Effectively managing educational expenses starts with understanding the loan plans available from servicers like Great Lakes and Nelnet. These services offer a variety of federal and private loan options to cater to diverse financial needs. This guide outlines these loan plans, repayment strategies, and additional features to help borrowers make informed decisions.
Federal Loan Plans Managed by Nelnet
Direct Subsidized Loans
- Eligibility: Undergraduate students demonstrating financial need.
- Interest Benefits: The government covers interest while you’re in school, during grace periods, and deferment.
- Annual Loan Limits:
- First-year students: Up to $3,500.
- Upperclassmen: Up to $5,500.
Direct Unsubsidized Loans
- Eligibility: Open to undergraduate, graduate, and professional students regardless of financial need.
- Interest: Borrowers are responsible for interest throughout the loan term.
- Annual Loan Limits:
- Undergraduate students: Up to $7,500.
- Graduate students: Up to $20,500.
Parent PLUS Loans
- Eligibility: Parents of dependent undergraduate students.
- Borrowing Limits: Up to the total cost of attendance, minus other financial aid.
- Credit Check: Required; no financial need necessary.
Graduate PLUS Loans
- Eligibility: Graduate and professional students.
- Borrowing Limits: Covers remaining educational costs after other aid.
Direct Consolidation Loans
- Purpose: Combine multiple federal loans into one for simplified management.
- Benefit: Extend repayment terms up to 30 years for lower monthly payments.
Private Loans Facilitated by Nelnet
While Nelnet primarily services federal loans, it collaborates with private lenders to manage private education loans. Key points include:
- Loan Amounts: Determined by the cost of attendance minus financial aid.
- Interest Rates: Based on lender policies and borrower creditworthiness.
- Cosigner Requirement: Most students require a creditworthy cosigner.
Loan Type Comparison Table
| Loan Type | Eligibility | Annual Limit | Aggregate Limit | Interest Benefits |
|---|---|---|---|---|
| Direct Subsidized | Undergraduates with financial need | $3,500–$5,500 | $23,000 | Government covers interest during school and deferment. |
| Direct Unsubsidized | All students (no need required) | $7,500 (undergrad), $20,500 (graduate) | $57,500 (undergrad), $138,500 (graduate) | Borrower responsible for all interest. |
| Parent PLUS | Parents of dependent students | Up to cost of attendance minus aid | None | Credit-based; borrower responsible for all interest. |
| Graduate PLUS | Graduate/professional students | Up to cost of attendance minus aid | None | Credit-based; borrower responsible for all interest. |
Repayment Plans for Federal Loans
Standard Repayment Plan
- Fixed monthly payments over 10 years.
- Best for borrowers who can afford consistent payments to minimize total interest.
Income-Driven Repayment (IDR) Plans
- Income-Based Repayment (IBR): Payments capped at 10–15% of discretionary income. Forgiveness after 20–25 years.
- Pay As You Earn (PAYE): Payments are set at 10% of discretionary income. Forgiveness after 20 years.
- Revised Pay As You Earn (REPAYE): Includes interest subsidy; forgiveness after 20–25 years.
Graduated Repayment Plan
- Starts with low payments, which increase every two years.
- Suitable for borrowers anticipating income growth.
Extended Repayment Plan
- Payments are extended up to 25 years, reducing monthly amounts but increasing total interest costs.
- Available for borrowers with over $30,000 in federal loans.
Borrowing Limits and Eligibility
Federal Loan Limits
| Student Type | Dependent Students | Independent Students |
|---|---|---|
| Undergraduate | Up to $31,000 (max $23,000 subsidized) | Up to $57,500 (max $23,000 subsidized) |
| Graduate/Professional | N/A | Up to $138,500 (includes undergraduate loans) |
Private Loan Limits
- Determined By: Cost of attendance minus other financial aid.
- Cosigner Requirements: Most private loans require a cosigner for approval.
Additional Features Offered by Nelnet
| Service | Description |
|---|---|
| Loan Management Tools | Online dashboards for tracking balances, payments, and due dates. |
| Autopay Discounts | Interest rate reductions for borrowers enrolled in automatic payments. |
| Payment Calculators | Estimate monthly payments under various repayment plans. |
| Customer Support | Assistance in resolving account issues and exploring repayment options. |
FAQs
How do I choose the right repayment plan?
Use Nelnet’s calculators to evaluate your income, expenses, and career goals to determine the best plan for your financial situation.
Can I switch repayment plans after selecting one?
Yes, you can change your repayment plan based on eligibility and your financial needs.
Are there penalties for paying off loans early?
No, federal loans managed by Nelnet do not have any prepayment penalties.
What happens if I miss a payment?
Contact Nelnet immediately to discuss options such as deferment, forbearance, or adjusting your repayment plan.
Conclusion
Great Lakes and Nelnet offer a variety of federal and private loan plans to support students and borrowers in managing educational expenses. By understanding these plans and leveraging Nelnet’s tools, you can make informed decisions to manage your loans effectively and achieve financial stability.