Nelnet suspends quarterly dividend

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By staff and wire reports

Nelnet, the student loan company based in Lincoln, announced Wednesday that it will “temporarily suspend” its dividend program.

Nelnet has paid a quarterly dividend of seven cents per share on its common stock.

Mike Dunlap, chairman and chief executive officer, said in a release, “With the volatility in the capital markets, we believe it is prudent to preserve capital. Today’s action is another step in that direction.”

On Tuesday, Bush administration officials told lenders including Nelnet that the government would buy up their student loans to ensure the companies have access to capital. Congress recently gave the Education Department the authority to do so.

The administration also has agreed to have the government invest in securities made of student loans bundled together, traditionally the exclusive province of private investing companies in a market that has become stressed.

The move is expected to make capital available to student lenders at cheaper rates than what they can get by issuing student loan securities on the market. Borrowing costs for lenders rose dramatically as a result of  recent disruption in the credit markets.