How Nelnet Handles Your Student Loan Payments
What Nelnet does with your student loan money
Nelnet is a loan servicer — the company that collects your monthly payment, applies it to your loan balance, and keeps records of what you owe. Nelnet does not decide whether you got the loan or how much interest you pay. Your loan's terms were set when you borrowed the money. Nelnet's job is to process the payment itself.
When you send a payment to Nelnet, the money goes into an account managed by Nelnet on behalf of your loan's owner. For federal student loans, the owner is the U.S. Department of Education. For private loans, the owner is the bank or lender that issued the loan. Nelnet then reports the payment to credit bureaus and updates your account balance.
Nelnet services both federal and private student loans. The way your payment is handled depends on which type you have, because federal loans and private loans follow different rules about due dates, payment plans, and what happens if you fall behind.
Key Takeaways
- Nelnet is the company that collects your payment and tracks your balance, but does not own your loan or set your interest rate.
- You can pay Nelnet online through their website, by phone, by mail, or through automatic withdrawal from your bank account.
- If you have a federal loan, your payment may be applied differently depending on which repayment plan you chose when you borrowed.
- Late payments to Nelnet are reported to credit bureaus after 30 days and can affect your credit score and future borrowing.
- If you cannot make a payment, contact Nelnet before the due date to learn about deferment, forbearance, or income-driven repayment options for federal loans.
How to send a payment to Nelnet
The fastest way to pay is through Nelnet's website. Log in to your account at nelnet.com, select your loan, and choose "Make a Payment." You can pay with a debit card, credit card, or bank account. Nelnet charges a fee if you use a credit card (usually around 1.85 percent of the payment), but there is no fee for debit card or bank account payments.
You can also pay by phone by calling Nelnet's customer service line. The number is on your loan statement or on the Nelnet website. A representative can process your payment over the phone using a debit card or bank account.
If you prefer to mail a check, write your loan number on the check and send it to the address listed on your statement. Mail payments take longer to process — usually 5 to 10 business days — so send them early if your due date is coming up.
The most reliable method is automatic withdrawal, also called autopay. Set it up through your Nelnet account to have your payment deducted from your bank account on the same day each month. Automatic payments reduce the risk of missing a due date, and some federal loan programs offer a small interest rate reduction (usually 0.25 percent) if you use autopay.
What happens to your payment once Nelnet receives it
Nelnet receives your payment and deposits it into a trust account. The money is then applied to your loan according to the terms of your loan agreement. For federal loans, the order is set by law: your payment first covers any fees owed, then interest, then principal (the amount you originally borrowed).
For private loans, the order may differ depending on your loan agreement. Check your promissory note or loan documents to see how your servicer applies payments.
Nelnet updates your account balance within one to two business days of receiving the payment. This updated balance is what you see when you log into your account online. Nelnet also reports your payment history to the three major credit bureaus — Equifax, Experian, and TransUnion — usually once a month. On-time payments build your credit score; late payments damage it.
Federal loans: repayment plans and how they affect your payment
If your loans are federal, Nelnet will service them under whichever repayment plan you selected. The plan determines how much you pay each month and how long you have to repay.
The Standard Repayment Plan requires a fixed payment for 10 years. The Graduated Repayment Plan starts with a lower payment that increases every two years, also over 10 years. Income-Driven Repayment Plans — including PAYE, REPAYE, IBR, and ICR — calculate your payment based on your current income and family size, and extend the repayment period to 20 or 25 years.
Nelnet does not choose your plan; you chose it when you first borrowed or when you last contacted your servicer. If you want to change plans, you contact Nelnet and request the change. Nelnet will recalculate your payment and send you a new bill. This is free and can be done at any time.
If you are on an income-driven plan, you must recertify your income each year. Nelnet will send you a notice when recertification is due. If you do not recertify, your plan may end and you will be moved to Standard Repayment, which usually means a much higher monthly payment.
What happens if you miss a payment or pay late
A payment is late if it arrives after the due date shown on your bill. Nelnet does not charge a late fee on federal loans — federal law prohibits it — but late payments are reported to credit bureaus and damage your credit score.
After 30 days late, the late payment appears on your credit report. After 90 days late, your loan enters delinquency. After 270 days late (about nine months), your federal loan enters default, and the government can take action to collect, including wage garnishment and tax refund offset.
Private loans may charge late fees, and the fee amount depends on your loan agreement. Late payments on private loans are also reported to credit bureaus and can lead to default more quickly than federal loans.
If you know you cannot make a payment, contact Nelnet before the due date. For federal loans, you may be able to request deferment (pause payments for up to three years) or forbearance (pause or reduce payments for up to 12 months). Interest may still accrue during these periods, depending on your loan type. For private loans, options are limited and depend on your lender's policy.
How to contact Nelnet and manage your account
You can reach Nelnet's customer service by phone, mail, or through your online account. The phone number is on your loan statement. You can also visit nelnet.com to log into your account, view your balance, make a payment, or send a message to customer service.
When you contact Nelnet, have your loan number and Social Security number ready. If you are calling about a federal loan, Nelnet can discuss repayment plans, deferment, forbearance, and income-driven options. If you are calling about a private loan, Nelnet can discuss your payment options and what to do if you are struggling to pay.
Keep records of every payment you make. Save confirmation numbers from online payments, keep copies of mailed checks, and review your account statement each month to confirm the payment was received and applied correctly. If you notice an error, contact Nelnet immediately.
Frequently Asked Questions
Can I change my payment due date?
Yes. Log into your Nelnet account and select the option to change your due date, or call customer service. You can usually choose any day between the 1st and the 28th of the month. The change takes effect on your next billing cycle.
What is the difference between deferment and forbearance?
Both pause or reduce your payments temporarily. Deferment is usually available if you are in school, unemployed, or facing economic hardship, and interest does not accrue on subsidized federal loans during deferment. Forbearance is available in other situations and interest accrues on all loan types. Both last up to 12 months for forbearance and up to three years for deferment, and both must be requested before you miss a payment.
Why is my payment different this month?
If you are on an income-driven plan, your payment recalculates each year based on your updated income. If you recently changed repayment plans, your new payment reflects the new plan. If you made extra payments last month, your balance is lower and interest accrues on a smaller amount, which can lower your payment slightly. Check your account or call Nelnet to confirm the reason.
Can Nelnet take money from my bank account without permission?
No. Nelnet can only withdraw money if you set up automatic payments and authorize it. If you did not set up autopay, Nelnet cannot access your account. If you believe an unauthorized withdrawal occurred, contact your bank immediately and then contact Nelnet to report it.
What happens if I pay off my loan early?
You can pay off your loan at any time without penalty. Send a payment for the full remaining balance, and Nelnet will close your account. Federal loans do not charge a prepayment penalty. Some private loans may, so check your loan agreement. Once paid off, your loan will no longer appear on your credit report as an active account, though the payment history remains.