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Nelnet Bank Student Loan Refinance Review

Nelnet Bank refinance comes with some red flags to review, but it is ultimately a reasonable choice for borrowers looking for a lower interest rate.

Written By: Michael P. Lux, Esq.

Last Updated:

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A Note from the Sherpa: Nelnet Bank has paused all refinance lending. This article will be updated this Summer as Nelnet claims to be releasing a new refinance option at that time.

Existing Nelnet Bank customers are still encouraged to share their thoughts on Nelent in the comments.

Borrowers can lower their interest rates by refinancing.

Refinancing means giving up the perks that come with federal student loans.

Lower monthly payments are available for borrowers who select longer repayment plans.

Other lenders may offer better interest rates.

Nelnet Bank Review Overview

Nelnet Bank, member FDIC, joins a long list of lenders offering student loan refinancing. How does Nelnet Bank compare to the top lenders in the market?

To prepare this review of Nelnet Bank student loan refinance, I’ve reviewed loan terms, spoken with a Nelnet Bank representative, and compared Nelnet Bank’s refinance options to other lenders in the marketplace.

Ultimately, Nelnet Bank is a solid but unremarkable student loan refinance option. Nelnet Bank has no selling point that meaningfully separates them from most other refinance lenders. However, they offer decent interest rates and could be the best option for many borrowers.

Nelnet Bank Refinance: The Basics

As far as minimum requirements are concerned, Nelnet Bank follows most industry standards. Borrowers will need to be U.S. citizens or permanent residents. Nelnet Bank also requires applicants to have at least a Bachelor’s degree.

Nelnet Bank Requirements
Minimum Credit Score680, or 640 with an eligible cosigner
Minimum Income$36,000

The minimum loan with Nelnet Bank is $5,000, and the maximum loan size will depend upon your field of study. Those with undergraduate degrees can borrow up to $125,000, while most graduate degree holders can borrow up to $175,000. Graduate health professionals can borrow up to $500,000.

Interest Rates Offered in May 2024

The Nelnet Bank interest rates lag slightly behind the very best rates on the market. However, Nelnet Bank does well both in short-term loans and long-term loans.

Nelnet Bank doesn’t advertise the best rates on the market, but they are close enough that Nelnet Bank is worth investigating. Actual rates offered to approved borrowers are far more important than the advertised rates. For this reason, some borrowers may find the best deal with Nelnet Bank.

A Warning about Refinancing with Nelnet Bank

Like most legitimate lenders, Nelnet Bank is free of any glaring red flags. Nelnet Bank does not charge application fees or origination fees, and there is no penalty for early repayment of the loan.

However, there is one significant concern that prospective borrowers should consider.

Nelnet Bank refinances federal government student loans. The fact that all refi lenders are willing to refinance federal loans does not make the decision any less risky. All borrowers should understand that if you refinance federal student loans, you convert federal debt into private student debt. This conversion means you permanently give up many key federal perks.

These federal perks include:

Income-Driven Repayment Plans – Borrowers with federal loans can make payments based upon what they can afford rather than what they owe. No private lender offers an IDR plan. If you doubt your ability to repay your loans, it might be best to stick with federal loans.

Student Loan Forgiveness – Federal student loans have a variety of student loan forgiveness options. A private refinance means a commitment to pay back your loan in full.

Other Federal Assistance – During the Covid-19 pandemic, the federal government suspended federal payments and set interest rates to 0%. There has also been a discussion of loan cancellation. A private refinance means missing out on potential future federal perks.

These concerns are not unique to Nelnet Bank, but they should be considered by anyone thinking about refinancing their federal loans.

Nelnet Bank Refinancing for Borrowers with Federal Student Loans Serviced by Nelnet

My biggest concern with Nelnet Bank, the student loan refinance lender, is the relationship with Nelnet, the federal student loan servicer.

As a federal student loan servicer, Nelnet is responsible for guiding borrowers through the repayment process. As a refinance lender, Nelnet Bank wants to encourage people to refinance their loans. This relationship creates an inherent conflict of interest.

To Nelnet’s credit, they do not advertise Nelnet Bank refinancing on their servicer page or encourage their federal servicer customers to refinance.

However, there are two important details that all federal borrowers with loans serviced by Nelnet should understand:

  1. Even though Nelnet services your federal loans, you can still refinance with any refinance lender, and Nelnet has no ability or authority to stand in the way.
  2. If you refinance your Nelnet federal loans with Nelnet Bank, you lose all of the federal protections previously discussed.

Parent PLUS Loans

One aspect of Nelnet Bank that is a bit unique is that they will refinance Parent PLUS loans in the student’s name.

Not all lenders offer this particular service. Refinancing Parent PLUS loans is somewhat unique because it transfers the debt from the parent to the child. This move comes with some significant risks, but it is one way that children can help their parents repay Parent PLUS loans.

Like other federal loans, the big danger of refinancing Parent PLUS loans is that the options of Income-Driven Repayment and student loan forgiveness are both eliminated.

Final Thoughts on the Nelnet Bank Student Loan Refinance Review

Ultimately, Nelnet Bank is just another student loan refinance lender.

For consumers, that is a really good thing. More lenders mean more competition and better rates for borrowers.

I don’t think Nelnet Bank should be the only lender that people apply to, but I do think taking 5-10 minutes to check your rate with Nelnet Bank is a good idea.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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