LINCOLN,
Neb., March 23, 2023 /PRNewswire/ -- Nelnet
(NYSE: NNI) today announced a staffing reduction to address lower
pricing and reduced servicing volume for the company's federal
servicing contracts as well as to align with the company's
strategic consolidation and sunsetting of select loan servicing
systems.
On March 22, 2023, Nelnet received
a contract modification from the Department of Education
(Department) for the company's current loan servicing contracts
with the Department. The modification significantly decreased
the price earned by the company per borrower per month.
Additionally, last month, the Department notified Nelnet of its
intent to transfer 1 million borrowers from Nelnet Loan Servicing
to another federal servicer. The transfer, which was not based on
Nelnet's performance, is scheduled to occur over the next few
months. Both the price reduction and the unanticipated transfer of
a million borrowers will have a material impact on NDS.
Approximately 550 associates who work in Nelnet's Diversified
Services (NDS) division and some in related shared services areas
that support NDS were notified today their positions are being
eliminated. Nelnet will also look for redundancies and efficiencies
throughout the year related to the conclusion of projects centered
on the consolidation of select loan servicing platforms. No other
Nelnet businesses are impacted.
"Of all the strategic business decisions we must make, the
rightsizing of teams is always the most difficult," said chief
executive officer Jeff Noordhoek.
"While some terms of employment end knowingly because the specific
work is completed, other unanticipated staff reductions are the
result of challenging circumstances that have a significant impact
on the business. We must adjust accordingly to continue providing
value to customers to the best of our ability while also
positioning the company for long-term success."
Regarding its loan servicing systems, Nelnet continues to
develop modern, innovative technology platforms to support federal
and consumer loan servicing, respectively. Throughout the remainder
of the year, the company will strategically continue migrating
borrowers from legacy systems to modern platforms and then sunset
the legacy systems, with the goal of creating ongoing
efficiencies.
"While the current federal student loan servicing climate is not
ideal, creating the need to make hard decisions—Nelnet remains
firmly committed to helping students and their families fulfill
their educational dreams," said Noordhoek.
Forward-looking and cautionary statements
This press release contains forward-looking statements within
the meaning of federal securities laws. The words "anticipate,"
"assume," "believe," "continue," "could," "estimate," "expect,"
"forecast," "future," "intend," "may," "plan," "potential,"
"predict," "scheduled," "should," "will," "would," and similar
expressions, as well as statements in future tense, are intended to
identify forward looking statements. These statements are based on
management's current expectations as of the date of this press
release and are subject to known and unknown risks and
uncertainties that may cause actual results or performance to
differ materially from those expressed or implied by the
forward-looking statements. Such risks include, but are not limited
to, risks related to the ability to successfully maintain and
increase allocated volumes of student loans serviced by Nelnet
under the existing servicing contracts with the Department, as
amended by the modifications, and any future servicing contracts
with the Department, which current contracts accounted for 32
percent of Nelnet's revenue in 2022, risks that the current
servicing contracts, as amended by the modifications, will not be
extended beyond December 14, 2023,
risks to Nelnet related to the Department's initiatives to procure
new contracts for federal student loan servicing, including the
pending and uncertain nature of the Department's procurement
processes, risks that Nelnet may not be successful in obtaining any
of such potential new contracts, and risks related to Nelnet 's
ability to comply with agreements with third-party customers for
the servicing of Federal Direct Loan Program, Federal Family
Education Loan Program, and private education and consumer loans.
For more information, see the "Risk Factors" sections and other
cautionary discussions of risks and uncertainties included in
documents filed or furnished by Nelnet with the Securities and
Exchange Commission. Although Nelnet may voluntarily update or
revise its forward-looking statements from time to time to reflect
actual results or changes in Nelnet's expectations, Nelnet
disclaims any commitment to do so except as required by law.
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SOURCE Nelnet, Inc.