“Dear Steve,
I have a situation that not many may be in, so I understand if you can’t answer my question. I worked and went to school, got my bachelor’s, and then did 3 semesters of grad work before dropping out. In total I had about $35k in loans. I was able to consolidate my loans and got a ridiculously low rate. After signing up for auto-pay and never missing a payment, my APR was down to 2.25% (supposedly).
Unfortunately, I opted for extended repayment. I thought it would be okay to just keep paying the minimums until I logged in and looked at my loans letters and how much freaking interest has accrued, and how much I’m on track to pay if I continue paying the minimum each month. I don’t know how they calc interest, but it’s highway robbery. The person I talked to was so hideously rude that I want to just quit the company altogether. Because I have already consolidated my loans with Nelnet, is there any way I can move the loans to another company and keep the same APR?
Linnea”
Dear Linnea,
According to the Nelnet website, the extended repayment plan will accumulate more interest.
Do you have more than $30,000 in outstanding FFELP or Direct Loans? Then the Extended Repayment Plan may be for you. This plan makes monthly payments more affordable, but it will take a longer amount of time to pay off the loan (up to 25 years), and you will pay more interest. Under the Extended Repayment Plan, you may choose standard payments (equal payments over the payment term) or graduated payments (payments that increase every two years). – Source
Essentially the extended plan you opted for strings your loan out over a longer period of time to lower the payment. But this will leave the loan front loaded with more interest since the smaller monthly payment is paying off the loan slower. Interest is charged on the unpaid balance. It works just like a mortgage does. If you opt for a longer repayment period you will pay more interest. A 15 year mortgage will cost less interest than a 30 year mortgage but the payment will be higher.
Rather than try to jump ship, my advice would be to call Nelnet again and speak to a different person. They do offer a wide variety of options and if your loans are government subsidized you do have access to program like the Income Based Repayment program (IBR) or the Income Contingent Repayment Program (ICR).
Frankly, it would be easier to work with your current servicer than it would be to jump to another servicer. That can lead to new and different ways to screw up the account in the transfer.
Call Nelnet back and let me know what they say. You should also review their page of options, here.
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Linnea,
You don’t mention your occupation., what do you do?. You may be eligible for a Pulic Service Loan Forgiveness program. This would take you to a 10 year loan and after the ten years all the remaining debt is forgiven. You can give me a call at 214-442-1149 to dicsuss. Even if not eliglbe for the PSLF progra m we can re-consoldate your loan.