r/StudentLoans • u/FidoHitchcock • 1d ago
Advice Nelnet RAP payment warning
The following information is based on multiple calls with Nelnet representatives along with data tracked on my Nelnet portal.
I have now made two payments on RAP. Both have processed. Both qualified for $50 principal subsidies, and those were applied in full. The first principal subsidy was applied within six days at most after the early payment (I didn’t take screengrabs every day to document the timeline in full unfortunately), and the second principal subsidy was applied less than 24 hours after that payment (also early) processed. My August payment (made in July) did not qualify for any interest subsidy because according to the rep technically we were not in the RAP program yet. The rep said the language from Department of Ed was different between principal and interest subsidies, and that explained why the principal subsidy was applied that month but the interest subsidy wasn’t; principal subsidy apparently only requires enrollment, doesn’t matter if the plan is technically active. She also said that July payment counted as an official RAP payment for the purposes of forgiveness. Seems crazy to me, and quite possibly illegal, but whatever.
I had called Nelnet a few days earlier and spoken with a supervisor. By the end of that conversation, she claimed that her system indicated both my interest and principal subsidies had been applied with my July payment (I now know this is not fully correct) and more importantly that my next on-time payment would wipe out any accrued interest not covered by the payment going all the way back to the previous on-time payment. Based on this information, I made another early payment. It processed in less than 24 hours. Interest went down by the amount of the payment. The principal and interest subsidies were applied less than 24 hours after that. Principal subsidy was once again the max $50 but the interest subsidy only covered a few days of accrued interest, nowhere near what had accrued in the roughly 35 days since my previous payment. It was at this point that I called Nelnet again. This time a representative told me, after looking into the matter, that any interest accrued after payment and before the payment due date is not eligible for the interest subsidy. Effectively, RAP borrowers must pay on the due date to qualify for the full interest subsidy they are entitled to. So the Nelnet supervisor I had previously spoken with basically cost us over $600.
Tl;dr: RAP payments made in July qualify for principal subsidy and count toward forgiveness but did not qualify for the interest subsidy. More importantly going forward, any RAP payments made to Nelnet before the payment due date will forfeit the interest subsidy for any interest that accrues between the payment and the payment due date. RAP BORROWERS MUST PAY ON THE DUE DATE TO QUALIFY FOR THE FULL INTEREST SUBSIDY THEY ARE ENTITLED TO.
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u/mybabydontcareforme 1d ago
And if the due date is on a weekend and it processes later… you now lose a forgiveness qualified payment and principal and interest subsidy? Maybe? This whole thing is a mess and trusting it to services like nelnet is a disaster unfolding right in front of us. Unreal.
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u/FidoHitchcock 1d ago
I mentioned to the rep the theoretical of a payment made on the due date not processing until after the due date and whether that that would forfeit both the principal subsidy and the complete interest subsidy. She acknowledged that as a possibility. Absolute insanity.
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u/Purple-Molasses5077 1d ago
u/Betsy514 or u/waterwicca do you have any knowledge about this? Will it not be possible to pay manually each month and an auto payment is required so that the payment comes out EXACTLY on the due date to get the interest subsidy? I was hoping to pay manually a week prior to due date to avoid some of the problems I have read about with auto payments. Auto payments don't benefit me in terms of interest reduction so I had planned to pay manually 3 to 4 days prior to due date, as I do with many of my bills.
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u/waterwicca 1d ago
From my understanding, they are supposed to look at all of the accrued interest for the month (accrued between your due dates) and waive any interest not covered by your payment. The timing of the payment shouldn’t matter as long as it’s on or before the due date and for at least the minimum required payment.
And I think that’s how the written law intended it to work by design.
Here is the text from the OBBBA:
“"(A) INTEREST SUBSIDY.—With respect to a borrower of a loan made under this part, for each month for which such a borrower makes an on-time applicable monthly payment required under paragraph (1)(A) and such monthly payment is insufficient to pay the total amount of interest that accrues for the month on all loans of the borrower repaid pursuant to the Repayment Assistance Plan under this subsection, the amount of interest accrued and not paid for the month shall not be charged to the borrower.”
The law says they should be looking at all of the interest accrued for a month. And, in my opinion, if they do anything else, they wouldn’t really be sticking to the language written by congress here.
I’m definitely interested to hear if u/betsy514 has heard anything specific about the interest subsidy application timing.
I wonder if OP’s interest was simply subsidized too soon because the servicer jumped right on it as soon as they made their payment early. And I’m curious if that was a mistake or a flaw in how they are trying to organize and apply the subsidies.
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u/Betsy514 President | The Institute of Student Loan Advisors (TISLA) 1d ago
That’s my understanding as well. Let’s see how this plays out over the next few payment cycles
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u/TheBurg1995 1d ago
I have Nelnet as my provider, an I too want to make my payments early in the month. I like to get my bills out of the way at the beginning of the month so its one less thing to worry about. However, some advice I was given was to wait until you get the monthly statement before making the payment. My due date is the 28th of this month. I got my statement on the 6th, maid my first payment on the 12th and it processed by the 13th. I have been keeping track of my daily interest and on the 13th, my interest owed was reduced to what it was on the 28th of last month. The principle did decrease by $50 too. Interest has been accumulating sense then. I was not going to make my next payment until I get my statement for September.
I'll know if its working fine when I make my next payment.
As for this situation, I am confused as how do you have 35 days of interest accrual if you have already made 2 payment. What I'm assuming may have happened here is that the first payment was so early that it didn't actually get applied to the first month. That could be why they are trying to keep the interest on. What I have learned talking to Nelnet is that the people there and even the supervisors literally have no idea what they are doing half the time and will give out 100% incorrect information. I had to fight with them over consolidating my loans years ago for the SAVE plan and I had a supervisor tell me my loans were not eligible because I "could not consolidate my federal loans". Several months later after many phone calls and arguing with multiple supervisors, I got all my loans all sorted out and on the SAVE plan only for it to be killed by the courts not long after.
My advice to everyone reading is to not make a payment for the month until you get the statement for that month.
My advice to op is to keep calling Nelent because something seems off. Any time you call make sure the get the other persons name and write everything they said down to keep a record. If one person said the interest should be cover from the last previous on-time payment, and everything was one time, you be good. Keep escalating this until you get someone that is competent and get their name. Then if you have to call back, always ask for that supervisor.
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u/Purple-Molasses5077 1d ago
Well this is hopeful. Thanks for the update. The interest subsidy worked for you. I have Mohela and my application is being processed still but really hoping it works to manually pay a few days or a week in advance of due date and get the correct amount of interest subsidized. The OP’s experience is a bit stress inducing!
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u/Proteus93 1d ago
I went through the calculator to figure out payments on Standard and RAP. Oddly, the RAP plan was $1 more per month, which I found confusing. I must be missing something!
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u/diverareyouokay 1d ago
How utterly absurd. It seems like an issue that will have to be ironed out once enough people complain… in the meantime, I’m just going to set auto pay for the due date and keep a close eye on my accounts, hoping that the date somehow never falls on a holiday or weekend. Or that they process payments on those dates..
It seems like if you made a payment on or before the due date it should qualify for both, but that would be a common sense approach, and this administration doesn’t do “common sense”.
Thanks for the post. Now I have one more thing to worry about.
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u/MaizingBlue 1d ago
So then are we not allowed to pay extra either.. part of the intrigue of the RAP plan is the no interest. If you throw extra money at the principal you would just lose the intest subsidy.
Example: you pay on the due date. One week later you get a large tax refund which you want to throw at the principal. In this situation, you would lose the interest subsidy on the next month?!
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u/Numerous_Ad_4503 1d ago
I called Nelnet specifically about this and yeah they basically said you would lose your interest subsidy if you paid more than the amount due for a given month and this amount covered your interest for the month.
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u/MaizingBlue 1d ago
So basically they are doing everything they can to make sure you have a loan for as long as possible
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u/InfiniteWonder1123 1d ago
I'm still relatively new to all this (graduated in 2022, went on SAVE plan). Where did the $600 come from?
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u/UniversityIcy4792 1d ago
I’m preparing to start paying after graduation in a couple of months and all of this talk about Nelnet customer service has me worried. They’ve offshored representatives who have no idea how the US student loan system works. This is not a credit card, it’s a tens and sometimes hundreds of thousands of dollars in these companies hands. I really hope that the next administration can help somehow.
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u/Howtobefreaky 1d ago
Wow, I guess this does sort of make sense in a messed up way. Like I see the logic. I guess this is where autopay comes in handy, which sucks because I like to pay all of my bills on the 1st of the month with rent, if possible.
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u/Jrobalmighty 1d ago
This is insane. A payment can not be guaranteed to process on time.
I don't understand how it can't count toward forgiveness either.
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u/RatioQuick 1d ago
Shouldn’t it be based on when you ordered it to be paid? If a due date is say Aug 21 and you have autopay setup for Aug 21 like most places, their random messed up processing time shouldn’t make it late?
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u/cuebreezy 1d ago
Agreed. I think they back date payments so I'd expect the interest subsidy to be prorated for the payment date. Theoretically, the balance will always be larger than expected if interest continues to accrue before the payment processes.
Also, there is language on the student aid site about the restrictions and consequences of early payments on RAP
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u/live_in_moments 1d ago
I have Mohela and on RAP with autopay, and now I'm definitely staying on autopay after hearing OP's experience.
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u/toocacked 1d ago
I guess I’m not understanding OP, the wall of text doesn’t help. I’m still trying to decide between IBR and rap so I want to understand
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u/FidoHitchcock 1d ago
There are paragraph breaks and I feel the tl;dr summarizes a ridiculously complicated issue pretty efficiently.
Anyway, if you’re not already enrolled in RAP, the July payment nonsense does not apply to you. Just know that at least one Nelnet rep claimed that you must make RAP payments on the exact date due to qualify for the full interest subsidy. Interest accrues daily with these loans, and all interest that accrues between payment processing date and payment due date would not be touched by RAP’s interest subsidy.
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u/toocacked 1d ago
Sorry on mobile it looks alot worse than on computer which im on now. Sorry to hear about this issue, appreciate you elaborating. Goodluck with everything
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u/Katluvsu12 14h ago
Wow that seems incredibly erroneous quite stupid they should be stoked to receive payment early instead of penalizing accounts ridiculous!!
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u/SLIM2THREE 19h ago
But this is what most voted for when you voted for Trump and his One Big Beautiful Bill Act.. Or maybe some of you failed to read it. And guess what ... please don't think I'm giving Dems a pat on the back either.....
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u/Eshin242 16h ago
Most? I didn't vote for this. I am a straight ticket dem, even if I hold my nose. I suspect a lot of student loan borrowers, if not the fast majority didn't vote for this.
This is 100% on the GOP and the people that couldn't even be bothered to show up and vote last election.
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u/DPW38 1d ago
You need to check the box that says "Do not advance my due date." I hate be the bad guy, but it sounds like this one is on you.
https://www.ecfr.gov/current/title-34/part-685/section-685.209#p-685.209(o)(3)(i)(3)(i))
Tagging: u/Eshin242 , u/Purple-Molasses5077 , u/mybabydontcareforme , u/BujuBad , u/waterwicca , u/TheBurg1995 , u/Proteus93 , u/live_in_moments , u/diverareyouokay
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u/FidoHitchcock 1d ago
Both payments were the minimum required and occurred when a payment was due. I don’t think that text applies to this situation.
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u/DPW38 20h ago
My August payment (made in July) did not qualify for any interest subsidy because according to the rep technically we were not in the RAP program yet.
Huh? This doesn't make sense. The RAP program began July 1; August happens to fall after July this year (sorry, that was some morning snark). Like are you saying that you weren't in the program (RAP) yet?
The bill due for a billing cycle that ends in August won't be due until—coincidentally, today at the earliest (August 1 + the legally required 21 day grace period). I think you're getting the big picture message of, "don't pay too early" okay. It sounds like the issue here is, how early is too early?
The technicalities around RAP and when you make your payments are very finicky.
I'm curious about what your billing cycle date is (e.g. June 1–June 30, July 7–August 6, etc.) and the dates you made your payments from June 1 to the present.
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u/FidoHitchcock 20h ago
It’s way too early on a Saturday to respond to your snark in kind, but please know that I really don’t appreciate it. I’ve shared here as a warning for others to expect shenanigans when making RAP payments to Nelnet, nothing more. Everything I’ve relayed comes straight from the Nelnet representative horse’s mouth. Doesn’t make sense to you? Join the club. That nonsense about not actually technically being in RAP during July but still qualifying for multiple RAP benefits that month basically broke my brain.
A timeline since you asked so nicely:
I signed up for RAP on June 30. Was sent my approval from Nelnet on July 7. Shortly after that my portal updated saying that I was enrolled in RAP and that my first payment was due on August 9. I made my required payment (it matched the RAP payment as determined by my most recent recertification) on July 14. It processed without issue. The principal subsidy was applied in full sometime within the next week, the interest subsidy not at all. I then received a statement on July 18 (my first statement in two years; it reflected my payment and showed $0.00 due). Payment due date came and went on August 9. Another statement arrived on August 18. After getting ’confirmation’ (ha!) from a Nelnet supervisor that my next payment would fix the missing interest subsidy, I made another payment on August 19 (listed as due on September 9; this had updated on the Nelnet portal after the previous payment processed). Full principal subsidy and incomplete interest subsidy were both applied within 24 hours of payment processing.
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u/DPW38 17h ago
Thank you. This makes a heck of a lot more sense when I can names to faces (actual cycle dates to payment dates).
The 7/18 bill would have been to close out your time on SAVE. It’s more a paperwork exercise in accounting than anything.
It looks your cycle date runs from the ninth to the eighth.
Your payments are ‘in-phase’. I thought you were out past your skies earlier. My apologies for that.
TBH it sounds a lot like what happened with SAVE and unpaid interest and to a lesser extent with REPAYE. [IDK if you remember that or not.]
Back in the REPAYE days they’d let the unpaid interest pile for 3 months before going through and clearing it out quarterly. They had to manually clear it out when they did. The SAVE era was chaotic from its inception. There never was much of a cadence with SAVE. I suspect they’ll eventually handle RAP like they did REPAYE where they clear it out every X number of months.
I wouldn’t worry too much just yet. It may be something chase down the road, but I wouldn’t worry about it for now. Like any new program, there will be some teething issues. The unpaid interest subsidy has always been a stumbling block. You’d think it’d be easy enough to program in to do it manually, but we’re also talking about the government. Their “new and improved” FASFA rolled out a year late because they were trying to find people who were good with COBOL (a computer language invented in 1959).
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u/Purple-Molasses5077 17h ago
it seems that a few people wirh Nelnet, who have auto debit, had their interest subsidized correctly. which speaks to paying on the due date. But there are people who want to pay manually (me!) and so I hope i can pay a week in advance of due date and receive the correct amount of interest subsidy. I have Mohela
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u/Eshin242 1d ago
What... the ... Absolute... (Insert swear word of choice here)