Nelnet to close Honolulu operation
The student lender is closing the two-person office as part of its nationwide job cuts
OMAHA, Neb. » Student loan company Nelnet Inc. said yesterday it will have to eliminate 400 jobs because of new lending rules before Congress that would cut back on federal subsidies for student aid.
Nelnet plans to cut expenses by at least $25 million annually and the cuts announced Thursday represent more than 12 percent of the company's 3,300 employees.
Nelnet Chairman and Chief Executive Mike Dunlap said the company is changing its approach to the student loan business because of the changes Congress is expected to approve.
The company announced the cuts a day after House and Senate negotiators announced a proposal that will boost aid to college students by cutting roughly $20 billion in government subsidies to banks that issue student loans.
The job cuts will affect two employees in Nelnet's Honolulu office, which the company plans to close along with offices in San Antonio, Texas; Mesa, Ariz.; Sacramento, Calif.; and Tulsa, Okla.
Nelnet spokesman Ben Kiser said the Honolulu employees can apply for positions at the company's other locations.
Nelnet spokesman Ben Kiser said that as part of the restructuring, Nelnet's Lincoln headquarters may gain about 100 positions by the end of the year because some customer-support and default management jobs will move there.
Nelnet said yesterday it expects to record noncash charges of $22 million to $27 million if Congress approves the student loan regulations, because some of the company's assets will be worth less. But Nelnet has not adjusted its profit outlook because of the changes.
Federal lawmakers have given preliminary approval to bills that would cut roughly $20 billion in federal subsidies to banks that issue government-backed student loans, restructure some federal loan programs and address conflicts of interest in the student loan industry.
Nelnet officials have said the changes will likely force some lenders out of business.
Both the Senate and House have passed a version of new student loan rules, and lawmakers worked out a compromise version of the bill. Now both houses of Congress will have to vote on the compromise.
The full House and Senate are expected to vote on the legislation soon.
Nelnet says it serves students in 50 states and has $26.2 billion in net student loan assets.