Student loan servicer Nelnet to cut 550 jobs Dept. of Education cut pricing of contracts

Shares of Nelnet Inc. (NNI) were indicated down more than 3% in premarket trading Friday, after the student-loan servicer said it was cutting 550 jobs following lower pricing and volume for its federal servicing contracts, and as it consolidated and replacement of certain loan servicing systems. The company said late Thursday that earlier in the week it received a "contract modification" from the U.S. Department of Education for its loan servicing contracts, which "significantly decreased" the price earned by the company per borrower per month. Nelnet also said that it was notified last month by the DOE of a plan to transfer one million borrowers from Nelnet to another loan servicer. "Both the price reduction and the unanticipated transfer of a million borrowers will have a material impact on NDS [Nelnet's Diversified Services]," the company said in a statement. The job cuts represent about 12% of 4,478 employees NDS had as of Dec. 31, and 6.7% of Nelnet's total workforce of 8,237. The stock has edged up 0.7% over the past three months through Thursday, while the S&P 500 has gained 2.7%.

-Tomi Kilgore

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03-24-23 0744ET

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