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A leaked internal email at student-loan company Nelnet detailed layoffs resulting from the payment pause.
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The email, provided to Insider on Thursday, said all impacted employees have already been notified.
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Federal loan servicers have not been collecting payments from most borrowers for over two years.
A major student-loan company just laid off about 150 employees citing the over two-year pause on payments, which President Joe Biden recently extended through August 31.
An employee of Nelnet, who requested to remain anonymous for privacy and employment concerns, provided an email to Insider from the company that notified its workers of layoffs that have already occurred. According to the email sent to workers on Thursday morning, Nelnet wrote that the student-loan payment pause has resulted in “limited work for certain teams.”
“Although we’ve been able to redeploy hundreds of associates to other opportunities in the last several months as well as minimize unused capacity through voluntary time off, reduced hours, and voluntary leave of absence, unfortunately there are not enough opportunities for everyone, and we’ve had to make the difficult decision to right size our loan servicing teams,” the email said.
“A performance-based approach was used to identify impacted associates,” it added. “All released associates have been notified and we are not planning further release of staff.”
Nelnet spokesperson Ben Kiser told Insider that “decisions affecting people’s employment are incredibly difficult” and confirmed that the company “let go approximately 150 associates from our loan servicing teams” this week.
Kiser said that as a result of the pause on student-loan payments, Nelnet’s loan servicing teams have experienced “extremely low call volume and limited work available.”
“Now, more than two years later and with the most recent extension continuing through August 31—with no certainty as to whether or not the relief will be further extended—we have excess capacity in our loan servicing teams, thus the need for right-sizing,” Kiser said.
The layoffs came less than a week after Jacque Mosely, Nelnet’s director of government relations, said during its annual shareholder meeting that “the probability’s pretty high” Biden will cancel $10,000 in student loans for every federal borrower. Jim Kruger, Nelnet’s chief financial officer, said wiping out that amount would reduce the company’s future cash flow from $1.8 billion to $1.2 billion, as originally reported by the Lincoln Star Journal.
Nelnet has nearly 8,000 full-time employees with associates stationed in 30 different centers across the country and headquarters in Lincoln, Nebraska. The company services federal loans from the Education Department, along with the privately-held Federal Family Education Loan (FFEL) program, for 16.8 million borrowers, according to Nelnet’s first quarter 2022 report.
Its loan-servicing segment reported a net income of $9.2 million after tax in the first three months of 2022, compared with $12.1 million in the same time frame in 2021, due to costs incurred from the repeated extension of the student-loan payment pause, per the report.
Jeff Noordhoek, CEO of Nelnet, said in a statement after the company’s first quarter report that he was “pleased” with the results.
“We are proud of our team of associates who are truly responsible for our success,” he said. “Their perseverance, optimism, and, most importantly, dedication to our customers through the current economic and political challenges and uncertainty is remarkable and gives us confidence for the future.”
Biden has yet to make a decision on what student-loan relief he will implement, while reports are suggesting it will be close to his $10,000 forgiveness campaign pledge and subject to income thresholds. Regardless of the relief, Education Secretary Miguel Cardona recently said that “at some point, people are going to have to start paying what they can afford to pay.”
Read the original article on Business Insider
George is Digismak’s reported cum editor with 13 years of experience in Journalism