−Removed: Nelnet is a diverse company with a purpose to serve others and a vision to make customers' dreams possible by delivering customer focused products and services.
+Added: Nelnet is a diverse, innovative company with a purpose to serve others and a vision to make dreams possible.
The largest operating businesses engage in loan servicing and education technology, services, and payment processing, and the Company also has a significant investment in communications.
A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans.
−Removed: The Company also makes investments to further diversify both within and outside of its historical core education-related businesses, including, but not limited to, investments in real estate, early-stage and emerging growth companies, and renewable energy.
+Added: The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in early-stage and emerging growth companies, real estate, and renewable energy (solar).
Substantially all revenue from external customers is earned, and all long-lived assets are located, in the United States.
2 unchanged sentences
A detailed description of the FFEL Program is included in Appendix A to this report.
−Removed: The Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act of 2010”) discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires that all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program.
+Added: The Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act of 2010”) discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program.
This law does not alter or affect the terms and conditions of existing FFELP loans.
−Removed: As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans.
+Added: As a result of the Reconciliation Act of 2010, the Company no longer originates FFELP loans.
However, a significant portion of the Company's income continues to be derived from its existing FFELP student loan portfolio.
−Removed: As of December 31, 2020, the Company had a $20.2 billion loan portfolio, consisting primarily of FFELP loans, that management anticipates will amortize over the next approximately 20 years and has a weighted average remaining life of 9.8 years.
+Added: As of December 31, 2021, the Company had a $17.2 billion FFELP loan portfolio that management anticipates will amortize over the next approximately 15 years and has a weighted average remaining life of approximately 8 years.
Interest income on the Company's existing FFELP loan portfolio will decline over time as the portfolio is paid down.
−Removed: However, since July 1, 2010, which is the effective date on and after which no new loans can be originated under the FFEL Program, the Company has purchased $27.9 billion of FFELP loans from other FFELP loan holders looking to exit or adjust their FFELP businesses.
−Removed: The Company believes there may be additional opportunities to purchase FFELP portfolios to generate incremental earnings and cash flow.
−Removed: However, since all FFELP loans will eventually run off, a key objective of the Company is to reposition itself for the post-FFELP environment.
+Added: Since all FFELP loans will eventually run off, a key objective of the Company is to reposition itself for the post-FFELP environment.
To reduce its reliance on interest income from FFELP loans, the Company has expanded its services and products.
−Removed: This expansion has been accomplished through internal growth and innovation as well as business acquisitions.
−Removed: The Company is also actively expanding its private education and consumer loan portfolios, and in November 2020 launched Nelnet Bank (as further discussed below).
+Added: This expansion has been accomplished through internal growth and innovation as well as business and certain investment acquisitions.
+Added: The Company is also actively expanding its private education and consumer loan portfolios, and in November 2020 launched Nelnet Bank (as further explained below).
In addition, the Company has been servicing federally owned student loans for the Department since 2009.
−Removed: Recent Developments
−Removed: ALLO’s Recapitalization and Additional Funding
−Removed: On October 1, 2020, the Company entered into various agreements with SDC Allo Holdings, LLC (“SDC”), a third party global digital infrastructure investor, and ALLO, then a majority owned communications subsidiary of the Company, to recapitalize and provide additional funding for ALLO.
−Removed: On October 15, 2020, ALLO received proceeds of $197.0 million from SDC for the issuance of membership units of ALLO, and redeemed $160.0 million of non-voting preferred membership units of ALLO held by the Company.
−Removed: As a result of the receipt of required regulatory approvals on December 21, 2020, SDC, the Company, and members of ALLO’s management own approximately 48 percent, 45 percent, and 7 percent, respectively, of the outstanding voting membership interests of ALLO, and the Company deconsolidated ALLO from the Company’s consolidated financial statements.
−Removed: Upon the deconsolidation of ALLO, the Company recorded its 45 percent voting membership interests in ALLO at fair value of $133.0 million, and accounts for such investment under the Hypothetical Liquidation at Book Value (“HLBV”) method of accounting.
−Removed: In addition, the Company recorded its remaining non-voting preferred membership units in ALLO at fair value of $228.5 million, and accounts for such investment as a separate equity investment.
−Removed: As a result of the deconsolidation of ALLO on December 21, 2020, the Company recognized a gain of $258.6 million in the fourth quarter of 2020.
−Removed: On January 19, 2021, ALLO closed on certain private debt financing facilities from unrelated third-party lenders providing for an aggregate financing of up to $230.0 million.
−Removed: With proceeds from this transaction, ALLO redeemed a portion of its non-
−Removed: voting preferred membership units held by the Company in exchange for an aggregate redemption price payment to the Company of $100.0 million.
−Removed: See note 2 of the notes to consolidated financial statements included in this report for additional information related to the ALLO recapitalization.
−Removed: ALLO’s results of operations, prior to deconsolidation, are presented by the Company as a reportable operating segment.
−Removed: On November 2, 2020, the Company obtained final approval from the Federal Deposit Insurance Corporation (“FDIC”) for federal deposit insurance and for a bank charter from the Utah Department of Financial Institutions (“UDFI”) in connection with the establishment of Nelnet Bank, and Nelnet Bank launched operations.
−Removed: Nelnet Bank operates as an internet Utah-chartered industrial bank franchise focused on the private education loan marketplace, with a home office in Salt Lake City, Utah.
−Removed: Nelnet Bank operates as a subsidiary of the Company, and the industrial bank charter allows the Company to maintain its other diversified business offerings.
Operating Segments
+Added: The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, in its Asset Generation and Management operating segment.
+Added: This segment is expected to generate a stable net interest margin and significant amounts of cash as the FFELP portfolio amortizes.
+Added: In addition, the Company earns fee-based revenue through its Loan Servicing and Systems and Education Technology, Services, and Payment Processing operating segments.
+Added: Further, the Company earned communications revenue through ALLO, formerly a majority-owned subsidiary of the Company prior to a recapitalization of ALLO, resulting in the deconsolidation of ALLO from the Company’s financial statements on December 21, 2020.
+Added: The recapitalization of ALLO was not considered a strategic shift in the Company’s involvement with ALLO, and ALLO’s results of operations, prior to the deconsolidation, are presented by the Company as a reportable operating segment.
+Added: See note 2, “ALLO Recapitalization” in the accompanying notes to consolidated financial statements included in this report for a description of ALLO’s recapitalization and the Company’s continued involvement.
+Added: On November 2, 2020, the Company obtained final approval for federal deposit insurance from the Federal Deposit Insurance Corporation (“FDIC”) and for a bank charter from the Utah Department of Financial Institutions (“UDFI”) in connection with the establishment of Nelnet Bank, and Nelnet Bank launched operations.
+Added: Nelnet Bank’s operations are presented by the Company as a reportable operating segment.
The Company’s reportable operating segments are summarized below.
−Removed: Business activities and operating segments that are not reportable are combined and included in "Corporate and Other Activities."
+Added: Business activities and operating segments that are not reportable are combined and included in "Corporate and Other Activities." Corporate and Other Activities also includes income earned on the majority of the Company’s investments and interest expense incurred on unsecured and other corporate related debt transactions.
Loan Servicing and Systems (“LSS”)
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• Includes the brands Nelnet Diversified Solutions, Nelnet Loan Servicing, Nelnet Servicing, Great Lakes Educational Loan Services, Inc.
−Removed: (“Great Lakes”), Firstmark Services, GreatNet, and Nelnet Renewable Energy
+Added: (“Great Lakes”), Firstmark Services, GreatNet, Nelnet Renewable Energy, and Nelnet Government Services
Education Technology, Services, and Payment Processing (“ETS&PP”)
• Referred to as Nelnet Business Services (“NBS”)
−Removed: • Includes the brands FACTS, Nelnet Campus Commerce, PaymentSpring, FACTS Education Solutions, Aware3, HigherSchool Instructional Services, Catholic Faith Technologies, CD2 Learning, and Nelnet International
−Removed: • Services include tuition payment plans and billing, financial needs assessment services, online payment and refund processing, school information system software, payment technologies, and professional development and educational instruction services
+Added: • NBS provides education services, payment technology, and community management solutions for K-12 schools, higher education institutions, churches, and businesses in the United States and internationally
+Added: • Includes the divisions of FACTS, Nelnet Campus Commerce, PaymentSpring, Nelnet Community Engagement, and Nelnet International
Communications
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• Customer acquisition, management services, and backup servicing for community solar developers
−Removed: • Providing outsourced services including call center, processing, technology, and marketing services
+Added: • Providing outsourced services including call center, processing, and technology services
As of December 31, 2021, the Company serviced $529.0 billion of loans for 16.4 million borrowers.
−Removed: See Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) - “Loan Servicing and Systems Operating Segment - Results of Operations - Student Loan Servicing Volumes” for additional information related to the Company's servicing volume.
+Added: See Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) - “Loan Servicing and Systems Operating Segment - Results of Operations - Loan Servicing Volumes” for additional information related to the Company's servicing volume.
Servicing federally-owned student loans for the Department
−Removed: Nelnet Servicing, LLC (“Nelnet Servicing”), a subsidiary of the Company, and Great Lakes, acquired by the Company in February 2018, are two of the four large private sector companies (referred to as Title IV Additional Servicers, or “TIVAS”) that have student loan servicing contracts awarded by the Department in June 2009 to provide servicing for loans owned by the Department.
−Removed: The Department has also awarded contracts to four not-for-profit entities (“NFP”) to service loans owned by the Department.
−Removed: These loans include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department.
−Removed: Under the servicing contracts, Nelnet Servicing and Great Lakes earn a monthly fee from the Department for each unique borrower who has loans owned by the Department and serviced by Nelnet Servicing or Great Lakes, respectively.
−Removed: The amount paid per each unique borrower is dependent on the status of the borrower (e.g., in school or in repayment).
+Added: Nelnet Servicing, LLC (“Nelnet Servicing”), a subsidiary of the Company, and Great Lakes, acquired by the Company in February 2018, are two of the current seven private sector entities that have student loan servicing contracts with the Department to service loans that include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department.
As of December 31, 2021, Nelnet Servicing was servicing $215.8 billion of student loans for 6.4 million borrowers under its contract, and Great Lakes was servicing $262.6 billion of student loans for 7.8 million borrowers under its contract.
−Removed: The Department is the Company's largest customer, representing 27 percent of the Company's revenue in 2020 and 66 percent of the LSS operating segment’s revenue.
−Removed: The current servicing contracts with the Department are currently scheduled to expire on June 14, 2021, but provide the potential for an additional six-month extension at the Department’s discretion through December 14, 2021.
−Removed: The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, provides that the Department may extend the period of performance for the servicing contracts scheduled to expire on December 14, 2021 for up to two additional years to December 14, 2023.
−Removed: The Department is conducting a contract procurement process entitled Next Generation Financial Services Environment (“NextGen”) for a new framework for the servicing of all student loans owned by the Department.
−Removed: On January 15, 2019, the Department issued solicitations for certain NextGen components, including the NextGen Enhanced Processing Solution (“EPS”), which is for a technology servicing system and certain processing functions the Department planned to use under NextGen to service the Department's student loan customers, and the NextGen Business Processing Operations (“BPO”), which is for the back office and call center operational functions for servicing the Department's student loan customers.
−Removed: On June 24, 2020, the Department awarded and signed contracts with five other companies in connection with the BPO solicitation.
−Removed: On July 10, 2020, the Department cancelled the solicitation for the EPS component.
−Removed: In the Department's description of its cancellation of the EPS solicitation component, the Department indicated that it continues to be committed to the goals and vision of NextGen, and that it would be introducing a new solicitation to continue the NextGen strategy in the future.
−Removed: On October 28, 2020, the Department issued a new federal loan servicing solicitation for an Interim Servicing Solution ("ISS").
−Removed: ISS was a follow-on to the existing contracts, which would award a full system and servicing solution to two providers.
−Removed: Under ISS, the selected providers would have provided the technology platform to host the Department's student loan portfolio;
−Removed: customer service (including contact centers) and back-office processing;
−Removed: digital engagement layer including borrower-facing website and mobile-applications;
−Removed: intake, imaging, and fulfillment;
−Removed: and portfolio-level operations.
−Removed: As the companies awarded BPO contracts are onboarded, contact center and back-office operations would have shifted from the ISS contract to the BPO providers.
−Removed: The Consolidated Appropriations Act, 2021 contains provisions directing certain aspects of the NextGen process, including that any new federal student loan servicing environment shall provide for the participation of multiple student loan servicers and the allocation of borrower accounts to eligible student loan servicers based on performance, and directed the suspension of awarding any ISS contract for at least 90 days.
−Removed: On January 9, 2021, the Department suspended the ISS solicitation.
−Removed: In the Department’s description of the suspension, it indicated that in consideration of the Consolidated Appropriations Act, 2021, the Government is reassessing its needs and will amend or cancel the subject solicitation in the future.
−Removed: The Department currently allocates new loan volume among the TIVAS and NFP servicers based on the following performance metrics:
−Removed: • Two metrics measure the satisfaction among separate customer groups, including borrowers (35 percent) and Department personnel who work with the servicers (5 percent).
−Removed: • Three metrics measure the success of keeping borrowers in an on-time repayment status and helping borrowers avoid
−Removed: default as reflected by the percentage of borrowers in current repayment status (30 percent), percentage of borrowers more than 90 days but fewer than 271 days delinquent (15 percent), and percentage of borrowers over 270 days and fewer than 361 days delinquent (15 percent).
−Removed: The loans are evaluated in 15 different loan portfolio stratifications to account for differences in portfolios.
−Removed: The allocation of ongoing volume is determined twice each year based on the performance of each servicer in relation to the other servicers.
−Removed: Quarterly results are compiled for each servicer.
−Removed: The average of the September and December quarter-end results are used to allocate volume for the period from March 1 to August 31, and the average of the March and June quarter-end results are used to allocate volume for the period from September 1 to February month end, of each year.
−Removed: Under the most recent publicly announced performance metrics measurements used by the Department for the quarterly periods January 1, 2020 through June 30, 2020, Great Lakes' and Nelnet Servicing's overall rankings among the then-current nine servicers for the Department at that time were first and tied for fifth, respectively.
−Removed: Based on these results, Great Lakes' and Nelnet Servicing's allocation of new student loan servicing volumes for the period September 1, 2020 through February 28, 2021 are 20 percent and 10 percent, respectively.
−Removed: In October 2020, the Department communicated to its servicers that a not-for-profit servicer requested to end its contract with the Department.
−Removed: Effective October 23, 2020, the percent of allocated new student loan servicing volume that previously was awarded to this servicer will be split among the remaining servicers, resulting in Great Lakes' allocation to increase by two percent and each remaining servicer to obtain an additional one percent allocation.
+Added: Under the servicing contracts, Nelnet Servicing and Great Lakes earn a monthly fee from the Department for each unique borrower they service on behalf of the Department.
+Added: The Department is the Company's largest customer, representing 29 percent of the Company's revenue and 69 percent of the LSS operating segment’s revenue in 2021.
+Added: Nelnet Servicing's and Great Lakes' student loan servicing contracts with the Department are scheduled to expire on December 14, 2023.
+Added: In 2017, the Department initiated a contract procurement process referred to as the Next Generation Financial
+Added: Services Environment ("NextGen") for a new framework for the servicing of all student loans owned by the Department.
+Added: The Consolidated Appropriations Act, 2021 contains provisions directing certain aspects of the NextGen process, including that any new federal student loan servicing environment is required to provide for the participation of multiple student loan servicers and the allocation of borrower accounts to eligible student loan servicers based on performance.
+Added: The Company cannot predict the timing, nature, or ultimate outcome of NextGen or any other contract procurement process by the Department.
+Added: In July 2021, the Pennsylvania Higher Education Assistance Agency ("PHEAA"), a servicer for the Department, announced that it will exit the federal student loan servicing business.
+Added: PHEAA notified the Department it would not be accepting a long-term extension of its student loan servicing contract beyond what was needed to ensure a smooth transition for borrowers.
+Added: In November 2021, PHEAA and the Department agreed to a short-term extension that will expire in December 2022.
+Added: All applicable student loans serviced by PHEAA will be transferred to successor servicers prior to the end of this contract extension.
+Added: At the time of its announcement, PHEAA serviced approximately 8.5 million borrowers under its contract.
+Added: A portion of the PHEAA servicing volume has been and will be transitioned prior to May 1, 2022, which is the date on which the suspension of federal student loan payments under the CARES Act is scheduled to expire.
+Added: Approximately 850,000 PHEAA borrowers have been transitioned to Nelnet Servicing’s platform as of the date of this filing (of which approximately 603,000 were converted prior to December 31, 2021).
+Added: The Company anticipates additional PHEAA volume to be transitioned to its platform during the remainder of 2022, but cannot currently estimate the number of additional borrowers that will be transferred and/or the timing of such transfers.
+Added: In addition, the New Hampshire Higher Education Association Foundation Network (“Granite State”) exited the federal student loan servicing business in 2021.
+Added: Granite State’s servicing volume of approximately 1.3 million borrowers was transitioned to Edfinancial Services, LLC ("Edfinancial"), a current servicer for the Department, during the third and fourth quarters of 2021.
+Added: Edfinancial utilizes Nelnet Servicing's platform to service their loans for the Department, as did Granite State prior to its exit.
+Added: The Department currently allocates new loan volume among its servicers based on certain performance metrics that measure the satisfaction among separate customer groups, including borrowers and Department personnel who work with the servicers.
+Added: The metrics also measure the success of keeping borrowers in an on-time repayment status and helping borrowers avoid default.
+Added: Under the most recent publicly announced performance metrics used by the Department for the quarterly periods January 1, 2021 through June 30, 2021, Great Lakes’ and Nelnet Servicing’s overall rankings among the remaining six go-forward servicers for the Department (which excludes PHEAA) were third and fifth, respectively.
+Added: Based on these results, Great Lakes’ and Nelnet Servicing’s allocation of new student loan servicing volumes beginning September 1, 2021 are 18 percent and 12 percent, respectively.
+Added: Servicing contract amendments entered into with the Department in September 2021 to extend the contracts through December 14, 2023, also amended the methodology for performance measurements and new loan volume allocations, in part by reflecting additional service level performance metrics under which, along with portfolio performance metrics, the Department will evaluate each servicer and make new loan volume allocations on a quarterly basis.
Incremental revenue components earned by Nelnet Servicing or Great Lakes from the Department (in addition to loan servicing revenues) include:
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Servicing FFELP loans
−Removed: NDS services the Company's student loan portfolio and the portfolios of third parties.
+Added: NDS services the Company's FFELP student loan portfolio and the portfolios of third parties.
The loan servicing activities include loan conversion activities, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliations, and claim processing.
10 unchanged sentences
NDS conducts origination and servicing activities for private education and consumer loans.
−Removed: Private education loans are non-federal private credit loans made to students or their families;
+Added: Private education loans are non-federal private credit loans made to students or their family;
as such, the loans are not issued or guaranteed by the federal government.
3 unchanged sentences
The Company is in the process of a complete modernization of its private education and consumer loan origination and repayment servicing systems.
−Removed: Improvements in systems will allow for diversified products to be both originated and serviced with state-of-the-art application and servicing platforms to drive growth for the Company's client partners.
+Added: Improvements in systems will allow for diversified products to be both originated and serviced with secure, state-of-the-art application and servicing platforms to drive growth for the Company's client partners.
Presenting a very wide market opportunity of new entrants and existing players, consumer lending is currently expected to be a growth area.
In both backup servicing and full servicing partnerships, the Company is a valuable resource for consumer lenders and asset holders as it allows for leveraged economies of scale, high compliance, and secure service to client partners.
−Removed: NDS serviced private education and consumer loans on behalf of 39 third-party servicing customers as of December 31, 2020.
−Removed: The Company expects that private education loan servicing revenue will increase beginning in the first half of 2021 as a result of the Company being selected to service all of the approximately $10 billion portfolio of private education loans (representing approximately 475,000 borrowers) that Wells Fargo announced in December 2020 it had agreed to sell to investors.
+Added: In December of 2020, Wells Fargo announced the sale of its approximately $10.0 billion portfolio of private education student loans representing approximately 445,000 borrowers.
+Added: In conjunction with the sale, the Company was selected as servicer of the portfolio.
+Added: During March 2021, approximately 261,000 borrowers were converted to the Company's servicing platform, with the vast majority of the remaining borrowers converted in the second quarter of 2021.
+Added: As of December 31, 2021, NDS serviced private education and consumer loans on behalf of 37 third-party servicing customers.
Backup servicing for FFELP, private education, and consumer loans
8 unchanged sentences
NDS provides data center services, student loan servicing software for servicing private education and federal loans, guaranty servicing software, and consulting and professional services to support the technology platforms.
−Removed: These proprietary software systems are used internally by the Company and/or licensed to third-party student loan holders and servicers.
+Added: These proprietary software
+Added: systems are used internally by the Company and/or licensed to third-party student loan holders and servicers.
These software systems have been adapted so they can be offered as hosted servicing software solutions that can be used by third parties for guaranty servicing and to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans.
The Company earns a monthly fee from its remote hosting customers for each loan or unique borrower on the Company's platform, with a minimum monthly charge for most contracts.
−Removed: As of December 31, 2020, 6.6 million borrowers were hosted on the Company's hosted servicing software solution platforms, including 4.0 million borrowers that were serviced by three of the four NFP servicers that have contracts to service loans for the Department and 2.3 million borrowers that were serviced by the Great Lakes’ former parent company in accordance with a contract that expired in January 2021.
+Added: As of December 31, 2021, 4.8 million borrowers were hosted on the Company's hosted servicing software solution platforms, including 4.6 million borrowers who were serviced by entities that have contracts to service loans for the Department.
+Added: As of December 31, 2020, 6.6 million borrowers were hosted on the Company’s platforms.
+Added: In January 2021, a contract with Great Lakes’ former parent company expired that resulted in a reduction of 2.3 million borrowers.
Customer acquisition, management services, and backup servicing for community solar developers
NDS, under the brand Nelnet Renewable Energy, works with solar developers and financiers to provide marketing, sales, and customer engagement services to meet key milestones before solar projects are interconnected to the grid and provide the subsequent operational support for the term of the subscriber agreement, including addressing incoming inquiries, verifying eligibility, billing, payment processing, and reconciliation.
−Removed: The Company earns a one-time fee for subscriber acquisition and a
−Removed: recurring fee for subscriber management.
+Added: The Company earns a one-time fee for subscriber acquisition and a recurring fee for subscriber management.
Additionally, NDS provides backup servicing capabilities to solar developers and financiers, which provides assurances that projects will still be serviced in the event the primary servicer’s situation changes.
5 unchanged sentences
The Company's scalable servicing platform allows it to provide compliant, efficient, and reliable service at a low cost, giving the Company a competitive advantage over others in the industry.
−Removed: The principal competitor for existing and prospective FFELP and private education loan servicing business is Navient Corporation (“Navient”), which in 2018 entered into an agreement with First Data, now part of Fiserv, to provide technology solutions for servicing Navient's federal education loans in addition to the technology role they already played with respect to private education loans.
−Removed: Navient is the largest for-profit provider of servicing functions.
−Removed: In contrast to its competitors, the Company has segmented its private education loan servicing on a distinct platform, created specifically to meet the needs of private education student loan borrowers, their families, the schools they attend, and the lenders who serve them.
+Added: In contrast to its competitors, the Company has segmented its private education loan servicing on a distinct platform, created specifically to meet the needs of private education student loan borrowers, their family, the school they attend, and the lenders who serve them.
This ensures access to specialized teams with a dedicated focus on servicing these borrowers.
−Removed: With the elimination of new loan originations under the FFEL Program, four TIVAS servicers, including Nelnet Servicing and Great Lakes, and four NFPs, are servicers of federally-owned loans.
−Removed: The two other TIVAS servicers are FedLoan Servicing (Pennsylvania Higher Education Assistance Agency (“PHEAA”)) and Navient.
−Removed: NDS currently licenses its hosted servicing software to three of the four NFP servicers.
+Added: Seven entities, including Nelnet Servicing and Great Lakes, are currently servicers of federally-owned loans.
+Added: Upon completion of the exit of PHEAA from the federal student loan servicing business, six servicers will remain on a go-forward basis.
+Added: NDS currently licenses its hosted servicing software to two of the eventual remaining six servicers for the Department.
NDS is one of the leaders in the development of servicing software for guaranty agencies, consumer and private education loan programs, the Federal Direct Loan Program, and FFELP student loans.
2 unchanged sentences
Education Technology, Services, and Payment Processing
−Removed: NBS provides services and technology to administrators, teachers, students, and families of K-12 schools and higher education institutions.
−Removed: The Company’s payment processing services and technologies also serve customers outside of education.
−Removed: The Company's solutions include:
−Removed: • Tuition payment plans
−Removed: • School administration
−Removed: • Payment processing
+Added: NBS is a service and technology company that operates as the following divisions:
+Added: • Nelnet Campus Commerce
+Added: • PaymentSpring
+Added: • Nelnet Community Engagement
+Added: • Nelnet International
+Added: The majority of this segment’s customers are located in the United States;
+Added: however, the Company also provides services and technology as part of its Nelnet International division in Australia, New Zealand, and Southeast Asia, and currently believes there are opportunities to increase its customer base and revenues internationally.
+Added: See the MD&A - “Education Technology, Services, and Payment Processing Operating Segment - Results of Operations” for an overview of the seasonality of the business in this operating segment.
+Added: A more detailed description of each NBS division is provided below.
+Added: For a presentation of NBS revenue disaggregated by service offering into tuition payment plan services revenue, payment processing revenue, and education technology and services revenue, see the MD&A - “Education Technology, Services, and Payment Processing Operating Segment - Results of Operations - Summary and Comparison of Operating Results - Education technology, services, and payment processing revenue.” In the discussion below, revenues from the described products and services are included in education technology and services revenue in such presentation, unless specifically indicated otherwise.
+Added: NBS uses the FACTS brand in the K-12 private and faith-based markets.
+Added: FACTS provides solutions that elevate the K-12 experience for school administrators, teachers, and families.
+Added: FACTS solutions include the following categories:
• Financial Management
−Removed: • Advancement (giving management)
+Added: • Administration
• Enrollment and Communications
−Removed: • Professional development
−Removed: • Instructional services
−Removed: The majority of this segment's customers are located in the United States;
−Removed: however, the Company also provides services and technology in Australia, New Zealand, and Southeast Asia, and currently believes there are opportunities to increase its customer base and revenues internationally.
−Removed: See the MD&A - “Education Technology, Services, and Payment Processing Operating Segment - Results of Operations” for a discussion of the seasonality of the business in this operating segment.
−Removed: In the K-12 market, FACTS comprehensive set of solutions includes (i) financial management, (ii) school administration solutions, (iii) advancement, (iv) enrollment and communications;
−Removed: (v) professional development and educational instruction services, and (vi) innovative technology products that aid in teacher and student evaluations.
−Removed: The Company provides services for more than 11,000 K-12 schools and serves over 4 million students and families.
−Removed: The Company’s K-12 business generated $153.4 million in revenue for the year ended December 31, 2020.
−Removed: The Company is the market leader in education financial management services, including actively managed tuition payment plans, financial needs assessment (grant and aid), incidental billing, advanced accounting, and payment forms.
+Added: • Advancement
+Added: • Education Development
+Added: FACTS provides services for almost 11,000 K-12 schools and serves over 4 million students and families.
+Added: FACTS generated $185 million and $142 million in revenue for the years ended December 31, 2021 and 2020, respectively.
+Added: Financial Management - FACTS is the market leader in education financial management services, including tuition payment plans and financial needs assessment (grant and aid).
K-12 educational institutions contract with the Company to administer tuition payment plans that allow families to make recurring payments generally over six to 12 months.
3 unchanged sentences
The Company earns service revenue by charging a fee for grant and aid applications processed.
−Removed: Under the FACTS brand, the Company provides actively managed tuition payment plans in Australia through Nelnet International.
−Removed: The Company’s school administration solutions include FACTS Student Information System (“SIS”), Family App, and Parent Alert.
−Removed: FACTS SIS automates the flow of information between school administrators, teachers, and parents and includes administrative processes such as admissions, enrollment, scheduling, cafeteria management, attendance, and grade book management.
+Added: Administration - The Company’s school administration solutions include FACTS Student Information System (“SIS”), Family App, and Parent Alert.
+Added: FACTS SIS automates the flow of information between school administrators, teachers, and parents and includes administrative processes such as scheduling, cafeteria management, attendance, and grade book management.
The Company’s information systems software is sold as a subscription service to schools.
1 unchanged sentence
FACTS Family App provides families with mobile access to the information they need and Parent Alert allows for instant communication with families when needed.
−Removed: The Company offers the school information system to more than 50 countries globally through Nelnet International.
−Removed: The combination of the Company’s school administration software and tuition management and grant and aid assessment services has significantly increased the value of the Company’s offerings in this area, allowing the Company to deliver a comprehensive suite of solutions to schools.
−Removed: The Company's advancement solution, FACTS Giving, is a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting.
−Removed: Enrollment and communications solutions include School Site and Application and Enrollment.
−Removed: School Site offers website design and Application and Enrollment is a simple, cost effective admissions software.
−Removed: FACTS Education Solutions provides customized professional development services for teachers and school leaders as well as instructional services for students experiencing academic challenges.
−Removed: These services provide continuous advanced learning and professional development while helping private schools identify and attain equitable participation in federal education programs.
+Added: Enrollment and Communications – The Company’s enrollment and communications tools are used by schools to enhance and streamline admissions and communications efforts.
+Added: FACTS Application & Enrollment provides a paperless experience for the admissions office and provides schools with real-time information as applications and enrollment forms are completed.
+Added: The Company earns a fee per completed application and/or enrollment form.
+Added: FACTS School Site is a website content management system for schools to promote and share information with current and prospective families.
+Added: FACTS solutions in this area allow for better overall connection between admissions, enrollment, and marketing.
+Added: The combination of the Company’s financial management, administration, and enrollment and communications products has significantly increased the value of the Company’s offerings in this area, allowing the Company to deliver a comprehensive suite of solutions to schools.
+Added: Advancement - The Company's advancement solution, FACTS Giving, is a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting.
+Added: FACTS Giving pairs with other FACTS solutions like SIS, School Site, and Family App.
+Added: FACTS Giving simplifies incoming donations through appeal pages and online registration for virtual school events.
+Added: FACTS Giving features also include text-to-give functionality, options to manage specific fundraising projects or year-long campaigns, and real-time reports to analyze fundraising efforts.
+Added: The Company earns subscription fees and payment processing revenues for these services.
+Added: Education Development - FACTS Education Solutions provides customized professional development and coaching services for teachers and school leaders as well as instructional services for students experiencing academic challenges.
+Added: These services provide continuous advanced learning and professional development while helping private schools identify and attain equitable participation in Title I and Title II federal education programs.
FACTS Education Solutions also offers an innovative technology product that aids in both teacher and student evaluation.
−Removed: On December 31, 2020, the Company acquired HigherSchool Instructional Services, a services company that provides supplemental instructional services and educational professional development for approximately 50 K-12 schools in New York City.
−Removed: HigherSchool Instructional Services compliments and will integrate operationally with FACTS Education Solutions.
−Removed: Higher Education
−Removed: In the higher education market, the Company (known as Nelnet Campus Commerce) offers solutions including (i) tuition payment plans and (ii) payments technology and processing.
+Added: Nelnet Campus Commerce
+Added: NBS uses the Nelnet Campus Commerce brand to offer payment technologies for a smarter campus to higher education institutions.
+Added: Nelnet Campus Commerce offers the following solutions:
+Added: • Tuition Management
+Added: • Integrated Commerce
The Company provides service for more than 1,150 colleges and universities worldwide and serves over 7 million students and families.
−Removed: The Company’s higher education business generated $126.0 million in revenue for the year ended December 31, 2020.
−Removed: Higher education institutions contract with the Company to administer tuition payment plans that allow the student and family to make recurring payments on either a semester or annual basis.
+Added: Nelnet Campus Commerce generated $99 million and $97 million in revenue for the years ended December 31, 2021 and 2020, respectively.
+Added: Tuition Management - Higher education institutions contract with the Company to administer tuition payment plans that allow the student and family to make recurring payments on either a semester or annual basis.
The Company earns tuition payment plan services revenue by collecting a fee from either the student or family to administer the plan.
−Removed: Additionally, the Company may earn revenue for payment processing fees when families make tuition payments.
−Removed: The Company's payment technology solutions allow for electronic billing and payment of campus charges.
−Removed: Payment technologies includes cashiering for face-to-face transactions, campus-wide commerce management, and refunds management, among other activities.
−Removed: The Company earns revenue for e-billing, hosting and maintenance, credit card processing fees, and e-payment transaction fees, which are powered by the Company's secure payment processing systems.
−Removed: The Company also offers a product, CampusKey, which provides students with a mobile app to replace their plastic student ID card.
−Removed: The Company's payment technology and processing solutions are sold as a subscription service to colleges and universities.
−Removed: The systems process payments through the appropriate channels in the banking or credit card networks to make deposits into the client's bank account.
−Removed: The systems can be further deployed to other departments around campus as requested (e.g., application fees, alumni giving, parking, events, etc.).
−Removed: Nelnet International also offers payments technology and processing solutions to higher education institutions in Australia, New Zealand, and Southeast Asia.
−Removed: Non-education services
−Removed: Under the brands PaymentSpring and Aware3, the Company has expanded its customer base to include both education and non-education customers.
−Removed: PaymentSpring offers technology and payment services including electronic transfer and credit card processing, reporting, billing and invoicing, mobile and virtual terminal solutions, and specialized integrations to business software.
−Removed: Aware3 is a mobile first technology focused on increasing engagement, online giving, and communication for church and not-for-profit customers.
−Removed: On December 31, 2020, the Company acquired CD2 LLC (“CD2”).
−Removed: CD2 has been operating since 2010 and includes two divisions, CD2 Learning, which is the brand for corporate sales, and Catholic Faith Technologies, which is the brand for churches, schools, and ministries.
−Removed: CD2 provides a platform technology solution that includes five features:
−Removed: learning management, collaboration/workflow, gamification, customer management/document storage, and employee boarding.
−Removed: The acquisition of CD2 further expands NBS’s non-education customer base.
−Removed: For the year ended December 31, 2020, the Company earned $6.2 million in revenue from its non-education services.
+Added: Additionally, the Company may earn payment processing revenue when families make tuition payments.
+Added: Nelnet Billing & Payments allows schools to send automated bills for tuition and fees, housing, parking, and other campus service offerings and allows students to safely make online payments from anywhere.
+Added: Nelnet Refunds helps schools stay compliant with federal refund regulations and allows students choice in their refund method.
+Added: The Company earns hosting fees, per transaction fees, and credit card processing fees for its Nelnet Billing & Payments and Nelnet Refunds products.
+Added: Credit card processing fees are included in payment processing revenue.
+Added: Integrated Commerce – Nelnet Campus Commerce integrated commerce solutions help schools maintain revenue sources across campus including in-person payments, online shopping experiences, and a mobile app.
+Added: Nelnet Storefront provides online stores for departments across campus with consolidated views and management by the business office.
+Added: Nelnet Cashiering allows higher education institutions to manage all in-person payments on campus.
+Added: Students can receive in-app messages, make payments on their phone, and use a digital student ID with the Company’s Nelnet Campus Key product.
+Added: The Company earns hosting fees, per transaction fees, and credit card processing fees for its integrated commerce solutions.
+Added: Credit card processing fees are included in payment processing revenue.
+Added: PaymentSpring
+Added: NBS uses the PaymentSpring brand to provide secure payment processing technology.
+Added: PaymentSpring supports and provides payment processing services, including credit card and electronic transfers, to the other divisions of NBS in addition to other industries and software platforms across the United States.
+Added: PaymentSpring offers mobile, in-person, and online solutions for customers to collect, process, and view credit card and Automated Clearing House (“ACH”) payments.
+Added: PaymentSpring services are Payment Card Industry (“PCI”) compliant.
+Added: PaymentSpring earns payment processing revenues through fees for credit card and ACH transactions.
+Added: PaymentSpring generated $43 million and $39 million in revenue for the years ended December 31, 2021 and 2020, respectively.
+Added: Nelnet Community Engagement
+Added: NBS uses the Nelnet Community Engagement (“NCE”) brand to provide faith community engagement, giving management, and learning management services and technologies.
+Added: NCE serves customers in the technology, nonprofit, religious, health care, and professional services industries and is the newest division within NBS.
+Added: NCE generated $6 million and $2 million in revenue for the years ended December 31, 2021 and 2020, respectively, and offers the following solutions:
+Added: • Faith Community Engagement
+Added: • Giving Management
+Added: • Learning Management
+Added: Faith Community Engagement – NCE services and technologies enable church leaders and members to easily engage and communicate with each other.
+Added: Faith Community Engagement product features include a customizable mobile app, text messaging, forms and registrations, and other digital tools to strengthen communication and engagement.
+Added: Additional solutions provide content management services including bulletin, news articles, and event calendars, as well as customized websites that provide on-demand support and automated communication to keep members engaged through newsletters and social media.
+Added: The Company earns subscription fees and content creation fees for these services.
+Added: Giving Management – Giving Management products connect organizations with partners, donors, and volunteers to make personalized giving simple.
+Added: Giving management administrative features provide a dashboard, customizable receipts, pledge
+Added: management, and real-time reporting.
+Added: Donors have options to give using the product's mobile app, text messaging, or passcode and can be one-time or recurring gifts.
+Added: The Company earns subscription fees and payment processing revenues for these services.
+Added: Learning Management – NCE offers comprehensive solutions that use innovations such as extended enterprise, social collaborations, and gamification to expand capabilities and engage and motivate learners.
+Added: Live and online training and certification is managed with simplified reporting, tracking, and record maintenance.
+Added: NCE technologies allow customers to update certificate programs or create new custom learning programs to meet emerging needs.
+Added: The Company earns subscription fees and content creation fees for these services.
+Added: Additionally, a fee may be earned from learners completing course offerings.
+Added: Nelnet International
+Added: NBS uses the brand Nelnet International to serve customers in the education, local government, and health care space to build future-focused agile businesses.
+Added: Nelnet International products include service and technology that align with the similarly named products categories for FACTS and Nelnet Campus Commerce.
+Added: Nelnet International products include:
+Added: • Integrated Commerce
+Added: • Financial Management
+Added: • Administration
+Added: Integrated Commerce – Nelnet International’s Xetta platform provides commerce payment solutions to its customers.
+Added: Xetta captures and centralizes financial information across organizations and integrates with core business systems to simplify workflows, expand payment capabilities, streamline reconciliation, reduce security and compliance risk, and provide reporting and analytics.
+Added: The Company earns subscription and consulting fees for the utilization of the Xetta platform.
+Added: Financial Management – Tuition payment plans and other financial management services are provided to customers internationally using the FACTS brand and service platforms.
+Added: Refer to “Financial Management” under the FACTS division for additional information.
+Added: Administration – PCSchool is a cloud-based school management platform that provides administrative, information management, financial management, and communication functions for K-12 schools in Australia and New Zealand.
+Added: Outside of Australia and New Zealand, Nelnet International provides administration products under the FACTS brand.
+Added: The technology and services provided are consistent with the “Administration” products described under the FACTS division.
+Added: The Company earns subscription fees and per transaction revenues for providing these services.
+Added: Nelnet International provides its services and technology to schools in more than 50 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region.
+Added: Nelnet International generated $7 million and $6 million in revenue for the years ended December 31, 2021 and 2020, respectively.
The Company is the largest provider of tuition management and financial needs assessment services to the private and faith-based K-12 market in the United States.
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Communications
−Removed: The Company provided communication services through ALLO, a former majority owned subsidiary, until a recapitalization and additional funding for ALLO resulted in a deconsolidation of ALLO from the Company’s consolidated financial statements on December 21, 2020.
−Removed: See “Recent Developments - ALLO Recapitalization and Additional Funding” above.
+Added: The Company provided communication services through ALLO, a former majority-owned subsidiary, until a recapitalization and additional funding for ALLO resulted in a deconsolidation of ALLO from the Company’s consolidated financial statements in the fourth quarter of 2020.
The Company continues to hold a significant investment in ALLO.
+Added: See note 2 of the notes to consolidated financial statements included in this report for additional information related to the ALLO recapitalization.
+Added: ALLO’s results of operations, prior to deconsolidation, are presented by the Company as a reportable operating segment.
ALLO derives its revenue primarily from the sale of telecommunication services, including internet, telephone, and television services, to business, governmental, and residential customers in Nebraska and Colorado, and specializes in high-speed internet and broadband services available through its all-fiber network.
−Removed: ALLO currently serves or has announced plans to serve 13 communities in Nebraska and two in Colorado.
−Removed: ALLO plans to continue to increase market share and revenue in its existing markets and is currently evaluating opportunities to expand to additional communities.
+Added: ALLO plans to continue to increase market share and revenue in its existing markets and plans to expand to additional communities.
+Added: ALLO has announced plans to serve customers in Arizona and is currently seeking regulatory approval to do so.
+Added: As of December 31, 2021, ALLO currently serves, is in the process of building their network in, and has announced they will build in a total of 26 communities.
+Added: The total households in these communities is approximately 325,000.
+Added: As of December 31, 2021, ALLO served almost 73,000 residential customers and had more than 34,000 business lines.
Asset Generation and Management
3 unchanged sentences
As of December 31, 2021, AGM's loan portfolio was $17.4 billion.
−Removed: The Company generates a substantial portion of its earnings from the spread, referred to as the Company's loan spread, between the yield it receives on its loan portfolio and the associated costs to finance such portfolio.
−Removed: See the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis,” for further details related to the loan spread.
+Added: The Company generates a substantial portion of its earnings from the spread, referred to as “loan spread,” between the yield it receives on its loan portfolio and the associated costs to finance such portfolio.
+Added: See the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis,” for further details related to loan spread.
The loan assets are held in a series of lending subsidiaries and associated securitization trusts designed specifically for this purpose.
4 unchanged sentences
In the case of death, disability, or bankruptcy of the borrower, the guarantee covers 100 percent of the loan's principal and accrued interest.
−Removed: FFELP loans are
−Removed: guaranteed by state agencies or nonprofit companies designated as guarantors, with the Department providing reinsurance to the guarantor.
+Added: FFELP loans are guaranteed by state agencies or nonprofit companies designated as guarantors, with the Department providing reinsurance to the guarantor.
Guarantors are responsible for performing certain functions necessary to ensure the program's soundness and accountability.
1 unchanged sentence
When a borrower defaults on a FFELP loan, AGM submits a claim to the guarantor, who provides reimbursements of principal and accrued interest, subject to the applicable risk share percentage.
−Removed: AGM’s portfolios of private education and consumer loans are subject to credit risk and defaults may increase above current levels based on numerous factors, including a decline in the economy or an increase in unemployment.
Origination and acquisition
1 unchanged sentence
However, the Company believes there may be ongoing opportunities to continue to purchase FFELP loan portfolios from current FFELP participants looking to exit or adjust their FFELP businesses.
−Removed: For example, the Company purchased a total of $1.3 billion of FFELP student loans from various third parties during 2020.
+Added: For example, the Company purchased a total of $904.1 million of FFELP student loans from various third parties during 2021.
However, since all FFELP loans will eventually pay off, a key objective of the Company over the last several years is to reposition itself for the post-FFELP environment.
−Removed: As such, the Company is actively expanding its private education and consumer loan portfolios.
+Added: As such, the Company is actively acquiring private education and consumer loans and currently plans to expand these portfolios.
During 2021, the Company purchased $89.3 million of private education loans and $81.9 million of consumer loans.
−Removed: In December of 2020, Wells Fargo announced the sale of its approximately $10 billion portfolio of private education student loans representing approximately 475,000 borrowers.
−Removed: In conjunction with the sale, the Company was selected as servicer of the portfolio and will begin servicing the portfolio following a series of loan transfers during the first half of 2021.
−Removed: In addition, the Company has entered into agreements to participate in a joint venture to acquire the portfolio.
−Removed: The Company expects to own approximately 8 percent of the interest in the loans and, dependent upon financing, currently expects to invest approximately $100 million as part of the acquisition.
−Removed: In addition, the Company will serve as the sponsor and administrator for loan securitizations on behalf of the purchaser group as the loans are securitized, and provide the required level of risk retention as the loans are permanently financed.
−Removed: This transaction is expected to close during the first half of 2021, with the securitizations occurring subsequent to closing.
AGM's competition for the purchase of FFELP, private education, and consumer loan portfolios includes banks, hedge funds, and other finance companies.
2 unchanged sentences
The current and future interest rate environment can and will affect the Company's interest income and net income.
−Removed: The effects on the Company's results of operations as a result of the changing interest rate environments are further outlined in the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis" and in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk.”
−Removed: As discussed under “Recent Developments - Nelnet Bank” above, Nelnet Bank launched operations on November 2, 2020.
−Removed: Nelnet Bank was funded by the Company with an initial capital contribution of $100 million, consisting of $55.9 million of cash and $44.1 million of student loan asset-backed securities.
−Removed: In addition, the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC.
−Removed: Nelnet Bank operates as an internet Utah chartered industrial bank franchise focused on the private education loan marketplace, with a home office in Salt Lake City, Utah.
−Removed: Currently, Nelnet Bank originates school refinance or consolidation loans, which are funded by deposits from custodians and commercial and institutional customers.
−Removed: Throughout Nelnet Bank’s three-year de novo period, Nelnet Bank plans to continue to launch products focused on helping students achieve their dreams, with the origination of in-school student loans and expansion of deposit products to consumers over the next year.
−Removed: As of December 31, 2020, Nelnet Bank had $17.5 million in private education loans.
+Added: The effects on the Company's results of operations as a result of the changing interest rate environments are further outlined in the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis" and in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment.”
+Added: Nelnet Bank is a Utah-chartered, FDIC-insured industrial bank headquartered in Salt Lake City, Utah.
+Added: Nelnet Bank is governed by a board of directors, a majority of the members of which are independent of the Company.
+Added: Nelnet Bank was formed November 2, 2020, and is a wholly-owned subsidiary of the Company.
+Added: Nelnet Bank was funded by the Company with an initial capital contribution of $100.0 million, consisting of $55.9 million of cash and $44.1 million of student loan asset-backed
+Added: As a consolidated subsidiary of the Company, the Bank’s assets, liabilities, results of operations, and cash flows are reflected in the Company’s consolidated financial statements, and the industrial bank charter allows the Company to maintain its other diversified business offerings.
+Added: Nelnet Bank serves and plans to serve a niche market, with a concentration in the private education and unsecured consumer loan markets.
+Added: Currently, Nelnet Bank offers refinance private education loan options to borrowers that have higher priced private education and/or federal student loan debt.
+Added: Throughout Nelnet Bank’s three-year de novo period, Nelnet Bank plans to continue to launch products focused on helping students achieve their dreams, with the origination of in-school private education loans, K-12 education loans offered to families attending private primary and secondary schools in the United States, and unsecured consumer loans, primarily refinance loans, for consumers to consolidate credit card and other general-purpose debt.
+Added: Nelnet Bank extends consumer loans to borrowers in all 50 states plus the District of Columbia.
+Added: As of December 31, 2021, Nelnet Bank’s loan portfolio was $257.9 million.
+Added: Nelnet Bank currently plans to offer its in-school private education loan product to students attending higher education institutions by the second quarter of 2022 for the 2022-2023 academic school year.
+Added: Nelnet Bank’s deposits are interest-bearing and consist of brokered certificates of deposit (CDs), retail and other savings deposits and CDs, and intercompany deposits.
+Added: Retail and other deposits include savings deposits from 529 College Savings and Health Savings plans and commercial and institutional CDs.
+Added: Union Bank and Trust Company (“Union Bank”), a related party, is the program manager for the College Savings plans.
+Added: The intercompany deposits are deposits from the Company and its subsidiaries and include a pledged deposit of $40.0 million from Nelnet, Inc.
+Added: (parent company), as required under a Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school.
+Added: As of December 31, 2021, Nelnet Bank had $425.4 million of deposits.
+Added: As a Utah-chartered industrial bank, Nelnet Bank is able to fulfill its mission of being a steady and stable supplier of education credit.
+Added: The Bank’s goal is to meet underserved needs in the United States for reliable education financing.
+Added: The Company’s strong history within, and understanding of, the education industry will afford Nelnet Bank access to more families participating in education nationwide.
Corporate and Other Activities
2 unchanged sentences
• The operating results of Whitetail Rock Capital Management, LLC (“WRCM”), the Company's SEC-registered investment advisor subsidiary
−Removed: • Income earned on certain investment activities, including renewable energy (solar) and real estate
+Added: • The results of the majority of the Company’s investment activities, including early-stage and emerging growth companies, real estate, and renewable energy (solar)
• Interest expense incurred on unsecured and certain other corporate related debt transactions
3 unchanged sentences
Whitetail Rock Capital Management, LLC
−Removed: As of December 31, 2020, WRCM, the Company's SEC-registered investment advisor subsidiary, had $1.87 billion in assets under management for third-party customers, consisting of student loan asset-backed securities and Nelnet stock.
−Removed: WRCM earns annual management fees of 25 basis points for asset-backed securities under management and up to 50 percent of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory services.
+Added: As of December 31, 2021, WRCM had $2.6 billion in assets under management for third-party customers, consisting of student loan asset-backed securities ($2.0 billion) and Nelnet stock ($0.6 billion) - primarily shares of Class B common stock.
+Added: WRCM earns annual management fees of 10 basis points to 25 basis points for asset-backed securities under management and a share of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory services.
WRCM earns annual management fees of five basis points for Nelnet stock under management.
During 2021, WRCM earned $4.2 million in management fees and generated $3.6 million in performance fees.
−Removed: The Company currently anticipates that assets under management will decrease from current levels and that opportunities to earn meaningful performance fees in future periods will be more limited.
−Removed: Solar, real estate, and other investments
−Removed: The Company makes investments to further diversify itself both within and outside of its historical core education-related businesses, including investments in renewable energy resources (solar projects), real estate, and early-stage and emerging growth companies.
−Removed: The Company’s investments in certain tax-advantaged projects promoting renewable energy resources (solar projects) are designed to generate a return primarily through the realization of federal income tax credits, operating cash flows, and other tax benefits, over specified time periods.
−Removed: The solar projects are currently forecasted to generate more than 214 megawatts of power each year.
−Removed: Recent real estate investments have been focused on the development of commercial properties in the Midwest, and particularly in Lincoln, Nebraska, where the Company is headquartered.
−Removed: These investments include projects for the development of properties in Lincoln’s east downtown Telegraph District, where a new facility for the Company’s student loan servicing operations is located, and projects in Lincoln’s Haymarket District, including the new headquarters of Hudl, an online video analysis and coaching tools software company for athletes of all levels.
−Removed: The Company is also a tenant at Hudl's headquarters.
+Added: The Company makes investments to further diversify itself both within and outside of its historical core education-related businesses, including investments in early-stage and emerging growth companies, real estate, renewable energy resources (solar projects), and various equity and student loan and other asset backed securities.
+Added: As of December 31, 2021, the Company has a
+Added: $1.6 billion portfolio of investments.
+Added: See note 7 in the notes to consolidated financial statements for additional detail of the Company’s investments, including a summary of holdings.
+Added: Early-Stage and Emerging Growth (Venture Capital) Investments
+Added: The Company has invested in early-stage, emerging growth companies and various funds.
+Added: As of December 31, 2021, the Company has investments in 76 entities and funds and the carrying value of such investments was $225.4 million.
+Added: The largest investment in the Company’s venture capital portfolio is Hudl.
+Added: As of December 31, 2021, the carrying value of the Company’s investment in Hudl was $133.9 million.
+Added: Hudl is a leading sports performance analysis company, and their software provides more than 200,000 teams across 40 sports and in 150 countries the insights to be more competitive.
Graff, a member of the Company’s board of directors, is a co-founder, the chief executive officer, and a director of Hudl.
−Removed: In addition, the Company has a total equity investment in Hudl of $128.6 million.
+Added: As of December 31, 2021, the Company has 33 real estate investments across the United States with a carrying value of $47.2 million.
+Added: Included in the Company’s real estate portfolio is the development of commercial properties in the Midwest, and particularly in Lincoln, Nebraska, where the Company is headquartered.
+Added: The local investments include projects for the development of properties in Lincoln’s east downtown Telegraph District, where a new facility for the Company’s student loan servicing operations is located, and projects in Lincoln’s Haymarket District, including the new headquarters of Hudl.
+Added: The Company is also a tenant at Hudl's headquarters.
+Added: As of December 31, 2021, the Company has invested a total of $168.7 million (which excludes $59.2 million syndicated to third-party investors) in tax equity investments in renewable energy solar partnerships to support the development and operations of solar projects throughout the country.
+Added: These investments provide a federal income tax credit under the Internal Revenue Code, currently at 26 percent (for projects commencing construction in 2020-2022) and 30 percent (for projects commencing construction prior to 2020) of the eligible project cost, with the tax credit available when the project is placed-in-service.
+Added: The Company is then allowed to reduce its tax estimates paid to the U.S.
+Added: Treasury based on the credits earned.
+Added: In addition to the credits, the Company structures the investments to receive quarterly distributions of cash from the operating earnings of the solar project for a period of at least five years (so the tax credits are not recaptured).
+Added: After that period, the contractual agreements typically provide for the Company’s interest in the projects to be purchased in an exit at the fair market value of the discounted forecasted future cash flows allocable to the Company.
+Added: Given the expected timing of cash flows, experience the Company has in underwriting these assets, and beneficial impact to the climate, the Company believes these investments are a great fit within its capital deployment initiatives.
+Added: These investments are structured such that a significant proportion of the cash distributions and tax items (including the income tax credit) are allocated back to the Company within the first eighteen months of the investment capital contribution, in order to achieve a target after tax return.
+Added: The cash distributions to the Company are then structured to flatten until exit, typically between years five and six.
+Added: Given the unique arrangement in which investors share in the profits and losses of the solar investment with cash and tax benefit allocations among the partners changing over the life of the project, the accounting guidance calls for the use of the Hypothetical Liquidation at Book Value (“HLBV”) method, which can result in non-linear GAAP income/loss allocation results.
+Added: Under this method, a balance sheet approach is utilized to determine what each investor would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in accordance with GAAP.
+Added: As the investor receives a majority of this return through the income tax credit and higher cash distributions at the beginning of the investment, as of the first period of the hypothetical liquidation, the investor’s remaining net claim on assets is relatively low compared to the initial cash contributed.
+Added: This difference between the initial cash contributions and the first period’s ending net claim on assets through the hypothetical liquidation causes significant GAAP losses on the investment to be recognized through the income statement within the initial periods of the investment.
+Added: After the carrying value of the investment on the balance sheet is written down to the hypothetical liquidation amount, subsequent year’s earnings are expected to align with and reflect the operating profits or losses of the investment.
+Added: The Company realizes that application of the HLBV method to its solar investments has a variable impact on its periodic earnings that in the early years is not reflective of the expected long-term economics of the investments.
+Added: Given the significant amount of investments made in the last couple of years and the associated ramp-up period, the Company recognized a $3.0 million and $33.6 million pre-tax loss attributable to its interests in these investments in 2021 and 2020, respectively, under the HLBV method.
+Added: These pre-tax loss amounts in 2021 and 2020 exclude $7.1 million and $3.8 million, respectively, of losses attributable to third-party investors that are included in “net loss attributable to noncontrolling interests” on the Company’s consolidated statements of income.
+Added: As these investments mature and perform as forecasted, the Company expects to recoup that loss and realize additional income between now and the sale of each of its interests, likely 60 to 72 months from the date the project is placed in service.
+Added: Thus, the Company expects the economic
+Added: gain from these investments to be realized in its future earnings, but, due to the hypothetical liquidation valuations as of the balance sheet dates during the intended investment horizon, the HLBV method results in some volatility in the Company’s consolidated periodic earnings results.
Regulation and Supervision
2 unchanged sentences
A failure to comply with these laws and regulations could subject the Company to substantial fines, penalties, and remedial and other costs, restrictions on business, and the loss of business.
−Removed: Regulations and supervision can change rapidly, and changes could alter the Company's business plan and increase the Company's operating expenses as new or additional regulatory compliance requirements are addressed.
+Added: Regulations and supervision can change rapidly, and changes could alter the Company's business plans and increase the Company's operating expenses as new or additional regulatory compliance requirements are addressed.
Loan Servicing and Systems
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• The General Data Protection Regulation (“GDPR”), a European Union (“EU”) regulation which places specific requirements on businesses that collect and process personal data of individuals residing in the EU, and provides for significant fines and other penalties for non-compliance
−Removed: • The California Consumer Privacy Act (“CCPA”), which enhances the privacy rights and consumer protection for residents of California
−Removed: • The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which provides temporary relief measures currently in place through September 30, 2021 for federal student loans held by the Department, during the COVID-19 pandemic
+Added: • The California Consumer Privacy Act (“CCPA”) and California Privacy Rights Act (“CPRA”), which enhances the privacy rights and consumer protection for residents of California
+Added: • The CARES Act, which provides temporary relief measures through May 1, 2022 for federal student loans held by the Department, as a result of the COVID-19 pandemic
• Laws prohibiting unfair, deceptive, or abusive acts or practices (“UDAAP”)
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While the HEA is required to be reviewed and reauthorized by Congress every five years, Congress has not reauthorized the HEA since 2008, choosing to temporarily extend the HEA each year since 2013 while Congress works on the next reauthorization.
−Removed: The Company continuously monitors for potential changes to HEA and evaluates possible impacts to its business operations.
+Added: The Company continuously monitors for potential changes to the HEA and evaluates possible impacts to its business operations.
Under the TCPA, plaintiffs may seek actual monetary loss or damages of $500 per violation, and courts may treble the damage award for willful or knowing violations.
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In 2015, the CFPB conducted a public inquiry into student loan servicing practices throughout the industry and issued a report discussing public comments submitted in response to the inquiry and suggesting a framework to improve borrower outcomes and reduce defaults, including the creation of consistent, industry-wide standards for the entire servicing market.
−Removed: The CFPB has authority to draft new regulations implementing federal consumer financial protection laws, to enforce those laws and regulations, and to conduct examinations of the Company's operations to determine compliance.
+Added: The CFPB has authority to draft new regulations implementing federal consumer financial protection laws, to enforce those laws and regulations, and to conduct examinations and investigations of the Company's operations to determine compliance.
The CFPB’s authority includes the ability to assess financial penalties and fines and provide for restitution to consumers if it determines there have been violations of consumer financial protection laws.
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Most states also have statutes that prohibit unfair and deceptive practices.
−Removed: To the extent states enact requirements that
−Removed: differ from federal standards or state officials and courts adopt interpretations of federal consumer laws that differ from those adopted by the CFPB under the Dodd-Frank Act, the Company's ability to offer the same products and services to consumers nationwide may be limited.
+Added: To the extent states enact requirements that differ from federal standards or state officials and courts adopt interpretations of federal consumer laws that differ from those adopted by the CFPB under the Dodd-Frank Act, the Company's ability to offer the same products and services to consumers nationwide may be limited.
As a third-party service provider to financial institutions, the Company is subject to periodic examination by the Federal Financial Institutions Examination Council (“FFIEC”).
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The Company assists bank partners with fulfilling their compliance obligations pursuant to these requirements.
−Removed: The Company's payment processing services are also subject to the National Automated Clearing House Association (“NACHA”) requirements, which include operating rules and sound risk management procedures to govern the use of the Automated Clearing House (“ACH”) Network.
+Added: The Company's payment processing services are also subject to the National Automated Clearing House Association (“NACHA”) requirements, which include operating rules and sound risk management procedures to govern the use of the ACH Network.
These rules are used to ensure that the ACH Network is efficient, reliable, and secure for its members.
Because the ACH Network uses a batch process, the importance of proper submissions by NACHA members is magnified.
−Removed: The Company is also impacted by laws and regulations that affect the bankcard industry.
+Added: The Company is
+Added: also impacted by laws and regulations that affect the bankcard industry.
The Company is registered with Visa, MasterCard, American Express, and the Discover Network as a service provider and is subject to their respective rules.
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Additionally, as the Company is indirectly subject to FERPA, it may not permit the transfer of any personally identifiable information to another party other than in a manner in which an educational institution may properly disclose it.
−Removed: While the Company believes that it has adequate policies and procedures in place to safeguard the privacy of such information, a breach of this prohibition could result in a five-year suspension of the Company's access to the related client’s records.
+Added: A breach of this prohibition could result in a five-year suspension of the Company's access to the related client’s records.
The Company may also be subject to similar state laws and regulations that restrict higher education institutions from disclosing certain personally identifiable student information.
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The Company's contracts with higher education institution clients also require the Company to comply with regulations promulgated by the Department regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV of the Higher Education Act.
−Removed: These regulations are designed to ensure students have convenient access
−Removed: to their Title IV funds, do not incur unreasonable fees, and are not led to believe they must open a financial account to receive such funds.
+Added: These regulations are designed to ensure students have convenient access to their Title IV funds, do not incur unreasonable fees, and are not led to believe they must open a financial account to receive such funds.
Asset Generation and Management
1 unchanged sentence
This framework, among other things, subjects certain swap participants to capital and margin requirements, recordkeeping, and business conduct standards and imposes registration and regulation of swap dealers and major swap participants.
−Removed: Even where a securitization trust qualifies for an exemption, many of the Company's derivative counterparties are subject to capital, margin, and business conduct requirements and therefore the Company may be impacted.
−Removed: Where securitization trusts do not qualify for an exemption, the Company may be unable to enter into new swaps to hedge interest rate risk or the costs associated with such swaps may increase.
+Added: Even when a securitization trust qualifies for an exemption, many of the Company's derivative counterparties are subject to capital, margin, and business conduct requirements;
+Added: therefore, the Company may be impacted.
+Added: When securitization trusts do not qualify for an exemption, the Company may be unable to enter into new swaps to hedge interest rate risk or the costs associated with such swaps may increase.
With respect to existing securitization trusts, an inability to amend, novate, or otherwise materially modify existing swap contracts could result in a downgrade of outstanding asset-backed securities.
As a result, the Company's business, ability to access the capital markets for financing, and costs may be impacted by these regulations.
−Removed: Nelnet Bank, chartered in November 2020, is a Utah Industrial Bank that is regulated by the FDIC and the UDFI.
−Removed: Nelnet Bank, which originates private education loans, is subject to federal and state consumer protection, privacy, and related laws and regulations.
−Removed: In addition to having to comply with the majority of laws and regulations addressed in the Loan Servicing and Systems section, there are additional laws and regulations that Nelnet Bank must comply with.
+Added: Nelnet Bank is a Utah industrial bank that is regulated by the FDIC and the UDFI.
+Added: As an originator of private education loans, and a purchaser and owner of federally insured student loans, Nelnet Bank is subject to federal and state consumer protection, privacy, and related laws and regulations.
+Added: In addition to having to comply with the majority of laws and regulations addressed in the Loan Servicing and Systems section, there are additional laws and regulations Nelnet Bank must follow.
Some of the more significant laws and regulations applicable to Nelnet Bank include:
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• Community Reinvestment Act - Encourages depository institutions to help meet the credit needs of the communities in which they operate
−Removed: • Federal Trade Commission (“FTC”) Act - Prevents unfair or deceptive acts or practices (UDAP) and ensures consumer privacy (including the Telephone Sales Rule, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, and FTC Policy Statement Regarding Advertising Substantiation)
+Added: • Federal Trade Commission (“FTC”) Act - Prevents unfair or deceptive acts or practices and ensures consumer privacy (including the Telephone Sales Rule, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, and FTC Policy Statement Regarding Advertising Substantiation)
• Regulation O - Places limits and conditions on credit extensions that a bank can offer to its executive officers, principal shareholders, directors, and related interests
• Right to Financial Privacy Act - Establishes specific procedures that government authorities must follow when requesting a customer’s financial records from a bank or other financial institution
−Removed: Regulation D, the Truth in Savings Act (reserve requirements), and Regulation DD (disclosure of deposit terms to customers) will be applicable to Nelnet Bank once consumer deposit products are launched, which is tentatively scheduled for the fourth quarter of 2021.
+Added: Regulation D, the Truth in Savings Act (reserve requirements), and Regulation DD (disclosure of deposit terms to customers) will be applicable to Nelnet Bank once consumer deposit products are launched, which is tentatively scheduled for 2023.
Governmental bodies in the United States and abroad have adopted, or are considering the adoption of, laws and regulations restricting the transfer and requiring the safeguarding of nonpublic personal information.
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For example, the CCPA, which became effective on January 1, 2020, applies to for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds.
−Removed: The CCPA gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to
−Removed: request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.
+Added: The CCPA gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.
The CCPA contains several exemptions, including an exemption applicable to information that is collected, processed, sold, or disclosed pursuant to the GLBA.
−Removed: In addition, the California Privacy Rights and Enforcement Act of 2020, which amends and expands upon the CCPA, will become effective on January 1, 2023.
+Added: In addition, the CPRA, which amends and expands upon the CCPA, will become effective January 1, 2023.
Further, similar laws may be adopted by other states where the Company does business.
The federal government may also pass data privacy or data protection legislation.
−Removed: In addition, in the EU, privacy law is now governed by the GDPR, which is directly binding and applicable for each EU member state from May 25, 2018.
−Removed: The GDPR contains enhanced compliance obligations and increased penalties for non-compliance compared to the prior law governing data privacy in the EU.
+Added: In addition, in the EU, privacy law is governed by the GDPR, which contains extensive compliance obligations and provides for substantial penalties for non-compliance.
Intellectual Property
4 unchanged sentences
Each of the Marks has, upon registration, an indefinite duration so long as the Company continues to use the Mark on or in connection with such goods or services as the Mark identifies.
−Removed: In order to protect the indefinite duration, the Company makes filings to continue registration of the Marks.
−Removed: The Company owns one patent application that has been published, but has not yet been issued, and has also actively asserted its rights thereunder in situations where the Company believes its claims may be infringed upon.
+Added: To protect the indefinite duration, the Company makes filings to continue registration of the Marks.
+Added: The Company owns one patent application that has been published, but has not yet been issued, and has also actively asserted its rights thereunder in situations during which the Company believes its claims may be infringed upon.
The Company owns many copyright-protected works, including its various computer system codes and displays, websites, and marketing materials.
4 unchanged sentences
The decision whether to seek such protection may depend on the perceived value of the intellectual property, the likelihood of securing protection, the cost of securing and maintaining that protection, and the potential for infringement.
−Removed: The Company's employees are trained in the fundamentals of intellectual property, intellectual property protection, and infringement issues.
−Removed: The Company's employees are also required to sign agreements requiring, among other things, confidentiality of trade secrets, assignment of inventions, and non-solicitation of other employees post-termination.
+Added: The Company's employees (referred to by the Company as “associates”) are trained in the fundamentals of intellectual property, intellectual property protection, and infringement issues.
+Added: The Company's associates are also required to sign agreements requiring, among other things, confidentiality of trade secrets, assignment of inventions, and non-solicitation of other associates post-termination.
Consultants, suppliers, and other business partners are also required to sign nondisclosure agreements to protect the Company's proprietary rights.
Human Capital Resources
−Removed: The Company’s employees (referred to by the Company as associates) are critical to its success, and the executive team puts significant focus on human capital resources.
+Added: The Company’s associates are critical to its success, and the executive team puts significant focus on human capital resources.
In addition, the executive team regularly updates the Company’s board of directors and its committees on the operation and status of human capital trends and activities.
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Employee recruitment, engagement, and retention
−Removed: The Company works diligently to attract the best talent from a diverse range of sources in order to meet the current and future demands of its businesses, and has established relationships with trade schools, universities, professional associations, and industry groups to proactively attract talent.
−Removed: In 2020, the Company hired approximately 1,900 new associates.
−Removed: In 2020, the Company conducted an associate engagement survey using a leading outside firm that specializes in employee engagement.
−Removed: Ninety-four percent of the Company’s associates participated in the survey, 14 points above the survey provider’s industry benchmark.
+Added: The Company works diligently to attract the best talent from a diverse range of sources to meet the current and future demands of its businesses, and has established relationships with trade schools, universities, professional associations, and industry groups to proactively attract talent.
+Added: In 2021, the Company hired approximately 4,400 new associates, including approximately 800 temporary associates who are contracted workers who perform a job for only a short amount of time.
+Added: In 2021, the Company conducted an associate culture survey using a leading outside firm that specializes in employee engagement.
+Added: Ninety-one percent of the Company’s associates participated in the survey, 11 points above the survey provider’s industry benchmark.
There were many questions, but the overarching goal of the survey was to determine overall associate engagement through understanding how associates feel about working for the Company and if associates would recommend the Company as a great place to work.
−Removed: The results of that survey were an overall engagement score of 79 out of 100, which was 5 points above the survey provider’s industry benchmark.
−Removed: The Company’s management team has collected all the feedback, and is focusing on making associate-suggested changes to become an even better place to work.
−Removed: The Company believes its positive associate engagement has resulted in higher levels of associate retention.
−Removed: For 2020, associate voluntary turnover was approximately 20 percent, an 8 percentage point decrease from 2019.
−Removed: The average associate has over 6 years of service.
+Added: The results of the survey were an overall engagement score of 80 out of 100, which was five points above the survey provider’s industry benchmark, and one point above last year’s survey engagement score.
+Added: The Company’s management team collected all the feedback and is focusing on making associate-suggested changes to become an even better place to work.
+Added: For 2021, associate voluntary turnover was approximately 28 percent, an 8 percentage point increase from 2020.
+Added: The average associate has over six years of service.
Diversity and inclusion
1 unchanged sentence
The Company demonstrates its commitment to diversity, equity, and inclusion at the highest levels of the Company.
−Removed: An equal number of the Company’s independent directors are women and men.
−Removed: As of December 31, 2020, the Company’s workforce was approximately 57 percent women.
+Added: The Company’s independent directors (seven in total) include three women.
+Added: As of December 31, 2021, the Company’s workforce was approximately 66 percent women, an increase from 57 percent as of December 31, 2020.
People of color, as defined by the U.S.
−Removed: Equal Employment Opportunity Commission's EEO-1 race and ethnicity categories for the U.S., represented approximately 20 percent of the Company’s workforce (based on associate self-identification).
−Removed: The Company is making progress in the number of women and people of color working in leadership positions (defined by the Company as an associate with one or more direct report) across the organization.
−Removed: As of December 31, 2020, women and people of color held 50 percent and 8 percent of leadership positions in the Company, respectively.
+Added: Equal Employment Opportunity Commission's EEO-1 race and ethnicity categories for the U.S., represented approximately 27 percent of the Company’s workforce (based on associate self-identification), an increase from 20 percent as of December 31, 2020.
+Added: The Company is making progress in the number of women and people of color working in leadership positions (defined by the Company as an associate with one or more direct reports) across the organization.
+Added: As of December 31, 2021, women and people of color held 52 percent and 10 percent of leadership positions in the Company, respectively, an increase from 50 percent and 8 percent, respectively, as of December 31, 2020.
The Company has acknowledged that people of color are underrepresented in leadership positions at Nelnet and is committed to have its workforce reflect the diversity in its communities.
−Removed: As part of its diversity and inclusion focus in 2020, the Company made an unwavering commitment to Black lives matter and to stand in support of all people of color and be a part of the long-term solution to systemic racism and inequality in the world.
−Removed: Accordingly, the Company deepened its support of organizations advancing racial and socioeconomic equality and social justice, and in 2020 the Company created the Service, Not Silence fundraising and volunteer campaign.
−Removed: Through this fundraiser, associates could donate to local and national organizations advancing these issues, with donations matched by the Nelnet Foundation 3:1.
−Removed: The campaign raised over $1 million.
−Removed: The Company also revised its scholarship program for the children of Nelnet associates to better recognize minority and low-income students.
To further Nelnet’s objective of creating an inspiring work environment and furthering associate development, the Company developed and launched the Nelnet Diversity, Equity, and Inclusion Council (the “Council”), sponsored by the Chief Executive Officer and the Executive Director of People Services.
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• Promoting a work environment that enables associates to feel safe to express their ideas and perspectives and feel they belong.
−Removed: During 2020, the Council partnered with Nelnet University to launch a robust mentoring program.
+Added: During 2020, the Council partnered with Nelnet University, the Company’s learning and development program for associates, to launch a robust mentoring program.
The program is available to all associates, prioritizing mentorships for associates from underrepresented racial and ethnic groups.
1 unchanged sentence
The Council has also provided training sessions for all associates on cultural competence and unconscious bias.
−Removed: In addition, the Company has changed new
−Removed: hire recruiting methods and strategies to increase pools of minority, women, veteran, and disabled candidates, and has created other programs to increase diversity throughout the Company focused on race and gender.
+Added: In addition, the Company has changed new hire recruiting methods and strategies to increase pools of minority, women, veteran, and disabled candidates, and has created other programs focused on race and gender to increase diversity throughout the Company.
+Added: The Company also revised its scholarship program for the children of its associates to better recognize minority and low-income students.
+Added: In addition, the Company was named on the following three Forbes listings:
+Added: Best Employer for Women, Best Employer for Diversity, and Best in State Employer.
Talent, development, and training
−Removed: The Company’s talent strategy is focused on attracting the best talent from a diverse range of sources, recognizing and rewarding their performance, and continually developing, engaging, and retaining them.
+Added: The Company’s talent strategy is focused on attracting the best talent from a diverse range of sources, recognizing and rewarding associates for their performance, and continually developing, engaging, and retaining associates.
The Company is committed to the continued development of its people.
1 unchanged sentence
The executive team convenes meetings with senior leadership and the board of directors to review top enterprise talent.
−Removed: The Company continues to provide opportunities for associates to grow their careers internally, with over half of open management positions filled internally during 2020.
+Added: The Company continues to provide opportunities for associates to grow their careers internally, with over 70 percent of open management positions filled internally during 2021.
The Company provides a variety of professional, technical, and leadership training courses to help its associates grow in their current roles and build new skills.
3 unchanged sentences
The Company also offers tuition assistance to associates for degree programs, non-degree seeking individual classes, or certificate programs that are related to areas of business at Nelnet.
−Removed: During 2020, the Company paid over $400,000 in tuition assistance for its associates.
+Added: During 2021, the Company paid almost $380,000 in tuition assistance for its associates.
+Added: During 2021, the Company partnered with Nebraska Dev Lab and Galvanize to offer two groups of technology-driven associates a modern coding education through the Company’s first ever Coding Academy.
+Added: Everyone who participated in the rigorous program passed the program and gained valuable current information technology skills.
Competitive pay, benefits, wellness, and safety
−Removed: The general compensation philosophy of the Company, as an organization that values the long-term success of its shareholders, customers, and associates, is that the Company will pay fair, competitive, and equitable compensation that is designed to encourage focus on the long-term performance objectives of the Company and is differentiated based on both the individual’s performance and the performance of their respective business segment.
+Added: The general compensation philosophy of the Company, as an organization that values the long-term success of its shareholders, customers, and associates, is that the Company will pay fair, competitive, and equitable compensation designed to encourage focus on the long-term performance objectives of the Company and is differentiated based on both the individual’s performance and the performance of his or her respective business segment.
In carrying out this philosophy, the Company structures its overall compensation framework with the general objectives of encouraging ownership, savings, wellness, productivity, and innovation.
4 unchanged sentences
In response to the COVID-19 pandemic, the Company has implemented and continues to implement safety measures in all its facilities.
−Removed: The Company has implemented adjustments to its operations designed to keep associates safe and comply with federal and local guidelines, including those regarding social distancing.
−Removed: As of March 2020, the majority of associates were working and continue to work from home.
+Added: The Company has implemented adjustments to its operations designed to keep associates safe and comply with federal and local guidelines, including those regarding masks, social distancing, and any applicable vaccine mandates.
+Added: Since March 2020, a vast majority of associates continue to work from their home.
+Added: However, all non-remote associates currently have the choice to work in the office, at home, or a hybrid of both.
Culture, values, and ethics
3 unchanged sentences
Ethics are deeply embedded in the Company’s values and business processes.
−Removed: The Company has a Code of Ethics and Conduct that all associates are required to read and acknowledge.
−Removed: The Company regularly re-enforces its commitment to ethics and integrity in associate communications, in its everyday actions, and in processes and controls.
−Removed: As a part of the Company’s on-going efforts to ensure its associates conduct business with the highest levels of ethics and integrity, the Company has compliance training programs.
+Added: The Company has a Code of Ethics and Conduct that includes the Company’s core values and guiding principles for which every associate is empowered to achieve.
+Added: The Company regularly reinforces its commitment to ethics and integrity in associate communications, in its everyday actions, and in processes and controls.
+Added: As part of the Company’s ongoing efforts to ensure its associates conduct business with the highest levels of ethics and integrity, the Company has compliance training programs.
The Company also maintains an Ask Ethics email through which associates can raise concerns they may have about business behavior they do not feel comfortable discussing personally with managers or human resources personnel.
4 unchanged sentences
The Company routinely posts important information for investors on its investor relations website.
−Removed: The Company has adopted a Code of Ethics and Conduct that applies to directors, officers, and employees, including the Company's principal executive officer and its principal financial and accounting officer, and has posted such Code of Ethics and Conduct on its investor relations website.
+Added: The Company has adopted a Code of Ethics and Conduct that applies to directors, officers, and associates, including the Company's principal executive officer and its principal financial and accounting officer, and has posted such Code of Ethics and Conduct on its investor relations website.
Amendments to and waivers granted with respect to the Company's Code of Ethics and Conduct relating to its executive officers and directors, which are required to be disclosed pursuant to applicable securities laws and stock exchange rules and regulations, will also be posted on its investor relations website.
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.