NELNET, an educational planning and lending company, does not offer private student loans. Instead, its entire lending portfolio consists of Stafford Loans and PLUS Loans offered through the Federal Family Education Loan Program (FFEL).

Considering that NELNET is one of the twelve largest student lending operations in the United States, the fact that it only offers federal student loans demonstrates the company’s remarkable success in marketing itself as a preferred destination for federal loans.

This article will explain the different federal NELNET student loans available and offer advice for those shopping around for both private and federal student loans.

Looking to Federal Loans Offered by Private Lenders

As a general rule, students should look to take out private education loans only after they have exhausted their federal loan options, such as Stafford Loans and PLUS Loans. This is because federal loans, backed by the U.S. government, often have lower interest rates and fees.

Many times, federal loans are offered by the same banks and financial institutions which offer private education loans. NELNET is one of the few private lending companies which only offers federal Stafford Loans and Parent PLUS Loans, which makes it an ideal first destination for both students and parents looking to take out a federal loan through the FFEL program.

NELNET Student Loans – Stafford Loan

NELNET offers both subsidized and unsubsidized Stafford Loans. Below are the terms and rates available:

  • Unsubsidized loans have a fixed interest rate of 6.80%, and subsidized loans have fixed rates of between 3.40 and 6.80% (depending on what year the loan is disbursed);
  • Unsubsidized loans do not require interest payment while in school (which is capitalized), and subsidized loans do not require principal payment while in school;
  • There are no fees;
  • A 6 month grace period exists for students upon graduation or leaving school;
  • Payments may be made from 10 to 25 years after the loan is taken out.

To qualify for a NELNET Stafford Loan, students must submit an FAFSA form, which is available from any college financial aid office or online from the Department of Education.

Additionally, students must be enrolled or plan to be enrolled at least half-time in a participating school, meet the school’s academic requirements, and be a U.S. citizen or permanent resident.

NELNET Student Loans – Parent PLUS Loans

NELNET PLUS Loans are available for the parents of dependent students as well as for graduate or professional degree students. Below are the terms and rates available:

  • Fixed interest rates of 8.5%;
  • There are no fees;
  • No payments are required until 6 months after graduating or leaving school;
  • Payments may be made between 10 and 25 years after the loan is taken out.

Parents borrowing on behalf of a dependent student must not have adverse credit (as determined by a credit check). In addition, both the borrowing parents and the dependent student must meet the following requirements to be eligible for a NELNET PLUS Loan:

  • Must have U.S. citizenship or an eligible permanent resident status;
  • Must not be in default of another federal student loan;
  • Must not owe any money back on a federal education grant.

Graduate students and those pursuing a professional degree have the same eligibility requirements as parents borrowing on behalf of a dependent. It should be noted that a credit check will be conducted for a loan applicant to be eligible. If the check shows bad credit, an applicant can still apply by securing an endorser (one who promises to pay back the loan if the original borrower defaults).

NELNET Student Loans and Federal Student Loan Consolidation

The NELNET student loans detailed in this article may be consolidated with other federal loans held by a borrower. Doing so can extend payment plans and, in some cases, reduce overall interest rates for students with rather expensive loans.