What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-07 compared with 2023-05-08 · 377 added, 201 removed, 869 unchanged (40% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Loans and accrued interest receivable (net of allowance for loan losses of $ 114,263 and

54 unchanged sentences

(Dollars in thousands, except share data)

Three months ended

Three months ended Six months ended

June 30, June 30,

2023 2022 2023 2022

Interest income:

4 unchanged sentences

Net interest income 50,879 77,945 117,398 155,062

Less provision (negative provision) for loan losses 34,275 ( 435 )

Less provision for loan losses 9,592 9,409 43,867 8,974

Net interest income after provision for loan losses 41,287 68,536 73,531 146,088

5 unchanged sentences

Gain on sale of loans, net 15,511 — 27,323 2,989

Impairment expense — ( 6,284 ) — ( 6,284 )

Derivative market value adjustments and derivative settlements, net 2,070 45,024 ( 12,005 ) 187,949

Total other income (expense) 265,148 404,445

Total other income (expense), net 247,183 267,291 512,330 671,736

Cost of services:

16 unchanged sentences

shareholders - basic and diluted

$ 0.75 2.26 1.46 7.18

Weighted average common shares outstanding - basic and diluted

4 unchanged sentences

(Dollars in thousands)

Three months ended March 31,

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

2023 2022 2023 2022

Net income $ 19,095 82,904 42,112 267,789

3 unchanged sentences

Unrealized holding gains (losses) arising during period, net 8,649 ( 33,822 ) 17,300 ( 50,520 )

Reclassification of losses (gains) recognized in net income, net 4,982 ( 2,793 )

Reclassification of (gains) losses recognized in net income, net ( 918 ) ( 849 ) 4,064 ( 3,642 )

Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 70 — 70 —

Income tax effect ( 1,872 ) 5,929 8,321 ( 26,350 ) ( 5,144 ) 16,290 12,999 ( 41,163 )

Net changes related to equity method investee's other comprehensive income:

Gain on cash flow hedges 2 —

Loss on cash flow hedges ( 501 ) — ( 499 ) —

Income tax effect 120 ( 381 ) — — 120 ( 379 ) — —

10 unchanged sentences

Class A Class B

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 — — — — — — — — — 9,275 9,275

Net income (loss) — — — — — — — 85,129 — ( 2,225 ) 82,904

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

Distribution to noncontrolling interests — — — — — — — — — ( 10,037 ) ( 10,037 )

Cash dividends on Class A and Class B common stock - $ 0.24 per share

— — — — — — — ( 8,973 ) — — ( 8,973 )

Issuance of common stock, net of forfeitures — 20,720 — — — — 2,116 — — — 2,116

Compensation expense for stock based awards — — — — — — 3,187 — — — 3,187

Repurchase of common stock — ( 558,257 ) — — ( 6 ) — ( 5,331 ) ( 40,695 ) — — ( 46,032 )

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, 2023 — 26,623,662 10,668,460 $ — 266 107 4,639 3,251,677 ( 27,006 ) ( 6,354 ) 3,223,329

Issuance of noncontrolling interests — — — — — — — — — 11,703 11,703

Net income (loss) — — — — — — — 28,267 — ( 9,172 ) 19,095

Other comprehensive income — — — — — — — — 5,548 — 5,548

Distribution to noncontrolling interests — — — — — — — — — ( 7,942 ) ( 7,942 )

Cash dividends on Class A and Class B common stock - $ 0.26 per share

— — — — — — — ( 9,694 ) — — ( 9,694 )

Issuance of common stock, net of forfeitures — 27,562 — — — — 2,056 — — — 2,056

Compensation expense for stock based awards — — — — — — 3,884 — — — 3,884

Repurchase of common stock — ( 4,734 ) — — — — ( 465 ) — — — ( 465 )

Balance as of June 30, 2023 — 26,646,490 10,668,460 $ — 266 107 10,114 3,270,250 ( 21,458 ) ( 11,765 ) 3,247,514

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands, except share data)

Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interests Total equity

Class A Class B

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 — 1,750 ( 1,750 ) — — — — — — — —

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

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 December 31, 2022 — 26,461,651 10,668,460 $ — 265 107 1,109 3,234,844 ( 37,366 ) 943 3,199,902

8 unchanged sentences

Repurchase of common stock — ( 41,247 ) — — — — ( 3,767 ) — — — ( 3,767 )

Balance as of March 31, 2023 — 26,623,662 10,668,460 $ — 266 107 4,639 3,251,677 ( 27,006 ) ( 6,354 ) 3,223,329

Balance as of June 30, 2023 — 26,646,490 10,668,460 $ — 266 107 10,114 3,270,250 ( 21,458 ) ( 11,765 ) 3,247,514

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Three months ended

Six months ended

Net income attributable to Nelnet, Inc.

2 unchanged sentences

Net income 42,112 267,789

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 acquisition:

Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs 93,573 74,080

Loan discount accretion ( 15,412 ) ( 19,554 )

Provision (negative provision) for loan losses 34,275 ( 435 )

Provision for loan losses 43,867 8,974

Derivative market value adjustments 35,407 ( 186,135 )

6 unchanged sentences

Non-cash compensation expense 7,810 6,171

Decrease in loan and investment accrued interest receivable 16,630 10,694

Impairment expense — 6,284

(Increase) decrease in loan and investment accrued interest receivable ( 4,884 ) 184

Decrease in accounts receivable 59,142 44,786

15 unchanged sentences

Proceeds from other investments 14,403 23,955

Purchases of held-to-maturity debt securities ( 2,889 ) —

Redemption of held-to-maturity debt securities 1,487 —

Purchases of property and equipment ( 37,253 ) ( 34,152 )

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

Net cash provided by investing activities 890,333 836,954

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Three months ended

Six months ended

Cash flows from financing activities:

2 unchanged sentences

Payments of debt issuance costs ( 2,214 ) ( 851 )

(Decrease) increase in bank deposits, net ( 15,555 ) 139,732

Decrease in due to customers ( 67,642 ) ( 89,884 )

Increase in bank deposits, net 39,724 244,159

(Decrease) increase in due to customers ( 48,728 ) 43,544

Dividends paid ( 19,348 ) ( 18,035 )

17 unchanged sentences

Distribution to noncontrolling interests $ 11,050 14,462

(a) The Company utilized $ 5.7 million and $ 1.1 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2023 and 2022, respectively.

Issuance of noncontrolling interests $ 1,114 6,137

(a) The Company utilized $ 13.9 million and $ 4.1 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2023 and 2022, respectively.

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

March 31, 2023 December 31, 2022 March 31, 2022 December 31, 2021

June 30, 2023 December 31, 2022 June 30, 2022 December 31, 2021

Total cash and cash equivalents $ 121,769 118,146 128,499 125,563

9 unchanged sentences

The accompanying unaudited consolidated financial statements of Nelnet, Inc.

and subsidiaries (the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2022 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 June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2022 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 months ended March 31, 2023 are not necessarily indicative of the results for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023.

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, 2022 (the "2022 Annual Report").

1 unchanged sentence

Loans and accrued interest receivable consisted of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Non-Nelnet Bank:

24 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.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Non-Nelnet Bank:

5 unchanged sentences

Consumer and other loans 9.18 % —

(a) As of March 31, 2023 and December 31, 2022, 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 22.4 %, respectively, and for Nelnet Bank was 10.1 % and 10.3 %, respectively.

(a) As of June 30, 2023 and December 31, 2022, 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 21.7 % and 22.4 %, respectively, and for Nelnet Bank was 10.0 % and 10.3 %, respectively.

The Company has sold portfolios of loans to unrelated third parties who securitized such loans.

As partial consideration received for the loans sold, the Company received residual interest in the loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheets.

The following table summarizes the loans sold and gains/losses recognized by the Company during the three months ended March 31, 2023 and 2022.

The following table summarizes the loans sold and gains/losses recognized by the Company during the six months ended June 30, 2023 and 2022.

(par value) Gain (loss) Loan type Residual interest received in securitization

Three months ended March 31, 2023

Six months ended June 30, 2023

January 31 $ 97,350 ( 1,441 ) Home equity 64.8 % (a)

1 unchanged sentence

March 2 122,277 8,903 Consumer 24.6 (a)

March 22 145 ( 63 ) Home equity —

April 4 5,633 659 Consumer —

April 13 24,980 3,123 Consumer 11.3

May 2 127,663 11,729 Consumer 26.5

$ 420,178 27,323

Three months ended March 31, 2022

Six months ended June 30, 2022

January 26 $ 18,125 2,989 Consumer 6.6 %

June 30 114 — Home equity —

$ 18,239 2,989

(a) In addition to receiving a residual interest in the securitizations, the Company also received $ 14.5 million and $ 43.7 million of asset-backed investment securities as part of the January 31 and March 2, 2023 transactions, respectively, that are included in "investments and notes receivable" on the Company's consolidated balance sheet.

2 unchanged sentences

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

Three months ended March 31, 2023

Three months ended June 30, 2023

Non-Nelnet Bank:

6 unchanged sentences

$ 134,704 9,601 ( 9,728 ) 657 — ( 20,971 ) 114,263

Three months ended March 31, 2022

Three months ended June 30, 2022

Non-Nelnet Bank:

5 unchanged sentences

$ 117,825 9,409 ( 7,101 ) 270 21 — 120,424

Six months ended June 30, 2023

Non-Nelnet Bank:

Federally insured loans $ 83,593 2,411 ( 11,949 ) — 6 — 74,061

Private education loans 15,411 240 ( 1,709 ) 380 — — 14,322

Consumer and other loans 30,263 37,306 ( 5,148 ) 661 — ( 43,077 ) 20,005

Federally insured loans 170 ( 12 ) ( 4 ) — — — 154

Private education loans 2,390 1,129 ( 614 ) — — — 2,905

Consumer and other loans — 2,816 — — — — 2,816

$ 131,827 43,890 ( 19,424 ) 1,041 6 ( 43,077 ) 114,263

Six months ended June 30, 2022

Non-Nelnet Bank:

Federally insured loans $ 103,381 ( 383 ) ( 10,549 ) — 144 — 92,593

Private education loans 16,143 817 ( 2,006 ) 295 — 4 15,253

Consumer and other loans 6,481 7,529 ( 1,469 ) 319 — ( 2,284 ) 10,576

Federally insured loans 268 ( 8 ) ( 2 ) — — — 258

Private education loans 840 995 ( 87 ) — — ( 4 ) 1,744

$ 127,113 8,950 ( 14,113 ) 614 144 ( 2,284 ) 120,424

The primary item impacting provision for loan losses was the establishment of an initial allowance for consumer loans originated and acquired during the periods presented above.

The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios.

Three months ended March 31,

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

2023 2022 2023 2022

Non-Nelnet Bank:

5 unchanged sentences

Consumer and other loans — — — —

The Company recorded a provision for loan losses for the three months ended March 31, 2023 due to (i) management's estimate of declining economic conditions as of March 31, 2023 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of December 31, 2022;

and (ii) the establishment of an initial allowance for loans originated and acquired during the period.

These amounts were partially offset by the amortization of the federally insured loan portfolio.

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 (the "FFEL Program" or FFELP) 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.

Unfunded Loan Commitments

As of March 31, 2023, Nelnet Bank has a liability of approximately $ 71,000 related to $ 2.5 million of unfunded private education loan commitments.

As of June 30, 2023, Nelnet Bank has a liability of approximately $ 62,000 related to $ 4.1 million of unfunded private education and consumer loan commitments.

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

During the three months ended March 31, 2023 and 2022, Nelnet Bank recognized negative provision for loan losses of approximately $ 15,000 and provision for loan losses of approximately $ 24,000 , respectively, related to unfunded loan commitments.

During the six months ended June 30, 2023 and 2022, Nelnet Bank recognized negative provision for loan losses of approximately $ 23,000 and provision for loan losses of approximately $ 24,000 , respectively, related to unfunded loan commitments.

Loan Modifications to Borrowers Experiencing Financial Difficulty

17 unchanged sentences

The following table presents the Company’s loan status and delinquency amounts.

As of March 31, 2023 As of December 31, 2022 As of March 31, 2022

As of June 30, 2023 As of December 31, 2022 As of June 30, 2022

Federally insured loans - Non-Nelnet Bank:

14 unchanged sentences

Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 13,522,406 $ 14,255,562 $ 16,085,681

As of March 31, 2023 As of December 31, 2022 As of March 31, 2022

Private education loans - Non-Nelnet Bank:

25 unchanged sentences

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 172,318 $ 323,722 $ 141,418

As of June 30, 2023 As of December 31, 2022 As of June 30, 2022

Federally insured loans - Nelnet Bank (a):

14 unchanged sentences

Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 63,338 $ 67,521 $ 78,574

As of March 31, 2023 As of December 31, 2022 As of March 31, 2022

Private education loans - Nelnet Bank (a):

29 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 March 31, 2023

Three months ended March 31, 2023 2022 2021 2020 Total

Loan balance as of June 30, 2023

Six months ended June 30, 2023 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, 2022 and March 31, 2023, 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 March 31, 2023 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 June 30, 2023 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.

Three months ended March 31, 2023 2022 2021 2020 2019 Prior years Total

Six months ended June 30, 2023 2022 2021 2020 2019 Prior years Total

Private education loans - Non-Nelnet Bank:

12 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 218,113

Gross charge-offs - three months ended March 31, 2023 $ — — — — 171 469 640

Gross charge-offs - six months ended June 30, 2023 $ — — 5 2 381 1,321 1,709

Six months ended June 30, 2023 2022 2021 2020 2019 Prior years Total

Consumer and other loans - Non-Nelnet Bank:

11 unchanged sentences

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 172,318

Gross charge-offs - three months ended March 31, 2023 $ — 1,868 245 27 46 81 2,267

Three months ended March 31, 2023 2022 2021 2020 2019 Prior years Total

Gross charge-offs - six months ended June 30, 2023 $ 265 4,272 439 27 55 90 5,148

Private education loans - Nelnet Bank (a):

12 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 356,371

Gross charge-offs - three months ended March 31, 2023 $ — 110 — — — — 110

Gross charge-offs - six months ended June 30, 2023 $ — 614 — — — — 614

Consumer and other loans - Nelnet Bank (a):

11 unchanged sentences

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 28,066

Gross charge-offs - three months ended March 31, 2023 $ — — — — — — —

Gross charge-offs - six months ended June 30, 2023 $ — — — — — — —

(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.

1 unchanged sentence

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

As of March 31, 2023

As of June 30, 2023

Interest rate

9 unchanged sentences

10/25/67 - 8/27/68

FFELP loan warehouse facility 919,337 5.12 % / 5.15 %

FFELP loan warehouse facilities 1,530,429 5.15 % - 5.42 %

11/22/24 / 4/2/25

Private education loan warehouse facility 42,200 5.37 % 12/31/23

1 unchanged sentence

Variable-rate bonds and notes issued in private education loan asset-backed securitizations 16,628 6.65 %

12/26/40 / 6/25/49

Fixed-rate bonds and notes issued in private education loan asset-backed securitization 19,606 5.35 %

12/26/40 / 12/28/43

Unsecured line of credit — — 9/22/26

36 unchanged sentences

Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements.

FFELP loan warehouse facilities

On March 31, 2023, the Company’s FFELP warehouse facility was amended to increase the aggregate maximum financing amount available from $ 1.20 billion to $ 1.25 billion.

The liquidity provisions and final maturity remain through May 22, 2023 and May 22, 2024, respectively.

As of March 31, 2023, $ 919.3 million was outstanding under this facility, $ 330.7 million was available for future funding, and the Company had $ 62.8 million advanced as equity support.

Subsequent to the end of the first quarter, the Company closed on a $ 250.0 million FFELP warehouse facility on April 3, 2023, with liquidity provisions expiring on April 2, 2024 and a final maturity date of April 2, 2025.

Private education loan warehouse facility

As of March 31, 2023, the Company's private education warehouse facility had an outstanding balance of $ 47.9 million, liquidity provisions through June 30, 2023, a final maturity of December 31, 2023, and $ 19.4 million was advanced as equity support.

The following table summarizes the Company's warehouse facilities as of June 30, 2023.

Type of loans Maximum financing amount Amount outstanding Amount available Expiration of liquidity provisions Final maturity date Advance rate Advanced as equity support

FFELP (a) $ 1,250,000 1,119,030 130,970 11/22/2023 11/22/2024 note (b) $ 99,220

FFELP (c) 432,000 411,399 20,601 4/2/2024 4/2/2025 92 % 34,497

$ 1,682,000 1,530,429 151,571 $ 133,717

Private (d) 42,200 42,200 — 8/31/2023 12/31/2023 — 18,720

Consumer 250,000 32,324 217,676 11/14/2024 11/14/2025 70 % 13,901

(a) On March 31, 2023, this facility was amended to increase the aggregate maximum financing amount available from $ 1.20 billion to $ 1.25 billion.

On May 22, 2023, this facility was amended to extend the expiration of liquidity provisions and final maturity date to November 22, 2023 and November 22, 2024, respectively.

(b) This facility has a static advance rate until the expiration date of the liquidity provisions.

The maximum advance rates for this facility are 90 % to 96 %, and the minimum advance rates are 84 % to 90 %.

In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor.

The loans would then be funded at this new advance rate until the final maturity date of the facility.

On May 25, 2023, this facility was amended to increase the maximum financing amount from $ 250.0 million to $ 432.0 million.

(d) On June 30, 2023, this facility was amended to extend the expiration of liquidity provisions to August 31, 2023.

No additional amounts can be borrowed under this facility.

Consumer loan warehouse facility

As of March 31, 2023, the Company's consumer loan warehouse facility had an aggregate maximum financing amount available of $ 250.0 million, an advance rate of 70 %, liquidity provisions through November 14, 2024, and a final maturity date of November 14, 2025.

As of March 31, 2023, $ 82.4 million was outstanding under this facility, $ 167.6 million was available for future funding, and the Company had $ 35.2 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 March 31, 2023, no amount was outstanding on the line of credit and $ 495.0 million was available for future use subject to certain financial covenants, including limitations on recourse indebtedness to adjusted EBITDA (over the last four rolling quarters).

Of the $ 495.0 million availability, approximately $ 260 million was available for purposes other than reducing existing recourse debt due to the limitations on recourse indebtedness to adjusted EBITDA financial covenant.

As of June 30, 2023, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

Participation Agreement

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 (bond investments).

As of March 31, 2023, $ 311.8 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

As of June 30, 2023, $ 6.8 million (par value) 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.

6 unchanged sentences

On May 3, 2021 and June 23, 2021, the Company entered into repurchase agreements with non-affiliated third parties, the proceeds of which are collateralized by certain private education and FFELP loan asset-backed securities (bond investments).

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 (as of March 31, 2023) from April 6, 2023 through November 27, 2024.

Subsequent to March 31, 2023, the maturities on this agreement were extended, and as of May 8, 2023, the maturity dates vary from May 26, 2023 through November 27, 2024.

Under the first agreement, the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase

price of such securities on any scheduled reset date, and under the second agreement, the Company could be subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities and the counter-party provides notice requiring such payment.

Included in “bonds and notes payable” in the consolidated balance sheets as of March 31, 2023 was $ 291.9 million subject to the first agreement and $ 141.1 million subject to the second agreement.

The first agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the maturity date of the second agreement (as of June 30, 2023) was July 26, 2023.

Subsequent to June 30, 2023, the remaining outstanding balance of this facility was paid in full.

Under the first agreement, the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date, and under the second agreement, the Company was subject to margin deficit payment requirements if the fair value of the securities subject to the agreement was less than the original purchase price

of such securities and the counter-party provided notice requiring such payment.

Included in “bonds and notes payable” in the consolidated balance sheets as of June 30, 2023 was $ 347.6 million subject to the first agreement and $ 67.9 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.

Nelnet Bank has Federal Funds lines of credit with correspondent banks totaling $ 30.0 million at a stated interest rate at the time of borrowing.

As of March 31, 2023, no amounts were drawn on these lines of credit.

Nelnet Bank has unsecured Federal Funds lines of credit with correspondent banks totaling $ 30.0 million at a stated interest rate at the time of borrowing.

Nelnet Bank has also established an account at the Federal Reserve Bank (FRB), the Federal Home Loan Bank (FHLB), and an additional $ 10.0 million Federal Funds line of credit with a correspondent bank which must be fully collateralized.

The FRB, FHLB, and secured Federal Funds line of credit accepts pledges of eligible securities.

In addition, FFELP and private education loans are accepted as collateral for FRB borrowings.

As of June 30, 2023 and December 31, 2022, Nelnet Bank had no amounts drawn on their Federal Funds, FRB, or FHLB lines of credit.

As of June 30, 2023, the Bank has $ 20.0 million of collateral pledged with the FRB that it may borrow against.

Debt Repurchases

1 unchanged sentence

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

Three months ended March 31,

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

2023 2022 2023 2022

Purchase price $ — ( 35,643 ) ( 828 ) ( 54,096 )

1 unchanged sentence

Remaining unamortized cost of issuance — ( 17 ) ( 2 ) ( 62 )

Gain $ — 1,040 78 1,071

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 March 31, 2023, the Company holds $ 397.8 million (par value) of its own FFELP loan asset-backed securities.

As of March 31, 2023, $ 197.5 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).

Subsequent Event

Subsequent to the end of the first quarter, in April 2023, the Company redeemed $ 188.6 million of FFELP loan asset-backed securities (bonds and notes payable) prior to their legal maturity, of which the Company owned $ 140.5 million of the bonds that were redeemed.

As of June 30, 2023, the Company holds $ 253.7 million (par value) of its own FFELP loan asset-backed securities.

As of June 30, 2023, $ 197.5 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).

In April 2023, the Company redeemed $ 188.6 million of FFELP loan asset-backed debt securities (bonds and notes payable) prior to their maturity, of which the Company owned $ 140.5 million of the bonds that were redeemed.

The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $ 25.9 million non-cash expense recognized in April 2023.

This expense is included in "interest expense on bonds and notes payable and bank deposits" on the consolidated statements of income.

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 2022 Annual Report.

A tabular presentation of such derivatives outstanding as of March 31, 2023 and December 31, 2022 is presented below.

The following table summarizes the Company’s outstanding basis swaps as of March 31, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022 is presented below.

Non-Nelnet Bank Derivatives

The following table summarizes the Company’s outstanding basis swaps, 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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

2023 $ — 750,000

3 unchanged sentences

$ 3,150,000 3,900,000

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of March 31, 2023 and December 31, 2022 was one-month LIBOR plus 10.1 basis points and 9.7 basis points, respectively.

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2023 and December 31, 2022 was one-month LIBOR plus 10.1 basis points and 9.7 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 December 31, 2022.

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

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, 2023 As of December 31, 2022 (a)

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

2024 $ — — % $ 2,000,000 0.35 %

2026 — — 500,000 1.02

2030 (c) 50,000 3.44 — —

2031 — — 100,000 1.53

2032 (b) 200,000 2.92

2032 — — 200,000 2.92

(a) For the interest rate derivatives maturing in 2032, the Company was to receive payments based on Secured Overnight Financing Rate (SOFR) that reset quarterly.

$ 50,000 3.44 % $ 2,800,000 0.70 %

(a) On March 15, 2023, to minimize the Company's exposure to market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($ 2.8 billion in notional amount of derivatives).

Through March 15, 2023, the Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the $ 2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $ 183.2 million, which included $ 19.1 million related to current period settlements.

(b) For the interest rate derivative maturing in 2030, the Company receives payments based on Secured Overnight Financing Rate (SOFR) that resets quarterly.

For the interest rate derivative maturing in 2032, the Company was to receive payments based on SOFR that reset quarterly.

For all other interest rate derivatives, the Company received payments based on three-month LIBOR that reset quarterly.

(b) These derivatives had forward effective start dates in November 2024.

All over-the-counter derivative contracts executed by the Company are cleared post-execution at a regulated clearinghouse.

Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default.

Through March 15, 2023, the Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the fixed rate floor derivatives as of March 15, 2023 of $ 183.2 million, which included $ 19.1 million related to current period settlements.

To minimize the Company's exposure to market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($ 2.8 billion in notional amount of derivatives).

Consolidated Financial Statement Impact Related to Derivatives - Statements of Income

Nelnet Bank Derivatives

Interest Rate Swaps

Derivative instruments are used by Nelnet Bank to hedge the exposure to variability in cash flows of variable rate intercompany deposits primarily to minimize the exposure to volatility in cash flows from future changes in interest rates.

Nelnet Bank has structured these derivatives so that each is economically effective;

however, because these derivatives are hedging intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements.

As a result, the change in market value of these derivative instruments is reported in current period earnings and presented in "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income.

The following table summarizes the outstanding derivative instruments used by Nelnet Bank to hedge exposure to variability in cash flows related to variable rate intercompany deposits as of June 30, 2023.

As of June 30, 2023

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

2028 $ 40,000 3.33 %

2030 (b) 25,000 2.97

$ 65,000 3.19 %

(a) For all interest rate derivatives, the Company receives payments based on SOFR that reset quarterly.

(b) This derivative with a $ 25 million notional amount has a forward effective start date in April 2026.

Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse.

As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset or liability measured at fair value.

As of June 30, 2023, the gross fair value of Nelnet Bank's interest rate swap derivatives was $ 1.1 million (an asset) that is included in "other assets" on the consolidated balance sheet.

Consolidated Financial Statement Impact Related to Derivatives

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 March 31,

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

2023 2022 2023 2022

1:3 basis swaps $ ( 65 ) 931 794 1,327

Interest rate swaps - floor income hedges (a) 22,478 ( 3,205 )

Total settlements - income (expense) 23,337 ( 2,809 )

Interest rate swaps - floor income hedges 47 3,692 22,525 487

Interest rate swaps - Nelnet Bank 83 — 83 —

Total settlements - income 65 4,623 23,402 1,814

Change in fair value:

1:3 basis swaps 235 ( 148 ) 211 741

Interest rate swaps - floor income hedges (a) ( 37,388 ) 144,845

Total change in fair value - (expense) income ( 37,411 ) 145,734

Derivative market value adjustments and derivative settlements, net - (expense) income $ ( 14,074 ) 142,925

(a) As a result of the Company terminating all its interest rate swaps hedging loans earning fixed rate floor income on March 15, 2023 (as discussed above), there will be no derivative settlements and changes in fair value on these derivatives in future periods.

Interest rate swaps - floor income hedges 662 40,549 ( 36,726 ) 185,394

Interest rate swaps - Nelnet Bank 1,108 — 1,108 —

Total change in fair value - income (expense) 2,005 40,401 ( 35,407 ) 186,135

Derivative market value adjustments and derivative settlements, net - income (expense) $ 2,070 45,024 ( 12,005 ) 187,949

Investments and Notes Receivable

Investments and notes receivable consisted of the following:

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Amortized cost Gross unrealized gains Gross unrealized losses Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value

22 unchanged sentences

Venture capital and funds:

Measurement alternative (e) 191,731 160,052

Measurement alternative (e) (f) 193,001 160,052

Equity method 109,988 89,332

2 unchanged sentences

Investment in ALLO:

Voting interest/equity method (f) 55,756 67,538

Preferred membership interest and accrued and unpaid preferred return (g) 148,175 145,926

Voting interest/equity method (g) 43,588 67,538

Preferred membership interest and accrued and unpaid preferred return (h) 150,449 145,926

Total investment in ALLO 194,037 213,464

Beneficial interest in loan securitizations (h):

Beneficial interest in loan securitizations (i):

Consumer loans and other 96,635 39,249

2 unchanged sentences

Total beneficial interest in loan securitizations 190,974 138,738

Solar (i) ( 66,353 ) ( 55,448 )

Solar (j) ( 72,455 ) ( 55,448 )

Notes receivable 54,931 31,106

2 unchanged sentences

Total investments and notes receivable $ 2,006,306 $ 2,111,917

(a) A portion of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement." As of March 31, 2023, the par value and fair value of these securities was $ 311.8 million and $ 289.1 million, respectively.

(b) A portion of private education loan asset-backed securities were subject to repurchase agreements with third parties, as discussed in note 3 under "Repurchase Agreements." As of March 31, 2023, the par value and fair value of these securities was $ 321.6 million and $ 294.6 million, respectively.

(a) A portion of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement." As of June 30, 2023, the par value and fair value of these securities was $ 6.8 million and $ 6.3 million, respectively.

(b) A portion of private education loan asset-backed securities were subject to a repurchase agreement with a third party, as discussed in note 3 under "Repurchase Agreements." As of June 30, 2023, the par value and fair value of these securities was $ 307.6 million and $ 281.8 million, respectively.

(c) On March 31, 2023, securities at Nelnet Bank with a fair value of $ 149.2 million were transferred from available-for-sale to held to maturity.

The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction.

Accumulated other comprehensive income as of March 31, 2023 includes pre-tax unrealized losses of $ 3.7 million related to the transfer.

These unrealized losses will be amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.

Accumulated other comprehensive income as of March 31, 2023 included pre-tax unrealized losses of $ 3.7 million related to the transfer.

These unrealized losses are being amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.

(d) On March 31, 2023, certain Non-Nelnet Bank debt securities were transferred from held to maturity to available-for-sale.

6 unchanged sentences

Accordingly, the Company did not adjust its carrying value of its Hudl investment to the February 2023 transaction value.

As of March 31, 2023, the carrying amount of the Company's investment in Hudl is $ 165.5 million, and the Company's equity ownership interests did not materially change as a result of the February 6, 2023 transaction.

As of June 30, 2023, the carrying amount of the Company's investment in Hudl is $ 165.5 million, and the Company's equity ownership interests did not materially change as a result of the February 6, 2023 transaction.

Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl.

(f) During the first quarter of 2023, the Company contributed $ 8.4 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO").

(f) During the second quarter of 2022, the Company recorded an impairment charge of $ 5.4 million related primarily to one of its venture capital investments accounted for under the measurement alternative method.

The impairment expense is included in "impairment expense" on the consolidated statements of income.

(g) During the first quarter of 2023, the Company contributed $ 8.4 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO").

As a result of this equity contribution, the Company's voting membership interests percentage in ALLO did not materially change.

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 March 31, 2023 and 2022, the Company recognized losses of $ 20.2 million and $ 13.1 million, respectively, under the HLBV method of accounting on its ALLO voting membership interests investment.

During the three months ended June 30, 2023 and 2022, the Company recognized losses of $ 12.2 million and $ 16.9 million, respectively, under the HLBV method of accounting on its ALLO voting membership interests investment, and during the six months ended June 30, 2023 and 2022, the Company recognized losses of $ 32.4 million and $ 30.1 million, respectively.

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

(g) As of March 31, 2023, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 145.9 million and $ 2.2 million, respectively.

(h) As of June 30, 2023, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 145.9 million and $ 4.5 million, respectively.

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

The Company recognized income on its ALLO preferred membership interests of $ 2.2 million and $ 2.1 million during the three months ended March 31, 2023 and 2022, respectively.

The Company recognized income on its ALLO preferred membership interests of $ 2.3 million and $ 2.1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 4.5 million and $ 4.3 million during the six months ended June 30, 2023 and 2022, respectively.

This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.

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

As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2023, the Company's ownership correlates to approximately $ 585 million, $ 590 million, and $ 370 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

(i) As of March 31, 2023, the Company has funded a total of $ 294.4 million in solar investments, which includes $ 115.9 million funded by syndication partners.

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

As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2023, the Company's ownership correlates to approximately $ 680 million, $ 560 million, and $ 360 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

(j) As of June 30, 2023, the Company has funded a total of $ 312.9 million in solar investments, which includes $ 120.0 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 as of March 31, 2023 represents the sum of total tax credits earned on solar projects placed-in-service through March 31, 2023 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.

As of March 31, 2023, the Company is committed to fund an additional $ 220.3 million on tax equity investments, of which $ 141.4 million is expected to be provided by syndication partners.

The solar investment balance as of June 30, 2023 represents the sum of total tax credits earned on solar projects placed-in-service through June 30, 2023 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.

As of June 30, 2023, the Company is committed to fund an additional $ 319.2 million on tax equity investments, of which $ 120.5 million is expected to 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 losses on its solar investments of $ 1.9 million and $ 1.0 million during the three months ended March 31, 2023 and 2022, respectively.

The Company recognized losses on its solar investments of $ 7.9 million and $ 1.9 million during the three months ended June 30, 2023 and 2022, respectively, and $ 9.9 million and $ 2.9 million during the six months ended June 30, 2023 and 2022, respectively.

These losses, which include losses attributable to third-party noncontrolling interest investors (syndication partners), are included in “other, net” in "other income (expense)" on the consolidated statements of income.

Solar losses attributed to noncontrolling interest investors was $ 2.7 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities at March 31, 2023:

As of March 31, 2023

Solar losses attributed to noncontrolling interest investors was $ 7.4 million and $ 2.0 million for the three months ended June 30, 2023 and 2022, respectively, and $ 10.1 million and $ 3.9 million during the six months ended June 30, 2023 and 2022, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities at June 30, 2023:

As of June 30, 2023

1 year or less After 1 year through 5 years After 5 years through 10 years After 10 years Total

23 unchanged sentences

Total held-to-maturity investments at fair value $ 4,941 3,743 — 147,853 156,537

The following table presents the gross unrealized losses and fair value of securities classified as available for sale at March 31, 2023.

The following table presents securities classified as available-for-sale that have gross unrealized losses at June 30, 2023 and the fair value of such securities as of June 30, 2023.

These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis.

1 unchanged sentence

As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.

As of March 31, 2023

As of June 30, 2023

Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total

10 unchanged sentences

Total available-for-sale asset-backed securities $ ( 12,535 ) 425,459 ( 24,611 ) 357,508 ( 37,146 ) 782,967

As of December 31, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $ 1.2 billion.

The following table summarizes the gross proceeds and gross realized gains and losses of available-for-sale asset-backed securities.

Gross realized gains Gross realized losses Gross proceeds from sales

Three months ended March 31, 2023 $ 1,274 ( 6,256 ) 492,173

Three months ended March 31, 2022 2,965 ( 172 ) 113,980

The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.

Three months ended Six months ended

June 30, June 30,

2023 2022 2023 2022

Gross proceeds from sales $ 85,375 205,772 577,548 319,752

Gross realized gains $ 920 909 2,194 3,874

Gross realized losses ( 2 ) ( 60 ) ( 6,258 ) ( 232 )

Net gains (losses) $ 918 849 ( 4,064 ) 3,642

Intangible Assets

1 unchanged sentence

Weighted average remaining useful life as of

March 31, 2023 (months)

March 31, 2023 December 31, 2022

June 30, 2023 (months)

June 30, 2023 December 31, 2022

Amortizable intangible assets, net:

8 unchanged sentences

Total - amortizable intangible assets, net 93 $ 57,293 63,501

The Company recorded amortization expense on its intangible assets of $ 2.7 million and $ 2.5 million for the three months ended March 31, 2023 and 2022, respectively.

The Company recorded amortization expense on its intangible assets of $ 3.5 million and $ 2.9 million for the three months ended June 30, 2023 and 2022, respectively, and $ 6.2 million and $ 5.3 million during the six months ended June 30, 2023 and 2022, respectively.

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

As of March 31, 2023, the Company estimates it will record amortization expense as follows:

2023 (April 1 - December 31) $ 7,648

As of June 30, 2023, the Company estimates it will record amortization expense as follows:

2023 (July 1 - December 31) $ 10,765

2028 and thereafter 18,504

The following table presents the carrying amount of goodwill as of March 31, 2023 and December 31, 2022 by reportable operating segment:

The following table presents the carrying amount of goodwill as of June 30, 2023 and December 31, 2022 by reportable operating segment:

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Total

3 unchanged sentences

Retail and other deposits include savings deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trusts (STFIT), and commercial and institutional CDs.

Union Bank and Trust Company (“Union Bank”), a related party, is the program manager for the College Savings plans and trustee for the STFIT Trust.

Union Bank, a related party, is the program manager for the College Savings plans and trustee for the STFIT Trust.

CDs are accounts that have a stipulated maturity and interest rate.

2 unchanged sentences

Nelnet Bank has intercompany deposits from Nelnet, Inc.

and its subsidiaries, including a $ 40.0 million pledged deposit from Nelnet, Inc.

and its subsidiaries totaling $ 140.4 million, including a $ 40.0 million pledged deposit from Nelnet, Inc.

as required under a Capital and Liquidity Maintenance Agreement with the FDIC.

1 unchanged sentence

The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Brokered CDs, net of brokered deposit fees $ 203,418 254,817

2 unchanged sentences

Total interest-bearing deposits $ 731,046 691,322

The following table presents certificates of deposit remaining maturities as of March 31, 2023:

The following table presents certificates of deposit remaining maturities as of June 30, 2023:

After two years to three years $ 151,559

4 unchanged sentences

Except for the pledged deposit from Nelnet, Inc.

and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of March 31, 2023 and December 31, 2022.

and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of June 30, 2023 and December 31, 2022.

Earnings per Common Share

The following table p resents the components used to calculate basic and diluted earnings per share.

The following table presents the components used to calculate basic and diluted earnings per share.

The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards.

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

Three months ended March 31,

Three months ended June 30,

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

3 unchanged sentences

Earnings per share - basic and diluted $ 0.75 0.75 0.75 2.26 2.26 2.26

Six months ended June 30,

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

Net income attributable to Nelnet, Inc.

$ 53,611 1,143 54,754 266,735 5,041 271,776

Weighted-average common shares outstanding - basic and diluted 36,625,819 781,024 37,406,843 37,172,606 702,502 37,875,108

Earnings per share - basic and diluted $ 1.46 1.46 1.46 7.18 7.18 7.18

Segment Reporting

1 unchanged sentence

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

Three months ended March 31, 2023

Three months ended June 30, 2023

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

4 unchanged sentences

Net interest income 1,058 5,268 21,450 5,490 17,613 — 50,879

Less provision (negative provision) for loan losses — — 31,858 2,417 — — 34,275

Less provision for loan losses — — 8,099 1,493 — — 9,592

Net interest income after provision for loan losses 1,058 5,268 13,351 3,997 17,613 — 41,287

6 unchanged sentences

Gain on sale of loans, net — — 15,511 — — — 15,511

Impairment expense — — — — — — —

Derivative settlements, net — — ( 18 ) 83 — — 65

Derivative market value adjustments, net — — 897 1,108 — — 2,005

Total other income (expense) 147,625 133,659 583 210 ( 9,083 ) ( 7,846 ) 265,148

Total other income (expense), net 129,871 109,923 17,709 1,811 ( 4,818 ) ( 7,311 ) 247,183

Cost of services:

11 unchanged sentences

Net income (loss) 12,942 13,715 13,455 1,348 ( 22,361 ) — 19,095

Net loss attributable to noncontrolling interests — 138 — — 3,332 — 3,470

Net (income) loss attributable to noncontrolling interests — ( 19 ) — — 9,191 — 9,172

Net income (loss) attributable to Nelnet, Inc.

$ 12,942 13,696 13,455 1,348 ( 13,170 ) — 28,267

Total assets as of March 31, 2023 $ 232,667 424,742 14,939,324 1,000,659 2,207,722 ( 722,505 ) 18,082,609

Three months ended March 31, 2022

Total assets as of June 30, 2023 $ 173,926 482,922 14,667,357 1,005,043 2,091,500 ( 613,116 ) 17,807,632

Three months ended June 30, 2022

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

4 unchanged sentences

Net interest income 226 874 70,688 3,573 2,583 — 77,945

Less provision (negative provision) for loan losses — — ( 864 ) 429 — — ( 435 )

Less provision for loan losses — — 8,827 582 — — 9,409

Net interest income after provision for loan losses 226 874 61,861 2,991 2,583 — 68,536

6 unchanged sentences

Gain on sale of loans, net — — — — — — —

Impairment expense — — — — ( 6,284 ) — ( 6,284 )

Derivative settlements, net — — 4,623 — — — 4,623

Derivative market value adjustments, net — — 40,401 — — — 40,401

Total other income (expense) 145,588 112,289 152,425 1,500 1,125 ( 8,483 ) 404,445

Total other income (expense), net 133,865 91,038 50,157 157 463 ( 8,388 ) 267,291

Cost of services:

11 unchanged sentences

Net income (loss) 10,251 11,162 75,504 368 ( 14,381 ) — 82,904

Net loss attributable to noncontrolling interests — — — — 1,761 — 1,761

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

Net income (loss) attributable to Nelnet, Inc.

$ 10,251 11,215 75,504 368 ( 12,209 ) — 85,129

Total assets as of March 31, 2022 $ 259,712 376,794 18,158,972 656,242 2,066,417 ( 528,396 ) 20,989,741

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, 2023

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

Generation and

Management Nelnet Bank Corporate and Other Activities Eliminations Total

Total interest income $ 2,095 11,304 488,482 25,920 47,054 ( 24,860 ) 549,995

Interest expense — — 421,511 15,385 20,560 ( 24,860 ) 432,597

Net interest income 2,095 11,304 66,971 10,535 26,494 — 117,398

Less provision for loan losses — — 39,957 3,910 — — 43,867

Net interest income after provision for loan losses 2,095 11,304 27,014 6,625 26,494 — 73,531

Other income (expense):

Loan servicing and systems revenue 261,247 — — — — — 261,247

Intersegment revenue 15,036 121 — — — ( 15,157 ) —

Education technology, services, and payment processing revenue — 243,462 — — — — 243,462

Solar construction revenue — — — — 13,386 — 13,386

Other, net 1,213 — 4,164 830 ( 27,287 ) — ( 21,083 )

Gain on sale of loans, net — — 27,323 — — — 27,323

Impairment expense — — — — — — —

Derivative settlements, net — — 23,319 83 — — 23,402

Derivative market value adjustments, net — — ( 36,515 ) 1,108 — — ( 35,407 )

Total other income (expense), net 277,496 243,583 18,291 2,021 ( 13,901 ) ( 15,157 ) 512,330

Cost of services:

Cost to provide education technology, services, and payment processing services — 88,110 — — — — 88,110

Cost to provide solar construction services — — — — 17,422 — 17,422

Total cost of services — 88,110 — — 17,422 — 105,532

Operating expenses:

Salaries and benefits 160,701 76,264 1,851 4,361 54,384 ( 145 ) 297,416

Depreciation and amortization 9,377 5,393 — 56 20,454 — 35,279

Other expenses 27,131 17,755 9,131 2,406 30,358 — 86,781

Intersegment expenses, net 40,136 11,684 16,841 173 ( 53,822 ) ( 15,012 ) —

Total operating expenses 237,345 111,096 27,823 6,996 51,374 ( 15,157 ) 419,476

Income (loss) before income taxes 42,246 55,681 17,482 1,650 ( 56,203 ) — 60,853

Income tax (expense) benefit ( 10,139 ) ( 13,393 ) ( 4,196 ) ( 362 ) 9,348 — ( 18,741 )

Net income (loss) 32,107 42,288 13,286 1,288 ( 46,855 ) — 42,112

Net (income) loss attributable to noncontrolling interests — 119 — — 12,523 — 12,642

Net income (loss) attributable to Nelnet, Inc.

$ 32,107 42,407 13,286 1,288 ( 34,332 ) — 54,754

Total assets as of June 30, 2023 $ 173,926 482,922 14,667,357 1,005,043 2,091,500 ( 613,116 ) 17,807,632

Six months ended June 30, 2022

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

Generation and

Management Nelnet Bank Corporate and Other Activities Eliminations Total

Total interest income $ 313 1,213 258,994 8,241 10,227 ( 2,205 ) 276,783

Interest expense 44 — 115,711 2,494 5,678 ( 2,205 ) 121,721

Net interest income 269 1,213 143,283 5,747 4,549 — 155,062

Less provision for loan losses — — 7,963 1,011 — — 8,974

Net interest income after provision for loan losses 269 1,213 135,320 4,736 4,549 — 146,088

Other income (expense):

Loan servicing and systems revenue 261,241 — — — — — 261,241

Intersegment revenue 16,860 10 — — — ( 16,870 ) —

Education technology, services, and payment processing revenue — 203,317 — — — — 203,317

Solar construction revenue — — — — — — —

Other, net 1,350 — 11,644 1,659 7,872 — 22,524

Gain on sale of loans, net — — 2,989 — — — 2,989

Impairment expense — — — — ( 6,284 ) — ( 6,284 )

Derivative settlements, net — — 1,814 — — — 1,814

Derivative market value adjustments, net — — 186,135 — — — 186,135

Total other income (expense), net 279,451 203,327 202,582 1,659 1,588 ( 16,870 ) 671,736

Cost of services:

Cost to provide education technology, services, and payment processing services — 66,397 — — — — 66,397

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

Total cost of services — 66,397 — — — — 66,397

Operating expenses:

Salaries and benefits 175,192 63,406 1,205 3,268 47,742 — 290,813

Depreciation and amortization 10,272 5,013 — 7 19,914 — 35,206

Other expenses 29,721 12,514 6,576 1,584 26,045 — 76,439

Intersegment expenses, net 38,955 9,410 17,344 102 ( 48,941 ) ( 16,870 ) —

Total operating expenses 254,140 90,343 25,125 4,961 44,760 ( 16,870 ) 402,458

Income (loss) before income taxes 25,580 47,800 312,777 1,434 ( 38,623 ) — 348,969

Income tax (expense) benefit ( 6,139 ) ( 11,472 ) ( 75,066 ) ( 328 ) 11,826 — ( 81,180 )

Net income (loss) 19,441 36,328 237,711 1,106 ( 26,797 ) — 267,789

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

Net income (loss) attributable to Nelnet, Inc.

$ 19,441 36,381 237,711 1,106 ( 22,863 ) — 271,776

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

Disaggregated Revenue

1 unchanged sentence

Loan Servicing and Systems

Three months ended March 31,

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

2023 2022 2023 2022

Government loan servicing $ 95,736 98,815 204,618 207,940

5 unchanged sentences

Education Technology, Services, and Payment Processing

Three months ended March 31,

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

2023 2022 2023 2022

Tuition payment plan services $ 30,825 27,637 65,012 58,352

5 unchanged sentences

GRNE Solar was acquired on July 1, 2022;

accordingly, there are no results for the three months ended March 31, 2022.

Three months ended March 31, 2023

accordingly, there are no results for the three and six months ended June 30, 2022.

Three months ended June 30, 2023 Six months ended June 30, 2023

Commercial revenue $ 2,004 8,238

4 unchanged sentences

The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:

Three months ended March 31,

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

2023 2022 2023 2022

ALLO preferred return $ 2,274 2,140 4,523 4,257

3 unchanged sentences

Loss from ALLO voting membership interest investment ( 12,169 ) ( 16,941 ) ( 32,382 ) ( 30,071 )

Investment activity, net ( 3,577 ) 11,856

Loss from solar investments ( 7,929 ) ( 1,854 ) ( 9,876 ) ( 2,884 )

Investment activity, net ( 3,574 ) 18,091 ( 7,154 ) 29,924

Other 8,883 5,281 12,673 9,533

4 unchanged sentences

(Great Lakes), both subsidiaries of the Company, are two of the current six private sector entities that have student loan servicing contracts with the Department.

Revenue earned by the Company related to these contracts was $ 108.9 million and $ 109.1 million for the three months ended March 31, 2023 and 2022, respectively.

The Company currently licenses its hosted servicing software two of the six servicers for the Department.

Revenue earned by the Company related to these contracts was $ 95.7 million and $ 98.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 204.6 million and $ 207.9 million for the six months ended June 30, 2023 and 2022, respectively.

The Company also licensed its hosted servicing software to two of the six servicers for the Department.

Contract Modifications and Award

On March 22, 2023, each of Nelnet Servicing and Great Lakes received modifications of contract with an effective date of April 1, 2023 (collectively the “modifications”) from the Department.

Such modifications outline the Department's amendment to the student loan servicing contracts between the Department and each of Nelnet Servicing and Great Lakes (the “servicing contracts”) to reduce the current prices earned by Nelnet Servicing and Great Lakes under the servicing contracts.

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.

The modifications reduce the monthly fee by $ 0.19 per borrower on certain borrower statuses.

The Company's current student loan servicing contracts with the Department are scheduled to expire on December 14, 2023.

In 2017, the Department initiated a contract procurement process referred to as the Next Generation Financial Services Environment for a new framework for the servicing of all student loans owned by the Department.

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.

On April 24, 2023, Nelnet Diversified Solutions, LLC (NDS), a subsidiary of the Company, received a contract award from the Department, pursuant to which NDS was selected to provide continued servicing capabilities for the Department's Office of Federal Student Aid's student aid recipients under a new USDS contract (the "New Government Servicing Contract") which will replace the existing legacy Department student loan servicing contracts that are currently scheduled to expire December 14, 2023.

Effective April 1, 2023, the Department modified the student loan servicing contracts between the Department and each of Nelnet Servicing and Great Lakes (the “servicing contracts”) to reduce the monthly fee under the servicing contracts by $ 0.19 per borrower on certain borrower statuses.

The Company's current student loan servicing contracts with the Department were scheduled to expire on December 14, 2023.

In April 2023, Nelnet Diversified Solutions, LLC (NDS), a subsidiary of the Company, received a contract award from the Department, pursuant to which NDS was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which will replace the existing legacy Department student loan servicing contracts.

The New Government Servicing Contract is effective April 24, 2023 and has a five year base period, with 2 two-year and 1 one-year possible extensions.

The Department's total loan servicing volume of more than 37 million existing borrowers will be allocated by the Department to NDS and four other servicers that were awarded a USDS contract.

New Department borrowers will be allocated to the USDS servicers based on service and performance levels.

The Department's total loan servicing volume of more than 37 million existing borrowers will be allocated by the Department to NDS and four other third-party servicers that were awarded a USDS contract based on service and performance levels.

Under the New Government Servicing Contract, NDS will begin immediately to make required servicing platform enhancements, for which NDS will be compensated from the Department on certain of these investments.

In a press release issued on April 24, 2023 by the Department's Office of Federal Student Aid (FSA), FSA indicated that servicing under the USDS contracts will go live in 2024 and to maintain stability as the new loan servicing environment gets underway, FSA will extend the current legacy servicing contracts with the Department from December 14, 2023 to December 2024.

In April 2023, the Department indicated that servicing under the USDS contracts will go live in 2024 and it will extend the current legacy servicing contracts from December 14, 2023 to December 2024.

Until servicing under the USDS contracts goes live, the Company will continue to earn revenue for servicing borrowers under its current legacy servicing contracts with the Department.

The fee structure included in the new Department servicing contracts under USDS are structurally different than the current legacy servicing contracts with the Department.

The USDS servicing contracts have multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contracts is primarily based on borrower status.

The new USDS servicing contracts have multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contracts is primarily based on borrower status.

Assuming borrower volume remains consistent under the USDS servicing contract, the Company expects revenue earned on a per borrower blended basis will decrease under the USDS contract versus the current legacy contracts.

However, consistent with the current legacy contracts, the Company expects to earn additional revenue from the Department under the USDS servicing contract for change requests, consolidations, and other support services.

As discussed below, during 2023, the Company will continue to transfer the Great Lakes direct loan servicing volume to the Nelnet servicing platform.

As discussed below, during the second quarter of 2023, the Company completed the transfer of Great Lakes direct loan servicing volume to the Nelnet servicing platform.

The associated cost savings with moving government borrowers to one servicing platform will be partially offset under the USDS contract as the Company will incur additional costs for cybersecurity and other system specifications as required under the new contract.

Loan Volume Transfers

Edfinancial Services, LLC ("Edfinancial"), a current servicer for the Department, utilizes Nelnet Servicing's platform to service their loans for the Department.

In the fourth quarter of 2022, Nelnet Servicing and Edfinancial reached an agreement on a decommission schedule transferring Edfinancial’s direct loan servicing volume to another servicing platform.

As of March 31, 2023, Edfinancial was servicing 3.5 million borrowers for the Department on the Company’s platform.

In February 2023, the Department notified the Company of its intention to transfer up to one million borrowers of the Company’s existing Department servicing borrowers to another servicer, and one of the Company’s remote hosted servicing customers notified the Company the Department intends to move that customer’s servicing borrowers to a different servicing platform.

As of March 31, 2023, the remote hosted servicing customer was servicing approximately 1.4 million borrowers for the Department on the Company's platform.

Neither transfer decision was based on the Company’s performance.

The 2023 transfers discussed above began in the first quarter of 2023 and the Company expects the transfers to be completed by the end of the second quarter of 2023.

As a result of the transfers, software services revenue for remote hosted customers and government servicing revenue will decrease in future periods as borrowers are transferred off of the Company’s platform.

In addition, once all remote hosted servicing transfers are complete, there will be no active Department remote hosted servicing customers using the Company’s platform.

In addition, the Company continues to transfer the Great Lakes direct loan servicing volume to the Nelnet servicing platform (the GreatNet Federal servicing platform).

The Company anticipates the transfer of active borrowers to be completed by the end of the second quarter of 2023 and decommissioning of the Great Lakes' platform to be completed by the end of 2023.

Loan Volume Transfers - Full Service Borrowers

In February 2023, the Department notified the Company of its intention to transfer up to one million of the Company’s existing Department servicing borrowers to another third-party servicer.

This transfer decision was not based on the Company's performance.

These transfers began in the second quarter of 2023 and were completed in July 2023.

In addition, the Company completed the transfer of active borrowers of Great Lakes direct loan servicing volume to the Nelnet servicing platform (the GreatNet Federal servicing platform) during the second quarter of 2023.

The Company anticipates the decommissioning of the Great Lakes' platform to be completed by the end of 2023.

Therefore, potential associated cost savings as a result of transferring direct loan servicing volume to one platform will not be recognized in operating results until 2024.

Loan Volume Transfers - Remote Hosted Servicing Borrowers

Edfinancial Services, LLC ("Edfinancial"), a current servicer for the Department, utilized Nelnet Servicing's platform to service their loans for the Department (remote hosted servicing customer).

As of December 31, 2022, Edfinancial was servicing 4.5 million borrowers for the Department on the Company’s platform.

The Company began transferring Edfinancial's servicing volume to another servicing platform in the first quarter of 2023 which reduced the number of Edfinancial's borrowers serviced on the Company's platform

to 3.5 million borrowers as of March 31, 2023 and 579,000 borrowers as of June 30, 2023.

Edfinancial's remaining borrowers were transferred off of the Company's platform in July 2023.

In February 2023, the Company’s other remote hosted servicing customer notified the Company the Department intended to move that customer’s servicing borrowers to a different third-party servicing platform.

This transfer decision was the result of this customer not being one of the servicers awarded a USDS contract.

As of March 31, 2023, this remote hosted servicing customer was servicing 1.4 million borrowers for the Department on the Company's platform.

The majority of this volume was transferred to another third-party servicing platform during the second quarter of 2023, and the remaining borrowers were transferred off of the Company's platform in July 2023.

As a result of the transfers discussed above, the Company has no remaining Department remote hosted servicing borrowers on its platform and software services revenue will be negatively impacted in future periods.

Department of Education Debt Relief

In August 2022, the Department announced a broad based student debt relief plan that would 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.

Decisions by the U.S.

Courts of Appeals for the Eighth Circuit and Fifth Circuit in October 2022 and November 2022, respectively, in response to legal challenges that were initiated by other parties (not the Company) have blocked implementation of the Department's broad based student debt relief plan.

These cases have been appealed to the U.S.

Supreme Court.

As of the filing of this report, the Supreme Court has not ruled on, and the Company cannot predict the timing, nature, or ultimate outcome of, this case.

The Company cannot estimate how many borrowers meet the eligibility requirements and other terms and conditions for one-time debt relief under the Department's announcement.

If there was a broad $10,000 or $20,000 per borrower forgiveness on all government owned loans, the Company estimates it would decrease the number of borrowers serviced (based on the borrower loan information as of March 31, 2023) by approximately 4.5 million borrowers and 7.7 million borrowers, respectively.

The actual impact to the number of borrowers serviced may be less than these amounts due to annual income ceilings for borrowers to qualify for forgiveness and the impact of whether a Pell Grant was received on the amount of forgiveness for a borrower.

Revenue earned under the current Department servicing contracts will decrease in future periods if the Department's student debt relief plan or other broad based loan forgiveness is implemented.

In August 2022, the Department announced a broad based student debt relief plan that would provide targeted student debt cancellation to borrowers with loans held by the Department with 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.

Federal courts blocked implementation of the Department's broad based student debt relief plan and on June 30, 2023, the Supreme Court struck down the Department's plan.

While the current version of the Department's forgiveness plan has been invalidated, the Department recently announced that it has begun a new rulemaking process to consider other ways to provide debt relief to borrowers.

The Company cannot predict the timing, nature, or ultimate outcome of any future potential student loan forgiveness programs as a result of the rulemaking process.

Revenue earned under the current Department servicing contracts will decrease in future periods if the Department successfully implements broad based loan forgiveness.

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

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

3 unchanged sentences

Total investments 204 1,047,975 1,087,650 6,819 1,388,937 1,428,119

Derivative instruments (b) — 1,108 1,108 — — —

Total assets $ 204 1,049,083 1,088,758 6,819 1,388,937 1,428,119

(a) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

(b) Nelnet Bank derivatives are accounted for at fair value on a recurring basis.

The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves and volatilities from active markets.

When determining the fair value of derivatives, Nelnet Bank takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held.

The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.

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

As of March 31, 2023

As of June 30, 2023

Fair value Carrying value Level 1 Level 2 Level 3

9 unchanged sentences

Restricted cash – due to customers 208,033 208,033 208,033 — —

Derivative instruments 1,108 1,108 — 1,108 —

Financial liabilities:

22 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.

What changed 10-Q

Item 1. Financial Statements