Nelnet faces borrower backlash as student-loan overhaul hits service

Nelnet (NNI) is facing a wave of customer frustration after the Trump administration's July 1 student-loan repayment overhaul left borrowers struggling to reach the company and get accurate payment information. One borrower, Jason Marques, applied for an income-based plan projected at under $100 a month but received a first bill for $633. After calling Nelnet, he was placed in temporary forbearance, though the original $633 remains due on his account.

Marques described the process as "a bunch of red tape." While he said the representatives he spoke to were "knowledgeable," he faulted the company for not proactively communicating changes.

Nelnet, one of five federal student-loan servicers, is handling the transition of millions of borrowers to new repayment plans. The scale of the shift has already produced glitches. Business Insider reported that some borrowers received $50 payment estimates despite actual bills being higher. Jessica Salmi, 38, said she stopped calling her servicer altogether after being disconnected following a nearly hour-long hold. "Getting them on the phone to actually talk to a human being is next to impossible," she said. "You could die waiting."

Federal oversight of servicers has weakened. The Consumer Financial Protection Bureau in April directed staff to "deprioritize" student-loan servicer oversight. The Government Accountability Office found that the Federal Student Aid office stopped assessing servicers' call quality and billing accuracy in February 2025 because of staffing cuts at the Education Department. Before the cuts, four of the five federal servicers faced $850,000 in penalties for failing to meet obligations, the GAO said.

Sarah Smith, 35, said she made a payment to MOHELA, another servicer, that was not reflected on the website. When she called, a representative told her she was no longer a client. Smith, whose SAVE plan was eliminated, said the uncertainty makes it impossible to plan. "I can't keep changing my life around to try and predict what these payments will be," she said.

Ellen Keast, the Education Department's higher education press secretary, said internal data show hold times and dropped-call rates have remained consistent, and the department "remains focused on ensuring student loan borrowers receive the highest-quality customer service." She said Federal Student Aid leadership "regularly meets with servicers" to review customer satisfaction surveys and performance.

For Nelnet, the operational strain comes as the company navigates a regulatory environment that has shifted from active enforcement to reduced oversight. The company did not respond to a request for comment.

Robin Binkley, 38, filed a complaint with Federal Student Aid after spending "countless hours" trying to understand repayment options. "This is a decision that could affect my finances for many years, and I cannot understand why borrowers are expected to make these choices without accurate information or meaningful guidance," Binkley said.

The Education Department withheld $7.2 million from MOHELA in October 2024 for failing to send timely billing statements, and later fined all remaining federal servicers over similar issues. Under the Trump administration, those penalties have not been repeated, even as the volume of borrower inquiries rises.

Nelnet's next quarterly report, expected in November, will show whether the servicing chaos has affected customer retention or led to new contractual penalties from the Education Department. The company's stock is down 3% this year, roughly in line with the broader market.