What Nelnet's Layoffs Mean for Student Loan Borrowers
Even student loan servicers aren't immune to layoffs. Here's why Nelnet's staff reduction could directly impact your student loan repayment experience.
In March, student loan servicing community Nelnet announced it would be laying off over 500 employees in its Diversified Services (NDS) division. This announcement came on the heels of the Department of Education's decision to modify its contracts with Nelnet, changing monthly earnings per borrower and transferring 1 million borrowers over to a different platform.
This isn't the first wave of layoffs for Nelnet this year. Earlier, the company laid off over 500 employees, citing the long delay in the return of student loan repayments.
TL;DR? Nelnet's reduced its staff in the past year due in part to the repayment pause and policy changes from the Department of Education.
But why could a reduced staff be a big deal for student loan borrowers?
How Layoffs Could Affect Your Repayment
Student loan servicers have never been known for stellar customer service. With the layoffs and payments resuming, most servicers are bracing for the worst.
Not only will they be overwhelmed with calls and questions from borrowers with payments resuming, but they'll also have to handle the influx of borrowers making payments for the first time. On top of that, policy changes around Income-Driven Repayment (IDR) Plans and Public Student Loan Forgiveness (PSLF) could have even the most seasoned borrowers reaching out for assistance.
💡 44 million borrowers have had payments on hold for the past three years. It's only natural they'll have some questions when payments resume.
If you have questions regarding your payment, expect long wait times, delayed communication, or even radio silence from your servicer, primarily as the repayment date draws near.
With the fate of student loan forgiveness in the hands of the Supreme Court, it makes sense most borrowers are waiting to hear a decision before deciding what to do next. Remember, according to the Biden administration, student loan payments will resume either 60 days after, whichever comes sooner, whether it is:
- The Supreme Court's ruling on Biden's forgiveness
- June 30
It can be tempting to put off your questions until when the Supreme Court rules on student loans. Still, experts predict that's when most borrowers will start reaching out, creating a backlog of communications across servicers where resources are already spread thin.
Even before the end of the repayment pause was in sight, servicers have been asked to do more with less. Last year, Congress approved a trillion-dollar funding bill, but only a sliver of it is set aside for the Office of Federal Student Aid (FSA). The FSA oversees federal student loans, of which many have been in limbo the past few years, whether it’s due to the student loan pause, other relief plans, or the latest changes to the Modified REPYAE plan.
A lack of funding leads to less staff and confusion across the student loan space. That means servicers like Great Lakes, Navient, and Discover are already spread thin. When loan repayments begin, the companies will be scrambling to keep up with borrowers’ needs.
So, What Can I Do to Avoid ?
Don’t wait. Determine what Income-Driven Repayment plan is best for you, and pre-enroll to avoid the headache of servicer wait times, avoid missed payments, and more. You want to give yourself the freedom to see all of your options, with transparent details that help you make the smartest repayment decision.
How Can I Find Transparent Options and Enroll?
The Chipper app shows you side-by-side details of the plans you are eligible for in minutes, making it easy to identify which plan has the lowest monthly payment, the most forgiveness, and more. By taking action and pre-enrolling, you’ll be able to rest easy and be notified to finalize enrollment and ensure that you’re on the right plan when payments resume in a few months.
Will student loans be paused again?
With most COVID benefits expiring, it is doubtful that student loans will be paused again. That's why now may be a good time to start considering your repayment plan when payments resume.
When do I have to start paying student loans?
Recent reports indicate that student loan payments will resume in October. Borrowers should officially be notified of repayment by August 31.
When does interest start on student loans?
Although payments will resume in October, servicers will start charging interest on your student loans in September.
What happens if I don't pay student loans?
The exact repayment dates are up in the air, which is why the end of the pause comes with a grace period for borrowers. If you miss the first payment, borrowers won't be charged a late fee or see the missed payment negatively impact their credit history.