A major student-loan company just laid off over 500 employees due to lack of work from Biden's stalled debt relief

• Student-loan company Nelnet just laid off over 500 employees.
• The company confirmed the reason for the layoffs was due to lack of work from Biden's stalled debt relief.

A major student-loan company just laid off over 500 of its employees — and blamed President Joe Biden's debt relief for it.

On Wednesday, Nelnet sent an email to 560 employees informing them that they were being laid off, an impacted employee told Insider. The company confirmed in a statement that 350 of those employees were hired in the past six months after Biden announced up to $20,000 in debt relief to help with what was expected to be high call volume as the relief was implemented and student-loan payments were turned back on.

But the debt relief has been blocked since October due to two conservative-backed lawsuits, and Biden extended the student-loan payment pause past December 31. It will now end 60 days after June 30, or 60 days after the lawsuits are resolved, whichever happens first. Nelnet said that the lack of work for those additional employees led to this decision.

"These decisions are never easy," Ben Kiser, Nelnet's executive director of corporate communications, said. "With the delay of federal student loan repayment through much of 2023, regrettably, it isn't feasible to maintain increased staffing levels for work that will remain on hold for a significant amount of time."

The 350 employees hired since August were given 60 days notice of their termination from the Nelnet Diversified Services (NDS) division, and the 210 other employees were laid off due to performance reasons.

"We will continue to actively search for opportunities within the organization to redeploy eligible associates, and we hope many will consider reapplying to join our NDS team when repayment does resume," Kiser said.

This is not the first time Nelnet has made layoffs during the student-loan payment pause. Insider first reported in May 2022 that Nelnet laid off about 150 employees, with the company writing in the email at the time that the student-loan payment pause has resulted in "limited work for certain teams."

"Although we've been able to redeploy hundreds of associates to other opportunities in the last several months as well as minimize unused capacity through voluntary time off, reduced hours, and voluntary leave of absence, unfortunately there are not enough opportunities for everyone, and we've had to make the difficult decision to right size our loan servicing teams," the email at the time said.

Insider spoke to two employees who were impacted by that first round of layoffs, and they described the abrupt decision as creating "mass panic."

"We just didn't know who was going to be next, and they weren't saying anything to us," a former employee said. "These people were being fired and removed without a word."

Other student-loan companies have not yet publicly confirmed any employment changes due to Biden's debt relief — but the industry will go through significant changes this year. The plan to cancel up to $20,000 in student debt for federal borrowers is going to the Supreme Court on February 28, and the Education Department has made clear that payments will resume this year, regardless of what the Court ultimately decides.

Along with transitioning millions of borrowers back into repayment, student-loan companies will also likely be tasked with implementing the range of reforms to targeted debt relief plans the department has put forth, including changes to income-driven repayment plans and the Public Service Loan Forgiveness (PSLF) program. An exact date for those reforms to go into place is not yet set, but it's likely to be a significant undertaking.