Nelnet Bank Student Loan Refinancing Review: Pros and Cons

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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

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.

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

Competitive fixed and variable APRs