. This means that even if you don't have the best credit score now, but you got a great education and are going into a profession that will pay dividends, you have a good chance of getting a good interest rate. In fact, they offer some of the most competitive rates in the industry.
Learn more about SoFi.
Considering refinancing but don't want to lose the benefits of federal loans, like forbearance and deferment? Laurel Road has you covered. It's one of the few lenders that offers these protections under certain circumstances.
In addition, it offers low rates, with customers saving an average of $20,000 or more over the life of their loans. It also offers special refinancing options for medical and dental students, as well as parents who’ve taken out loans for their child's education.
Learn more about Laurel Road.
To make sure you're getting the best deal possible, Splash Financial negotiates on your behalf with its partner banks and credit unions. Their mission is to help you save money and make sure you can repay your loans — which is why they also offer financial literacy to prospective customers. Through free consultations, the company helps you navigate through the options for your particular student loan scenario.
It's also a go-to lender for those in a medical residency or fellowship because they have specific refinancing plans just for you.
Learn more about Splash Financial.
Education Loan Finance, or ELFI, offers the benefits of traditional loan lenders with the highly-rated customer service of a smaller, community bank—it's backed by a management team with a combined 30 years of experience. To eliminate the issues borrowers tend to experience during the refinancing process, it has streamlined the online application process.
There are also a few perks: When you sign on as a customer, you get a $100 bonus for certain loan types, and $400 each time you refer a friend to refinance with ELFI (your friend also gets $100).
Learn more about ElFI.
LendKey partners with credit unions and community lenders, rather than big banks, to offer low interest rates and an emphasis on great customer satisfaction.If you want to compare several options at once, LendKey operates as a platform that connects you directly to lenders.
Learn more about LendKey.
Which lender should you choose?
To research and compare lenders' rates before making your decision, see Best Options in 2018 to Refinance Student Loans.
After you choose a lender, you can apply for refinancing directly on their website. Then, just wait until you hear back about your application.
Your interest rate and loan terms will depend on your credit history, among other factors. Don't forget that you need to keep making payments to NelNet on your original loan until you get confirmation that refinancing has been approved.
Ready to refinance? Visit our lender page to compare rates and loan terms.
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