What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-07 compared with 2022-08-08 · 209 added, 146 removed, 850 unchanged (29% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Loans and accrued interest receivable (net of allowance for loan losses of $ 119,057 and

54 unchanged sentences

(Dollars in thousands, except share data)

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2022 2021 2022 2021

10 unchanged sentences

Education technology, services, and payment processing revenue 106,894 85,324 310,211 257,284

Solar construction revenue 9,358 — 9,358 —

Other 2,225 11,867 24,750 30,183

3 unchanged sentences

Total other income/expense 318,684 200,178 990,420 658,788

Cost of services:

Cost to provide education technology, services, and payment processing services 42,676 31,335 109,073 80,063

Cost to provide solar construction services 5,968 — 5,968 —

Total cost of services 48,644 31,335 115,041 80,063

Operating expenses:

19 unchanged sentences

(Dollars in thousands)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Net income $ 100,469 51,219 368,258 257,136

Other comprehensive (loss) income:

Other comprehensive income (loss):

Net changes related to foreign currency translation adjustments $ 18 ( 9 ) 19 ( 9 )

Net changes related to available-for-sale debt securities:

Unrealized holding (losses) gains arising during period, net ( 33,822 ) 2,897 ( 50,520 ) 7,246

Unrealized holding gains (losses) arising during period, net 4,790 4,524 ( 45,730 ) 11,770

Reclassification of gains recognized in net income, net of losses ( 578 ) ( 1,173 ) ( 4,220 ) ( 2,052 )

Income tax effect ( 1,011 ) 3,201 ( 804 ) 2,547 11,988 ( 37,962 ) ( 2,332 ) 7,386

Other comprehensive (loss) income ( 26,358 ) 1,919 ( 41,162 ) 4,839

Other comprehensive income (loss) 3,219 2,538 ( 37,943 ) 7,377

Comprehensive income 103,688 53,757 330,315 264,513

8 unchanged sentences

Class A Class B

Balance as of March 31, 2021 — 27,367,797 11,154,171 $ — 274 112 5,859 2,736,923 9,022 ( 3,089 ) 2,749,101

Balance as of June 30, 2021 — 27,494,942 11,054,171 $ — 275 111 10,158 2,812,315 10,941 ( 5,182 ) 2,828,618

Issuance of noncontrolling interests — — — — — — — — — 4,935 4,935

8 unchanged sentences

Conversion of common stock — 372,717 ( 372,717 ) — 4 ( 4 ) — — — — —

Balance as of September 30, 2021 — 27,556,370 10,681,454 $ — 276 107 1,593 2,843,799 13,479 ( 2,291 ) 2,856,963

Balance as of June 30, 2022 — 26,613,733 10,674,892 $ — 266 107 1,180 3,127,687 ( 31,858 ) ( 6,237 ) 3,091,145

Balance as of March 31, 2022 — 27,151,270 10,674,892 $ — 272 107 1,208 3,092,226 ( 5,500 ) ( 3,250 ) 3,085,063

Issuance of noncontrolling interests — — — — — — — — — 14,018 14,018

Net income (loss) — — — — — — — 104,798 — ( 4,329 ) 100,469

Other comprehensive loss — — — — — — — — ( 26,358 ) — ( 26,358 )

Other comprehensive income — — — — — — — — 3,219 — 3,219

Distribution to noncontrolling interests — — — — — — — — — ( 17,707 ) ( 17,707 )

4 unchanged sentences

Repurchase of common stock — ( 169,860 ) — — ( 2 ) — ( 4,450 ) ( 9,841 ) — — ( 14,293 )

Balance as of June 30, 2022 — 26,613,733 10,674,892 $ — 266 107 1,180 3,127,687 ( 31,858 ) ( 6,237 ) 3,091,145

Conversion of common stock — 1,233 ( 1,233 ) — — — — — — — —

Other — — — — — — — ( 5,675 ) — — ( 5,675 )

Balance as of September 30, 2022 — 26,483,298 10,673,659 $ — 265 107 837 3,208,044 ( 28,639 ) ( 14,255 ) 3,166,359

See accompanying notes to consolidated financial statements.

15 unchanged sentences

Conversion of common stock — 474,117 ( 474,117 ) — 5 ( 5 ) — — — — —

Balance as of June 30, 2021 — 27,494,942 11,054,171 $ — 275 111 10,158 2,812,315 10,941 ( 5,182 ) 2,828,618

Balance as of September 30, 2021 — 27,556,370 10,681,454 $ — 276 107 1,593 2,843,799 13,479 ( 2,291 ) 2,856,963

Balance as of December 31, 2021 — 27,239,654 10,676,642 $ — 272 107 1,000 2,940,523 9,304 1,632 2,952,838

9 unchanged sentences

Conversion of common stock — 2,983 ( 2,983 ) — — — — — — — —

Balance as of June 30, 2022 — 26,613,733 10,674,892 $ — 266 107 1,180 3,127,687 ( 31,858 ) ( 6,237 ) 3,091,145

Other — — — — — — — ( 5,675 ) — — ( 5,675 )

Balance as of September 30, 2022 — 26,483,298 10,673,659 $ — 265 107 837 3,208,044 ( 28,639 ) ( 14,255 ) 3,166,359

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Six months ended

Nine months ended

September 30,

Net income attributable to Nelnet, Inc.

2 unchanged sentences

Net income 368,258 257,136

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities, net of business acquisitions:

Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs 113,655 113,651

5 unchanged sentences

Gain on sale of loans ( 5,616 ) ( 18,715 )

Loss on investments, net 3,207 812

Loss (gain) on investments, net 13,605 ( 293 )

(Gain) loss from repurchases of debt, net ( 1,231 ) 3,964

2 unchanged sentences

Non-cash compensation expense 9,872 7,824

Provision (negative provision) for beneficial interests and impairment expense, net 6,284 ( 1,936 )

Decrease (increase) in loan and investment accrued interest receivable 184 ( 40,488 )

Provision for beneficial interests and impairment expense, net 6,163 12,223

Increase in loan and investment accrued interest receivable ( 16,206 ) ( 41,931 )

Decrease (increase) in accounts receivable 47,514 ( 2,137 )

2 unchanged sentences

Increase (decrease) in accrued interest payable 17,230 ( 24,260 )

Decrease in other liabilities, net ( 12,200 ) ( 13,663 )

Increase in other liabilities, net 5,388 41,040

Decrease in the carrying amount of lease liability ( 4,227 ) ( 5,158 )

Net cash provided by operating activities 656,872 336,547

Cash flows from investing activities:

Cash flows from investing activities, net of business acquisitions:

Purchases and originations of loans ( 539,118 ) ( 1,145,775 )

8 unchanged sentences

Purchases of property and equipment ( 44,423 ) ( 42,594 )

Business acquisition, net of cash acquired ( 7,320 ) —

Net cash provided by (used in) investing activities 836,954 ( 243,422 )

Business acquisitions, net of cash acquired ( 35,973 ) —

Net cash provided by investing activities 1,739,274 543,442

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Six months ended

Cash flows from financing activities:

Nine months ended

September 30,

Cash flows from financing activities, net of business acquisitions:

Payments on bonds and notes payable $ ( 3,035,082 ) ( 2,479,582 )

2 unchanged sentences

Increase in bank deposits, net 236,510 146,018

Increase in due to customers 43,544 1,746

(Decrease) increase in due to customers ( 59,467 ) 53,146

Dividends paid ( 26,960 ) ( 25,319 )

3 unchanged sentences

Distribution to noncontrolling interests ( 1,153 ) ( 548 )

Net cash (used in) provided by financing activities ( 1,340,636 ) 176,643

Net cash used in financing activities ( 2,546,559 ) ( 587,131 )

Effect of exchange rate changes on cash ( 447 ) ( 175 )

8 unchanged sentences

ROU assets obtained in exchange for lease obligations $ 5,981 4,026

Receipt of beneficial interest in consumer loan securitization $ 3,660 19,280

Receipt of beneficial interest in consumer loan securitizations $ 8,336 23,506

Distribution to noncontrolling interests $ 31,716 6,406

Issuance of noncontrolling interests $ 5,917 2,082

(a) The Company utilized $ 4.1 million and $ 22.0 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2022 and 2021, respectively.

Supplemental disclosures of noncash activities regarding the Company's business acquisition are contained in note 6.

(a) The Company utilized $ 9.4 million and $ 22.2 million of federal and state tax credits related primarily to renewable energy during the nine months ended September 30, 2022 and 2021, respectively.

Supplemental disclosures of noncash activities regarding the Company's business acquisitions are contained in note 6.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.

As of As of As of As of

June 30, 2022 December 31, 2021 June 30, 2021 December 31, 2020

September 30, 2022 December 31, 2021 September 30, 2021 December 31, 2020

Total cash and cash equivalents $ 63,198 125,563 191,936 121,249

9 unchanged sentences

The accompanying unaudited consolidated financial statements of Nelnet, Inc.

and subsidiaries (the “Company”) as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2021 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented.

and subsidiaries (the “Company”) as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2021 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented.

The preparation of financial statements in conformity with U.S.

1 unchanged sentence

Actual results could differ from those estimates.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022.

The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Annual Report").

Reclassification of Prior Period Cash Flows Presentation

The line item in the Company's consolidated statements of cash flows for changes during a period in amounts "due to customers" was previously presented in cash flows from operating activities, and has been corrected for the periods presented in this report (including the prior year period) to be presented in cash flows from financing activities.

This correction has no impact on the Company's previously reported consolidated net income, total assets (including cash and cash equivalents), liabilities, and equity, and while the correction has a corresponding impact on the amounts of cash flows from operating and financing activities, it has no impact on the net increase or decrease in cash for previously reported periods.

The Company has concluded that the correction was not material from a combined quantitative and qualitative perspective to its previously issued interim financial statements for 2022, or its previously issued financial statements for 2021, 2020, and 2019.

Prior to June 30, 2022, the line item in the Company's consolidated statements of cash flows for changes during a period in amounts "due to customers" was presented in cash flows from operating activities.

Beginning in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, the Company corrected this presentation in its statements of cash flows to show this activity as a financing activity.

This correction had no impact on the Company's previously reported consolidated net income, total assets (including cash and cash equivalents), liabilities, and equity, and while the correction had a corresponding impact on the amounts of cash flows from operating and financing activities, it had no impact on the net increase or decrease in cash for previously reported periods.

The Company has concluded that the correction was not material from a combined quantitative and qualitative perspective to its previously issued interim financial statements, or its previously issued financial statements for 2021, 2020, and 2019.

Loans and Accrued Interest Receivable and Allowance for Loan Losses

Loans and accrued interest receivable consisted of the following:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Non-Nelnet Bank:

22 unchanged sentences

The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Non-Nelnet Bank:

4 unchanged sentences

Private education loans 0.63 % 0.49 %

(a) As of June 30, 2022 and December 31, 2021, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 21.8 % and 22.2 %, respectively, and for Nelnet Bank was 13.2 % and 12.1 %, respectively.

(b) During the second quarter of 2022, the Company purchased home equity loans that generally have lower default rates than unsecured consumer loans.

As such, the allowance for loan losses as a percentage of the ending loan balance has decreased as of June 30, 2022 as compared to December 31, 2021.

(a) As of September 30, 2022 and December 31, 2021, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 22.3 % and 22.2 %, respectively, and for Nelnet Bank was 8.9 % and 12.1 %, respectively.

(b) During 2022, the Company purchased home equity loans that generally have lower default rates than unsecured consumer loans.

As such, the allowance for loan losses as a percentage of the ending loan balance has decreased as of September 30, 2022 as compared to December 31, 2021.

Gain on Sale of Loans

On January 26, 2022, the Company sold $ 18.1 million (par value) of consumer loans to an unrelated third party who securitized such loans.

The Company recognized a gain of $ 3.0 million (pre-tax) as part of this transaction.

As partial consideration received for the consumer loans sold, the Company received a 6.6 percent residual interest in the consumer loan securitization, which is included in "investments and notes receivable" on the Company's consolidated balance sheet.

On January 26, 2022 and July 7, 2022, the Company sold $ 18.1 million (par value) and $ 28.9 million (par value) of consumer loans, respectively, to an unrelated third party who securitized such loans.

The Company recognized a gain of $ 3.0 million (pre-tax) and $ 2.6 million (pre-tax), respectively, as part of these transactions.

As partial consideration received for the consumer loans sold, the Company received a 6.6 percent and 7.6 percent residual interest, respectively, in the consumer loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheet.

Activity in the Allowance for Loan Losses

1 unchanged sentence

Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration (a) Loan sales Balance at end of period

Three months ended June 30, 2022

Three months ended September 30, 2022

Non-Nelnet Bank:

5 unchanged sentences

$ 120,424 9,625 ( 7,802 ) 383 12 ( 3,585 ) 119,057

Three months ended June 30, 2021

Three months ended September 30, 2021

Non-Nelnet Bank:

5 unchanged sentences

$ 145,719 5,827 ( 12,417 ) 304 935 ( 2,324 ) 138,044

Six months ended June 30, 2022

Nine months ended September 30, 2022

Non-Nelnet Bank

5 unchanged sentences

$ 127,113 18,575 ( 21,914 ) 996 156 ( 5,869 ) 119,057

Six months ended June 30, 2021

Nine months ended September 30, 2021

Non-Nelnet Bank

5 unchanged sentences

$ 175,698 ( 10,847 ) ( 17,960 ) 1,126 2,260 ( 12,233 ) 138,044

(a) During the three months ended June 30, 2022 and 2021, and six months ended June 30, 2022 and 2021, the Company acquired $ 1.6 million (par value), $ 34.7 million (par value), $ 10.8 million (par value), and $ 88.7 million (par value), respectively, of federally insured rehabilitation loans that met the definition of purchased loans with credit deterioration ("PCD loans") when they were purchased by the Company.

The Company recorded a negative provision for loan losses for its federally insured loan portfolio for the three months ended March 31, 2022 due to the amortization of the portfolio and an increase in expected prepayments as a result of an initiative offered by the Department of Education (the “Department”) for Federal Family Education Loan Program ("FFELP" or "FFEL Program") borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department by October 31, 2022 to qualify for loan forgiveness under the Public Service Loan Forgiveness program.

The Company recorded a provision for loan losses on its consumer loan portfolio during the three months ended March 31, 2022 as a result of loans acquired during the period.

The Company recorded a provision for loan losses for its federally insured, private education, consumer, and other loan portfolios for the three months ended June 30, 2022 due to management's estimate of worsening economic conditions as of June 30, 2022 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of March 31, 2022.

In addition, the Company recorded provision for loan losses on its consumer and other loan portfolio during the three months ended June 30, 2022 as a result of loans acquired during the period.

The provision for loan losses recognized by the Company for its federally insured loan portfolio during the three months ended June 30, 2022 was partially offset due to the continued amortization of the portfolio and an increase in the estimate of prepayments as of June 30, 2022 in comparison to management's estimate used to determine the allowance for loan losses as of March 31, 2022.

(a) During the three months ended September 30, 2022 and 2021, and nine months ended September 30, 2022 and 2021, the Company acquired $ 0.9 million (par value), $ 64.6 million (par value), $ 11.6 million (par value), and $ 153.3 million (par value), respectively, of federally insured rehabilitation loans that met the definition of purchased loans with credit deterioration ("PCD loans") when they were purchased by the Company.

The Company recorded a negative provision for loan losses for its federally insured loan portfolio during the first quarter of 2022 due to the amortization of the portfolio and an increase in expected prepayments as a result of an initiative offered by the Department of Education (the “Department”) for Federal Family Education Loan Program ("FFELP" or "FFEL Program") borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department by October 31, 2022 to qualify for loan forgiveness under the Public Service Loan Forgiveness program.

The Company recorded a provision for loan losses on its consumer loan portfolio during the first quarter of 2022 as a result of loans acquired during the period.

The Company recorded a provision for loan losses for its federally insured, private education, consumer, and other loan portfolios during the second and third quarters of 2022 due to management's estimate of declining economic conditions.

In addition, the Company recorded provision for loan losses on its consumer and other loan and Nelnet Bank private education loan portfolios during these periods as a result of loans acquired and originated during the period.

The provision for loan losses recognized by the Company for its federally insured loan portfolio during these periods was partially offset due to the continued amortization of the portfolio.

Unfunded Private Education Loan Commitments

As of June 30, 2022, Nelnet Bank has a liability of approximately $ 36,000 related to $ 3.0 million of unfunded private education loan commitments.

As of September 30, 2022, Nelnet Bank has a liability of approximately $ 76,000 related to $ 4.3 million of unfunded private education loan commitments.

The liability for unfunded loan commitments is included in "other liabilities" on the consolidated balance sheet.

During the six months ended June 30, 2022, Nelnet Bank recognized provision for loan losses of approximately $ 24,000 related to unfunded loan commitments.

During the nine months ended September 30, 2022, Nelnet Bank recognized provision for loan losses of approximately $ 65,000 related to unfunded loan commitments.

Key Credit Quality Indicators

4 unchanged sentences

The table below shows the Company’s loan status and delinquency amounts.

As of June 30, 2022 As of December 31, 2021 As of June 30, 2021

As of September 30, 2022 As of December 31, 2021 As of September 30, 2021

Federally insured loans - Non-Nelnet Bank:

25 unchanged sentences

Accrued interest receivable 2,207 1,960 2,076

Loan premium, net of unamortized discount 94 ( 1,123 ) ( 1,547 )

Loan discount, net of unamortized premiums ( 185 ) ( 1,123 ) ( 1,496 )

Allowance for loan losses ( 15,577 ) ( 16,143 ) ( 17,053 )

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 248,628 $ 284,136 $ 302,739

As of June 30, 2022 As of December 31, 2021 As of June 30, 2021

As of September 30, 2022 As of December 31, 2021 As of September 30, 2021

Consumer and other loans - Non-Nelnet Bank:

38 unchanged sentences

Accrued interest receivable 969 264 156

Deferred origination costs 5,909 2,560 1,374

Deferred origination costs, net of unaccreted discount 5,369 2,560 1,430

Allowance for loan losses ( 2,248 ) ( 840 ) ( 414 )

4 unchanged sentences

The following tables highlight the gross principal balance of Nelnet Bank's private education loan portfolio, by year of origination, stratified by FICO score at the time of origination.

Loan balance as of June 30, 2022

Six months ended June 30, 2022 2021 2020 Total

Loan balance as of September 30, 2022

Nine months ended September 30, 2022 2021 2020 Total

FICO at origination:

16 unchanged sentences

The Company does not place federally insured loans on nonaccrual status due to the government guaranty.

The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of December 31, 2021 and June 30, 2022, was not material.

Amortized Cost Basis by Origination Year

The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of June 30, 2022 based on year of origination.

The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of September 30, 2022 based on year of origination.

Effective July 1, 2010, no new loan originations can be made under the FFEL Program and all new federal loan originations must be made under the Federal Direct Loan Program.

As such, all the Company’s federally insured loans were originated prior to July 1, 2010.

Six months ended June 30, 2022 2021 2020 2019 2018 Prior years Total

Nine months ended September 30, 2022 2021 2020 2019 2018 Prior years Total

Private education loans - Non-Nelnet Bank:

9 unchanged sentences

Accrued interest receivable 2,207

Loan premium, net of unamortized discount 94

Loan discount, net of unamortized premiums ( 185 )

Allowance for loan losses ( 15,577 )

24 unchanged sentences

Accrued interest receivable 969

Deferred origination costs 5,909

Deferred origination costs, net of unaccreted discount 5,369

Allowance for loan losses ( 2,248 )

3 unchanged sentences

The following tables summarize the Company’s outstanding debt obligations by type of instrument:

As of June 30, 2022

As of September 30, 2022

Interest rate

21 unchanged sentences

10/7/22 - 11/27/24

Other - due to related party 743 3.55 % - 5.35 %

11/22/22 - 10/14/28

Discount on bonds and notes payable and debt issuance costs ( 158,499 )

28 unchanged sentences

FFELP loan warehouse facility

As of June 30, 2022, the Company’s FFELP warehouse facility had an aggregate maximum financing amount available of $ 25.0 million that was reduced from $ 60.0 million per a May 23, 2022 amendment to the facility.

The May 2022 amendment also extended the liquidity provisions and final maturity to November 22, 2022 and November 22, 2023, respectively.

As of June 30, 2022, $ 4.6 million was outstanding under this facility, $ 20.4 million was available for future funding, and the Company had $ 0.3 million advanced as equity support.

As of September 30, 2022, the Company’s FFELP warehouse facility had an aggregate maximum financing amount available of $ 300.0 million that was increased from $ 25.0 million per a July 29, 2022 amendment to the facility.

A May 2022 amendment extended the liquidity provisions and final maturity to November 22, 2022 and November 22, 2023, respectively.

As of September 30, 2022, $ 249.5 million was outstanding under this facility, $ 50.5 million was available for future funding, and the Company had $ 20.3 million advanced as equity support.

Private education loan warehouse facility

As of June 30, 2022, the Company's private education warehouse facility had an aggregate maximum financing amount available of $ 175.0 million and an advance rate of 80 to 90 percent.

As of September 30, 2022, the Company's private education warehouse facility had an aggregate maximum financing amount available of $ 175.0 million and an advance rate of 80 to 90 percent.

On June 30, 2022, the Company amended the facility to extend the liquidity provisions through October 31, 2022 and final maturity date to October 31, 2023.

As of June 30, 2022, $ 89.5 million was outstanding under this warehouse facility, $ 85.5 million was available for future funding, and the Company had $ 10.1 million advanced as equity support.

As of September 30, 2022, $ 86.2 million was outstanding under this warehouse facility, $ 88.8 million was available for future funding, and the Company had $ 9.8 million advanced as equity support.

Unsecured Line of Credit

The Company has a $ 495.0 million unsecured line of credit that has a maturity date of September 22, 2026.

As of June 30, 2022, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

As of September 30, 2022, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

The line of credit provides that the Company may increase the aggregate financing commitments, through the existing lenders and/or through new lenders, up to a total of $ 737.5 million, subject to certain conditions.

1 unchanged sentence

The Company has an agreement with Union Bank and Trust Company ("Union Bank"), a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities.

As of June 30, 2022, $ 393.4 million of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

As of September 30, 2022, $ 399.7 million of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

The agreement automatically renews annually and is terminable by either party upon five business days' notice.

7 unchanged sentences

The first agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the second agreement has various maturity dates through January 13, 2023.

Included in “bonds and notes payable” as of June 30, 2022 was $ 228.5 million subject to the first agreement and $ 272.2 million subject to the second agreement.

Included in “bonds and notes payable” as of September 30, 2022 was $ 218.0 million subject to the first agreement and $ 289.0 million subject to the second agreement.

See note 5 and below under "Debt Repurchases" for additional information about the private education and FFELP loan asset-backed securities investments, respectively, serving as collateral for these repurchase agreements.

4 unchanged sentences

Debt Repurchases

During the three and six months ended June 30, 2022, the Company repurchased $ 36.7 million and $ 55.2 million, respectively, of its own debt and recognized gains of $ 1.0 million and $ 1.1 million, respectively.

During the second quarter of 2021, the Company repurchased $ 19.8 million of its own debt and recognized a loss of $ 0.7 million.

The following table summarizes the Company's repurchases of its own debt.

Gains/losses recorded by the Company from the repurchase of debt are included in "other" in "other income/expense" on the Company's consolidated statements of income.

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Purchase price $ ( 13,563 ) ( 184,827 ) ( 67,081 ) ( 205,269 )

Par value 13,903 184,781 69,133 204,597

Remaining unamortized cost of issuance ( 180 ) ( 3,222 ) ( 821 ) ( 3,292 )

Gain (loss) $ 160 ( 3,268 ) 1,231 ( 3,964 )

The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market.

2 unchanged sentences

Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale.

As of June 30, 2022, the Company holds $ 431.2 million (par value) of its own FFELP asset-backed securities.

As of June 30, 2022, $ 206.9 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreements (as discussed above).

As of September 30, 2022, the Company holds $ 431.5 million (par value) of its own FFELP asset-backed securities.

As of September 30, 2022, $ 230.6 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreements (as discussed above).

Derivative Financial Instruments

1 unchanged sentence

Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 6 of the notes to consolidated financial statements included in the 2021 Annual Report.

A tabular presentation of such derivatives outstanding as of June 30, 2022 and December 31, 2021 is presented below.

The following table summarizes the Company’s outstanding basis swaps as of June 30, 2022 and December 31, 2021, in which the Company receives three-month LIBOR set discretely in advance and pays one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").

A tabular presentation of such derivatives outstanding as of September 30, 2022 and December 31, 2021 is presented below.

The following table summarizes the Company’s outstanding basis swaps as of September 30, 2022 and December 31, 2021, in which the Company receives three-month LIBOR set discretely in advance and pays one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").

Maturity Notional amount

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

2022 $ 1,000,000 2,000,000

4 unchanged sentences

$ 4,900,000 5,900,000

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2022 and December 31, 2021 was one-month LIBOR plus 9.4 basis points and 9.1 basis points, respectively.

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of September 30, 2022 and December 31, 2021 was one-month LIBOR plus 9.4 basis points and 9.1 basis points, respectively.

Interest Rate Swaps – Floor Income Hedges

The following table summarizes the outstanding derivative instruments used by the Company to economically hedge loans earning fixed rate floor income.

As of June 30, 2022 As of December 31, 2021

As of September 30, 2022 As of December 31, 2021

Maturity Notional amount Weighted average fixed rate paid by the Company (a) Notional amount Weighted average fixed rate paid by the Company (a)

9 unchanged sentences

On April 29, 2022, the Company terminated $ 1.25 billion in notional amount of derivatives ($ 500 million, $ 250 million, and $ 500 million that had maturity dates in 2023, 2024, and 2025, respectively) for total proceeds of $ 68.1 million.

On August 26, 2022, the Company terminated $ 500 million in notional amount of derivatives ($ 250 million that had maturity dates in each of 2023 and 2024) for total proceeds of $ 23.8 million.

Consolidated Financial Statement Impact Related to Derivatives - Statements of Income

The following table summarizes the components of "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

5 unchanged sentences

Interest rate swaps - floor income hedges 52,802 6,199 238,196 41,700

Total change in fair value - income (expense) 40,401 ( 1,615 ) 186,135 37,194

Derivative market value adjustments and derivative settlements, net - income (expense) $ 45,024 ( 6,989 ) 187,949 27,516

Total change in fair value - income 52,991 7,260 239,125 44,455

Derivative market value adjustments and derivative settlements, net - income $ 63,262 1,351 251,210 28,868

Investments and Notes Receivable

A summary of the Company's investments and notes receivable follows:

As of June 30, 2022 As of December 31, 2021

As of September 30, 2022 As of December 31, 2021

Amortized cost Gross unrealized gains Gross unrealized losses (a) Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value

6 unchanged sentences

Total investments (at fair value) 1,417,285 1,001,655

Other Investments (not measured at fair value):

Other Investments and Notes Receivable (not measured at fair value):

Other debt securities - held-to-maturity 8,440 8,200

4 unchanged sentences

Equity method 81,820 47,226

Notes receivable 5,069 —

Total real estate 62,601 47,226

Investment in ALLO:

12 unchanged sentences

Total investments and notes receivable $ 2,063,514 $ 1,588,919

(a) As of June 30, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $ 1.1 billion.

(a) As of September 30, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $ 1.0 billion.

The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.

(b) As of June 30, 2022, $ 393.4 million (par value) of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement."

(c) The Company's private education loan asset-backed securities portfolio is subject to repurchase agreements with third parties, as discussed in note 3 under “Repurchase Agreements.”

(b) As of September 30, 2022, $ 399.7 million (par value) of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement."

(c) As of September 30, 2022, $ 350.9 million (par value) of private education loan asset-backed securities are subject to repurchase agreements with third parties, as discussed in note 3 under “Repurchase Agreements.”

(d) On February 25, 2022, the Company contributed $ 34.7 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO").

1 unchanged sentence

The Company accounts for its voting membership interests in ALLO under the Hypothetical Liquidation at Book Value ("HLBV") method of accounting.

During the three months ended June 30, 2022 and 2021, the Company recognized a pre-tax loss of $ 16.9 million and income of $ 1.1 million, respectively, under the HLBV method of accounting on its ALLO

voting membership interests investment, and during the six months ended June 30, 2022 and 2021, the Company recognized pre-tax losses of $ 30.1 million and $ 21.1 million, respectively.

During the three months ended September 30, 2022 and 2021, the Company recognized pre-tax losses of $ 17.6 million and $ 10.5 million, respectively, under the HLBV method of accounting on its ALLO voting membership interests investment, and during the nine months ended September 30, 2022 and 2021, the Company recognized pre-tax losses of $ 47.6 million and $ 31.6 million, respectively.

Income and losses from the Company's investment in ALLO are included in "other" in "other income/expense" on the consolidated statements of income.

In the second quarter of 2021, the Company revised its accounting policy to correct for an error in its method of applying the HLBV method of accounting for its investment in ALLO.

Prior to the second quarter of 2021, the Company calculated Nelnet’s liquidation basis in ALLO under the HLBV method by using Nelnet’s proportionate share of tax losses and amortizing any basis difference using tax methods.

The Company determined that Nelnet’s liquidation basis in ALLO under the HLBV method should equal ALLO’s GAAP losses and amortization of any basis difference should use book lives.

During the second quarter of 2021, the Company recorded an adjustment to reflect the cumulative net impact on prior periods (since the deconsolidation of ALLO on December 21, 2020) for the correction of this error that resulted in a $ 14.0 million increase to the Company’s ALLO investment balance and a corresponding pre-tax increase to other income.

The Company concluded this error had an immaterial impact on 2021 results as well as the results for prior periods.

(e) As of June 30, 2022, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 137.3 million and $ 4.3 million, respectively.

(e) As of September 30, 2022, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 137.3 million and $ 6.4 million, respectively.

The preferred membership interests of ALLO held by the Company earn a preferred annual return of 6.25 percent.

The Company recognized pre-tax income on its ALLO preferred membership interests of $ 2.1 million and $ 2.0 million during the three months ended June 30, 2022 and 2021, respectively, and $ 4.3 million during both the six months ended June 30, 2022 and 2021.

The Company recognized pre-tax income on its ALLO preferred membership interests of $ 2.2 million and $ 2.0 million during the three months ended September 30, 2022 and 2021, respectively, and $ 6.4 million during each of the nine months ended September 30, 2022 and 2021.

This income is included in "other" in "other income/expense" on the consolidated statements of income.

(f) The Company has partial ownership in certain private education, consumer, and federally insured student loan securitizations.

As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2022, the Company's ownership correlates to approximately $ 650 million, $ 160 million, and $ 430 million of private education, consumer, and federally insured student loans, respectively, included in these securitizations.

(g) As of June 30, 2022, the Company has funded a total of $ 241.3 million in solar investments, which includes $ 71.4 million funded by syndication partners.

The carrying value of the Company’s solar investments are reduced by tax credits earned when the solar project is placed in service.

The solar investment balance at June 30, 2022 represents the sum of total tax credits earned on solar projects placed in service through June 30, 2022 and the calculated HLBV net losses being larger than total payments made by the Company on such projects.

As of June 30, 2022, the Company is committed to fund an additional $ 51.9 million on these projects, of which $ 43.1 million will be provided by syndication partners.

As of the latest remittance reports filed by the various trusts prior to or as of September 30, 2022, the Company's ownership correlates to approximately $ 630 million, $ 150 million, and $ 420 million of private education, consumer, and federally insured student loans, respectively, included in these securitizations.

(g) As of September 30, 2022, the Company has funded a total of $ 252.1 million in solar investments, which includes $ 81.3 million funded by syndication partners.

The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed in service.

The solar investment balance at September 30, 2022 represents the sum of total tax credits earned on solar projects placed in service through September 30, 2022 and the calculated HLBV net losses being larger than total payments made by the Company on such projects.

As of September 30, 2022, the Company is committed to fund an additional $ 42.8 million on these projects, of which $ 35.1 million will be provided by syndication partners.

The Company accounts for its solar investments using the HLBV method of accounting.

For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment.

The Company recognized pre-tax losses on its solar investments of $ 1.9 million and $ 2.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 2.9 million and $ 4.0 million during the six months ended June 30, 2022 and 2021, respectively.

The Company recognized pre-tax losses on its solar investments of $ 4.2 million and $ 3.4 million during the three months ended September 30, 2022 and 2021, respectively, and $ 7.1 million and $ 7.4 million during the nine months ended September 30, 2022 and 2021, respectively.

These losses are included in “other” in "other income/expense" on the consolidated statements of income.

Losses from solar investments include losses attributable to third-party minority interest investors (syndication partners) that are included in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

Solar losses attributed to minority investors was $ 2.0 million and $ 0.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 3.8 million and $ 1.9 million for the six months ended June 30, 2022 and 2021, respectively.

Solar losses attributed to minority interest investors was $ 4.1 million and $ 2.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 8.0 million and $ 4.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Impairment Expense

1 unchanged sentence

The impairment expense is included in "impairment expense and provision for beneficial interests, net" on the consolidated statements of income.

Business Combination

Business Combinations

NGWeb Solutions, LLC

3 unchanged sentences

As a result of the acquisition, the previously held 50 percent ownership interests was remeasured to its fair value as of the April 30, 2022 date of acquisition of the additional 30 percent of the ownership interests, resulting in a $ 15.2 million revaluation gain, which is included in "other" in "other income/expense" on the consolidated statements of income.

For segment reporting, this gain is included in "Corporate and Other Activities." Subsequent to the acquisition, the Company will consolidate the operating results of NextGen and such results will be included in the Education Technology, Services, and Payment Processing reportable segment.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

The fair values of the assets and liabilities related to NextGen are subject to refinement as the Company completes its analysis relative to the fair values at the date of acquisition.

For segment reporting, this gain is included in Corporate and Other Activities.

Subsequent to the acquisition, the Company has consolidated the operating results of NextGen and such results are included in the Education Technology, Services, and Payment Processing reportable segment.

The following table summarizes the final estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

During the three months ended September 30, 2022, the Company recognized certain adjustments to the provisional amounts recorded on the acquisition date that were needed to reflect new information obtained about facts and circumstances that existed as of the acquisition date.

The net impact of these adjustments had no impact on operating results.

Cash and cash equivalents $ 1,885

9 unchanged sentences

Total consideration paid by the Company $ 9,205

The $ 23.4 million of acquired intangible assets is made up of computer software of $ 18.8 million ( 5 -year useful life) and customer relationships of $ 4.6 million ( 7 -year useful life).

The $ 15.3 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 14 years.

The intangible assets that made up this amount include customer relationships of $ 12.8 million ( 15 -year useful life), computer software of $ 1.7 million ( 5 -year useful life) and a trade name of $ 0.8 million ( 10 -year useful life).

The $ 15.9 million of goodwill is not expected to be deductible for tax purposes.

The amount allocated to goodwill was primarily attributed to the synergies and economies of scale expected from combining the operations of the Company and NextGen.

The pro forma impacts of the NextGen acquisition on the Company's historical results prior to the acquisition were not material.

On July 1, 2022, the Company acquired 80 percent of the ownership interests of two subsidiaries of GRNE Solutions, LLC named GRNE-Nelnet, LLC ("GRNE") and ENRG-Nelnet, LLC ("ENRG") (collectively referred to as "GRNE Solar") for total cash consideration of $ 30.4 million.

GRNE designs and installs residential, commercial, and utility-scale solar systems in the Midwest.

ENRG owns certain assets that generate and sell solar energy.

The acquisition diversifies the Company's position in the renewable energy space to include solar construction.

For segment reporting, the operating results of GRNE Solar are included in Corporate and Other Activities.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents $ 1,742

Accounts receivable 4,941

Property and equipment 8,720

Other assets 3,092

Intangible assets 11,683

Excess cost over fair value of net assets acquired (goodwill) 14,004

Bonds and notes payable ( 750 )

Other liabilities ( 5,438 )

Net assets acquired 37,994

Minority interest ( 7,599 )

Total consideration paid by the Company $ 30,395

The $ 11.7 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 8 years.

The intangible assets that made up this amount include a trade name of $ 8.1 million ( 10 -year useful life), customer relationships of $ 1.1 million ( 3 -year useful life), and other separably identified intangibles of $ 2.4 million ( 5 -year useful life).

The $ 14.0 million of goodwill is expected to be deductible for tax purposes.

The amount allocated to goodwill was attributed to synergies from combining the operations of the Company and GRNE Solar and intangible assets that do not qualify for separate recognition.

The pro forma impacts of the GRNE Solar acquisition on the Company's historical results prior to the acquisition were not material.

Intangible Assets

Intangible assets consisted of the following:

Weighted average remaining useful life as of

June 30, 2022 (months)

June 30, 2022 December 31, 2021

September 30, 2022 (months)

September 30, 2022 December 31, 2021

Amortizable intangible assets, net:

1 unchanged sentence

112 $ 55,385 47,894

Trade names (net of accumulated amortization of $ 312 )

Computer software (net of accumulated amortization of $ 3,730 and $ 3,669 , respectively)

30 4,190 4,135

Other (net of accumulated amortization of $ 245 )

Total - amortizable intangible assets, net 106 $ 70,368 52,029

The Company recorded amortization expense on its intangible assets of $ 2.9 million and $ 8.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 5.3 million and $ 16.6 million during the six months ended June 30, 2022 and 2021, respectively.

The Company recorded amortization expense on its intangible assets of $ 3.3 million for the three months ended September 30, 2022 and 2021, and $ 8.6 million and $ 19.9 million during the nine months ended September 30, 2022 and 2021, respectively.

The Company will continue to amortize intangible assets over their remaining useful lives.

As of June 30, 2022, the Company estimates it will record amortization expense as follows:

2022 (July 1 - December 31) $ 7,176

As of September 30, 2022, the Company estimates it will record amortization expense as follows:

2022 (October 1 - December 31) $ 3,509

2027 and thereafter 28,083

2 unchanged sentences

Balance as of December 31, 2021 and March 31, 2022 $ 23,639 76,570 41,883 — — 142,092

Goodwill acquired — 7,025 — — — 7,025

Goodwill acquired during the period (NextGen) — 7,025 — — — 7,025

Balance as of June 30, 2022 23,639 83,595 41,883 — — 149,117

Goodwill acquired during the period (GRNE Solar) — — — — 14,004 14,004

NextGen purchase price allocation adjustment — 8,912 — — — 8,912

Balance as of September 30, 2022 $ 23,639 92,507 41,883 — 14,004 172,033

Earnings per Common Share

2 unchanged sentences

Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock.

Three months ended June 30,

Three months ended September 30,

Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total

3 unchanged sentences

Earnings per share - basic and diluted $ 2.80 2.80 2.80 1.38 1.38 1.38

Six months ended June 30,

Nine months ended September 30,

Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total

6 unchanged sentences

The following tables include the results of each of the Company's operating segments reconciled to the consolidated financial statements.

Three months ended June 30, 2022

Three months ended September 30, 2022

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

10 unchanged sentences

Education technology, services, and payment processing revenue — 106,894 — — — — 106,894

Solar construction revenue — — — — 9,358 — 9,358

Other 596 — 4,627 566 ( 3,564 ) — 2,225

5 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 42,676 — — — — 42,676

Cost to provide solar construction services — — — — 5,968 — 5,968

Total cost of services — 42,676 — — 5,968 — 48,644

Operating expenses:

7 unchanged sentences

Net income (loss) 16,655 14,180 85,023 809 ( 16,198 ) — 100,469

Net loss attributable to noncontrolling interests — 53 — — 2,172 — 2,225

Net (income) loss attributable to noncontrolling interests — ( 61 ) — — 4,390 — 4,329

Net income (loss) attributable to Nelnet, Inc.

$ 16,655 14,119 85,023 809 ( 11,808 ) — 104,798

Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013

Three months ended June 30, 2021

Total assets as of September 30, 2022 $ 235,858 440,859 16,374,493 884,089 2,360,882 ( 732,648 ) 19,563,533

Three months ended September 30, 2021

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

10 unchanged sentences

Education technology, services, and payment processing revenue — 85,324 — — — — 85,324

Solar construction revenue — — — — — — —

Other 727 13 ( 7,275 ) 450 17,952 — 11,867

5 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 31,335 — — — — 31,335

Cost to provide solar construction services — — — — — — —

Total cost of services — 31,335 — — — — 31,335

Operating expenses:

7 unchanged sentences

Net income (loss) ( 2,312 ) 10,634 45,664 636 ( 3,403 ) — 51,219

Net loss attributable to noncontrolling interests — — — — 854 — 854

Net (income) loss attributable to noncontrolling interests — — — — 1,919 — 1,919

Net income (loss) attributable to Nelnet, Inc.

$ ( 2,312 ) 10,634 45,664 636 ( 1,484 ) — 53,138

Total assets as of June 30, 2021 $ 205,214 424,079 20,783,755 407,611 1,489,212 ( 281,008 ) 23,028,863

Six months ended June 30, 2022

Total assets as of September 30, 2021 $ 238,602 415,178 20,001,997 413,155 1,740,060 ( 406,253 ) 22,402,739

Nine months ended September 30, 2022

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

10 unchanged sentences

Education technology, services, and payment processing revenue — 310,211 — — — — 310,211

Solar construction revenue — — — — 9,358 — 9,358

Other 1,946 — 16,270 2,224 4,309 — 24,750

5 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 109,073 — — — — 109,073

Cost to provide solar construction services — — — — 5,968 — 5,968

Total cost of services — 109,073 — — 5,968 — 115,041

Operating expenses:

7 unchanged sentences

Net income (loss) 36,095 50,507 322,732 1,915 ( 42,991 ) — 368,258

Net loss attributable to noncontrolling interests — 53 — — 3,934 — 3,987

Net (income) loss attributable to noncontrolling interests — ( 8 ) — — 8,323 — 8,315

Net income (loss) attributable to Nelnet, Inc.

$ 36,095 50,499 322,732 1,915 ( 34,668 ) — 376,573

Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013

Six months ended June 30, 2021

Total assets as of September 30, 2022 $ 235,858 440,859 16,374,493 884,089 2,360,882 ( 732,648 ) 19,563,533

Nine months ended September 30, 2021

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

10 unchanged sentences

Education technology, services, and payment processing revenue — 257,284 — — — — 257,284

Solar construction revenue — — — — — — —

Other 2,541 13 ( 4,514 ) 475 31,668 — 30,183

5 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 80,063 — — — — 80,063

Cost to provide solar construction services — — — — — — —

Total cost of services — 80,063 — — — — 80,063

Operating expenses:

7 unchanged sentences

Net income (loss) 21,701 47,271 213,266 ( 535 ) ( 24,566 ) — 257,136

Net loss attributable to noncontrolling interests — — — — 1,548 — 1,548

Net (income) loss attributable to noncontrolling interests — — — — 3,467 — 3,467

Net income (loss) attributable to Nelnet, Inc.

$ 21,701 47,271 213,266 ( 535 ) ( 21,099 ) — 260,603

Total assets as of June 30, 2021 $ 205,214 424,079 20,783,755 407,611 1,489,212 ( 281,008 ) 23,028,863

Total assets as of September 30, 2021 $ 238,602 415,178 20,001,997 413,155 1,740,060 ( 406,253 ) 22,402,739

Disaggregated Revenue

1 unchanged sentence

Loan Servicing and Systems

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

6 unchanged sentences

Education Technology, Services, and Payment Processing

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

6 unchanged sentences

The following table provides the components of "other" in "other income/expense" on the consolidated statements of income:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

15 unchanged sentences

In the second quarter of 2022, the Department released a solicitation entitled Unified Servicing and Data Solution ("USDS") for the new servicing framework.

The Company responded to the USDS solicitation.

The Company responded to the USDS

solicitation.

The Company cannot predict the timing, nature, or ultimate outcome of this or any other contract procurement process by the Department.

On August 24, 2022, the Department issued a bulletin titled “Biden-Harris Administration Announces Final Student Loan Pause Extension Through December 31 and Targeted Debt Cancellation to Smooth Transition to Repayment” (the “August 24, 2022 Bulletin”).

The August 24, 2022 Bulletin indicates the Department will provide targeted student debt cancellation to borrowers with loans held by the Department, and that borrowers whose annual income for either 2020 or 2021 was under $125,000 (for single or married, filing separately) or under $250,000 (for married couples, filing jointly or heads of household) will be eligible for otherwise unconditional loan cancellation in amounts of up to $20,000 for eligible borrowers who received a Pell Grant, or of up to $10,000 for eligible borrowers who did not receive a Pell Grant.

On October 21, 2022, the U.S.

Court of Appeals for the Eighth Circuit issued a temporary administrative stay of implementation of the Department's student debt relief plan in response to a legal challenge that was initiated by other parties (not the Company).

As of September 30, 2022, the Company was servicing 15.7 million borrowers under its government servicing contracts.

The Company cannot currently estimate how many borrowers meet the eligibility requirements and other terms and conditions for one-time debt relief under the August 24, 2022 Bulletin and subsequent publicly available guidance provided by the Department.

However, revenue earned by the Company under its contracts will be negatively impacted if the Department’s student debt relief plan or other broad based loan forgiveness is implemented.

The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.

As of June 30, 2022 As of December 31, 2021

As of September 30, 2022 As of December 31, 2021

Level 1 Level 2 Total Level 1 Level 2 Total

8 unchanged sentences

The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:

As of June 30, 2022

As of September 30, 2022

Fair value Carrying value Level 1 Level 2 Level 3

28 unchanged sentences

The methodologies for estimating the fair value of financial assets and liabilities are described in note 22 of the notes to consolidated financial statements included in the 2021 Annual Report.

Subsequent Event

On July 1, 2022, the Company acquired 80 percent of the outstanding ownership interests of GRNE-Nelnet, LLC ("GRNE") and its affiliate ENRG-Nelnet, LLC ("ENRG") for $ 29.7 million in cash.

GRNE designs and installs residential, commercial, and utility-scale solar systems in the Midwest.

ENRG owns certain assets that generate and sell solar energy.

The operating results of GRNE and ENRG will be included in the Company's consolidated results of operations beginning July 1, 2022 .

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.

What changed 10-Q

Item 1. Financial Statements