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Item 1. Business

2024-02-27 compared with 2023-02-28 · 265 added, 268 removed, 327 unchanged (62% of the section changed)

Nelnet is a diverse, innovative company with a purpose to serve others and a vision to make dreams possible.

The largest operating businesses engage in loan servicing and education technology, services, and payment processing, and the Company also has a significant investment in communications.

The largest operating businesses engage in loan servicing and education technology services and payments.

A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans.

The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in early-stage and emerging growth companies, real estate, and renewable energy (solar).

The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, and renewable energy (solar).

Substantially all revenue from external customers is earned, and all long-lived assets are located, in the United States.

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The Company built on this initial foundation as a servicer to become a leading originator, holder, and servicer of federal student loans, principally consisting of loans originated under the Federal Family Education Loan Program.

A detailed description of the FFEL Program is included in Appendix A to this report.

The Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act of 2010”) discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program.

This law does not alter or affect the terms and conditions of existing FFELP loans.

As a result of the Reconciliation Act of 2010, the Company no longer originates FFELP loans.

Subsequent to the Reconciliation Act of 2010, the Company no longer originates FFELP loans.

However, a significant portion of the Company's income continues to be derived from its existing FFELP student loan portfolio.

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Interest income on the Company's existing FFELP loan portfolio will decline over time as the portfolio is paid down.

Since all FFELP loans will eventually run off, a key objective of the Company is to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment.

To reduce its reliance on interest income from FFELP loans, the Company has expanded its services and products.

This expansion has been accomplished through internal growth and innovation as well as business and certain investment acquisitions.

The Company is also actively expanding its private education, consumer, and other loan portfolios, and in November 2020 launched Nelnet Bank (as further explained below).

The Company is also actively expanding its private education, consumer, and other loan portfolios, or investment interests therein, and as part of this strategy launched Nelnet Bank in 2020.

In addition, the Company has been servicing federally owned student loans for the Department since 2009.

Operating Segments

The Company’s reportable operating segments are summarized below.

Business activities and operating segments that are not reportable are combined and included in “Corporate and Other Activities."

The Company has four reportable operating segments as summarized below.

Loan Servicing and Systems (LSS)

• Referred to as Nelnet Diversified Services (NDS)

• Focuses on student and consumer loan origination services and servicing, loan origination and servicing-related technology solutions, and outsourcing business services

• Includes the brands Nelnet Diversified Solutions, Nelnet Loan Servicing, Nelnet Servicing, Great Lakes, Firstmark Services, GreatNet, and Nelnet Government Services

Education Technology, Services, and Payment Processing (ETS&PP)

• Focuses on student and consumer loan servicing, loan servicing-related technology solutions, and outsourcing business services

• Includes the brands Nelnet Diversified Solutions, Nelnet Loan Servicing, Nelnet Servicing, Firstmark Services, Sloan Servicing, GreatNet, and Nelnet Government Services

Education Technology Services and Payments (ETSP)

• Referred to as Nelnet Business Services (NBS)

• NBS provides education services, payment technology, and community management solutions for K-12 schools, higher education institutions, churches, and businesses in the United States and internationally

• Includes the divisions of FACTS, Nelnet Campus Commerce, Nelnet Payment Services (formerly PaymentSpring), Nelnet Community Engagement, and Nelnet International

• NBS provides education and payment technology and services for K-12 schools, higher education institutions, churches, and businesses in the United States and internationally

• Includes the divisions of FACTS, Nelnet Campus Commerce, Nelnet Payment Services, and Nelnet International

Asset Generation and Management (AGM)

• Also referred to as Nelnet Financial Services

• Includes the acquisition and management of student and other loan assets

• Included in the Nelnet Financial Services (NFS) division

• Includes the acquisition and management of student and other loan assets, including investment interests therein

• Included in the Nelnet Financial Services (NFS) division

• Internet Utah-chartered industrial bank focused on the private education and unsecured consumer loan markets

Communications

• Comprised of the operations of ALLO prior to the deconsolidation of ALLO on December 21, 2020

• ALLO focuses on providing fiber optic service directly to homes and businesses for internet, telephone, and television services

A more detailed description of each of the Company's reportable operating segments and Corporate and Other Activities is provided below.

The NFS division has other operating segments that are not reportable as further described below under “Nelnet Financial Services - NFS Other Operating Segments.” All other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in “Corporate and Other Activities." A more detailed description of each of the Company’s operating segments and Corporate and Other Activities is provided below.

Loan Servicing and Systems

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• Servicing FFELP loans

• Originating and servicing private education and consumer loans

• Backup servicing for FFELP, private education, and consumer loans

• Servicing private education and consumer loans

• Providing backup servicing for FFELP, private education, and consumer loans

• Providing student loan servicing software and other information technology products and services

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Servicing federally owned student loans for the Department

Nelnet Servicing, LLC (Nelnet Servicing), a subsidiary of the Company, and Great Lakes Educational Loan Services, Inc.

(“Great Lakes”), acquired by the Company in February 2018, are two of the current six private sector entities that have student loan servicing contracts with the Department to service loans that include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department.

Nelnet Servicing, LLC (Nelnet Servicing), a subsidiary of the Company, is one of the current four private sector entities that have student loan servicing contracts with the Department to service loans that include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department.

The Department evaluates each federal loan servicer and allocates new borrower accounts on a quarterly basis based on service level and portfolio performance metrics.

As of December 31, 2022, NDS was servicing $545.4 billion of student loans for 15.8 million borrowers under its 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.

As of December 31, 2023, the Company was servicing $494.7 billion of student loans for 14.5 million borrowers for the Department.

Nelnet Servicing earns a monthly fee from the Department for each unique borrower it services on behalf of the Department.

The Department is the Company's largest customer, representing 32% of the Company's revenue and 74% of the LSS operating segment’s revenue in 2023.

The Company’s 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.

The Consolidated Appropriations Act, 2021 contains provisions directing certain aspects of the process, including that any new federal student loan servicing environment is required to provide for the participation of multiple student loan servicers and the allocation of borrower accounts to eligible student loan servicers based on performance.

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

If the Company’s servicing contracts are not extended beyond the current expiration date or the Company is not chosen as a subsequent servicer, the Company’s servicing revenue would decrease significantly.

If the terms and requirements under a potential new contract with the Department are less favorable than under the Company’s current contracts, loan servicing revenue and/or operating margins could be adversely impacted.

Incremental revenue components earned by Nelnet Servicing or Great Lakes from the Department (in addition to loan servicing revenues) include:

The Company’s current student loan servicing contract with the Department was scheduled to expire on December 14, 2023.

In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it 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 contract.

The New Government Servicing Contract 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 40 million existing borrowers will be allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract.

Until servicing under the New Government Servicing Contract goes live, which is anticipated to be in April 2024, the Company will continue to earn revenue for servicing borrowers under its current legacy servicing contract with the Department.

Incremental revenue components earned currently by Nelnet Servicing from the Department under its existing contract (in addition to loan servicing revenue) include:

• Administration of the Total and Permanent Disability (TPD) Discharge program .

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The Department pays the Company a fee for each completed consolidation loan application it processes.

Nelnet Servicing and Great Lakes each service the consolidation volume it originates.

Nelnet Servicing services the consolidation volume it originates.

Once the New Government Servicing Contract goes live, the Company will no longer originate consolidation loans for the Department.

However, it will earn incremental revenue under the New Government Servicing Contract as the exclusive service provider to the Department for certain specialty tasks, including managing FFELP guaranty agency rehabilitation loan purchases and providing image repository services, decommissioned servicer data and payment support services, and legacy loan consolidation origination and disbursement support services.

Servicing FFELP loans

NDS services AGM and Nelnet Bank’s FFELP student loan portfolios and the portfolios of third parties.

The loan servicing activities include loan conversion activities, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliations, and claim processing.

NDS services AGM’s FFELP student loan portfolio and the portfolios of third parties.

The loan servicing activities include loan conversion activities, application processing, borrower updates, customer service, payment processing, due diligence

procedures, funds management reconciliations, and claim processing.

These activities are performed internally for the Company's portfolio, in addition to generating external fee revenue when performed for third-party clients.

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The discontinuation of new FFELP loan originations in July 2010 has caused and will continue to cause FFELP servicing revenue to decline as these loan portfolios are paid down.

However, the Company believes there may be opportunities to service additional FFELP loan portfolios from current FFELP participants not currently using the Company as a servicer as the FFEL Program winds down.

Originating and servicing private education and consumer loans

NDS conducts origination and servicing activities for private education and consumer loans.

Servicing private education and consumer loans

NDS conducts servicing activities for private education and consumer loans.

Private education loans are non-federal private credit loans made to students or their family;

as such, the loans are not issued or guaranteed by the federal government.

These loans are used primarily to bridge the gap between the cost of higher education and the amount funded through financial aid, federal loans, or the borrowers' personal resources.

Although similar in terms of activities and functions as FFELP loan servicing, private education loan servicing activities are not required to comply with provisions of the Higher Education Act and may be more customized to individual client requirements.

The Company has invested and plans to continue to invest in modernizing key technologies and services to position its consumer loan servicing business for the long-term, expanding services to include personal loan products and other consumer installment assets.

The Company is in the process of a modernization of its private education and consumer loan origination and repayment servicing systems.

The Company believes improvements in systems will allow for diversified products to be both originated and serviced with secure, state-of-the-art application and servicing platforms to drive growth for the Company's client partners.

The Company is in the process of a modernization of its private education and consumer servicing systems.

The Company believes improvements in systems will allow for diversified products to be serviced with secure, state-of-the-art application and servicing platforms to drive growth for the Company's client partners.

Presenting a very wide market opportunity of new entrants and existing players, consumer lending is expected to be a growth area.

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As of December 31, 2023, NDS serviced private education and consumer loans on behalf of 28 third-party servicing customers.

Backup servicing for FFELP, private education, and consumer loans

In January 2024, Discover announced they were moving the servicing of its approximately $10 billion private education loan portfolio, representing approximately 500,000 borrowers, to the Company.

The timing of the conversion of these loans to the Company’s platform is dependent on the timing of Discover’s potential sale of its portfolio.

Providing backup servicing for FFELP, private education, and consumer loans

NDS offers protection against unexpected business failure, or any event that stretches a third-party service provider’s resources beyond its capability to perform essential services, through backup servicing.

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For a monthly fee, these arrangements require a 30 to 90 day notice from a triggering event to transfer the customer's servicing volume to the Company's platform and becoming a full servicing customer.

NDS offers backup servicing for FFEL, private education, and consumer loan

programs that leverages existing servicing systems and full service experience.

NDS provides backup servicing arrangements to assist 20 entities for more than 17 million borrowers.

NDS offers backup servicing for FFELP, private education, and consumer loans that leverages existing servicing systems and full service experience.

As of December 31, 2023, NDS provided backup servicing arrangements to nine entities for more than 26 million borrowers.

Providing student loan servicing software and other information technology products and services

NDS provides data center services, student loan servicing software for servicing private education and federal loans, guaranty servicing software, and consulting and professional services to support the technology platforms.

NDS provides student loan servicing software for servicing federal and private education loans, guaranty servicing software, data center services, and consulting and professional services to support the technology platforms.

These proprietary software systems are used internally by the Company and/or licensed to third-party student loan holders and servicers.

These software systems have been adapted so they can be offered as hosted servicing software solutions that can be used by third parties for guaranty servicing and to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans.

The Company earns a monthly fee from its remote hosting customers for each loan or unique borrower on the Company's platform, with a minimum monthly charge for most contracts.

As of December 31, 2022, 6.1 million borrowers were hosted on the Company's hosted servicing software solution platforms, including 6.0 million borrowers who were serviced by entities that have contracts to service loans for the Department.

Six entities, including Nelnet Servicing and Great Lakes, are currently servicers of federally owned loans.

NDS currently licenses its hosted servicing software to two of the six servicers for the Department.

The Company’s remote hosted Department servicing customers will transfer their servicing volume to other servicers in 2023, which will have a significant adverse impact to software services revenue in future periods.

See the MD&A - “Loan Servicing and Systems Operating Segment - Results of Operations - Government Loan Servicing” for additional information.

As of December 31, 2023 and 2022, 0.1 million and 6.1 million borrowers, respectively, were hosted on the Company's hosted servicing software solution platforms.

During 2023, the Company’s two Department remote hosted servicing borrowers, representing 6.0 million borrowers as of December 31, 2022, were transferred to other servicers.

These transfer decisions were not based on the Company’s performance.

The Company has executed an agreement with a third-party servicer awarded a USDS contract with the Department to license its servicing software to such entity and the Company will earn remote hosted servicing revenue from this new customer when USDS goes live, which is anticipated to be in the second quarter of 2024.

Providing outsourced services including call center, processing, and technology services

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NDS also outsources technology expertise and capacity to supplement development needs in organizations.

As of December 31, 2023, NDS provided business process and technology outsourcing to 11 customers.

We believe the Company's scalable servicing platform allows it to provide compliant, efficient, and reliable service at a low cost, giving the Company a competitive advantage over others in the industry.

In contrast to its competitors, the Company has segmented its private education loan servicing on a distinct platform, created specifically to meet the needs of private education student loan borrowers, their family, the school they attend, and the lenders who serve them.

The Company has segmented its private education loan servicing on a distinct platform, created specifically to meet the needs of private education student loan borrowers, their families, the schools they attend, and the lenders who serve them.

This ensures access to specialized teams with a dedicated focus on servicing these borrowers.

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NDS believes the investments it has made to scale its systems and to create a secure infrastructure to support the Department's servicing volume and requirements increase its competitive advantage as a long-term partner in the loan servicing market.

Education Technology, Services, and Payment Processing

Education Technology Services and Payments

NBS is a service and technology company that operates as the following divisions:

• Nelnet Campus Commerce

• Nelnet Payment Services (formerly PaymentSpring)

• Nelnet Community Engagement

• Nelnet Payment Services

• Nelnet International

The majority of this segment’s customers are located in the United States;

however, the Company also provides services and technology as part of its Nelnet International division in Australia, New Zealand, and Southeast Asia, and believes there are opportunities to increase its customer base and revenues internationally.

See the MD&A - “Education Technology, Services, and Payment Processing Operating Segment - Results of Operations” for an overview of the seasonality of the business in this operating segment.

however, the Company also provides services and technology as part of its Nelnet International division primarily in Australia, New Zealand, and Southeast Asia, and believes there are opportunities to increase its customer base and revenues internationally.

See the MD&A – “Education Technology Services and Payments Operating Segment – Results of Operations” for an overview of the seasonality of the business in this operating segment.

A more detailed description of each NBS division is provided below.

For a presentation of NBS revenue disaggregated by service offering into tuition payment plan services revenue, payment processing revenue, and education technology and services revenue, see the MD&A - “Education Technology, Services, and Payment Processing Operating Segment - Results of Operations - Summary and Comparison of Operating Results - Education technology, services, and payment processing revenue.” In the discussion below, revenues from the described products and services are included in education technology and services revenue in such presentation, unless specifically indicated otherwise.

For a presentation of NBS revenue disaggregated by service offering into tuition payment plan services revenue, payment processing revenue, and education technology services revenue, see the MD&A – “Education Technology Services and Payments Operating Segment – Results of Operations – Summary and Comparison of Operating Results – Education technology services and payments revenue.” In the discussion below, revenues from the described products and services are included in education technology services revenue in such presentation, unless specifically indicated otherwise.

NBS uses the FACTS brand in the K-12 private and faith-based markets.

FACTS provides solutions that elevate the K-12 experience for school administrators, teachers, and families.

FACTS solutions include the following categories:

FACTS provides solutions that elevate the K-12 education experience for school administrators, teachers, and families.

FACTS solutions include the following products:

• Financial Management

• Administration

• Enrollment and Communications

• Advancement

• Education Development

FACTS provides services for almost 11,000 K-12 schools and serves over 4 million students and families.

• School Management

• Learning Management

The combination of the Company’s financial, school, and learning management products has significantly increased the value of the Company’s offerings and allows the Company to deliver a comprehensive suite of solutions to schools.

FACTS provides services for nearly 12,000 K-12 schools and serves over 4.5 million students and families.

FACTS generated $298 million and $248 million in revenue for the years ended December 31, 2023 and 2022, respectively.

Financial Management - FACTS is the market leader in education financial management services, including tuition payment plans and financial needs assessment (grant and aid).

Financial Management - FACTS is the market leader in education financial management with services in the following categories:

• Tuition Management

• Grant & Aid

• Advanced Accounting

• Incidental Billing

• Payment Forms

• FACTS Giving

K-12 educational institutions contract with the Company to administer tuition payment plans that allow families to make recurring payments generally over six to 12 months.

The Company earns tuition payment plan services revenue by collecting a fee from either the institution or the payer to administer the plan.

Additionally, the Company may earn payment processing revenue for fees when families make tuition payments.

Additionally, the Company may earn payment processing revenue when families make tuition payments.

The Company’s grant and aid assessment service helps K-12 schools evaluate and determine the amount of financial aid to disburse to the families it serves.

The Company earns service revenue by charging a fee for grant and aid applications processed.

Administration - The Company’s school administration solutions include FACTS Student Information System (SIS), Family App, and Parent Alert.

The Company’s advanced accounting services create efficiencies in school accounting processes with a single system that captures and tracks all tuition and fees.

Incidental billing allows schools to bill families for fees that fall outside of regular tuition costs.

Payment Forms allows schools to create forms for event registrations and permissions coupled with an automated way to collect payments.

The Company’s giving solution is a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting.

The Company earns subscription fees and payment processing revenues for these services.

School Management - The Company’s school management solutions include the following products:

• Student Information System (SIS)

• Parent Alert

• Application & Enrollment

• School Site

FACTS SIS automates the flow of information between school administrators, teachers, and parents and includes administrative processes such as scheduling, cafeteria management, attendance, and grade book management.

The Company’s information systems software is sold as a subscription service to schools.

The Company also offers a streamlined, social, and fully integrated learning management system to enhance classroom instruction for both teachers and students.

FACTS Family App provides families with mobile access to the information they need and Parent Alert allows for instant communication with families when needed.

Enrollment and Communications – The Company’s enrollment and communications tools are used by schools to enhance and streamline admissions and communications efforts.

FACTS Application & Enrollment provides a paperless experience for the admissions office and provides schools with real-time information as applications and enrollment forms are completed.

Family App provides families with mobile access to the information they need and Parent Alert allows for instant communication with families when needed.

The Company’s SIS, Family App, and Parent Alert are sold as a subscription service to schools.

Application & Enrollment provides a paperless experience for the admissions office and provides schools with real-time information as applications and enrollment forms are completed.

The Company earns a fee per completed application and/or enrollment form.

FACTS School Site is a website content management system for schools to promote and share information with current and prospective families.

FACTS solutions in this area allow for better overall connection between admissions, enrollment, and marketing.

The combination of the Company’s financial management, administration, and enrollment and communications products has significantly increased the value of the Company’s offerings in this area, allowing the Company to deliver a comprehensive suite of solutions to schools.

Advancement - The Company's advancement solution, FACTS Giving, is a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting.

FACTS Giving pairs with other FACTS solutions like SIS, School Site, and Family App.

FACTS Giving simplifies incoming donations through appeal pages and online registration for virtual school events.

FACTS Giving features also include text-to-give functionality, options to manage specific fundraising projects or year-long campaigns, and real-time reports to analyze fundraising efforts.

The Company earns subscription fees and payment processing revenues for these services.

Education Development - FACTS Education Solutions provides customized professional development and coaching services for teachers and school leaders as well as instructional services for students experiencing academic challenges.

These services provide continuous advanced learning and professional development while helping private schools identify and attain equitable participation in Title I and Title II federal education programs.

Due to the increases in federal pandemic-related funds supporting K-12 education under the Emergency Assistance to Non-Public Schools (EANS) program, the Company has

witnessed a spike in schools asking for services in these areas.

FACTS Education Solutions also offers an innovative technology product that aids in both teacher and student evaluation.

Learning Management - The Company’s learning management solutions include the following products:

• Learning Management System

• Content Development

• Professional Development and Coaching

• School Evaluation & Observation

• Instructional Services

• ESSA Consulting

The Company’s learning management system uses innovations such as extended enterprise, social collaborations, and gamification to expand capabilities and engage and motivate learners.

In-person and online training and certification is managed with simplified reporting, tracking, and record maintenance.

FACTS’ technologies allow customers to update certificate programs or create new custom learning programs to meet emerging needs.

The Company earns subscription and content creation fees for these services.

Additionally, a fee may be earned from learners completing course offerings.

The Company provides customized professional development and coaching services for teachers and school leaders as well as instructional services for students experiencing academic challenges.

The Company also offers an innovative technology product that aids in both teacher and student evaluation.

Due to the increases in federal pandemic-related funds supporting K-12 education under the Emergency Assistance to Non-Public Schools (EANS) program, the Company has experienced a

spike in schools asking for services in these areas.

One EANS award period ended September 30, 2023 and the final EANS award period ends September 30, 2024, which will have a significant adverse impact to education technology services revenue in future periods.

Nelnet Campus Commerce

NBS uses the Nelnet Campus Commerce brand to offer payment technologies for a smarter campus to higher education institutions.

Nelnet Campus Commerce offers the following solutions:

NBS uses the Nelnet Campus Commerce brand to offer payment technologies to higher education institutions.

Nelnet Campus Commerce offers the following products:

• Tuition Management

• Integrated Commerce

The Company provides service for more than 1,100 colleges and universities worldwide and serves over 8 million students and families.

Nelnet Campus Commerce provides service for over 1,000 colleges and universities worldwide and serves over 8 million students and families.

Nelnet Campus Commerce generated $129 million and $113 million in revenue for the years ended December 31, 2023 and 2022, respectively.

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Nelnet Refunds helps schools stay compliant with federal refund regulations and allows students choice in their refund method.

The Company earns hosting fees, per transaction fees, and credit card processing fees for its Nelnet Billing & Payments and Nelnet Refunds products.

The Company earns hosting, per transaction, and credit card processing fees for its Nelnet Billing & Payments and Nelnet Refunds products.

Credit card processing fees are included in payment processing revenue.

Integrated Commerce – Nelnet Campus Commerce integrated commerce solutions help schools maintain revenue sources across campus including in-person payments, online shopping experiences, and a mobile app.

Nelnet Storefront provides online stores for departments across campus with consolidated views and management by the business office.

Integrated Commerce – Nelnet Campus Commerce integrated commerce solutions help schools maintain revenue sources across campuses including in-person payments, online shopping experiences, and a mobile app.

Nelnet Storefront provides online stores for departments across campuses with consolidated views and management by the business office.

Nelnet Cashiering allows higher education institutions to manage all in-person payments on campus.

The Company earns hosting fees, per transaction fees, and credit card processing fees for its integrated commerce solutions.

Nelnet Checkout streamlines all payments through one system and provides a common make-a-payment experience.

The Company earns hosting, per transaction, and credit card processing fees for its integrated commerce solutions.

Credit card processing fees are included in payment processing revenue.

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NBS uses the Nelnet Payment Services brand to provide secure payment processing technology.

Nelnet Payment Services supports and provides payment processing services, including credit card and electronic transfers, to the other divisions of NBS in addition to other third-party industries and software platforms across the United States.

Nelnet Payment Services supports and provides payment processing services, including credit card and electronic transfers, to the other divisions of NBS and Nelnet in addition to other third-party industries and software platforms across the United States.

Nelnet Payment Services offers mobile, in-person, and online solutions for customers to collect, process, and view credit card and Automated Clearing House (ACH) payments.

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Nelnet Payment Services generated $55 million and $50 million in revenue for the years ended December 31, 2023 and 2022, respectively.

Nelnet Community Engagement

NBS uses the Nelnet Community Engagement (NCE) brand to provide faith community engagement, giving management, and learning management services and technologies.

NCE serves customers in the technology, nonprofit, religious, health care, and professional services industries and is the newest division within NBS.

NCE generated $4 million and $6 million in revenue for the years ended December 31, 2022 and 2021, respectively, and offers the following solutions:

• Faith Community Engagement

• Giving Management

• Learning Management

Faith Community Engagement – NCE services and technologies enable church leaders and members to easily engage and communicate with each other.

Faith Community Engagement product features include a customizable mobile app, text messaging, forms and registrations, and other digital tools to strengthen communication and engagement.

Additional solutions provide content management services including bulletin, news articles, and event calendars, as well as customized websites that provide on-demand support and automated communication to keep members engaged through newsletters and social media.

The Company earns subscription fees and content creation fees for these services.

Giving Management – Giving management products connect organizations with partners, donors, and volunteers to make personalized giving simple.

Giving management administrative features provide a dashboard, customizable receipts, pledge management, and real-time reporting.

Donors have options to give using the product's mobile app, text messaging, or passcode and can be one-time or recurring gifts.

The Company earns subscription fees and payment processing revenues for these services.

Learning Management – NCE offers comprehensive solutions that use innovations such as extended enterprise, social collaborations, and gamification to expand capabilities and engage and motivate learners.

Live and online training and certification is managed with simplified reporting, tracking, and record maintenance.

NCE technologies allow customers to update certificate programs or create new custom learning programs to meet emerging needs.

The Company earns subscription fees and content creation fees for these services.

Additionally, a fee may be earned from learners completing course offerings.

Nelnet International

NBS uses the brand Nelnet International to serve customers in the education, local government, and health care space to build future-focused agile businesses.

Nelnet International products include service and technology that align with the similarly named products categories for FACTS and Nelnet Campus Commerce.

Nelnet International products include:

NBS uses the Nelnet International brand to serve customers in the education, local government, and health care industries.

Nelnet International products include services and technology that align with the similarly named product categories for FACTS and Nelnet Campus Commerce.

Nelnet International offers the following products:

• Integrated Commerce

• Financial Management

• Administration

• School Management

Nelnet International provides its services and technology to schools in 64 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region.

Nelnet International generated $8 million and $7 million in revenue for the years ended December 31, 2023 and 2022, respectively.

Integrated Commerce – Nelnet International’s Xetta platform provides commerce payment solutions to its customers.

Xetta captures and centralizes financial information across organizations and integrates with core business systems to simplify workflows, expand payment capabilities, streamline reconciliation, reduce security and compliance risk, and provide reporting and analytics.

Xetta captures and centralizes financial information across organizations and integrates with core business systems to simplify

workflows, expand payment capabilities, streamline reconciliation, reduce security and compliance risk, and provide reporting and analytics.

The Company earns subscription and consulting fees for the utilization of the Xetta platform.

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Refer to “Financial Management” under the FACTS division for additional information.

Administration – PCSchool is a cloud-based school management platform that provides administrative, information management, financial management, and communication functions for K-12 schools in Australia and New Zealand.

School Management – PCSchool is a cloud-based school management platform that provides administrative, information management, financial management, and communication functions for K-12 schools in Australia and New Zealand.

Outside of Australia and New Zealand, Nelnet International provides administration products under the FACTS brand.

The technology and services provided are consistent with the “Administration” products described under the FACTS division.

The technology and services provided are consistent with the School Management products described under the FACTS division.

The Company earns subscription fees and per transaction revenues for providing these services.

Nelnet International provides its services and technology to schools in more than 55 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region.

Nelnet International generated $7 million in revenue for each of the years ended December 31, 2022 and 2021.

The Company is the largest provider of tuition management and financial needs assessment services to the private and faith-based K-12 market in the United States.

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The Company believes its clients select products primarily based on technology features, functionality, and the ability to integrate with other systems, but price and service also impact the selection process.

Nelnet Financial Services

The Company formally established the Nelnet Financial Services division in 2023 intended to focus on the Company’s key objective to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment by expanding its private education, consumer, and other loan portfolios.

The creation of NFS resulted in financial results grouped and reported differently to the Company’s chief operating decision maker.

In addition to the reportable operating segments of AGM and Nelnet Bank being part of the NFS division, NFS’s other operating segments that are not reportable (that were previously included in Corporate and Other Activities) include:

• The operating results of Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S.

Securities and Exchange Commission (SEC)-registered investment advisor subsidiary

• The operating results of Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and causality policies

• The operating results of the Company’s investment activities in real estate

• The operating results of the Company’s investment debt securities (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments

Asset Generation and Management

AGM includes the acquisition, management, and ownership of the Company's loan assets (excluding loan assets held by Nelnet Bank).

Loans consist of federally insured student (originated under the FFEL Program), private education, consumer, and other loans.

Loans consist of federally insured student (originated under the FFEL Program), private education, consumer, and other loans, including investment interests therein.

As of December 31, 2023, AGM's loan portfolio was $12.0 billion.

Substantially all of AGM’s loan portfolio (95.7% as

of December 31, 2022) is federally insured.

Substantially all of AGM’s loan portfolio (97.0% as of December 31, 2023) is federally insured.

The Company earns net interest income on its loan portfolio, and generates a substantial portion of its earnings from the spread, referred to as “loan spread,” between the yield it receives on its loan portfolio and the associated costs to finance such portfolio.

See the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis,” for further details related to loan spread.

In addition to the loan spread earned on its portfolio, all costs and activity associated with managing the portfolio, such as servicing of the assets and debt maintenance, are included in this segment.

See the MD&A - "Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Spread Analysis,” for further details related to loan spread.

Origination and acquisition

Since all FFELP loans will eventually pay off, as new FFELP loans are not being originated, a key objective of the Company is to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment.

As such, the Company is actively acquiring private education, consumer, and other loans, or investment interests therein (see below under “Beneficial interest in loan securitizations”), and plans to expand these portfolios.

During 2023, the Company purchased $556.1 million of private education, consumer, and other non-FFELP loans.

AGM's competition for the purchase of loan portfolios includes banks, hedge funds, and other finance companies.

AGM's portfolio of federally insured student loans is subject to minimal credit risk, as these loans are guaranteed by the Department at levels ranging from 97% to 100%.

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When a borrower defaults on a FFELP loan, the servicer submits a claim to the guarantor, who provides reimbursements of principal and accrued interest, subject to the applicable risk share percentage.

Origination and acquisition

As such, the Company is actively acquiring private education, consumer, and other loans and plans to expand these portfolios.

During 2022, the Company purchased $524.5 million of private education, consumer, and other non-FFELP loans.

AGM's competition for the purchase of FFELP, private education, consumer, and other loan portfolios includes banks, hedge funds, and other finance companies.

AGM’s private education, consumer, and other loans are unsecured, with neither a government nor a private insurance guarantee.

Accordingly, the Company bears the full risk of loss on these loans if the borrower and co-borrower, if applicable, default, which increases the Company’s exposure to credit risk.

Interest rate risk management

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The current and future interest rate environment can and will affect the Company's interest income and net income.

The effects on the Company's results of operations as a result of the changing interest rate environments are further outlined in the MD&A - "Asset Generation and Management Operating Segment - Results of Operations - Loan Spread Analysis" and in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment.”

On November 2, 2020, the Company obtained final approval for federal deposit insurance from the Federal Deposit Insurance Corporation (FDIC) and for a bank charter from the Utah Department of Financial Institutions (UDFI) in connection with the establishment of Nelnet Bank, and Nelnet Bank launched operations.

Nelnet Bank, a wholly owned subsidiary of the Company, operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah.

The effects on the Company's results of operations as a result of the changing interest rate environments are further outlined in the MD&A - "Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Spread Analysis" and in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment.”

Beneficial interest in loan securitizations

AGM has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "investments and notes receivable" on the Company's consolidated balance sheets.

The Company’s partial ownership in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization.

These residual interests were acquired by AGM or have been received in consideration of AGM selling portfolios of loans to unrelated third parties who securitized such loans.

As of the latest remittance reports filed by the various trusts prior to or as of December 31, 2023, the Company's ownership correlates to approximately $1.76 billion of loans included in these securitizations.

Nelnet Bank operates as an internet industrial bank franchise with a home office in Salt Lake City, Utah.

Nelnet Bank is governed by a board of directors, a majority of the members of which are independent of the Company.

Nelnet Bank was funded by the Company with an initial capital contribution of $100.0 million and an additional $30.0 million of capital was contributed in 2022 by the Company to support Nelnet Bank’s asset growth.

As a consolidated subsidiary of the Company, the Bank’s assets, liabilities, results of operations, and cash flows are reflected in the Company’s consolidated financial statements, and the industrial bank charter allows the Company to maintain its other diversified business offerings.

Nelnet Bank serves and plans to serve a niche market, with a concentration in the private education and unsecured consumer loan markets.

Nelnet Bank serves a niche market, with a concentration in the private education and unsecured consumer loan markets.

Currently, Nelnet Bank offers refinance private education loan options to borrowers that have higher priced private education and/or federal student loan debt and in-school private education loans to students attending higher education institutions.

The recent increase of interest rates has negatively impacted and will continue to negatively impact the origination of refinanced private education loans.

Nelnet Bank plans to begin offering unsecured consumer loans, primarily refinance loans, in 2023 for consumers to consolidate credit card and other general-purpose debt as well as financing home improvements.

Unsecured consumer loans consist of home improvement loans and refinance loans for consumers to consolidate credit card and other general-purpose debt.

Nelnet Bank extends consumer loans to borrowers in all 50 states plus the District of Columbia.

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Nelnet Bank’s deposits are interest-bearing and consist of brokered certificates of deposit (CDs), retail and other savings deposits and CDs, and intercompany deposits.

Retail and other savings deposits include deposits from Educational 529 College

Savings and Health Savings plans and commercial and institutional CDs.

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

The intercompany deposits are deposits from the Company and its subsidiaries and include a pledged deposit of $40.0 million from Nelnet, Inc.

(parent company), as required under a Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school.

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

The intercompany deposits are deposits from Nelnet, Inc.

(parent company) and its subsidiaries and include a pledged deposit of $40.0 million from Nelnet, Inc., as required under a Capital and Liquidity Maintenance Agreement with the Federal Deposit Insurance Corporation (FDIC), deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school.

As of December 31, 2023, Nelnet Bank had $847.6 million of deposits, of which $104.0 million were intercompany deposits.

As a Utah-chartered industrial bank, Nelnet Bank is able to fulfill its mission of being a steady and stable supplier of education credit.

The Bank’s goal is to meet underserved needs in the United States for reliable education financing.

The Company’s strong history within, and understanding of, the education industry are expected to afford Nelnet Bank access to more families participating in education nationwide.

Communications

The Company provided communication services through ALLO, a former majority-owned subsidiary, until a recapitalization and additional funding for ALLO resulted in a deconsolidation of ALLO from the Company’s consolidated financial statements in the fourth quarter of 2020.

The recapitalization of ALLO was not considered a strategic shift in the Company’s involvement with ALLO, and ALLO’s results of operations, prior to the deconsolidation, are presented by the Company as a reportable operating segment.

The Company continues to hold a significant investment in ALLO.

See note 2 of the notes to consolidated financial statements included in this report for additional information related to the ALLO recapitalization and the Company’s current ownership investment in ALLO.

ALLO derives its revenue primarily from the sale of telecommunication services, including internet, telephone, and television services to business, governmental, and residential customers in Nebraska, Colorado, and Arizona, and specializes in high-speed internet and broadband services available through its all-fiber network.

ALLO plans to continue to increase market share and revenue in its existing markets and plans to expand to additional communities.

As of December 31, 2022, ALLO currently serves, is in the process of building their network in, and has announced they will build in a total of 36 communities.

The total households in these communities is approximately 410,000.

As of December 31, 2022, ALLO served more than 90,000 residential customers and had nearly 41,000 business lines.

Corporate and Other Activities

Other business activities and operating segments that are not reportable are combined and included in Corporate and Other Activities.

Corporate and Other Activities include the following items:

• The operating results of Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S.

Securities and Exchange Commission (SEC)-registered investment advisor subsidiary

• The operating results of Nelnet Renewable Energy, which include solar tax equity investments made by the Company, administrative and management services provided by the Company on tax equity investments made by third parties, and solar development

• The results of the majority of the Company’s investment activities, including early-stage and emerging growth companies and real estate

• Interest income earned on cash and investment debt securities (primarily student loan and other asset-backed securities)

• Interest expense incurred on unsecured and certain other corporate related debt transactions

• Other product and service offerings that are not considered reportable operating segments

Corporate and Other Activities also include certain activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing.

These costs are allocated to each operating segment based on estimated use of such activities and services.

Corporate and Other Activities also includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs.

All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.

NFS Other Operating Segments

Whitetail Rock Capital Management, LLC

Whitetail Rock Capital Management, a majority-owned subsidiary of the Company, is an SEC-registered investment advisor.

As of December 31, 2023, WRCM had $3.3 billion in assets under management for third-party customers, consisting of student loan asset-backed securities ($2.6 billion) and Nelnet stock ($0.7 billion) - primarily shares of Class B common stock.

WRCM earns annual management fees of 10 basis points to 25 basis points for asset-backed securities under management and a share of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory

WRCM's core assets under management are FFELP asset-backed securities.

Accordingly, WRCM is beginning to transition away from FFELP asset-backed securities to additional asset-backed asset classes (consumer and collateralized loan obligations).

WRCM earns annual management fees of five basis points for Nelnet stock under management.

During 2022, WRCM earned $6.0 million in management fees.

During 2023, WRCM earned $6.2 million and $0.5 million in management and performance fees, respectively.

Nelnet Insurance Services

The Company launched a wholly-owned captive insurance subsidiary in 2013 to provide insurance to Nelnet, Inc.

and its subsidiaries.

The captive insurance company’s capital has grown over the years to $21.3 million as of December 31, 2023.

Nelnet Insurance Services, the Company’s operating segment established to include all the Company’s insurance products, entered into multiple reinsurance treaties with third parties on property and casualty policies in 2022 to leverage the captive insurance company’s capital.

Reinsurance is an arrangement under which the Company has agreed to indemnify an insurance company, the “ceding company,” for a portion of the insurance and/or investment risks underwritten by the ceding company.

As of December 31, 2023, the Company has five treaties that reinsure risk on roughly 70 different insurance programs issued by four carriers.

The Company has also entered into arrangements to cede a portion of its exposure, typically 50%, to a third party.

For the year ended December 31, 2023, the Company recognized $20.1 million in reinsurance premiums (net of $21.5 million retroceded to a third party).

In addition to premium revenue, the Company earns investment income on its capital and cash premiums it receives, until such amounts are paid out for claims.

If premiums exceed the total amount of expenses and eventual losses, the Company recognizes an underwriting profit that adds to the investment income earned.

Investments - real estate

As of December 31, 2023, the Company has approximately 40 real estate investments across the United States with a carrying value of $103.8 million.

For the majority of its real estate investments, the Company partners with a third-party co-investor that (i) has asset-specific and/or geographic expertise of the underlying property and (ii) manages the day-to-day operations.

The Company’s real estate portfolio includes commercial properties, including office space, industrial, multifamily, and mixed-use properties.

Investment portfolio - debt securities

The Company invests excess cash in debt securities, primarily student loan and other asset-backed securities.

Included in NFS’s debt securities portfolio are certain of the Company’s own asset-backed securities (bonds and notes payable) that were issued to finance student loans that the Company repurchased in the secondary market.

For accounting purposes, these notes are eliminated in consolidation and are not included in the Company’s consolidated financial statements.

However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate.

As of December 31, 2023, the par value and fair value of the Company’s debt securities held in the NFS division, including its own asset backed securities, was $905.1 million and $828.5 million, respectively.

The Company has entered into repurchase agreements (debt), the proceeds of which are collateralized by the asset-backed securities (bond investments).

As of December 31, 2023, the Company had $208.2 million of repurchase agreements outstanding that were collateralized by $251.2 million (fair value) of asset-backed securities investments.

Corporate and Other Activities

Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities.

Corporate and Other Activities include the following items:

• Shared service activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing.

These costs are allocated to each operating segment based on estimated use of such activities and services

• Corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs

• The operating results of certain of the Company’s investment activities, including its investment in ALLO and early-stage and emerging growth companies (venture capital investments)

• Interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions

• Other product and service offerings that are not considered reportable operating segments

Nelnet Renewable Energy

As of December 31, 2023, the Company has invested a total of $271.9 million (which excludes $198.8 million syndicated to third-party investors) in tax equity investments in renewable energy solar partnerships to support the development and operations of solar projects throughout the country.

These investments provide a federal income tax credit under the Internal Revenue Code, equaling either 26% or 30% of the eligible project cost, with the tax credit available when the project is placed-in-service.

These investments provide a federal income tax credit under the Internal Revenue Code, equaling 30% to 40% of the eligible project cost, with the tax credit available when the project is placed-in-service.

The Company is then allowed to reduce its tax estimates paid to the U.S.

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The Company has developed expertise in sourcing, underwriting, closing, and managing these investments and believes it has strong relationships with solar developers throughout the country.

The Company invests anywhere between 10% and 100% in each investment transaction, with its co-investment partners taking the remaining share.

The Company invests at least 10% in each investment transaction, with its co-investment partners taking the remaining share.

The Company earns an upfront management fee based on the amount of capital contributed by the co-investor.

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In addition, a performance fee is earned and recognized by the Company upon the co-investor’s exit from the investment.

The performance fee is typically a percentage of the capital invested and is collected during the sixth year following the initial investment.

The aggregate of the management and performance fees earned from co-investors is typically five to six percent of the capital invested.

The Company raised and invested a total of $94.5 million during 2023 on behalf of its co-investors.

Due to the management and control of each of these investment partnerships, the tax equity investments are consolidated on the Company’s consolidated financial statements, with the co-investor’s portion being presented as noncontrolling interests.

Due to the management and control of each of these investment partnerships, such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the co-investor’s portion being presented as noncontrolling interests.

In addition to solar tax equity investments, the Company has a strategy to own solar energy project assets.

These assets provide long-term, predictable, and recurring cash flows.

Accordingly, the Company has begun to execute a multi-faceted approach to originate, acquire, finance, own, and manage these assets.

As part of this strategy, on July 1, 2022, the Company acquired 80% of the ownership interest 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 consideration of $33.9 million.

GRNE is a solar contracting company that provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities.

As of December 31, 2022, it has seven physical branches, predominately in the Midwest with its primary corporate operations in Palatine, Illinois and Lincoln, Nebraska.

GRNE contracts to build solar on a cost-plus-margin basis.

ENRG is a development company that is primarily focused on the development of solar assets that the Company expects to own long-term.

ENRG performs services such as site control, permitting, execution of power purchase agreements, utility interconnections, construction oversight, project finance, and other ancillary services to enable a successful solar photovoltaic project.

The acquisition of GRNE Solar provides technical know-how, customer relationships, a talented workforce, and revenue streams to Nelnet’s expanding renewable energy business.

The acquisition gives the Company an ability to realize a diversified revenue stream by generating a fee-based service from its EPC and operations and maintenance (O&M) services, while also originating solar assets for the Company’s own balance sheet on a high-quality, cost-efficient basis.

These assets are expected to earn revenue and generate a profit for up to 40 years based on energy production and energy sales to entities, such as utilities, governmental bodies, commercial companies, educational institutions, multi-family landlords, and healthcare groups.

The Company plans to expand this business geographically across the United States, increase the team size and technical expertise to build larger projects, and serve new and existing customers on a go-forward basis.

In addition to asset origination, the Company plans to begin acquiring solar assets that are in various stages of their project life-cycle with other development partners.

The Company makes investments to further diversify itself both within and outside of its historical core education-related businesses, including investments in early-stage and emerging growth companies and real estate.

As of December 31, 2022, the Company has a $2.1 billion portfolio of investments, which includes $1.4 billion of student loan and other asset-backed

See note 7 in the notes to consolidated financial statements for additional detail of the Company’s investments, including a summary of holdings.

Early-Stage and Emerging Growth (Venture Capital) Investments

These assets provide long-term, predictable, and recurring cash flows based on energy production and energy sales to entities, such as utilities, governmental bodies, commercial companies, educational institutions, multi-family landlords, and health care groups.

Accordingly, the Company has begun to execute a multi-faceted approach to construct, finance, own, and operate these assets.

GRNE is a solar construction company and ENRG is a solar development company.

During 2023, the Company rebranded GRNE Solar to gain greater leverage with its overall brand, Nelnet Renewable Energy.

The Company’s solar construction company provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities and contracts to build solar on a fixed fee basis.

The development company performs services such as site control, permitting, execution of power purchase agreements, utility interconnections, construction oversight, project finance, and other ancillary services to enable a successful solar photovoltaic project.

The Company makes investments to further diversify itself both within and outside of its historical core education-related businesses, including investments in ALLO and early-stage and emerging growth companies (venture capital investments).

The Company provided fiber communication services through ALLO, a former majority-owned subsidiary, until a recapitalization in 2020 resulted in a deconsolidation of ALLO from the Company’s consolidated financial statements.

The Company continues to hold a significant investment in ALLO.

As of December 31, 2023, ALLO serves 34 communities and is currently in the process of building their network in 11 communities.

The total households in these communities is approximately 440,000.

As of December 31, 2023, ALLO served more than 109,000 residential customers and had almost 49,000 business lines, increases from more than 90,000 and nearly 41,000 as of December 31, 2022, respectively.

For the year ended December 31, 2023, ALLO recognized approximately $150 million in revenue.

ALLO uses debt to fund a portion of its operations and capital needs.

As of December 31, 2023, ALLO had approximately $715 million of debt outstanding, an increase from approximately $340 million as of December 31, 2022.

ALLO plans to continue to increase market share and revenue in its existing markets and plans to expand to additional communities.

The Company accounts for its approximately 45% voting membership interests in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting.

As of December 31, 2023, the carrying amount of the Company’s voting membership interests was $10.7 million.

The Company believes the fair value of its voting membership interests in ALLO is significantly greater than its carrying value.

The Company also holds non-voting preferred membership interests in ALLO, which it accounts for as a separate equity investment.

The non-voting preferred membership interests of ALLO currently earns a preferred annual return of 6.25% that will increase to 10.0% in April 2024.

The accrued preferred return capitalizes to preferred membership interests annually on each December 31.

As of December 31, 2023, the carrying amount of the Company’s preferred membership interests was $155.0 million.

Venture capital investments

The Company has invested in early-stage and emerging growth companies and various funds.

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The largest investment in the Company’s venture capital portfolio is Agile Sports Technologies, Inc.

(doing business as “Hudl”).

As of December 31, 2022, the carrying value of the Company’s investment in Hudl was $133.9 million.

(doing business as “Hudl.”) As of December 31, 2023, the carrying value of the Company’s investment in Hudl was $165.5 million.

The Company accounts for its investment in Hudl using the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The Company believes the fair value of its ownership in Hudl is significantly greater than its carrying value.

Hudl is a leading sports performance analysis company, and its software provides more than 230,000 teams across 40 sports and in 150 countries the insights to be more competitive.

Graff, a member of the Company’s Board of Directors, is a co-founder, the chief executive officer, and a director of Hudl.

As of December 31, 2022, the Company has 31 real estate investments across the United States with a carrying value of $80.4 million.

Included in the Company’s real estate portfolio is the development of commercial properties in the Midwest, particularly in Lincoln, Nebraska, where the Company is headquartered.

The local investments include projects for the development of properties in Lincoln’s east downtown Telegraph District, where a facility for the Company’s student loan servicing operations is located, and projects in Lincoln’s Haymarket District, including the headquarters of Hudl.

The Company is also a tenant at Hudl's headquarters.

Regulation and Supervision

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• The Gramm-Leach-Bliley Act (GLBA) and Regulation P, which govern a financial institution’s treatment of nonpublic personal information about consumers and require that an institution, under certain circumstances, notify consumers about its privacy policies and practices

• The General Data Protection Regulation (GDPR), a European Union (EU) regulation which places specific requirements on businesses that collect and process personal data of individuals residing in the EU, and provides for significant fines and other penalties for non-compliance

• The California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), which enhances the privacy rights and consumer protection for residents of California

• The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides temporary relief measures for federal student loans held by the Department, as a result of the COVID-19 pandemic

• The Federal Bankruptcy laws Title 11 of the U.S.

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• Laws prohibiting unfair, deceptive, or abusive acts or practices (UDAAP)

• Anti-Money Laundering (AML) laws and regulations designed to detect and prevent money laundering and terrorist financing

• Regulations administered and enforced by the Office of Foreign Assets Control (OFAC), which is a U.S.

government agency that administers and enforces economic and trade sanctions

• Various laws, regulations, and standards that govern government contractors

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The Company monitors for potential changes to the HEA and evaluates possible impacts to its business operations.

Our federal servicing contract with the Department, an indefinite-delivery, indefinite quantity contract must be in compliance with the Federal Acquisition Regulations, which regulates the procurement, award, administration, and performance of U.S.

The Company’s New Government Servicing Contract that became effective April 24, 2023 requires us to comply with the Federal Acquisition Regulations, which regulates the procurement, award, administration, and performance of U.S.

government contracts.

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The CFPB also provides consumer financial education, tracks consumer complaints, requests data from industry participants, and promotes the availability of financial services to underserved consumers and communities.

The CFPB has authority to prevent unfair, deceptive, or abusive acts or practices and to ensure that all consumers have access to fair, transparent, and competitive markets for consumer financial products and services.

The CFPB has authority to prevent unfair, deceptive, or abusive acts or

practices and to ensure that all consumers have access to fair, transparent, and competitive markets for consumer financial products and services.

The CFPB’s scrutiny of financial services has impacted industry participants’ approach to their services, including how the Company interacts with consumers.

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To the extent states enact requirements that differ from federal standards or state officials and courts adopt interpretations of federal consumer laws that differ from those adopted by the CFPB under the Dodd-Frank Act, the Company's ability to offer the same products and services to consumers nationwide may be limited.

As a third-party service provider to financial institutions, the Company is subject to periodic examination by the Federal Financial Institutions Examination Council (FFIEC).

As a third-party service provider to financial institutions, the Company is subject to the standards set by the Federal Financial Institutions Examination Council (FFIEC).

FFIEC is a formal interagency body of the U.S.

government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Federal Reserve Banks, the FDIC, and the CFPB, and to make recommendations to promote uniformity in the supervision of financial institutions.

Several states have enacted laws regulating and monitoring the activity of student loan servicers.

Data privacy and security standards, laws, and regulations that may apply to the Company, such as the National Institute of Standards and Technology (NIST) Special Publication 800-53, Payment Card Industry Data Security Standard (PCI DSS), FTC Safeguards Rule, and New York Codes, Rules, and Regulations (NYCRR) Chapter 23 part 500, among others, are becoming more rigorous.

In addition, data security and breach incident response continues to be a focus for policymakers at the federal and state levels.

Any actual or perceived non-compliance with such obligations by the Company or third-party service providers could result in proceedings, investigations, or claims against the Company by federal and/or state regulatory authorities, customers, or others, leading to reputational harm, higher liability and indemnity obligations, significant fines, litigation costs, or additional reporting requirements or oversight.

Many states have enacted laws regulating and monitoring the activity of student loan servicers.

Some of these laws stipulate additional licensing fees which increase the Company’s cost of doing business.

Where the Company has obtained licenses, state licensing statutes may impose a variety of requirements and restrictions on the Company.

In addition, these statutes may also subject the Company to the supervisory and examination authority of state regulators in certain cases, and the Company will be

subject to and experience exams by state regulators.

In addition, these statutes may also subject the Company to the supervisory and examination authority of state regulators in certain cases, and the Company will be subject to and experience exams by state regulators.

If the Company is found to not have complied with applicable laws, regulations, or requirements, it could:

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The Company anticipates additional states adopting similar laws.

Education Technology, Services, and Payment Processing

NBS provides tuition management services, payment processing, and school information software for K-12 schools and tuition management services and payment processing solutions for higher education institutions.

Education Technology Services and Payments

NBS provides tuition management services, payment processing solutions, and school information software for K-12 schools and tuition management services and payment processing solutions for higher education institutions.

The Company also provides payment technologies and payment services for software platforms, businesses, and nonprofits beyond the K-12 and higher education space.

As a service provider that takes payment instructions from institutions and their constituents and sends them to bank partners, the Company is directly or indirectly subject to a variety of federal and state laws and regulations.

The Company's contracts with clients and bank partners require the Company to comply with these laws and regulations.

The Company's contracts with clients and bank partners may require the Company to comply with these laws and regulations.

The Company's payment processing services are subject to the EFTA and Regulation E, which govern automatic deposits to and withdrawals from deposit accounts, and customers’ rights and liabilities arising from the use of debit cards and certain other electronic banking services.

The Company assists bank partners with fulfilling their compliance obligations pursuant to these requirements.

The Company's payment processing services are also subject to the National Automated Clearing House Association (NACHA) requirements, which include operating rules and sound risk management procedures to govern the use of the ACH Network.

These rules are used to ensure that the ACH Network is efficient, reliable, and secure for its members.

The Company's payment processing services are also subject to the National Automated Clearing House Association (NACHA) requirements, which include operating rules and risk management procedures to govern the use of the ACH Network.

These rules are designed to make the ACH Network efficient, reliable, and secure for its members.

Because the ACH Network uses a batch process, the importance of proper submissions by NACHA members is magnified.

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These clients disclose certain non-directory information concerning their students to the Company, including contact information, student identification numbers, and the amount of students’ credit balances pursuant to one or more exceptions under FERPA.

Additionally, as the Company is indirectly subject to FERPA, it may not permit the transfer of any personally identifiable information to another party other than in a manner in which an educational institution may properly disclose it.

Additionally, as the Company is indirectly subject to FERPA, it may not permit the transfer of any personally identifiable information to another party other than in a manner in which an

educational institution may properly disclose it.

A breach of this prohibition could result in a five-year suspension of the Company's access to the related client’s records.

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These regulations are designed to ensure students have convenient access to their Title IV funds, do not incur unreasonable fees, and are not led to believe they must open a financial account to receive such funds.

Asset Generation and Management

The Dodd-Frank Act created a comprehensive regulatory framework for derivatives transactions, with regulatory authority allocated among the Commodity Futures Trading Commission (CFTC), other prudential regulators, and the SEC.

This framework, among other things, subjects certain swap participants to capital and margin requirements, recordkeeping, and business conduct standards and imposes registration and regulation of swap dealers and major swap participants.

Even when a securitization trust qualifies for an exemption, many of the Company's derivative counterparties are subject to capital, margin, and business conduct requirements;

therefore, the Company may be impacted.

When securitization trusts do not qualify for an exemption, the Company may be unable to enter into new swaps to hedge interest rate risk or the costs associated with such swaps may increase.

With respect to existing securitization trusts, an inability to amend, novate, or otherwise materially modify existing swap contracts could result in a downgrade of outstanding asset-backed securities.

As a result, the Company's business, ability to access the capital markets for financing, and costs may be impacted by these regulations.

Nelnet Bank is a Utah industrial bank that is regulated by the FDIC and the UDFI.

As an originator of private education and consumer loans and a purchaser and owner of federally insured student loans, Nelnet Bank is subject to federal and state consumer protection, privacy, and related laws and regulations.

On September 14, 2023, the CFPB issued an industry and markets report specific to tuition payment plans in higher education.

This report builds on other recent work by the CFPB including reports on financial products and services offered by colleges or in college settings and recent supervisory examinations of institutional student lenders.

Based on the CFPB’s focus, the higher education industry may be required to make changes to their product offerings and disclosures.

These changes may impact the products and services provided by NBS.

Nelnet Financial Services

Nelnet Bank is a Utah industrial bank that is regulated by the FDIC and the Utah Department of Financial Institutions (UDFI).

As an originator of private education and consumer loans, Nelnet Bank is subject to federal and state consumer protection, privacy, and related laws and regulations.

In addition to having to comply with the majority of laws and regulations addressed in the Loan Servicing and Systems section, there are additional laws and regulations Nelnet Bank must follow.

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government agencies with detecting and preventing money laundering and terrorist financing

Regulation D, the Truth in Savings Act (reserve requirements), and Regulation DD (disclosure of deposit terms to customers) will be applicable to Nelnet Bank once consumer deposit products are launched, which is tentatively scheduled for 2023.

Governmental bodies in the United States and abroad have adopted, or are considering the adoption of, data privacy laws and regulations that include requirements with respect to nonpublic personal information such as data minimization, purpose limitation, transparency, accountability, integrity, and confidentiality.

For example, in the United States, certain of the Company’s operating segments and their financial institution clients are within the corresponding capacities in which they operate, subject to the FTC’s and the federal banking regulators’ privacy and information safeguarding requirements under the GLBA.

The GLBA requires financial institutions to periodically disclose their privacy policies and practices relating to sharing such information and enables customers to opt out of the disclosing institution’s ability to share information with third parties under certain circumstances.

under certain circumstances.

Other federal and state laws and regulations also impact the Company’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers.

The GLBA, under the Safeguards Rule, further requires financial institutions to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information.

The Safeguards Rule was the subject of recent changes approved by the FTC in October 2021 with an effective date of June 9, 2023, whereby such changes are intended to provide for detailed criteria for what specific safeguards applicable financial institutions must implement as part of their information security programs.

Depending on the Company operating segment and the capacities in which they operate, various other domestic federal laws with data privacy and protection requirements may also be relevant such as the FERPA and Fair Credit Reporting Act.

Data privacy and data protection are also areas of increasing state legislative focus.

For example, the CCPA, which became effective on January 1, 2020, is the first state-level comprehensive data privacy and protection law that applies to for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds.

The CCPA gives consumers the right to know what personal information is collected about them, the right to access that information, the right to know whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights.

The CCPA contains several exemptions, including an exemption applicable to information that is collected, processed, sold, or disclosed pursuant to the GLBA.

In addition, the CPRA, which amends and expands upon the CCPA, became effective January 1, 2023.

The CPRA, amongst other newly added requirements, and subject to regulations that have yet to become final, sunsets previous CCPA exemptions relating to employment data and business contact data thereby bringing such data within scope of the law.

Also, effective January 1, 2023, is Virginia’s newly enacted VCDPA which is a comprehensive consumer data privacy statute that mandates requirements similar to those found under the California’s CCPA and CPRA.

Similarly, Colorado has enacted the CPA effective July 1, 2023, Connecticut has enacted the CTDPA effective July

1, 2023, and Utah has enacted the UCPA effective December 31, 2023.

For example, several states where the Company does business, including California, Virginia, Colorado, Connecticut, and Utah have adopted comprehensive data privacy laws.

Similar comprehensive privacy laws may be adopted by other states where the Company does business.

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In addition, it is estimated that over 130 countries worldwide have instituted some form of privacy or data protection law.

Of these laws, one of the prominent is the GDPR, which applies to countries in the European Economic Area (EEA) notwithstanding the United Kingdom where the identical law was maintained but is specifically referred to as the UK GDPR.

Of these laws, one of the prominent is the General Data Protection Regulation (GDPR), which applies to countries in the European Economic Area (EEA) notwithstanding the United Kingdom where the identical law was maintained but is specifically referred to as the UK GDPR.

The GDPR contains extensive compliance obligations and provides for substantial penalties for non-compliance and has expansive extraterritorial scope that reaches beyond the boundaries of the EEA and the UK.

The Company’s renewable energy business is subject to and depends in significant part upon complex federal, state, and other laws and regulations, including the recently passed Inflation Reduction Act, which regulate and, in some instances, incentivize the production of renewable energy.

The Company’s renewable energy business is subject to and depends in significant part upon complex federal, state, and other laws and regulations, including the Inflation Reduction Act, which regulate and, in some instances, incentivize the production of renewable energy.

Intellectual Property

The Company owns numerous trademarks and service marks (“Marks”) to identify its various products and services.

As of December 31, 2022, the Company had 94 registered Marks.

As of December 31, 2023, the Company has a significant number of registered Marks.

The Company actively asserts its rights to these Marks when it believes infringement may exist.

The Company believes its Marks have developed and continue to develop strong brand-name recognition in the industry and the consumer marketplace.

Each of the Marks has, upon registration, an indefinite duration so long as the Company continues to use the Mark on or in connection with such goods or services as the Mark identifies.

To protect the indefinite duration, the Company makes filings to continue registration of the Marks.

The Company owns one patent application that has been published, but has not yet been issued, and has also actively asserted its rights thereunder in situations during which the Company believes its claims may be infringed upon.

The Company owns many copyright-protected works, including its various computer system codes and displays, websites, and marketing materials.

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The Company also has adopted internal procedures designed to protect the Company's intellectual property.

The Company seeks federal and/or state protection of intellectual property when deemed appropriate, including patent, trademark/service mark, and copyright.

The decision whether to seek such protection may depend on the perceived value of the intellectual property, the likelihood of securing protection, the cost of securing and maintaining that protection, and the potential for infringement.

The Company's employees (referred to by the Company as “associates”) are trained in the fundamentals of intellectual property, intellectual property protection, and infringement issues.

The Company's associates are also required to sign agreements requiring, among other things, confidentiality of trade secrets, assignment of inventions, and non-solicitation of other associates post-termination.

Consultants, suppliers, and other business partners are also required to sign nondisclosure agreements to protect the Company's proprietary rights.

Human Capital Resources

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The Company works diligently to attract the best talent from a diverse range of sources that are expected to meet the current and future demands of its businesses, and has established relationships with trade schools, universities, professional associations, and industry groups to proactively attract talent.

In 2022, the Company hired approximately 5,200 new associates, including approximately 900 temporary associates who are contracted to perform a job for only a short amount of time.

In 2023, the Company conducted an associate culture survey using a leading outside firm that specializes in employee engagement.

Ninety percent of the Company’s associates participated in the survey with results 15 points above the survey provider’s industry benchmark.

Eighty-eight percent of the Company’s associates participated in the survey.

There were many questions, but the overarching goal of the survey was to determine overall associate engagement through understanding of how associates feel about working for the Company and if associates would recommend the Company as a great place to work.

The results of the survey were an overall engagement score of 78 out of 100, which was three points above the survey provider’s industry benchmark.

The results of the survey were an overall engagement score of 74 out of 100, which was slightly better than the survey provider’s industry benchmark.

The Company’s management team collected all the feedback and is focusing on making associate-suggested changes so the Company becomes an even better place to work.

For 2022, associate voluntary turnover was approximately 25%, a 3 percentage point decrease from 2021.

The average associate has nearly five years of service.

For 2023, associate voluntary turnover was 24%, a decrease from 25% in 2022 and 28% in 2021.

The average associate has nearly eight years of service.

Diversity and inclusion

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The Company’s independent directors (seven in total) include four women and two directors that are members of racial/ethnic minorities.

As of December 31, 2022, the Company’s workforce was approximately 66% women, which was unchanged from December 31, 2021.

As of December 31, 2020, 57% of the Company’s workforce was women.

As of December 31, 2023, the Company’s workforce was approximately 66% women.

People of color, as defined by the U.S.

Equal Employment Opportunity Commission's EEO-1 race and ethnicity categories for the U.S., represented approximately 29% of the Company’s workforce (based on associate self-identification), an increase from 27% as of December 31, 2021, and 20% as of December 31, 2020.

Equal Employment Opportunity Commission's EEO-1 race and ethnicity categories for the U.S., represented approximately 33% of the Company’s workforce (based on associate self-identification), an increase from 29%, 27%, and 20% as of December 31, 2022, 2021, and 2020, respectively.

The Company is making progress in the number of women and people of color working in leadership positions (defined by the Company as an associate with one or more direct reports) across the organization.

As of December 31, 2022 and 2021, women held 52% of leadership positions in the Company, an increase from 50% as of December 31, 2020, and people of color held 11% of leadership positions in the Company, an increase from 10% as of December 31, 2021, and 8% as of December 31, 2020.

As of December 31, 2023, women held 52% of leadership positions in the Company, and people of color held 11% of leadership positions in the Company, an increase from 8% as of December 31, 2020.

The Company has acknowledged that people of color are underrepresented in leadership positions at Nelnet and is committed to fostering an inclusive workforce that reflects the diversity in the communities the Company serves and that provides opportunity for all associates to advance and thrive.

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In addition, the Company has changed new hire recruiting methods and strategies to increase pools of minority, women, veteran, and disabled candidates, and has created other programs focused on race and gender to increase diversity throughout the Company.

The Company also revised its scholarship program for the children of its associates to better recognize minority and low-income students.

In addition, the Company was named on the following Forbes listings:

Best Large Employers and Best Employers for Diversity.

In Lincoln, Nebraska, where the Company’s headquarters is located, the Company was awarded Best Places to Work.

Talent, development, and training

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The executive team convenes meetings with senior leadership and the board of directors to review top enterprise talent.

The Company continues to provide opportunities for associates to grow their careers internally, with almost 70% of open management positions filled internally during 2022.

The Company continues to provide opportunities for associates to grow their careers internally, with 60% of open management positions filled internally during 2023.

The Company provides a variety of professional, technical, and leadership training courses to help its associates grow in their current roles and build new skills and capabilities.

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The Company also offers tuition assistance to associates for degree programs, non-degree seeking individual classes, or certificate programs.

During 2022, the Company paid over $310,000 in tuition assistance for its associates.

Competitive pay, benefits, wellness, and safety

During 2023, the Company paid almost $540,000 in tuition assistance for its associates.

Competitive pay, benefits, and wellness

The general compensation philosophy of the Company, as an organization that values the long-term success of its shareholders, customers, and associates, is that the Company will pay fair, competitive, and equitable compensation designed to encourage focus on the long-term performance objectives of the Company and is differentiated based on both the individual’s performance and the performance of his or her respective business segment.

In carrying out this philosophy, the Company structures its overall compensation framework with the general objectives of encouraging equity ownership in the Company, savings, wellness, productivity, and innovation.

In addition, total compensation is intended to be market competitive compared to select industry surveys, internally consistent, and aligned with the philosophy of a performance-based organization.

In addition, total compensation is intended to be market competitive compared with select industry surveys, internally consistent, and aligned with the philosophy of a performance-based organization.

The Company provides a comprehensive benefits package, opportunities for retirement savings, and a robust wellness program.

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personal, professional, physical, and financial well-being.

In response to the COVID-19 pandemic, the Company has implemented and continues to implement safety measures in all its facilities.

Since March 2020, a vast majority of associates continue to work from their home.

However, non-remote associates currently have the choice to work in the office, at home, or a hybrid of both.

Culture, values, and ethics

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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-K

Item 1. Business