- Student loan company Nelnet just laid off over 500 employees.
- The company confirmed that the reason for the layoffs was a lack of work due to Biden’s stall in debt relief.
- Insider first reported in May 2022 that Nelnet had laid off 150 employees due to a pause in student loan payments.
A major student loan company just laid off more than 500 of its employees — and blamed it on President Joe Biden’s debt relief.
On Wednesday, Nelnet sent an email to 560 employees informing them they were being laid off, an affected employee told Insider. The company confirmed in a statement that 350 of those employees were hired in the past six months after Biden announced up to $20,000 in debt relief to help with an expected high number of calls as the relief was implemented and student loan payments reversed Back to.
But debt relief has been blocked since October by two conservative-backed lawsuits, and Biden extended the student loan payment pause beyond Dec. 31. It will now end 60 days after June 30 or 60 days after the lawsuits are resolved, whichever comes first. Nelnet said the lack of work for those additional employees led to this decision.
“These decisions are never easy,” said Ben Kiser, Nelnet’s executive director of corporate communications. “With federal student loan repayments in arrears for most of 2023, unfortunately, it is not possible to maintain increased staffing levels for work that will remain on hold for a significant period of time.”
350 employees who have been employed since August have been given 60 days’ notice of termination by Nelnet Diversified Services (NDS), and another 210 employees have been laid off for performance reasons.
“We will continue to actively seek opportunities within the organization to redeploy qualified associates, and we hope that many will consider reapplying to join our NDS team when repayment resumes,” Kiser said.
This isn’t the first time Nelnet has laid off workers during a student loan break. Insider first reported in May 2022 that Nelnet was laying off about 150 employees, with the company writing in an email at the time that the student loan pause resulted in “limited work for certain teams.”
“While we have been able to redeploy hundreds of associates to other opportunities over the past few months, as well as minimize unused capacity through voluntary leave, reduced working hours and voluntary leave, unfortunately there are not enough opportunities for everyone, and we had to make the difficult decision to determine the appropriate size of our teams for loan servicing,” the email said at the time.
Insider spoke to two employees affected by the first round of layoffs, who described the sudden decision as creating “mass panic.”
“We just didn’t know who was going to be next, and they weren’t telling us anything,” the former employee said. “These people were fired and removed without a word.”
Other student loan companies have yet to publicly confirm any hiring changes due to Biden’s debt relief — but the industry will see significant changes this year. A plan to cancel up to $20,000 in student debt for federal borrowers heads to the Supreme Court on Feb. 28, and the Education Department has made it clear that payments will continue this year, regardless of what the Court ultimately decides.
Along with getting millions of borrowers back into repayment, student loan companies are also likely to be tasked with implementing a series of reforms to targeted debt relief plans outlined by the Department, including changes to income-based repayment plans and the Public Service Loan Forgiveness (PSLF) program. The exact date for the start of these reforms has not yet been determined, but it is likely to be a significant undertaking.