Nelnet cutting 400 jobs before loan law change

NEW YORK (Reuters) - Student loan company Nelnet Inc (NNI.N) said on Thursday it was cutting 400 jobs, or about 12 percent of its work force, ahead of expected legislative changes that could pinch profits for lenders.

Nelnet said the cuts should reduce operating expenses by $25 million to $35 million before taxes annually, beginning in 2008.

The layoffs will result in charges of $12 million to $14 million in 2007, of which between 70 percent and 80 percent will be in the third quarter.

If the proposed legislation is enacted in its current form, Nelnet said it expects additional charges of between $22 million and $27 million for writing down goodwill and other assets.

Nelnet, whose shares are down 34 percent so far this year, said it will close five small lending offices and cut staff in Indianapolis.

The U.S. House of Representatives and Senate are expected to pass legislation that would slash federal subsidies to lenders, increase student grants, cut federal default insurance on student loans and increase fees lenders pay to make loans.

President George W. Bush intends to sign the bill, the White House said on Thursday.

(Reporting by Dan Wilchins)