Nelnet is one of the largest federal student loan servicers, handling millions of borrower accounts. As a federal servicer, many terms are dictated by Department of Education contracts rather than Nelnet's own policies. However, their implementation of these requirements and handling of edge cases still leaves room for borrower-unfriendly practices.
While Nelnet processes payments, the terms allow for processing delays of several business days. During this time, interest continues to accrue. Payments submitted near due dates may be credited late despite timely submission.
Targeting extra payments to specific loans with higher interest rates is theoretically possible but requires explicit written instructions each time. Default application rules often spread payments across loans in ways that don't minimize total interest.
Income-driven repayment recertification must be completed annually, and the terms place the burden entirely on borrowers to track deadlines. Missing recertification can result in capitalized interest and payment spikes.
By creating an account, borrowers consent to electronic delivery of all notices. Critical information about payment changes, IDR deadlines, and account issues may be buried in emails easily missed or filtered to spam.
While federal loans don't have the same arbitration restrictions as private loans, the terms specify complaint procedures that route through Nelnet first, potentially delaying escalation to the Department of Education or CFPB.
As a federal loan servicer, Nelnet must honor certain borrower rights:
Beyond loan servicing, Nelnet's website terms include: