Shamil Rodriguez (00:00): Welcome back to another episode of the student loan podcast. Today, we have a unique episode for you. A recorded call. The Daphne had with a student loan servicer. Now we hope that this episode will help you before you call your own student loan servicer and ask for details about your student loans. Because as you've heard from other guests of the show, the first step you needed to take in paying off your student loans is gathering all the details and options available to your specific student loans scenario so that you have the right plan of attack. So without further ado, let's get to it.

The Student Loan Podcast Intro (00:35): Welcome to the student loan podcast. Here, you'll find practical advice on tackling student loan debt, paying down your higher education expenses and inspiring stories about paying off student loans, where your hosts Daphne Vanessa Rodriguez.

Nelnet Robot (00:54): Welcome to Nelnet your student loan servicer. All calls may be monitored or recorded. The 0% interest rate and suspension of payments on federal student loans owned by the us department of education have been extended through at least September 30th, 2021. If you have a commercial loan held by a bank credit union or other lender, this extension does not apply your 2020 tax information is available on your January or February monthly statement by letter, or when you log into your nelnet.com account. This information serves as your IRS form 10 98 E and provides the amount of student loan interest you paid to Nelnet in 2020. If you're having trouble making payments, there are repayment options available. When you log into your nelnet.com account to get started, please tell me your Nelnet account number letter included, or your social security number, Pata espaniol market or cha. Hmm. I didn't find you in our system. Let me get you over to an advisor who can take it from here. All calls may be monitored or recorded. We value your feedback. If you'd like to participate in a short three question survey after you speak to an advisor, please remain on the line.

Customer Service Rep (02:06): Thank you for calling now. May I get your first and last name and account or social please? Hello,

Daphné Vanessa (02:13): Kristen. My name is Daphne my account. Yeah.

Customer Service Rep (02:18): Okay. If you can hold one moment while I look that up. Thank you. Thank you for holding Daphne. And may I get your date of birth? Thank you for that. Um, for verification, I have your phone as correct. Thank you. How can I help you today? Hi. I just want to let you know,

Daphné Vanessa (02:39): Before we get started that this call is being recorded for educational purposes. I have a few questions about what the different options are for, uh, as a borrower. So I was hoping you could help with that.

Customer Service Rep (02:54): Sure. Not a problem. Thank you.

Daphné Vanessa (02:56): So as a borrower, we have income-based repayment. What are the other options that people have to get through student loans?

Customer Service Rep (03:10): You mean in terms of other programs, in terms of, um, income based,

Daphné Vanessa (03:17): What is the best program for the borrower? What's the best program of the federal programs out there?

Customer Service Rep (03:24): Well, um, for instance, um, we do have the, um, a standard plan, which is just based on the amount that the bar has, um, borrowed versus a 10 year term. That's basically, um, the, um, fastest way to make payments on the account to pay it off. Unfortunately, sometimes with, um, the bars, that's basically a too, too much of a, um, it can be an expensive payment per month. So, um, we try to see, um, to get people into different options of the different plans to see what best fits their need and family size and, you know, circumstances for, you know, life itself. Um, we have graduated plans which are, um, uh, they start out lower and then they gradually increase about 9% every two years or 24 payments. Um, those tend to have a longer payout term in terms of like between 10, 20 and 25 years.

Customer Service Rep (04:42): Um, the payments are helpful for bars that have it at the very beginning, cause they're lower, but then it, they increase every 24 payments. So towards the end of the amount, it can be quite a sizeable, um, amount to, to, uh, excuse me to, uh, you know, pay. So that's why we try to see about, um, getting, um, borrowers into, um, possibly an income driven plan that could be as low as $0, um, based on their income and family size. That way the payments are more affordable and they're able to, um, you know, keep the loan and, um, a current status.

Daphné Vanessa (05:27): Got it, got it. So the way that you're defining affordability is by the payment, not necessarily the amount that you're paying over the course of the loan, is that correct?

Customer Service Rep (05:39): Correct. Yes. Um, well it does, you know, um, with, with these student loans, the interest is it's a very interest bearing loans. So, um, right now, in terms of, you know, having a, whether it be a direct loan or, um, commercial loan, um, the direct loans right now are not accruing any interest. So, um, this is kind of an ideal time to be able to try to, to, um, make payments on the loans, to knock down the principal balance, whether they have it versus a, um, you know, if you pay it by groups or you pay it by overall because, um, um, sometimes the borrowers, um, because they interest is not accruing, um, they're able to maybe knock off certain long groups that they can, um, affordably, you know, um, get down so that, you know, their balance, their total balance gets slower over the course of time. Like within the commercial sector though, um, the interest is still accruing, so they, um, have to be able to decide if they can affordably make payments on the account.

Daphné Vanessa (07:03): That makes sense. That makes sense. So what you're saying is that now with the 0% interest program, until I think it's September borrowers can make payments on their student loans without having to consider interest in their payments, is that right?

Customer Service Rep (07:24): Correct. Well, they're not accruing any interest. Um, they still have to, if they make payments, it still goes toward the unpaid interest on the account first. And then it goes to the principal loan balance. But if they, if they have a, like a small enough amount of unpaid interest and it's a direct loan and they make a payment to satisfy that interest, then going forward, any payments that they make will just apply directly to the principal loan balance so that they can actually make a headway in terms of their, um, the balance on the overall, um, amount of the loan.

Daphné Vanessa (08:09): They got it. And so how is somebody supposed to know how much interest they've accrued? I see a note when you log in online for Nelnet, that the interest that has accrued for the period is included, but how does a borrower know how much interest they've accrued generally? Is that located in an online portal or in a document, um, are, are contracts shared? How, how does the borrower know that?

Customer Service Rep (08:44): Um, well they do have a, um, if they look up under their online accounts, through little details, um, if they expand each of the different loans, um, loan groups, they can see what the interest rate is and how much it accrues, um, you know, over the course of a month or, or, you know, whatever for their payments for that month. So for instance, this bar has, um, a cruise daily interest. Um, and then their outstanding, uh, principle is this. And then they have outstanding interest of, um, but they can see the breakdown in their, in their online account if they log into their account and then, um, excuse me, um, they can see what each of their accounts are and what their, um, loan groups are. I can see the interest in terms of that, um, and, and see how much they accrue because like right now, um, they're, um, let me just get in there for a second.

Customer Service Rep (10:03): So this bar has two accounts and each of the different lung groups have different percent, um, different interest rates. Some are 7.9, so some are 6.8 and they can see what the, um, current principal is, the accrued interest, how much, um, daily interest, you know, how much they accrue each, each day and daily interest. And then their commercial account is the, in our commercial system, which is the, and that shows that, um, is accruing interest daily. So it doesn't, it's not, it doesn't have qualified for the cares act of the zero interest in no payment through the end of September 30th of this year.

Daphné Vanessa (10:49): And for that loan, the borrower is under the impression that the borrower only entered into government loans. Was there a point at which a government loan was sold to a private lender? I'm not understanding why that doesn't qualify for the federal government program?

Customer Service Rep (11:14): Um, well, um, what we tell borrowers is that dispersed or their loan was dispersed before 2010 before the department of education, um, started, um, buying the loans directly. Um, so their, their account is in our commercial sector. We have to w when those loans were dispersed before, um, so they're government loans, but they're, um, their guarantors are different companies other than having the department of education be the guarantor. Um, so what, what they, um, basically, because that they're dispersed before 2010, they don't qualify for all the, um, I say perks of the cares act of the zero interest and no payment through the end of September, but what they can do is they can, um, request to do a direct consolidation through student aid.gov. Um, if they do that, then it would turn into a direct loan, and then, um, they would qualify for the zero interest and no payment through the end of September, which can be helpful for some people, especially if their balances are high, because, um, they're not accruing any interest during this timeframe

Daphné Vanessa (12:40): Makes a lot of sense. And why we're, I guess the guarantors were different. Why was the decision to create a consolidation program? How does that impact the, I guess why is probably not a good question? The better question is how, how does that impact the bar in terms of interest payments?

Customer Service Rep (13:09): Um, well, when they do consolidate, um, um, at the time of the consolidation, the department of education will set what the consolidation interest rate is. Um, basically, um, we don't have the exact amount of what the interest rate is going to be at the time of the consolidation. We always refer them back to [inaudible] dot gov. What they do is they do take a weighted average when they consolidate, and then they round up to the nearest eighth of a percent. Um, but, um, advisors here are, um, um, not all of us are trained in consolidations. So we basically, um, revert back to consolidation questions either to the student aid.gov to, um, answer their specific initial consolidations. And then if they use nail med as a con as their, um, servicer, then we have a direct consolidation department that they can ask more specific questions and get more specific answers in terms of that consolidation.

Daphné Vanessa (14:20): And if a borrower does not consolidate, but instead just pays the loan off. Is there a way to know, you know, whether it would have been faster to pay through consolidation or with the existing arrangement? Is there a calculator available for that at all?

Customer Service Rep (14:42): Um, we do have like an income driven, um, calculator or repayment calculator. We, um, we plug in the bars, you know, um, specific amounts, loan amounts, and that sort of thing in terms of, um, you know, what, they're, what they, what they borrowed, how much they're making, what their family size is, and that sort of thing in terms of, um, reverting, you know, in terms of saying whether it's better to, um, they would be able to pay it off sooner versus w versus, um, being a consolidated loan or making the payments, um, they would actually need to, um, speak to the consolidation team to make, to make sure of the specific amounts of what, um, the repayment amount will be in terms of whether it be, it will be paid off faster or not. Um, we can, we can kind of give them a gauge of what they qualify for in terms of either a standard graduated plan, you know, the different term length of repayment, but in terms of a consolidation, um, we, we really do, um, revert back to the student aid.gov in terms of giving them specific amounts to be, um, or specific guidelines of repayment and what's the fastest option to do so.

Customer Service Rep (16:21): Um, not all of us are trained in consolidation. Um, so, um, we do have, you know, certain parameters of what we can and cannot say to the bars in terms of, um, repayment plans. And, um, and we can always give them additional, um, additional information or sources to be able to, um, specifically guide them into what is the best plan for them.

Daphné Vanessa (16:53): That makes sense. And I know that there's, income-based repayment, we covered a few other programs, two things that I think that we didn't cover are pay as you earn and repay as you earn. Can you talk to me a little bit about what are the differences between those programs who qualifies for them and how are those options better? Both for reducing the amount of payment and also for reducing the total amount of interest paid over the course of the loan.

Customer Service Rep (17:30): Okay. So, um, basically those two programs are income-based programs. Um, the revised pay as you earn is, um, is basically what, what the bars are able to, um, when they qualify for it. Um, there are interest subsidies. So for instance, on the revised page, you learn, um, they can, um, for the first three years, the government will, um, pay a hundred percent of the unpaid interest on their subsidized loans. And then after that, they'll pay 50% of the unpaid interest on their subsidized and unsubsidized loans. So what that will be able to do is I kind of, um, give them the idea of, um, when you're growing your hair out. Um, if your, the subsidized loans are ones that, um, stay as they are, you know, they th the interest doesn't, um, acute, well, it doesn't grow every day, I mean, or accumulate interest every day.

Customer Service Rep (18:44): Um, the, um, subsidized loans do so, um, basically, um, it does help the borrower to be able to, um, to have some of the interest paid down, especially on the revised pay as you are in plan, because, um, um, they pay for a hundred percent of the unpaid interest on the subsidize loans. And then after that, they pay 50% of the unpaid interest on the subsidized and unsubsidized loans. Um, the pay as you are in plan, um, just does the 50% of each of the subsidized and unsubsidized loans. So it does, um, help the borrower to be able to, um, I guess, have a contribution from the department of education to help pay on the unpaid interest. So that, that will act, um, over time it could bring their monthly payment amount down because, um, the government is actually helping to get some of the interest on those subsidized or unsubsidized loans paid off for them instead of them having to do it all themselves. So that's kind of a, um, a perk of the revised pay as you are in plans.

Daphné Vanessa (20:04): I would agree, definitely a perk. So I'm understanding a little bit better, the options that are available. I understand the consolidation piece, which is something that I actually did not have a lot of familiarity with the next step, I guess, is sort of deciding what the best option is for alone that was government, but then it was government during the time of transition. So it was guaranteed by somebody who is not the U S department of education as a result. There is an option to consolidate. Does it make more sense to pay off the entire balance today or consolidate?

Customer Service Rep (20:49): Um, it would most probably, um, make sense to consolidate first because, um, if you consolidate then basically with the consolidation, um, once it's turned into a direct loan, the consolidation will pay off, um, the commercial loan and then it will turn it into the direct loan, which qualifies for the zero interest accrual and no payment through the end of September. So it would make more sense, um, so that they can, um, take advantage of, um, of some of the government. Um, I always say perks, but, you know, the, some of the, the plans of the government that is allowing them to have less interest accrual on that sort of thing. Got it. Got it. That makes sense.

Daphné Vanessa (21:44): No, no, no, no. That that's really helpful. That's very helpful. I have a question about Perkins loans. So Perkins loan seemed to be in that same bucket of historical loans that were guaranteed by, I believe the university. Is that correct? Yes. Okay. And so that's why those loans got rolled over into a university owned loan, if you will. Correct. Okay. And so those loans are also eligible for consolidation,

Customer Service Rep (22:17): Correct? Yes. Yeah. Through a student aid dug up.

Daphné Vanessa (22:21): Yup. There's your name? Okay. Does, is there any work effort to make the process easier for people who are not experts in this field? Student aid.gov can be interesting because on some pages, there appears to be a clear effort to communicate in a user-friendly way, but once you get into the process of whatever you're doing, there's a lot of legal jargon. There's a lot of technical terms. What is being done to translate that information into information that people regardless of background or expertise can understand as borrowers?

Customer Service Rep (23:09): Um, I, I believe what they're, what they're trying to do is, is on, um, the student aid website, as well as on their own accounts through, um, you know, through Nelnet, they tried to give, um, broad explanations, um, and blurbs of what, um, each area is trying to maintain. So that it's more of a user-friendly environment. And being able to understand that the jargon on, you know, each of the different plans or, or things like that in terms of qualifications. And then, um, because sometimes it can be almost like, um, reading a, um, you know, if you're in court and the legal jargon of, um, people not understanding all the ins and outs of the, um, of what their loans are and how do they work. And then we always, um, refer to, um, you know, whether it be our help desk or a solution center, um, to ask specific questions and get specific answers for the bars, if there's questions and that sort of thing.

Customer Service Rep (24:30): Um, I think that's one of the good tools that we do have, um, to be able to, um, you know, we have a help page that we can, um, borrowers can go to and, and take a look at, you know, different areas and different links of things. And then also if they have questions, they can always, um, check with us and we can advise them and then also advise them where else to get the information or gain the information from someone else so that we can properly advise them of, you know, the different specifics of each of the loans are, or what their loans are in terms of that.

Daphné Vanessa (25:13): Very helpful, very helpful, quick question. I'm not a service member. However, if I was to dedicate service to the country, what programs are available for me,

Customer Service Rep (25:29): We do have, um, a military department. So, um, what we typically do is if, um, we, if a bar is asking for certain, um, specifics of getting into a different, um, plan, um, and, or, um, help on their loans, um, we determine what, um, if they took out the loans during their military service to make sure that they're, um, um, they, that they were, you know, specified within, within that overall area of when they were in service. And then we automatically then transferred to our military line and they would be able to assist from there in terms of, uh, options and income driven plans and forgiveness plans and that sort of thing in terms of if they're in the military or not,

Daphné Vanessa (26:30): It's really helpful. And so that line is going to have the specific benefits, like interest rate benefits and any other benefits that would exist that hotline is, is where people should call. Correct. But they actually

Customer Service Rep (26:44): Do call through the main line. We just have to make sure that when we talk to them, what we have to look up when their military service was, and if the loans were actually taken out during that timeframe, so that we can make sure that they qualify for that program. And then there's specific advisors that are trained in the military portion of it, um, that they can give them specifics of the programs and things that they could qualify for.

Daphné Vanessa (27:15): Got it. That makes sense. So there is a lot of money in the student loans world. Who's making this money, who's profiting,

Customer Service Rep (27:26): Who's profiting. Well, um, I would, we really don't say that the government or whatever is, is profiting per se, but, you know, they, they loans are very interest bearing loans. Um, unfortunately I I've, I've, um, talked to a lot of bars that they feel like, um, the government is profiting more than off of their loans due to, you know, where they started out with a small amount, like a $5,000 loan. And then if life happened and they have to go into forbearances or deferments or anything like that, and their loans are still accruing interest, then they, um, they go, you know, their loans go up. And so, um, they could easily, you know, have gained $20,000 in interest just based on, on that. Um, unfortunately, you know, it's, um, it's, it's a kind of a touchy situation. I mean, I always feel that way when I speak to borrowers, because they're so frustrated with that.

Customer Service Rep (28:38): They took these loans out 20 years ago and they're still paying on them and there's, um, you know, there's not a lot of forgiveness plans other than, um, you know, if they have public service loan, forgiveness, or teacher loan, forgiveness, the different programs that they can, um, get into and, and possibly have some forgiveness, um, that also with the, um, the income driven, if they're in an income-based repayment plan or any other, um, income-based repayment plan, other than what we call it, the IBR, which is the income-based, uh, they can qualify for forgiveness. Um, so if they're in an income based plan, they can, um, if they make 300 on-time payments, um, they don't have to be consecutive over 25 years, then they can qualify to see if they're going to have, or if they can have their loans forgiven, if are any other income-based plan, like the revised pay as you earn or pay as you earn, they have to make 240, um, on-time payments over 20 years.

Customer Service Rep (29:53): So, um, it's just in terms of profiting, I mean, it T to borrow, or sometimes they feel like now let us profiting. Or the government is profit profiting because there's no kind of way out of, of, you know, having their loans forgiven. And, you know, with life, you know, life happens and things happen. You know, people get sick, um, people have issues. And so the student loans are very interest bearing. Um, and so that it can, you know, accumulate over time and then they feel like they're not making any headway and they, they don't have any place to go because they're not, they don't know how to be able to pay it off because the balances are so high and the interest is so high. Um, and then if they switch into different programs, like if they switch into an income based plan, their interests can capitalize and be added to their principal loan balance, which could result in higher monthly payments once they're back in repayment status.

Customer Service Rep (31:06): So I've, I've seen, I've heard a lot of people, you know, um, you know, being in tears and, you know, things like that, which we try to give them as the best options that we can with what the programs that we have at the moment. Um, this zero interest accrual has really helped a lot of people. Um, because I mean, that's the first time that I've seen where those student loans are not, um, the direct student loans are not accruing interest because before, whether it be a direct loan or a commercial loan, they were still accruing interest daily. And that's where people were having a hard time to be able to make affordable payments and even try to get out from under all the interest that's accumulating on the account so that they can make a debt in their principal balance to pay off the loans.

Daphné Vanessa (31:58): Yup. Yup. That's, that's what people need to be able to do. That's all, that's all borrowers want to do, right. Is to take those baby steps to get rid of it. Um, that makes a lot of sense. So we spoke a little bit about profit. Are there disclosures for borrowers when their loans are packaged and securitized for investors, for example, uh, student loans and other other products that are fixed income are packaged and securitized and investors make money off of those. Do borrowers receive a notice when their loans are included in a securitized asset?

Customer Service Rep (32:48): Well, um, they are, um, we do send out disclosures on the loans. So the buyers are, um, alerted to when, um, different things happen on to, onto the loans. And if, um, and what venue that they're going to be in in terms of, um, you know, what payment is and that sort of thing, information on, um, on their account, we do send disclosures out, um, in regards to that,

Daphné Vanessa (33:23): That's helpful. Thank you. And then last question, there was a contract signed a long time ago to get this student loan. Where can you access that contract?

Customer Service Rep (33:37): Um, you mean in terms of this specific loan? Okay.

Daphné Vanessa (33:42): For, for any borrower, right. If they need to find their amortization schedule and original MP and contract

Customer Service Rep (33:52): They're master promissory notes, they can look on N S L D S.

Daphné Vanessa (33:57): Okay. And S L D S

Customer Service Rep (34:00): L D a S. And that's a national, um, student database.

Daphné Vanessa (34:06): Got it. And that's where you can get the master promissory note in any other agreements like your amortization schedule.

Customer Service Rep (34:15): Correct. We can also, as servicers, we can send out, um, electronic e-forms, um, to, uh, you know, send them their master promissory note or any other specific, um, repayment, history, that sort of thing. Um, they're just, um, it does take, we do have specific, you know, it does take, like sometimes it takes two to four days. Sometimes it takes three to six days and we can get that for the borrower as well.

Daphné Vanessa (34:49): Makes complete sense. Okay. I would like to request, uh, my MPN and amortization schedule from Nelnet. Is that possible, or should I go through N S L D S

Customer Service Rep (35:05): Um, you can do the, um, master promissory note and what the amortization or the payment schedule,

Daphné Vanessa (35:14): The amortization schedule of the interest of, of the loan over the life of the loan.

Customer Service Rep (35:22): Um, sure. So we can do, um, a document imaging, um, E form, which is basically, um, we can go in and request, um, um, for the master promissory note to be sent out, as well as any sort of amortization schedule. Um, the master promissory note is under the, um, the document imaging sector, um, and the amortization schedule, um, is under our correspondence, um, um, department. So we can, um, advise the borrowers of the, um, amount of time that it's going to take and whether they want it in the mail or in the, um, in an encrypted email,

Daphné Vanessa (36:10): Sounds like a plan. If that's as close as we're going to get let's do it.

Customer Service Rep (36:15): Okay. Is there anything else I can help with any color questions?

Daphné Vanessa (36:19): No. No, thank you so much. I really appreciate your time and I really appreciate your patience.

Customer Service Rep (36:26): Oh, sure. It was nice speaking with you. I hope you have a nice evening. Okay. You too. Have a great night. You too. Bye bye.

Shamil Rodriguez (36:35): For more information on today's episode, visit the student on podcast four slash episode 24. That's the student loan podcast.com forward slash episode 24.