I was going through the Nelnet website and making an extra payment on DW's student loans and I noticed a link for "Lower My Payments" on their site.
After plugging in some data on income and whatnot, they offered four options:
A) Standard
B) Graduated
C) Income Sensitive
D) Interest Only Deferment
Because we've been paying about 4-5 times the original monthly payment amount, it appears that we can re-amortize the loan to reduce the required monthly minimum under standard repayment terms to about half the original amortization amount.
First, have no direct financial need to do this -- we have steady jobs, good financial reserves, etc. The indirect benefit would be that when we enter the home purchase market in late 2012 or early 2013 that we will have a lower debt to income ratio for the loan (we would reduce our debt to income ratio by about 1%).
Second, we have no intention of lowering our monthly payments so the reduced payment will not result in more interest charges.
My concern is that I'm missing something and there will be some bad credit reporting as the result of this change.
Another concern I have is that it may make more sense to wait as long as possible to make the change, because we will have an even lower required payment because of our additional pay downs. Are there any restrictions as to how many times you can re-amoritize a loan?
FYI -- These are consolidated loans where Nelnet is both the servicer and the lender.
