Congressional votes on Thursday to end federally subsidized student lending by private companies will mean job cuts at Lincoln student loan company Nelnet, a company spokesman said Friday.
"We are very disappointed by this political news," spokesman Ben Kiser said. "We believe it is poor public policy that will eliminate a part of our business and result in job losses in our community."
Kiser declined to give any details about the scope of the cuts, although he said they will occur over the next several months. Nelnet employs about 2,100 people, including more than 800 in Lincoln.
The provision to end the Federal Family Education Loan Program and to channel all federal student lending directly through the government was tacked on to the controversial health insurance overhaul reconciliation legislation.
The Senate voted 56-43 in favor of the bill Thursday, and the House followed suit later in the day, voting 220-207 to end the program.
In addition to ending federally subsidized loans through private lenders, the bill also would increase Pell grants to needy students and send more money to community colleges and historically black colleges.
Nebraska Sen. Ben Nelson, who supported the health care overhaul, ultimately voted against the "fix-it" bill, one of only three Senate Democrats to do so. He cited the student lending provision as one of his main reasons.
"Perhaps most troubling is adding unrelated student loan reforms that have never been debated in the Senate and would result in a government takeover of student lending," Nelson said in a release earlier this week. "It's not clear why we would, on the one hand, jeopardize more than 30,000 private sector jobs while, on the other, we are promoting job creation in every state to aid our economic recovery."
Sallie Mae, the largest student lender, has said previously it may have to cut as many as 2,300 jobs - or nearly 30 percent of its work force - because of the loss of the federally subsidized loan program.
Nelnet is not likely to experience anywhere near that level of job reductions.
The company for some time has been shifting its focus away from originating loans and toward fee-based businesses such as tuition payment services.
At the end of 2009, Nelnet reported that 66 percent of its revenue came from its fee-based business.
Kiser said that when Nelnet became a publicly traded company in 2003, it had virtually no fee-based revenue.
The company also is one of four that were selected to service those direct loans from the federal government, and Kiser said Nelnet is now servicing $6 billion worth of those loans.
That business has the potential to continue growing for Nelnet, he said.
But that will not have any impact on the potential job losses related to the loss of the loan-origination business, Kiser said.
Nelnet is in the midst of hiring about 250 people in Lincoln related to the closing of a Jacksonville, Fla., office and the consolidation of most of the jobs here.
Kiser said that, whenever possible, affected employees will have the opportunity to apply for other jobs within the company.
"We're going to do everything we can to minimize the effects," he said.
Reach Matt Olberding at 473-2647 or firstname.lastname@example.org.