45 unchanged sentences
During the fourth quarter of 2023, no information was required to be disclosed in a report on Form 8-K, but not reported.
+Added: Rule 10b5-1 Trading Plans
+Added: During the fourth quarter of 2023, none of the Company's officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans, or any non-Rule 10b5-1 trading arrangement.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
39 unchanged sentences
3.2 Ninth Amended and Restated Bylaws of Nelnet, Inc., as amended as of May 24, 2018, filed as Exhibit 3.2 to the registrant's Current Report on Form 8-K filed on May 24, 2018 and incorporated herein by reference.
−Removed: 4.1 * Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 .
+Added: 4.1 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, filed as Exhibit 4.1 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2022 and incorporated herein by reference.
4.2 Form of Class A Common Stock Certificate of Nelnet, Inc., filed on November 24, 2003 as Exhibit 4.1 to the registrant’s Registration Statement on Form S-1 (Registration No.
27 unchanged sentences
Employee Share Purchase Plan, as amended through March 17, 2011, filed as Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference.
−Removed: 10.11 Office Building Lease dated June 21, 1996 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated herein by reference.
−Removed: 10.12 Amendment to Office Building Lease dated June 11, 1997 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.4 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated herein by reference.
−Removed: 10.13 Lease Amendment Number Two dated February 8, 2001 between Miller & Paine and Union Bank and Trust Company, filed as Exhibit 10.5 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated herein by reference.
−Removed: 10.14 Lease Amendment Number Three dated May 23, 2005 between Miller & Paine, LLC and Union Bank and Trust Company, filed as Exhibit 10.6 to the registrant's Current Report on Form 8-K filed on October 16, 2006 and incorporated herein by reference.
−Removed: 10.15 Lease Amendment Number Four dated November 13, 2007 between M & P Building, LLC and Union Bank and Trust Company, filed as Exhibit 10.14 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference.
−Removed: 10.16 Lease Amendment Number Five entered into in September 2008 between M & P Building, LLC and Union Bank and Trust Company, filed as Exhibit 10.15 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference.
−Removed: 10.17 Lease Amendment Number Six dated December 15, 2017 between Nelnet Real Estate Ventures, Inc.
−Removed: and Union Bank and Trust Company, filed as Exhibit 10.16 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference.
−Removed: 10.18# Office Building Lease dated January 5, 2021 between Union Bank and Trust Company and National Education Loan Network, filed as Exhibit 10.13 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.
10.11+ Nelnet, Inc.
3 unchanged sentences
10.13+ Nelnet, Inc.
−Removed: Directors Stock Compensation Plan, as amended through March 21, 2018, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on May 24, 2018 and incorporated herein by reference.
+Added: Directors Stock Compensation Plan, as amended and restated as of May 18, 202 3 , filed as Exhibit 10.1 to the registrant ’ s Current Report on Form 8-K filed on May 22, 2023 and incorporated herein by re ference.
10.14+ Nelnet, Inc.
−Removed: Executive Officers Incentive Compensation Plan, effective as of January 1, 2019, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on May 23, 2019 and incorporated herein by reference.
+Added: Executive Officers Incentive Compensation Plan, as amended and restated as of May 18, 202 3 , filed as Exhibit 10.2 to the registrant ’ s Current Report on Form 8-K filed on May 22, 2023 and incorporated herein by reference.
10.15 Loan Purchase Agreement, dated as of November 25, 2008, by and between Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC., acting, where applicable, by and through Wells Fargo Bank, National Association, not individually but as Eligible Lender Trustee for the Seller under the Warehouse Agreement or Eligible Lender Trust Agreement, and Union Bank and Trust Company, acting in its individual capacity and as trustee, filed as Exhibit 10.71 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
7 unchanged sentences
10.23 Form of Modification of Contract entered into on September 24, 2021 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on September 27, 2021 and incorporated herein by reference.
−Removed: 10.32 Form of Modification of Contract entered into December 29, 2021 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC , filed as Exhibit 10.3 2 to the registrant ’ s Annual Report on Form 10-K for the year ended Dec ember 31, 2021 and incorporated herein by reference .
−Removed: 10.33 Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.6 to the registrant's Current Report on Form 8-K filed on May 17, 2019 and incorporated herein by reference.
−Removed: 10.34 Modification of Contract dated effective as of May 21, 2014 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.7 to the registrant's Current Report on Form 8-K filed on May 17, 2019 and incorporated herein by reference.
−Removed: 10.35 Modification of Contract dated effective as of September 1, 2014 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.8 to the registrant's Current Report on Form 8-K filed on May 17, 2019 and incorporated herein by reference.
−Removed: 10.36 Modification of Contract dated effective as of June 16, 2019 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on May 17, 2019 and incorporated herein by reference.
−Removed: 10.37 Modification of Contract dated effective as of November 25, 2019 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on November 27, 2019 and incorporated herein by reference.
−Removed: 10.38 Modification of Contract dated effective as of December 15, 2020 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on December 15, 2020 and incorporated herein by reference.
−Removed: 10.39 Form of Modification of Contract dated effective as of June 15, 2021 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on June 10, 2021 and incorporated herein by reference.
−Removed: 10.40 Form of Modification of Contract entered into on September 24, 2021 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on September 27, 2021 and incorporated herein by reference.
−Removed: 10.41 Form of Modification of Contract entered into on January 7, 2022 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc ., filed as Exhibit 10.41 to the registrant ’ s Annual Report on Form 10-K for the year ended December 3 1, 2021 and incorporated herein by reference .
+Added: 10.24 Form of Modification of Contract entered into December 29, 2021 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC, filed as Exhibit 10.32 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.
+Added: 10.25 Form of Modification of Contract dated effective as of April 1, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC , filed as Exhibit 10.1 to the registrant ’ s Current Report on Form 8-K filed on March 30, 2023 and inc orporated herein by ref erence.
+Added: Student Loan Servicing Contract between the United States Department of Education and Nelnet Diversified Solutions, LLC , filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on April 25 , 2023 and incorporated herein by reference.
+Added: 10.27 Form of Modification of Contract dated effective as of October 10, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC , filed as Exhibit 10.
+Added: 1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and incorporated herein by reference.
+Added: 10.28 Form of Modification of Contract dated effective as of October 11, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC, filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and incorporated herein by reference.
+Added: 10.29*## Form of Modification of Contract dated effective as of December 15, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
+Added: 10.30*## Form of Modification of Contract dated effective as of December 15, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
+Added: 10.31*## Form of Modification of Contract dated effective as of December 15, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
+Added: 10.32*## Form of Modification of Contract dated effective as of December 15, 2023 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
10.33 Management Agreement, dated effective as of May 1, 2011, by Whitetail Rock Capital Management, LLC and Union Bank and Trust Company, filed as Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference.
10 unchanged sentences
10.44 Form of Custodian Agreement for Whitetail Rock SLAB Funds by and among the Fund, Whitetail Rock Fund Management, LLC, and Union Bank and Trust Company, filed as Exhibit 10.27 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference.
+Added: 10.45 Amended and Restated Form of Custodian Agreement for Whitetail Rock SLAB Funds by and among the Fund, Whitetail Rock Fund Management, LLC, and Union Bank and Trust Company , filed as Exhibit 10.
+Added: 5 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and incorporated herein by reference.
10.46 Form of Administrative Services Agreement for Whitetail Rock SLAB Funds by and among the Fund, Whitetail Rock Fund Management, LLC, Adminisystems, Inc., and Union Bank and Trust Company, filed as Exhibit 10.28 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference.
5 unchanged sentences
and various lender parties thereto, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on September 22, 2021 and incorporated herein by reference.
+Added: 10.49 Amendment No.
+Added: 1 to Third Amended and Restated Credit Agreement dated as of June 22, 2023, among Nelnet, Inc., the various lender parties thereto, and U.S.
+Added: Bank National Association, as Administrative Agent, filed as Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and incorporated herein by reference.
10.50 Third Amended and Restated Guaranty dated as of September 22, 2021, by each of the subsidiaries of Nelnet, Inc.
3 unchanged sentences
Bank National Association, as Administrative Agent, filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 and incorporated herein by reference.
−Removed: 10.59 Aircraft Joint Ownership Agreement dated as of January 1, 2019, by and between National Education Loan Network, Inc.
−Removed: and MSD711, LLC, filed as Exhibit 10.43 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference.
−Removed: 10.60 Aircraft Management Agreement, dated as of January 1, 2019, by and between Duncan Aviation, Inc.
−Removed: and National Education Loan Network, Inc.
−Removed: and MSD711, LLC, filed as Exhibit 10.44 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference.
+Added: 10.52 Guarantor Consent and Reaffirmation dated as of June 22, 2023, by each of the subsidiaries of Nelnet, Inc.
+Added: signatories thereto, in favor of U.S.
+Added: Bank National Association, as Administrative Agent , filed as Exhibit 10.
+Added: 4 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and incorporated herein by reference.
10.53 Amended and Restated Consulting and Services Agreement made and entered into as of October 1, 2013, by and between Nelnet, Inc.
21 unchanged sentences
10.68 SLABS Participation Agreement, dated effective as of May 5, 2020, by and between National Education Loan Network, Inc., and Union Bank and Trust Company, as Trustee, filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and incorporated herein by reference.
−Removed: 10.77 First Amendment of SLABS Participation Agreement, dated effective as of October 1, 2021, by and between National Education Loan Network, Inc., and Union Bank and Trust Company, as Trustee , filed as Exhibit 10.77 to the registra nt ’ s Annual Report on Form 10-K for the year ended Dec ember 31, 2021 and inc orporated herein by reference .
+Added: 10.69 First Amendment of SLABS Participation Agreement, dated effective as of October 1, 2021, by and between National Education Loan Network, Inc., and Union Bank and Trust Company, as Trustee, filed as Exhibit 10.77 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.
10.70 Parent Company Agreement, dated as of June 26, 2020, by and among the Federal Deposit Insurance Corporation, Nelnet, Inc., Michael Dunlap, and Nelnet Bank, filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and incorporated herein by reference.
5 unchanged sentences
and in which certain parties referred to therein with other relationships with Nelnet, Inc.
−Removed: have participated , filed as Exhibit 10.83 to the registrant ’ s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated here in by reference .
+Added: have participated, filed as Exhibit 10.83 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.
10.76±± Form of Management Agreement for solar energy investments managed by a subsidiary of Nelnet, Inc.
and in which certain parties referred to therein with other relationships with Nelnet, Inc.
−Removed: have participated , filed as Exhibit 10.84 to the registrant ’ s Annual Report on Form 10-K for the year ended December 31, 2021 and inc orporated herein by reference .
+Added: have participated, filed as Exhibit 10.84 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference.
21.1* Subsidiaries of Nelnet, Inc.
4 unchanged sentences
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
+Added: 97* Nelnet, Inc.
+Added: Incentive Compensation Clawback Policy dated November 9, 2023.
101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
17 unchanged sentences
# Schedules, exhibits, and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
+Added: ## Provided herewith for purposes of providing a complete set of all modifications to the Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
FORM 10-K SUMMARY
59 unchanged sentences
Assessment of the allowance for loan losses
−Removed: As discussed in Note 4 to the consolidated financial statements, the Company’s allowance for loan losses as of December 31, 2022, was $131.8 million, of which $83.6 million related to the Company’s allowance for loan losses on Non-Nelnet Bank federally insured loans and $15.4 million related to the Company’s allowance for loan losses on Non-Nelnet Bank private education loans, collectively, the allowance for loan losses (the ALL).
+Added: As discussed in Note 3 to the consolidated financial statements, the Company’s allowance for loan losses as of December 31, 2023, was $104.6 million, of which $68.5 million related to the Company’s allowance for loan losses on federally insured loans and $15.8 million related to the Company’s allowance for loan losses on Non-Nelnet Bank private education loans, collectively, the allowance for loan losses (the ALL).
The ALL is the measure of expected credit losses on a pooled basis for those loans that share similar risk characteristics based on a collective assessment using a combination of measurement models and management judgment.
3 unchanged sentences
The undiscounted cash flow model incorporates probability weighted economic forecast scenarios and macroeconomic assumptions over the reasonable and supportable forecast periods.
−Removed: After the reasonable and supportable forecast periods, the Company reverts on a straight-line basis over the reversion period to its historical loss rates, evaluated over the historical observation period, for the remaining life of the loans.
+Added: After the reasonable and supportable forecast periods, the Company reverts on a straight-line basis over the reversion period to its historical loss rates, evaluated
+Added: over the historical observation period, for the remaining life of the loans.
All such periods are established for each portfolio segment.
3 unchanged sentences
Specifically, the assessment encompassed the evaluation of the ALL methodology, including the methods, models, and significant assumptions used to estimate the PD and LGD.
−Removed: Such assumptions included segmentation of loans with similar risk characteristics, the economic forecast scenario and macroeconomic assumptions, the reasonable and supportable forecast periods, and the historical observation period.
+Added: Such assumptions included the economic forecast scenario and macroeconomic assumptions, the reasonable and supportable forecast periods, and the historical observation period.
The assessment also included an evaluation of the conceptual soundness and performance of the PD and LGD models.
15 unchanged sentences
• evaluating the historical observation period and reasonable and supportable forecast periods by comparing to specific portfolio risk characteristics and trends
−Removed: • determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices.
We also assessed the cumulative results of the procedures performed to assess the sufficiency of the audit evidence obtained related to the ALL estimate by evaluating the:
19 unchanged sentences
Restricted cash - due to customers 368,656 294,311
+Added: Restricted investments 17,969 —
Accounts receivable (net of allowance for doubtful accounts of $ 4,304 and $ 3,079 , respectively)
27 unchanged sentences
Retained earnings 3,279,273 3,234,844
−Removed: Accumulated other comprehensive (loss) earnings, net ( 37,366 ) 9,304
+Added: Accumulated other comprehensive loss, net ( 20,119 ) ( 37,366 )
Total Nelnet, Inc.
25 unchanged sentences
Loan servicing and systems revenue 517,954 535,459 486,363
−Removed: Education technology, services, and payment processing revenue 408,543 338,234 282,196
−Removed: Communications revenue — — 76,643
+Added: Education technology services and payments revenue 463,311 408,543 338,234
Solar construction revenue 31,669 24,543 —
1 unchanged sentence
Gain on sale of loans, net 39,673 2,903 18,715
−Removed: Gain from deconsolidation of ALLO — — 258,588
−Removed: Impairment expense and provision for beneficial interests, net ( 15,523 ) ( 16,360 ) ( 24,723 )
+Added: Impairment expense ( 31,925 ) ( 15,523 ) ( 16,360 )
Derivative market value adjustments and derivative settlements, net ( 16,701 ) 264,634 71,446
−Removed: Total other income (expense) 1,246,045 977,079 1,110,384
+Added: Total other income (expense), net 955,194 1,246,045 977,079
Cost of services:
−Removed: Cost to provide education technology, services, and payment processing services 148,403 108,660 82,206
−Removed: Cost to provide communications services — — 22,812
+Added: Cost to provide education technology services and payments 171,183 148,403 108,660
Cost to provide solar construction services 48,576 19,971 —
22 unchanged sentences
Net income $ 54,435 396,241 386,283
−Removed: Other comprehensive (loss) income:
+Added: Other comprehensive income (loss):
Net changes related to foreign currency translation adjustments $ ( 10 ) ( 9 ) ( 10 )
Net changes related to available-for-sale debt securities:
−Removed: Unrealized holding (losses) gains arising during period, net ( 58,946 ) 6,921 6,637
−Removed: Reclassification of gains recognized in net income, net of losses ( 5,902 ) ( 2,695 ) ( 2,521 )
+Added: Unrealized holding gains (losses) arising during period, net 18,379 ( 58,946 ) 6,921
+Added: Reclassification of losses (gains) recognized in net income, net 3,504 ( 5,902 ) ( 2,695 )
+Added: Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 202 — —
Income tax effect ( 5,301 ) 16,784 15,564 ( 49,284 ) ( 1,014 ) 3,212
2 unchanged sentences
Income tax effect ( 149 ) 473 ( 829 ) 2,623 — —
−Removed: Other comprehensive (loss) income ( 46,670 ) 3,202 3,130
+Added: Other comprehensive income (loss) 17,247 ( 46,670 ) 3,202
Comprehensive income 71,682 349,571 389,485
6 unchanged sentences
Years ended December 31, 2023, 2022, and 2021
−Removed: Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) earnings Noncontrolling interests Total equity
+Added: Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive earnings (loss) Noncontrolling interests Total equity
Class A Class B
11 unchanged sentences
Repurchase of common stock — ( 713,274 ) — — ( 7 ) — ( 18,036 ) ( 40,068 ) — — ( 58,111 )
−Removed: Impact of adoption of new accounting standard — — — — — — — ( 18,868 ) — — ( 18,868 )
Conversion of common stock — 478,929 ( 478,929 ) — 5 ( 5 ) — — — — —
−Removed: Acquisition of noncontrolling interest — — — — — — — ( 375 ) — ( 225 ) ( 600 )
−Removed: Deconsolidation of noncontrolling interest - ALLO — — — — — — — — — ( 208,175 ) ( 208,175 )
−Removed: Other equity transactions, net of costs incurred to sell shares of subsidiary — — — — — — — 1,218 — — 1,218
Balance as of December 31, 2021 — 27,239,654 10,676,642 — 272 107 1,000 2,940,523 9,304 1,632 2,952,838
1 unchanged sentence
Net income (loss) — — — — — — — 407,347 — ( 11,106 ) 396,241
−Removed: Other comprehensive income
+Added: Other comprehensive loss
— — — — — — — — ( 46,670 ) — ( 46,670 )
9 unchanged sentences
Net income (loss) — — — — — — — 91,532 — ( 37,097 ) 54,435
−Removed: Other comprehensive loss
+Added: Other comprehensive income
— — — — — — — — 17,247 — 17,247
22 unchanged sentences
Derivative market value adjustments 41,773 ( 231,691 ) ( 92,813 )
−Removed: Proceeds from termination of derivative instruments, net 91,786 — —
−Removed: Proceeds from (payments to) clearinghouse - initial and variation margin, net 148,691 91,294 ( 26,747 )
−Removed: Gain from deconsolidation of ALLO, including cash impact — — ( 287,579 )
−Removed: Gain on sale of loans ( 2,903 ) ( 18,715 ) ( 33,023 )
+Added: Proceeds from termination of derivative instruments 164,079 91,786 —
+Added: (Payments to) proceeds from clearinghouse - initial and variation margin, net ( 213,923 ) 148,691 91,294
+Added: Gain on sale of loans, net ( 39,673 ) ( 2,903 ) ( 18,715 )
Loss (gain) on investments, net 117,968 24,643 ( 3,811 )
−Removed: (Gain) loss from repurchases of debt, net ( 1,231 ) 6,775 ( 1,924 )
−Removed: Proceeds from sale (purchases) of equity securities, net 42,841 ( 42,916 ) —
−Removed: Deferred income tax expense 34,640 55,622 7,974
+Added: Proceeds from sale of equity securities, net of purchases 75 42,841 ( 42,916 )
+Added: Deferred income tax (benefit) expense ( 51,963 ) 34,640 55,622
Non-cash compensation expense 16,476 14,176 10,673
−Removed: Impairment expense and provision for beneficial interests, net 15,523 16,360 24,723
−Removed: Other, net 723 — 186
−Removed: (Increase) decrease in loan and investment accrued interest receivable ( 38,500 ) 1,378 ( 61,090 )
−Removed: (Increase) decrease in accounts receivable ( 26,358 ) ( 86,982 ) 40,880
−Removed: (Increase) decrease in other assets, net ( 11,275 ) 39,439 59,182
+Added: Impairment expense 29,539 15,523 16,360
+Added: Decrease (increase) in loan and investment accrued interest receivable 47,217 ( 38,500 ) 1,378
+Added: Increase in accounts receivable ( 1,356 ) ( 26,358 ) ( 86,982 )
+Added: Decrease (increase) in other assets, net 3,890 ( 11,783 ) 46,214
Decrease in the carrying amount of ROU asset, net 4,881 5,702 7,170
−Removed: Increase (decrease) in accrued interest payable 31,483 ( 24,135 ) ( 18,584 )
+Added: (Decrease) increase in accrued interest payable ( 658 ) 31,483 ( 24,135 )
Increase in other liabilities 85,537 40,001 29,775
10 unchanged sentences
Purchases of other investments and issuance of notes receivable ( 344,918 ) ( 263,346 ) ( 253,894 )
−Removed: Proceeds from other investments 65,369 191,821 13,011
+Added: Proceeds from other investments and repayments of notes receivable 41,309 65,369 191,821
Purchases of held-to-maturity debt securities ( 12,425 ) ( 240 ) ( 8,200 )
12 unchanged sentences
Increase in bank deposits, net 52,277 347,007 289,682
−Removed: (Decrease) increase in due to customers ( 17,670 ) 64,539 ( 136,285 )
+Added: Increase (decrease) in due to customers 77,182 ( 17,670 ) 64,539
Dividends paid ( 39,419 ) ( 36,608 ) ( 34,457 )
1 unchanged sentence
Proceeds from issuance of common stock 1,780 1,633 1,465
−Removed: Acquisition of noncontrolling interest — — ( 600 )
Issuance of noncontrolling interests 88,389 55,777 50,716
2 unchanged sentences
Effect of exchange rate changes on cash 16 ( 160 ) ( 121 )
−Removed: Net increase (decrease) in cash, cash equivalents, and restricted cash 163,427 235,794 ( 264,206 )
+Added: Net (decrease) increase in cash, cash equivalents, and restricted cash ( 332,125 ) 163,427 235,794
Cash, cash equivalents, and restricted cash, beginning of period 1,357,616 1,194,189 958,395
4 unchanged sentences
Cash disbursements made for operating leases $ 6,550 6,797 7,970
−Removed: Noncash operating, investing, and financing activity:
−Removed: Business acquisition deferred purchase price $ 5,000 — —
+Added: Non-cash operating, investing, and financing activity:
ROU assets obtained in exchange for lease obligations $ 18,860 7,728 4,228
+Added: Business acquisition deferred purchase price $ — 5,000 —
Receipt of beneficial interest in consumer loan securitizations as consideration from sale of loans $ 89,130 19,069 23,506
−Removed: Receipt of held-to-maturity debt securities as consideration from sale of loans $ 13,806 — —
+Added: Receipt of asset-backed investment securities as consideration from sale of loans $ 66,546 13,806 —
+Added: Asset-backed investment securities held as collateral for reinsurance treaties $ 17,969 — —
Distribution to noncontrolling interests $ 101,132 53,038 47,881
1 unchanged sentence
(a) For 2023, 2022, and 2021 the Company utilized $ 53.8 million, $ 11.2 million, and $ 34.1 million of federal and state tax credits, respectively, related primarily to renewable energy.
−Removed: Supplemental disclosures of noncash activities regarding the adoption of the new accounting standard for measurement of credit losses on January 1, 2020 are contained in note 3.
−Removed: Supplemental disclosures of noncash activities regarding the Company's recapitalization of ALLO in 2020 and business acquisitions during 2020 and 2022 are contained in note 2 and note 8, respectively.
−Removed: The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.
+Added: Supplemental disclosures of non-cash activities regarding the Company's business acquisitions are contained in note 7.
+Added: The following table presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.
As of As of As of As of
4 unchanged sentences
Cash, cash equivalents, and restricted cash $ 1,025,491 1,357,616 1,194,189 958,395
−Removed: $ 1,357,616 1,194,189 958,395 1,222,601
See accompanying notes to consolidated financial statements.
4 unchanged sentences
and its subsidiaries (“Nelnet” or the “Company”) is a diverse, innovative company with a purpose to serve others and a vision to make dreams possible.
−Removed: 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.
+Added: 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.
−Removed: The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in early-stage and emerging growth companies, real estate, and renewable energy (solar).
+Added: The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in 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.
4 unchanged sentences
This law does not alter or affect the terms and conditions of existing FFELP loans.
−Removed: As a result of the Reconciliation Act of 2010, the Company no longer originates FFELP loans.
+Added: 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.
Interest income on the Company's existing FFELP loan portfolio will decline over time as the portfolio is paid down.
−Removed: 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.
−Removed: 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).
+Added: 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.
1 unchanged sentence
• Loan Servicing and Systems (LSS)
−Removed: • Education Technology, Services, and Payment Processing (ETS&PP)
−Removed: • Asset Generation and Management (AGM)
−Removed: • Nelnet Bank
−Removed: • Communications
−Removed: A description of each reportable operating segment is included below.
+Added: • Education Technology Services and Payments (ETSP)
+Added: • Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division
+Added: • Nelnet Bank, part of the NFS division
+Added: A description of each reportable operating segments is included below.
See note 16 for additional information on the Company's segment reporting.
3 unchanged sentences
• Servicing FFELP loans
−Removed: • Originating and servicing private education and consumer loans
−Removed: • Backup servicing for FFELP, private education, and consumer loans
+Added: • Servicing private education and consumer loans
+Added: • Providing backup servicing for FFELP, private education, and consumer loans
• Providing student loan servicing software and other information technology products and services
7 unchanged sentences
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Nelnet Servicing, LLC (“Nelnet Servicing”) and Great Lakes Educational Loan Services, Inc.
−Removed: (“Great Lakes”), subsidiaries of the Company, are two of the current six private sector entities that have student loan servicing contracts with the Department to provide servicing capacity for loans owned by the Department.
−Removed: This segment also provides student loan servicing software, which is used internally and licensed to third-party student loan holders and servicers.
+Added: 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.
+Added: LSS also provides student loan servicing software, which is used internally and licensed to third-party student loan holders and servicers.
These software systems have been adapted so that they can be offered as hosted servicing software solutions usable by third parties to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans.
1 unchanged sentence
The contact center solutions and services include taking inbound calls, helping with outreach campaigns and sales, interacting with customers through multi-channels, and processing and technology services.
−Removed: Education Technology, Services, and Payment Processing
−Removed: The Education Technology, Services, and Payment Processing reportable operating segment (known as Nelnet Business Services (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.
−Removed: NBS provides service and technology under five divisions as follows:
+Added: Education Technology Services and Payments
+Added: The Education Technology Services and Payments reportable operating segment (known as Nelnet Business Services (NBS)) provides education and payment technology and services for K-12 schools, higher education institutions, churches, and businesses in the United States and internationally.
+Added: NBS provides service and technology under four divisions as described below.
FACTS provides solutions that elevate the education experience in the K-12 private and faith-based markets for school administrators, teachers, and families.
−Removed: FACTS offers (i) financial management, including tuition payment plans and financial needs assessment (grant and aid);
−Removed: (ii) school administration solutions, including school information system software that 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;
−Removed: (iii) enrollment and communications, including website design and cost effective admissions software;
−Removed: (iv) advancement (giving management), including a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting;
−Removed: and (v) education development, including customized professional development and coaching services, educational instruction services, and innovative technology products that aid in teacher and student evaluations.
+Added: FACTS offers a comprehensive suite of services and technology in the following categories:
+Added: (i) financial management, including tuition payment plans, incidental billing, payment forms, advanced accounting, financial needs assessments (grant and aid), and a donation platform;
+Added: (ii) school management, including a school management platform and application and enrollment services;
+Added: and (iii) learning management.
Nelnet Campus Commerce delivers payment technology to higher education institutions.
2 unchanged sentences
Nelnet Payment Services provides secure payment processing technology.
−Removed: Nelnet Payment Services supports and provides payment processing services, including credit card and electronic transfer, to the other divisions of NBS and Nelnet in addition to other industries and software platforms across the United States.
−Removed: Nelnet Community Engagement provides faith community engagement, giving management, and learning management services and technologies.
−Removed: Nelnet Community Engagement serves customers in the technology, nonprofit, religious, health care, and professional services industries.
+Added: 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 industries and software platforms across the United States.
Nelnet International provides its services and technology in Australia, New Zealand, and the Asia-Pacific region.
−Removed: Nelnet International serves customers in the education, local government, and healthcare industries.
+Added: Nelnet International serves customers in the education, local government, and health care industries.
Nelnet International’s suite of services include an integrated commerce payment platform, financial management and tuition payment plan services, and a school management platform that provides administrative, information management, financial management, and communication functions for K-12 schools.
+Added: Nelnet Financial Services
+Added: Nelnet Financial Services is a division of the Company that includes the following reportable operating segments:
• Asset Generation and Management
+Added: • Nelnet Bank
+Added: Asset Generation and Management
The Company's Asset Generation and Management reportable operating segment includes the acquisition, management, and ownership of the Company's loan assets (excluding loan assets held by Nelnet Bank).
Substantially all loan assets included in this segment are student loans originated under the FFEL Program, including the Stafford Loan Program, the PLUS Loan program, and loans that reflect the consolidation into a single loan of certain previously separate borrower obligations (“consolidation” loans).
−Removed: AGM also acquires private education, consumer, and other loans.
+Added: AGM also acquires private education, consumer, and other loans, or investment interests therein.
AGM 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.
4 unchanged sentences
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: 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.
−Removed: Nelnet Bank operates as an internet Utah-chartered industrial bank franchise focused on the private education and consumer loan marketplace, with a home office in Salt Lake City, Utah.
−Removed: Nelnet Bank serves and plans to serve a niche market, with a concentration in the private education and unsecured consumer loan markets.
−Removed: Communications
−Removed: ALLO Communications LLC (“ALLO”) provides pure fiber optic service to homes and businesses for internet, television, and telephone services.
−Removed: ALLO derives its revenue primarily from the sale of communication services to residential, governmental, and business customers in Nebraska, Colorado, and Arizona.
−Removed: Internet and television services include revenue from residential and business customers for subscriptions to ALLO's data and video products.
−Removed: ALLO data services provide high-speed internet access over ALLO's all-fiber network at various symmetrical speeds of up to 1 gigabit per second for residential customers and is capable of providing symmetrical speeds of over 1 gigabit per second for business customers.
−Removed: Telephone services include local and long distance telephone service, hosted PBX services, and other services.
−Removed: On December 21, 2020 the Company deconsolidated ALLO from the Company’s consolidated financial statements due to ALLO’s recapitalization.
−Removed: 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 deconsolidation, are presented by the Company as a reportable operating segment.
−Removed: See note 2 for a description of this transaction and the Company’s continued involvement.
−Removed: Corporate and Other Activities
−Removed: Other business activities and operating segments that are not reportable are combined and included in Corporate and Other Activities.
−Removed: Corporate and Other Activities include the following items:
+Added: In addition to ownership of loan assets, AGM has partial ownership in consumer, private education, and federally insured student loan third-party securitizations.
+Added: 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.
+Added: AGM’s partial ownership percentage in each loan securitization grants AGM the right to receive the corresponding percentage of cash flows generated by the securitization.
+Added: Nelnet Bank operates as an internet Utah-chartered industrial bank franchise with a home office in Salt Lake City, Utah.
+Added: Nelnet Bank is focused on the private education and consumer loan marketplace.
+Added: NFS Other Operating Segments
+Added: 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 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
−Removed: • 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
−Removed: • The results of the majority of the Company’s investment activities, including early-stage and emerging growth companies and real estate
−Removed: • Interest income earned on cash and investment debt securities (primarily student loan and other asset-backed securities)
−Removed: • Interest expense incurred on unsecured and certain other corporate related debt transactions
−Removed: • Other product and service offerings that are not considered reportable operating segments
−Removed: Corporate and Other Activities also include certain activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing.
+Added: • The operating results of Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and causality policies
+Added: • The operating results of the Company’s investment activities in real estate
+Added: • 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
+Added: Corporate and Other Activities
+Added: 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”).
+Added: Corporate includes the following items:
+Added: • 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
−Removed: 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.
−Removed: ALLO Recapitalization
−Removed: On October 1, 2020, the Company entered into various agreements with SDC, a third-party global digital infrastructure investor, and ALLO, then a majority owned communications subsidiary of the Company, for various transactions contemplated by the parties in connection with a recapitalization and additional funding for ALLO.
−Removed: The agreements provided for a series of interrelated transactions, whereby on October 15, 2020, ALLO received proceeds of $ 197.0 million from SDC as the purchase price for the issuance of non-voting preferred membership units of ALLO, and redeemed $ 160.0 million of non-voting preferred membership units of ALLO held by the Company.
−Removed: On December 21, 2020, the non-voting preferred membership units of ALLO held by SDC automatically converted into voting membership units of ALLO pursuant to the terms of the agreements upon the receipt on December 21, 2020 of the required approvals from
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: applicable regulatory authorities.
−Removed: As a result of such conversion, SDC, the Company, and members of ALLO’s management own approximately 48 %, 45 %, and 7 %, respectively, of the outstanding voting membership interests of ALLO, and the Company deconsolidated ALLO from the Company’s consolidated financial statements.
−Removed: Upon the deconsolidation of ALLO, the Company recorded its 45 % voting membership interests in ALLO at fair value, and accounts for such investment under the Hypothetical Liquidation at Book Value (HLBV) method of accounting.
−Removed: In addition, the Company recorded its remaining non-voting preferred membership interests in ALLO at fair value, and accounts for such investment as a separate equity investment.
−Removed: The agreements between the Company, SDC, and ALLO provide that they will use commercially reasonable efforts (which expressly excludes requiring ALLO to raise any additional equity financing or sell any assets) to cause ALLO to redeem, on or before April 2024, the remaining preferred membership units of ALLO held by the Company, plus the amount of accrued and unpaid preferred return on such units.
−Removed: The preferred membership units earn a preferred annual return of 6.25 %.
−Removed: However, if the non-voting preferred membership interests are not redeemed on or before April 2024, the preferred annual return is increased from 6.25 % to 10.00 %.
−Removed: The voting membership interests and non-voting preferred membership interests of ALLO are included on the consolidated balance sheet in “investments and notes receivable.” See note 7 for additional information.
−Removed: As a result of the deconsolidation of ALLO on December 21, 2020, the Company recognized a gain of $ 258.6 million as summarized below.
−Removed: December 21, 2020
−Removed: Voting interest/equity method investment - recorded at fair value $ 132,960
−Removed: Preferred membership interest investment - recorded at fair value 228,530
−Removed: ALLO assets deconsolidated:
−Removed: Cash and cash equivalents – not held at a related party ( 299 )
−Removed: Cash and cash equivalents – held at a related party ( 28,692 )
−Removed: Accounts receivable ( 4,138 )
−Removed: Goodwill ( 21,112 )
−Removed: Intangible assets ( 6,083 )
−Removed: Property and equipment, net ( 245,295 )
−Removed: Other assets ( 29,643 )
−Removed: Other liabilities 24,185
−Removed: Noncontrolling interests 208,175
−Removed: Gain recognized upon deconsolidation of ALLO $ 258,588
−Removed: The impact to the Company’s 2020 operating results as a result of the ALLO recapitalization is summarized below:
−Removed: Gain from deconsolidation $ 258,588
−Removed: Compensation expense (note 1) ( 9,298 )
−Removed: Obligation to SDC (note 2) ( 2,339 )
−Removed: On October 1, 2020 (prior to the deconsolidation of ALLO), ALLO recognized compensation expense related to the modification of certain equity awards previously granted to members of ALLO’s management.
−Removed: As part of the ALLO recapitalization transaction, the Company and SDC entered into an agreement, in which the Company has a contingent payment obligation to pay SDC a contingent payment amount of $ 25.0 million to $ 35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels.
−Removed: The Company recognized the estimated fair value of the contingent payment as of December 31, 2020 to be $ 2.3 million.
−Removed: During 2022, the Company recognized an additional expense of $ 5.3 million associated with this obligation, and as of December 31, 2022 the estimated fair value of the contingent payment is $ 7.6 million, which is included in “other liabilities” on the consolidated balance sheet.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: • Corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs
+Added: • 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 construction and development
+Added: • The operating results of certain of the Company’s investment activities, including its investment in ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as “ALLO”) and early-stage and emerging growth companies (venture capital investments)
+Added: • Interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions
+Added: • Other product and service offerings that are not considered reportable operating segments
Summary of Significant Accounting Policies and Practices
4 unchanged sentences
All significant intercompany balances and transactions have been eliminated in consolidation.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Variable Interest Entities
The Company assesses its partnerships and joint ventures to determine if the entity meets the qualifications of a VIE.
−Removed: The Company performs a qualitative assessment of each VIE to determine if it is the primary beneficiary.
+Added: The Company performs a qualitative assessment of each identified VIE to determine if it is the primary beneficiary.
The primary beneficiary is the entity which has both:
14 unchanged sentences
The Company is not required to consolidate VIEs in which it has determined it is not the primary beneficiary.
−Removed: As of December 31, 2022, the Company owned 45 % of the economic rights of ALLO Communications LLC and has a disproportional 43 % of the voting rights related to all operating decisions for ALLO's business.
−Removed: See note 1 for a description of ALLO, including the primary services offered.
−Removed: See note 2 for disclosure of ALLO’s recapitalization and the Company’s initial recognition of its voting interest/equity method and non-voting preferred membership investments.
−Removed: See note 7 for the Company’s carrying value of its voting interest/equity method and non-voting preferred membership investments, which is the Company’s maximum exposure to loss.
+Added: VIEs not consolidated by the Company include its equity investment in ALLO, tax equity investments, and beneficial interests in loan securitizations.
+Added: As of December 31, 2023, the Company owned 45 % of the economic rights of ALLO, and has a disproportional 43 % of the voting rights related to all operating decisions for ALLO's business.
+Added: ALLO provides pure fiber optic service to homes and businesses for internet, television, and telephone services.
+Added: See note 6 for the Company’s carrying value of its voting interest and non-voting preferred membership investments, which is the Company’s maximum exposure to loss.
+Added: Prior to December 21, 2020, the Company consolidated the operating results of ALLO.
+Added: In 2020, the Company entered into various agreements with SDC, a third-party global digital infrastructure investor, and ALLO, for various transactions contemplated by the parties in connection with a recapitalization for ALLO.
+Added: The recapitalization transaction ultimately resulted in the deconsolidation of ALLO from the Company’s consolidated financial statements.
+Added: As part of the ALLO recapitalization transaction, the Company and SDC entered into an agreement, in which the Company has a contingent payment obligation to pay SDC a contingent payment amount of up to $ 35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels.
+Added: The Company recognized the estimated fair value of the contingent payment to be $ 9.8 million and $ 7.6 million as of December 31, 2023 and 2022, respectively, which is included in “other liabilities” on the consolidated balance sheets.
+Added: Tax Equity Investments
The Company makes tax equity investments in entities that promote renewable energy sources (solar).
The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits, operating cash flows, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods.
−Removed: These investments are included in "investments and notes receivable" on the consolidated balance sheets and accounted for under the HLBV method of accounting.
+Added: These investments are included in "investments and notes receivable" on the consolidated balance sheets.
+Added: As of December 31, 2023, the Company has funded a total of $ 470.7 million in solar investments, which included $ 198.8 million funded by syndication partners.
The carrying value of these investments are reduced by tax credits earned when the solar project is placed-in-service.
−Removed: The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are included in “other liabilities” on the consolidated balance sheets.
−Removed: The Company’s maximum exposure to loss from these unconsolidated VIEs include the investment, unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level.
−Removed: The tax credit recapture period ratably decreases over five years from when the project is placed-in-service.
−Removed: While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the energy-producing projects completely fail and do not meet certain government compliance requirements resulting in recapture of the related tax credits.
+Added: The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are included in “other liabilities” on the consolidated balance sheets when the solar project is placed-in-service.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: The following table provides a summary of solar investment VIEs that the Company has not consolidated:
+Added: The Company’s maximum exposure to loss from these unconsolidated VIEs include the investment, unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level.
+Added: The tax credit recapture period ratably decreases over five years from when the project is placed-in-service.
+Added: While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the energy-producing projects completely fail and do not meet certain government compliance requirements resulting in recapture of the related tax credits.
+Added: The following table presents a summary of solar investment VIEs that the Company has not consolidated:
As of December 31,
−Removed: Investment carrying amount $ ( 36,863 ) ( 42,457 )
+Added: Investment carrying amount, excluding third-party investors $ ( 65,266 ) ( 36,863 )
Tax credits subject to recapture 153,699 88,692
1 unchanged sentence
Company’s maximum exposure to loss $ 170,479 85,285
−Removed: Exposure syndicated to third-party investors 129,011 71,511
−Removed: Maximum exposure to loss $ 214,296 144,693
−Removed: Reclassification of Prior Period Cash Flow Presentation
−Removed: In prior years, the line item in the Company's consolidated statements of cash flows for changes in amounts "due to customers" was presented in cash flows from operating activities.
−Removed: Beginning in 2022, the Company corrected this presentation for all periods presented in its statements of cash flows to show this activity as a financing activity.
−Removed: This correction had no impact on the Company's previously reported consolidated net income, total assets (including cash and cash equivalents), liabilities, and equity, and while the correction had a corresponding impact on the amounts of cash flows from operating and financing activities, it had no impact on the net increase or decrease in cash for previously reported periods.
−Removed: The Company has concluded that the correction was not material from a combined quantitative and qualitative perspective to its previously issued financial statements for 2021 and 2020.
+Added: As of December 31, 2023, the Company is committed to fund an additional $ 154.2 million on new tax equity investments, of which $ 72.1 million is expected to be provided by syndication partners.
+Added: Beneficial Interest in Loan Securitizations
+Added: The Company 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.
+Added: 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.
+Added: See note 6 for the Company’s carrying value of its beneficial interest in loan securitization investments, which is the Company’s maximum exposure to loss.
Noncontrolling Interests
3 unchanged sentences
• NGWeb Solutions, LLC - The Company acquired a controlling interest of NGWeb Solutions, LLC on April 30, 2022.
−Removed: Minority membership interests of 20 % was maintained by prior interest holders.
+Added: Minority membership interests of 20 % were maintained by prior interest holders.
See note 7 for a description of NGWeb Solutions, LLC, including the primary services offered.
• GRNE-Nelnet, LLC and ENRG-Nelnet, LLC - The Company acquired a controlling interest in two subsidiaries of GRNE Solutions, LLC on July 1, 2022.
−Removed: Minority membership interests of 20 % was maintained by prior interest holders.
+Added: Minority membership interests of 20 % were maintained by prior interest holders.
See note 7 for additional description of the acquisition, including the primary services offered.
7 unchanged sentences
If the Company has the ability and intent to hold loans for the foreseeable future, such loans are held for investment and carried at amortized cost.
−Removed: Amortized cost includes the unamortized premium or discount and capitalized origination costs and fees, all of which are amortized to interest income.
+Added: Amortized cost includes the unamortized premium or discount and capitalized origination costs and fees, all of which are amortized to interest
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Loans which are held-for-investment also have an allowance for loan loss as needed.
2 unchanged sentences
There were no loans classified as held for sale as of December 31, 2023 and 2022.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
Federally insured loans were originated under the FFEL Program by certain eligible lenders as defined by the Higher Education Act of 1965, as amended (the “Higher Education Act”).
23 unchanged sentences
These loans typically have a revolving draw period of five years and a repayment period at the end of the draw period of five to ten years .
−Removed: Principal and interest payments are generally required to be made during the draw period and repayment period.
+Added: Principal and interest payments are generally required to be made during the draw and repayment periods.
+Added: On January 1, 2023, the Company adopted new accounting guidance concerning loan modifications.
+Added: The new guidance requires an entity to evaluate whether a loan modification represents a new loan or a continuation of an existing loan and enhances the disclosure requirements for certain modifications of receivables made to borrowers experiencing financial difficulty.
+Added: Because federally insured loan modifications are driven by the Higher Education Act, the Company does not consider these events as part of its loan modification programs.
+Added: Administrative forbearances (e.g.
+Added: bankruptcy, military service, death and disability, and disaster forbearance) are required by law and therefore are also not considered as part of the Company's loan modification programs.
+Added: The Company does offer payment delays in the form of deferments or forbearances on certain private education and consumer loan programs for short-term periods.
+Added: The Company generally considers payment delays to be insignificant when the delay is 3 months or less.
+Added: The amortized cost of the Company’s private education and consumer loans in which the borrower is experiencing financial difficulty and the financial effect of such loan modifications is not material.
Allowance for Loan Losses
−Removed: On January 1, 2020, the Company adopted ASU No.
−Removed: 2016-13, Financial Instruments – Credit Losses (“Topic 326”):
−Removed: Measurement of Credit Losses on Financial Instruments , which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology.
+Added: The Company accounts for the evaluation and estimate of probable losses on loans under the current expected credit loss (CECL) methodology.
The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for financial assets measured at amortized cost at the time the financial asset is originated or acquired.
The expected credit losses are adjusted each period for changes in expected lifetime credit losses.
−Removed: The Company adopted Topic 326 using the modified retrospective method.
−Removed: Upon adoption, the Company recorded an increase to the allowance for loan losses of $ 91.0 million and decreased retained earnings, net of tax, by $ 18.9 million.
−Removed: Allowance for Loan Losses - Accounting Policies
The allowance for loan losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans as of the balance sheet date.
−Removed: Such allowance is based on the credit losses expected to arise over the life of the asset which includes consideration of prepayments.
−Removed: Loans are charged off when management determines the loan is uncollectible.
−Removed: Charge-offs are recognized as a reduction to the allowance for loan losses.
−Removed: Expected recoveries of amounts previously charged off, not to exceed the aggregate of the amount previously charged off, are included in the estimate of the allowance for loan losses at the balance sheet date.
+Added: Such allowance is based on the credit losses expected
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: to arise over the life of the asset which includes consideration of prepayments.
+Added: Loans are charged off when management determines the loan is uncollectible.
+Added: Charge-offs are recognized as a reduction to the allowance for loan losses.
+Added: Expected recoveries of amounts previously charged off, not to exceed the aggregate of the amount previously charged off, are included in the estimate of the allowance for loan losses at the balance sheet date.
The Company determines its estimated credit losses for the following financial assets as follows:
39 unchanged sentences
Subsequent changes to the allowance for credit losses are recorded through provision expense.
−Removed: Loan Accrued Interest Receivable
−Removed: Accrued interest receivable on loans is combined and presented with the loans receivable amortized cost balance on the Company’s consolidated balance sheets.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Loan Accrued Interest Receivable
+Added: Accrued interest receivable on loans is combined and presented with the loans receivable amortized cost balance on the Company’s consolidated balance sheets.
For the Company’s federally insured loan portfolio, the Company records an allowance for credit losses for accrued interest receivables.
4 unchanged sentences
Charge-offs of accrued interest receivable are recognized by reversing interest income.
−Removed: Cash and Cash Equivalents and Statements of Cash Flows
+Added: Cash and Cash Equivalents
The Company considers all investments with original maturities of three months or less to be cash equivalents.
Cash and cash equivalents include amounts due to Nelnet Bank from the Federal Reserve Bank of $ 7.0 million and $ 5.2 million as of December 31, 2023 and 2022, respectively.
−Removed: Accrued interest on loans purchased and sold is included in cash flows from operating activities in the respective period.
−Removed: Net purchased loan accrued interest was $ 33.1 million, $ 48.3 million, and $ 92.3 million in 2022, 2021, and 2020, respectively.
−Removed: The Company classifies its debt securities, primarily student loan and other asset-backed securities, as available-for-sale.
−Removed: These securities are carried at fair value, with the changes in fair value, net of taxes, carried as a separate component of shareholders’ equity.
−Removed: The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts, which are amortized using the effective interest rate method.
+Added: The Company accounts for purchases and sales of debt securities on a settlement-date basis.
When an investment is sold, the cost basis is determined through specific identification of the security sold.
+Added: The Company classifies its debt securities as either available-for-sale or held-to-maturity.
+Added: Securities classified as available-for-sale are carried at fair value, with the changes in fair value, net of taxes, carried as a separate component of shareholders’ equity.
+Added: The amortized cost of debt securities in this classification is adjusted for amortization of premiums and accretion of discounts, which are amortized using the effective interest rate method.
For available-for-sale debt securities where fair value is less than amortized cost, credit-related impairment, if any, is recognized through an allowance for credit losses and adjusted each period for changes in credit risk.
−Removed: The Company classifies its residual interest in federally insured, private education, consumer, and other loan securitizations as held-to-maturity beneficial interest investments.
+Added: Securities in which the Company has the intent and ability to hold until maturity are classified as held-to-maturity.
+Added: These securities are carried at amortized cost, with expected future credit losses, if any, recognized through an allowance for credit losses.
+Added: The Company classifies its residual interest in consumer, private education, and federally insured student loan securitizations as held-to-maturity beneficial interest investments.
The Company measures accretable yield initially as the excess of all cash flows expected to be collected attributable to the beneficial interest estimated at the acquisition/transaction date over the initial investment and recognizes interest income over the life of the beneficial interest using the effective interest method.
3 unchanged sentences
Subsequent favorable changes, if any, decreases the allowance for credit losses.
−Removed: The Company reflects the changes in the allowance for credit losses in provision for beneficial interests on the consolidated statements of income.
Equity investments with readily determinable fair values are measured at fair value, with changes in the fair value recognized through net income.
−Removed: For equity investments without readily determinable fair value, the Company uses 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.
−Removed: The Company uses qualitative factors to identify impairment on these investments.
+Added: For equity investments without readily determinable fair values, the Company uses 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.
+Added: The Company uses qualitative factors to identify impairment on its measurement alternative investments.
The Company accounts for equity investments over which it has significant influence but not a controlling financial interest using the equity method of accounting.
2 unchanged sentences
These factors may indicate that a decrease in value of the investment has occurred that is other-than-temporary and shall be recognized.
−Removed: The Company accounts for its solar investments, voting equity investment in ALLO, and certain real estate investments under the HLBV method of accounting.
−Removed: The HLBV method of accounting is used by the Company for equity method investments when the liquidation rights and priorities as defined by an equity investment agreement differ from what is reflected by the
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: underlying percentage ownership or voting interests.
+Added: In March 2023, the Financial Accounting Standards Board issued new accounting guidance which expands the population of investments for which an investor may elect to apply the proportional amortization method (PAM).
+Added: The guidance allows an investor in a tax equity investment to elect the PAM for qualifying investments on a tax credit program-by-program basis.
+Added: The Company elected to early adopt the new accounting guidance as of January 1, 2023 for its tax equity investments in renewable energy sources (solar) tax credit program.
+Added: There were no investments prior to January 1, 2023 that met the qualification to apply the PAM, thus no cumulative effect adjustment in retained earnings was required.
+Added: Subsequent to adoption, the Company evaluates each tax equity investment in renewable energy sources (solar) to determine if it meets the qualifications to apply the PAM.
+Added: For qualifying investments, the Company uses the flow-through method of accounting to account for the related tax credit.
+Added: The flow-through method requires an investor to amortize the cost of its investment through income tax expense (or benefit) as an offset to the nonrefundable income tax credits and other income tax benefits, such as tax deductions from operating losses of the investment.
+Added: The Company accounts for its non-qualifying PAM solar investments, voting equity investment in ALLO, and certain real estate investments under the Hypothetical Liquidation at Book Value (HLBV) method of accounting.
+Added: The HLBV method of accounting is used by the Company for equity method investments when the liquidation rights and priorities as defined by an equity investment agreement differ from what is reflected by the underlying percentage ownership or voting interests.
The Company applies the HLBV method using a balance sheet approach.
1 unchanged sentence
The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is the amount the Company recognizes for its share of the earnings or losses from the equity investment for the period.
+Added: For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment.
+Added: The Company recognized losses on its solar investments of $ 46.7 million, $ 9.5 million, and $ 10.1 million during the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: These losses, which include losses attributable to third-party noncontrolling interest investors (syndication partners), are included in “other, net” in "other income (expense)" on the consolidated statements of income.
+Added: Solar losses attributed to noncontrolling interest investors was $ 26.4 million, $ 10.9 million, and $ 7.4 million during the years ended December 31, 2023, 2022, and 2021, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.
+Added: Excluding losses attributed to noncontrolling interest investors, the Company recognized losses of $ 20.3 million, gains of $ 1.4 million, and losses of $ 2.7 million on its solar investments during the years ended December 31, 2023, 2022, and 2021, respectively.
Notes Receivable
−Removed: The Company accounts for its investments in notes receivable as financing receivables under ASC Topic 310, Receivables.
−Removed: Notes exchanged for cash are recorded at amortized cost.
+Added: Notes receivable exchanged for cash are recorded at amortized cost.
Discounts, if any, upon issuance are accreted to income over the contractual life of the issued note, and interest income is accounted for on an accrual basis.
−Removed: The Company applies the principles in ASC Topic 326 to evaluate and record expected losses, if any, on its notes receivable.
−Removed: Restricted Cash
+Added: The Company records an allowance for expected credit losses, if any, to present the net amount expected to be collected on the receivable as of the balance sheet date.
+Added: Restricted Cash and Restricted Investments
Restricted cash primarily includes amounts for student loan securitizations and other secured borrowings.
1 unchanged sentence
Amounts on deposit in these accounts are primarily the result of timing differences between when principal and interest is collected on the student loans held as trust assets and when principal and interest is paid on the trust's asset-backed debt securities.
−Removed: Restricted cash also includes collateral deposits with derivative third-party clearinghouses.
+Added: Restricted cash also includes collateral deposits with derivative counterparties and third-party clearinghouses.
+Added: Nelnet Insurance Services is required to hold collateral in third-party trusts related to its reinsurance treaties on property and casualty policies.
+Added: The cash and investments in such trusts are classified by the Company as restricted.
+Added: Restricted investments include student loan asset-backed securities classified as available-for-sale.
Restricted Cash - Due to Customers
As a servicer of student loans, the Company collects student loan remittances and subsequently disburses these remittances to the appropriate lending entities.
−Removed: In addition, as part of the Company's Education Technology, Services, and Payment Processing operating segment, the Company collects tuition payments and subsequently remits these payments to the appropriate schools.
−Removed: Cash collected for customers and the related liability are included in the accompanying consolidated balance sheets.
−Removed: A portion of cash collected for customers in the Company's Education Technology, Services, and Payment Processing operating segment are held at Nelnet Bank, in which Nelnet Bank can use these cash deposits for general operating purposes and is no longer considered restricted.
−Removed: As of December 31, 2022 and 2021, $ 55.0 million and $ 40.0 million, respectively, of cash collected for customers are held at Nelnet Bank.
+Added: As part of the Company's Education Technology Services and Payments operating segment, the Company collects tuition payments and subsequently remits these payments to the appropriate schools.
+Added: In addition, Nelnet
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Insurance Services retains cash it collects on behalf of its third parties to which it has retroceded a portion of its exposure.
+Added: Cash collected for customers and the related liability are included in the consolidated balance sheets.
+Added: A portion of cash collected for customers in the Company's Education Technology Services and Payments operating segment are held at Nelnet Bank, in which Nelnet Bank can use these cash deposits for general operating purposes and is no longer considered restricted.
+Added: As of December 31, 2023 and 2022, $ 57.5 million and $ 55.0 million, respectively, of cash collected for customers is held at Nelnet Bank.
Accounts Receivable
12 unchanged sentences
However, components are aggregated as a single reporting unit if they have similar economic characteristics.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
The Company tests goodwill for impairment in accordance with applicable accounting guidance.
The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount.
−Removed: If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform a quantitative impairment test, otherwise no further analysis is required.
+Added: If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform a quantitative impairment test.
+Added: If the qualitative assessment determines that an impairment is not more likely than not, no further analysis is required.
An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test.
−Removed: For the 2022, 2021, and 2020 annual reviews of goodwill, the Company assessed qualitative factors and concluded it was not more likely than not that the fair value of its reporting units were less than their carrying amount.
−Removed: As such, the Company was not required to perform further impairment testing and concluded there was no impairment of goodwill.
+Added: For the 2023, 2022, and 2021 annual reviews of goodwill, the Company assessed qualitative factors, with the exception of one reporting unit in 2023, and concluded it was not more likely than not that the fair value of its reporting units were less than their carrying amount.
+Added: As such, except for the one reporting unit in 2023, no further impairment analysis was required.
+Added: For the one reporting unit identified in 2023 that the Company concluded it was more likely than not that the fair value was less than its carrying amount, the Company performed a quantitative impairment test and concluded there was an impairment.
+Added: See note 11 for additional information.
Intangible Assets
4 unchanged sentences
The Company may also use replacement cost or market comparison approaches to estimate fair value if such methods are determined to be more appropriate.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Intangible assets with finite lives are amortized over their estimated lives.
11 unchanged sentences
The Company determines if the arrangement is, or contains, a lease at the inception of an arrangement and records the lease in the consolidated financial statements upon lease commencement, which is the date when the underlying asset is made available by the lessor.
−Removed: The Company primarily leases office and data center space.
+Added: The Company primarily leases office and data center space and accounts for lease and non-lease components in these contracts together as a single, combined lease component.
Leases with an initial term of 12 months or less are not recorded on the balance sheet.
3 unchanged sentences
When the discount rate implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate.
−Removed: The Company accounts for lease and non-lease components together as a single, combined lease component for its office and data center space.
−Removed: In addition, the Company identified itself as the lessor in its Communications operating segment for services provided to customers that include customer-premise equipment.
−Removed: The Company accounted for those services and associated leases as a single, combined component.
−Removed: The non-lease services are 'predominant' in those contracts.
−Removed: Therefore, the combined component is considered a single performance obligation under ASC Topic 606, Revenue from Contracts with Customers .
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
Most leases include one or more options to renew, with renewal terms that can be extended.
16 unchanged sentences
Depending on current market conditions, additional adjustments to fair value may be based on factors such as liquidity, credit, and bid/offer spreads.
−Removed: In some cases fair values are based on estimates using present value or other valuation techniques.
+Added: In some cases fair values are based on estimates using present
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
17 unchanged sentences
The Company applies the provisions of ASC Topic 606 , Revenue from Contracts with Customers ("Topic 606") , to its fee-based operating segments.
−Removed: The majority of the Company’s revenue earned in its Asset Generation and Management and Nelnet Bank operating segments, including loan interest and derivative activity, is explicitly excluded from the scope of Topic 606.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: The majority of the Company’s revenue earned in its NFS Division, including loan interest and derivative activity earned in its Asset Generation and Management and Nelnet Bank operating segments and reinsurance premiums earned in its Nelnet Insurance Services operating segment, is explicitly excluded from the scope of Topic 606.
The Company recognizes revenue under the core principle of Topic 606 to depict the transfer of control of products and services to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled.
8 unchanged sentences
In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component.
−Removed: The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year.
−Removed: Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in “other assets” on the consolidated balance sheets.
−Removed: Additional information related to revenue earned in its Asset Generation and Management and Nelnet Bank operating segments is provided below.
+Added: The Company recognizes an asset for the incremental costs of obtaining and/or fulfilling a contract with a customer if it expects the benefit of those costs to be longer than one year.
+Added: Total capitalized costs to obtain and/or fulfill a contract were immaterial during the periods presented.
+Added: Additional information related to revenue earned in its Asset Generation and Management, Nelnet Bank, and Nelnet Insurance Services operating segments is provided below.
See note 17 for additional information related to the Company's fee-based operating segments.
3 unchanged sentences
Loan interest on federally insured student loans is paid by the Department or the borrower, depending on the status of the loan at the time of the accrual.
−Removed: The Department makes quarterly interest subsidy payments on certain qualified FFELP loans until the student is required under the provisions of the Higher Education Act to begin repayment.
+Added: The Department makes quarterly interest subsidy payments on certain qualified FFELP loans until the
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: student is required under the provisions of the Higher Education Act to begin repayment.
Borrower repayment of FFELP loans normally begins within six months after completion of the borrower's course of study, leaving school, or ceasing to carry at least one-half the normal full-time academic load, as determined by the educational institution.
3 unchanged sentences
The Department provides a special allowance to lenders participating in the FFEL Program.
−Removed: The special allowance is accrued based upon the daily fiscal quarter average of the 13-week Treasury Bill auction rate (for loans originated prior to January 1, 2000), the daily fiscal quarter average of the three-month financial commercial paper rate (for loans originated on and after January 1, 2000), or the daily fiscal quarter average of the one-month LIBOR rate (for loans originated on and after January 1, 2000, and for lenders which elected to change the special allowance index to one-month LIBOR effective April 1, 2012) relative to the yield of the student loan.
+Added: The special allowance rate is accrued based upon either the daily fiscal quarter average of the 13-week Treasury Bill auction rate, the daily fiscal quarter average of the three-month financial commercial paper rate, or the daily fiscal quarter average of the 30-day Average Secured Overnight Financing Rate (SOFR), relative to the yield of the student loan.
The constant prepayment rate currently used by the Company to amortize/accrete federally insured loan premiums/discounts is 6 % for Stafford loans and 5 % for consolidation loans.
5 unchanged sentences
These rebate fees are netted against loan interest income.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Reinsurance premiums earned and related expenses - Premiums are recognized as income, net of applicable retrocessional coverage, over the terms of the related contracts and polices.
+Added: Unearned premiums represent the portion of premiums written that relate to the unexpired terms of contracts and polices in force.
+Added: Acquisition costs are incurred when a contract or policy is issued and only the costs directly related to the successful acquisition of new and renewal contract or policies are deferred and amortized over the same period in which the related premiums are earned.
+Added: Acquisition costs consist principally of commissions and brokerage expenses and are shown net of commissions and brokerage expenses earned on ceded reinsurance.
+Added: The reserve for claims and claim expenses includes estimates for unpaid claims and claim expenses on reported losses as well as an estimate of losses incurred but not reported.
+Added: The reserve is based on individual claims, case reserves, and other reserve estimates reported by insureds and ceding companies.
+Added: Inherent in the estimates of ultimate losses are expected trends in claim severity and frequency and other factors which could vary significantly as claims are settled.
Deposits and Interest Expense
Deposits are interest-bearing deposits and consist of brokered certificates of deposit (CDs) and retail and other savings deposits and CDs.
−Removed: Retail and other deposits include savings deposits from Educational 529 College Savings and Health Savings plans and commercial and institutional CDs.
−Removed: Union Bank and Trust Company (“Union Bank”), a related party, is the program manager for the College Savings plans.
+Added: Retail and other savings deposits include deposits from Educational 529 College Savings (529) and Health Savings plans (HSA), Short Term Federal Investment Trust (STFIT), and commercial and institutional CDs.
+Added: Union Bank and Trust Company (“Union Bank”), a related party, is the program manager for the Educational 529 College Savings plans and trustee for the STFIT.
CDs are accounts that have a stipulated maturity and interest rate.
2 unchanged sentences
Nelnet Bank has intercompany deposits from Nelnet, Inc.
−Removed: and its subsidiaries, including a $ 40.0 million pledged deposit from Nelnet, Inc.
−Removed: as required under a Capital and Liquidity Maintenance Agreement with the FDIC.
+Added: and its subsidiaries.
All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.
1 unchanged sentence
The amortization of debt issuance costs and accretion of discounts are recognized using the effective interest method.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Transfer of Financial Assets and Extinguishments of Liabilities
3 unchanged sentences
Derivative Accounting
−Removed: All over-the-counter derivative contracts executed by the Company are cleared post-execution at the Chicago Mercantile Exchange (CME), a regulated clearinghouse.
−Removed: Substantially all of the Company’s outstanding derivatives are over-the-counter contracts.
+Added: All over-the-counter derivative contracts are cleared post-execution at the Chicago Mercantile Exchange (CME), a regulated clearinghouse.
Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default.
1 unchanged sentence
For accounting and presentation purposes, the Company considers variation margin and the corresponding derivative instrument as a single unit of account.
−Removed: As such, variation margin payments are considered in determining the fair value of the centrally cleared derivative portfolio.
−Removed: The Company records derivative contracts on its balance sheet with a fair value of zero due to the payment or receipt of variation margin between the Company and the CME settling the outstanding mark-to-market exposure on such derivatives to a balance of zero on a daily basis.
+Added: As such, variation margin payments are considered in determining the fair value of the centrally cleared derivative portfolio (“settled-to-market”).
+Added: The Company records settled-to-market derivative contracts on its balance sheet with a fair value of zero due to the payment or receipt of variation margin between the Company and the CME settling the outstanding mark-to-market exposure on such derivatives to a balance of zero on a daily basis, and records the underlying daily changes in the market value of such derivative contracts that result in such receipts or payments on its income statement as realized derivative market value adjustments in “derivative market value adjustments and derivative settlements, net” on the consolidated statements of income.
+Added: The Company records derivative instruments that are not required to be cleared at a clearinghouse (non-centrally cleared derivatives) in the consolidated balance sheets on a gross basis as either an asset or liability measured at its fair value.
+Added: Certain non-centrally cleared derivatives are subject to right of offset provisions with counterparties.
+Added: For these derivatives, the Company does not offset fair value amounts executed with the same counterparty under a master netting arrangement.
+Added: In addition, the Company does not offset fair value amounts recognized for derivative instruments with respect to the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable).
+Added: The Company determines the fair value for its non-centrally cleared derivative instruments using either (i) pricing models that consider current market conditions and the contractual terms of the derivative instrument;
+Added: or (ii) counterparty valuations.
+Added: The factors that impact the fair value of the Company’s derivatives include interest rates, time value, forward interest rate curve, and volatility factors.
Management has structured all of the Company's derivative transactions with the intent that each is economically effective;
−Removed: however, the Company's derivative instruments do not qualify for hedge accounting.
+Added: however, the Company's derivative instruments do not qualify for hedge accounting in the consolidated financial statements.
As a result, the change in market value of derivative instruments is reported in current period earnings.
7 unchanged sentences
The investment tax credits are recognized as a reduction to the related asset.
+Added: Income tax expense includes deferred tax expense, which represents a portion of the net change in the deferred tax asset or liability balance during the year, plus any change made in the valuation allowance, and current tax expense, which represents the amount of tax currently payable to or receivable from a tax authority plus amounts for expected tax deficiencies .
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Income tax expense includes deferred tax expense, which represents a portion of the net change in the deferred tax asset or liability balance during the year, plus any change made in the valuation allowance, and current tax expense, which represents the amount of tax currently payable to or receivable from a tax authority plus amounts for expected tax deficiencies .
Compensation Expense for Stock Based Awards
5 unchanged sentences
The Company accounts for forfeitures as they occur.
−Removed: The Company also has a directors stock compensation plan pursuant to which non-employee directors can elect to receive their annual retainer fees in the form of fully vested shares of Class A common stock, and also elect to defer receipt of such shares until the termination of their service on the board of directors.
+Added: The Company also has a directors stock compensation plan pursuant to which directors can elect to receive their annual retainer fees in the form of fully vested shares of Class A common stock, and also elect to defer receipt of such shares until the termination of their service on the board of directors.
The fair value of grants under this plan is determined on the grant date based on the Company's stock price, and is expensed over the board member's annual service period.
5 unchanged sentences
Revenue and expense accounts are translated using the weighted average exchange rate during the period.
−Removed: The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive earnings in the accompanying consolidated statements of shareholders’ equity.
+Added: The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive earnings in the consolidated statements of shareholders’ equity.
AND SUBSIDIARIES
12 unchanged sentences
Non-Nelnet Bank loans 12,049,462 14,169,771
−Removed: Federally insured loans 65,913 88,011
+Added: Federally insured loans (a) — 65,913
Private education loans 360,520 353,882
+Added: Consumer and other loans 72,352 —
Nelnet Bank loans 432,872 419,795
7 unchanged sentences
Non-Nelnet Bank allowance for loan losses ( 95,945 ) ( 129,267 )
−Removed: Federally insured loans ( 170 ) ( 268 )
+Added: Federally insured loans (a) — ( 170 )
Private education loans ( 3,347 ) ( 2,390 )
+Added: Consumer and other loans ( 5,351 ) —
Nelnet Bank allowance for loan losses ( 8,698 ) ( 2,560 )
$ 13,108,204 15,243,889
+Added: (a) During 2023, Nelnet Bank sold its federally insured loan portfolio to the Company’s AGM (non-Nelnet Bank) operating segment.
The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.
3 unchanged sentences
Private education loans 5.68 % 6.11 %
−Removed: Consumer and other loans (b) 8.62 % 12.63 %
+Added: Consumer and other loans 13.66 % 8.62 %
Federally insured loans (a) — 0.26 %
Private education loans 0.93 % 0.68 %
−Removed: (a) As of December 31, 2022 and 2021, the allowance for loan losses as a percent of the risk sharing component of federally insured loans not covered by the federal guaranty for non-Nelnet Bank was 22.4 % and 22.2 %, respectively, and for Nelnet Bank was 10.3 % and 12.1 %, respectively.
−Removed: (b) During 2022, the Company purchased home equity loans that generally have lower default rates than unsecured consumer loans.
−Removed: As such, the allowance for loan losses as a percentage of the ending loan balance has decreased as of December 31, 2022 compared with December 31, 2021.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: The Company has sold portfolios of loans to unrelated third parties who securitized such loans.
−Removed: As partial consideration received for the loans sold, the Company received residual interest in the loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheets.
−Removed: The following table provides a summary of the loans sold and gains/losses recognized by the Company during 2022, 2021, and 2020.
−Removed: (par value) Gain (loss) Loan type Residual interest received in securitization
−Removed: January 26 $ 18,125 2,989 Consumer 6.6 %
−Removed: June 30 114 — Home equity —
−Removed: July 7 28,915 2,627 Consumer 7.6
−Removed: October 27 28,498 2,901 Consumer 7.9
−Removed: November 29 91,298 ( 5,614 ) Home equity 54.8 (a)
−Removed: $ 166,950 2,903
−Removed: May 14 $ 77,417 15,271 Consumer 24.5 %
−Removed: August 10 5,280 195 Private —
−Removed: September 29 18,390 3,249 Consumer 6.9
−Removed: December 28 20 — Federally insured —
−Removed: $ 101,107 18,715
−Removed: January 30 $ 124,249 18,206 Consumer 31.4 %
−Removed: July 29 60,779 14,817 Consumer 25.4
−Removed: $ 185,028 33,023
−Removed: (a) In addition to receiving a residual interest in the securitization, the Company also received $ 13.8 million of asset-backed securities issued as part of the transaction.
−Removed: These debt securities are classified as held-to-maturity and included in “investments and notes receivable” on the Company’s consolidated balance sheet.
+Added: Consumer and other loans 7.40 % —
+Added: (a) As of December 31, 2023 and 2022, the allowance for loan losses as a percent of the risk sharing component of federally insured loans not covered by the federal guaranty for non-Nelnet Bank was 21.8 % and 22.4 %, respectively, and for Nelnet Bank was 10.3 % as of December 31, 2022.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: During 2023, 2022, and 2021, the Company sold $ 728.1 million, $ 167.0 million, and $ 101.1 million of consumer and other loans, respectively, and recognized net gains of $ 39.7 million, $ 2.9 million, and $ 18.7 million, respectively.
+Added: Consumer loans sold by the Company were to non-affiliated third parties who securitized such loans.
+Added: As partial consideration received for the majority of such loan portfolio sales, the Company received residual interest in the third parties’ loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheets.
Activity in the Allowance for Loan Losses
The following table presents the activity in the allowance for loan losses by portfolio segment.
−Removed: Balance at beginning of period Impact of Topic 326 adoption Provision (negative provision) for loan losses Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration (a) Loan sales Balance at end of period
+Added: Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration (a) Loan sales Balance at end of period
Year ended December 31, 2023
5 unchanged sentences
Private education loans 2,390 2,171 ( 1,214 ) — — — 3,347
+Added: Consumer and other loans — 6,245 ( 1,775 ) 881 — — 5,351
$ 131,827 65,377 ( 38,367 ) 3,135 6 ( 57,335 ) 104,643
12 unchanged sentences
Consumer and other loans 27,256 ( 4,544 ) ( 5,123 ) 824 — ( 11,932 ) 6,481
+Added: Federally insured loans — 268 — — — — 268
Private education loans 323 526 ( 4 ) — — ( 5 ) 840
1 unchanged sentence
(a) During the years ended December 31, 2023, 2022, and 2021 the Company acquired $ 3.3 million (par value), $ 12.0 million (par value), and $ 224.1 million (par value), respectively, of federally insured rehabilitation loans that met the definition of PCD loans when they were purchased by the Company.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
The following table summarizes net charge-offs as a percentage of average loans for each of the Company's loan portfolios.
7 unchanged sentences
Private education loans 0.34 % 0.10 % 0.00 %
−Removed: (a) The charge-offs as a percentage of average loans for Nelnet Bank in 2020 is for the period from November 2, 2020 (Nelnet Bank’s inception) through December 31, 2020.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Beginning in March 2020, the coronavirus disease 2019 (“COVID-19”) pandemic caused significant disruptions in the U.S.
−Removed: and world economies.
−Removed: Apart from the impact of the adoption of Topic 326 effective January 1, 2020, the Company’s allowance for loan losses increased in 2020 primarily as a result of the COVID-19 pandemic and its effects on economic conditions.
+Added: Consumer and other loans 2.64 % — —
During the year ended December 31, 2021, the Company recorded a negative provision for loan losses due to (i) management's estimate of certain improved economic conditions as of December 31, 2021 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of December 31, 2020;
4 unchanged sentences
and (ii) the establishment of an initial allowance for loans originated and acquired during the period.
−Removed: These amounts were partially offset by the amortization of the federally insured loan portfolio and an increase in expected prepayments as a result of continued initiatives offered and proposed by the Department for FFELP borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department.
−Removed: Unfunded Private Education Loan Commitments
−Removed: As of December 31, 2022, Nelnet Bank has a liability of approximately $ 84,000 related to $ 5.0 million of unfunded private education loan commitments.
+Added: During the year ended December 31, 2023, the Company recorded a provision for loan losses primarily due to the establishment of an initial allowance for loans originated and acquired during the period.
+Added: During both 2022 and 2023, provision for loan losses were partially offset by the amortization of the federally insured loan portfolio and an increase in expected prepayments as a result of continued initiatives offered and proposed by the Department for FFELP borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department.
+Added: Unfunded Loan Commitments
+Added: As of December 31, 2023, Nelnet Bank has a liability of approximately $ 158,000 related to $ 12.3 million of unfunded private education and consumer loan commitments.
The liability for unfunded loan commitments is included in "other liabilities" on the consolidated balance sheets.
−Removed: During the year ended December 31, 2022, Nelnet Bank recognized provision for loan losses of approximately $ 73,000 related to unfunded loan commitments.
+Added: During both years ended December 31, 2023 and 2022, Nelnet Bank recognized provision for loan losses of approximately $ 73,000 related to unfunded loan commitments.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Key Credit Quality Indicators
3 unchanged sentences
Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs.
−Removed: The table below shows the Company’s loan status and delinquency amounts.
+Added: The following table presents the Company’s loan status and delinquency amounts.
As of December 31,
16 unchanged sentences
Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 12,346,504 $ 14,255,562 $ 17,744,073
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: As of December 31,
−Removed: 2022 2021 2020
Private education loans - Non-Nelnet Bank:
13 unchanged sentences
Consumer and other loans - Non-Nelnet Bank:
−Removed: Loans in deferment (a) $ 109 0.0 % $ 43 0.1 % $ 829 0.8 %
+Added: Loans in deferment $ 146 0.2 % $ 109 0.0 % $ 43 0.1 %
Loans in repayment status:
9 unchanged sentences
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 72,580 $ 323,722 $ 46,129
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: As of December 31,
+Added: 2023 2022 2021
Federally insured loans - Nelnet Bank (e):
7 unchanged sentences
Loans delinquent 120-270 days (c) 183 0.3 209 0.2
−Removed: Loans delinquent 271 days or greater (c) 159 0.2 — —
+Added: Loans delinquent 271 days or greater (c)(d) 159 0.2 — —
Total loans in repayment 64,691 98.1 100.0 % 86,624 98.4 100.0 %
4 unchanged sentences
Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 67,521 $ 88,985
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: As of December 31,
−Removed: 2022 2021 2020
Private education loans - Nelnet Bank (e):
12 unchanged sentences
Total private education loans and accrued interest receivable, net of allowance for loan losses $ 364,804 $ 358,004 $ 171,874
+Added: Consumer and other loans - Nelnet Bank (e):
+Added: Loans in deferment $ 103 0.1 %
+Added: Loans in repayment status:
+Added: Loans current 69,584 96.3 %
+Added: Loans delinquent 30-59 days (c) 1,075 1.5
+Added: Loans delinquent 60-89 days (c) 941 1.3
+Added: Loans delinquent 90 days or greater (c) 649 0.9
+Added: Total loans in repayment 72,249 99.9 100.0 %
+Added: Total consumer and other loans 72,352 100.0 %
+Added: Accrued interest receivable 575
+Added: Loan discount ( 6 )
+Added: Allowance for loan losses ( 5,351 )
+Added: Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 67,570
(a) Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g.
2 unchanged sentences
(c) The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance.
−Removed: (d) A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency.
+Added: (d) A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency for reinsurance.
(e) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.
−Removed: FICO Scores - Nelnet Bank Private Education Loans
−Removed: An additional key credit quality indicator for Nelnet Bank private education loans is FICO scores at the time of origination.
−Removed: The following tables highlight the gross principal balance of Nelnet Bank's private education loan portfolio, by year of origination, stratified by FICO score at the time of origination.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination.
+Added: The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination.
+Added: Nelnet Bank Private Education Loans
Loan balance as of December 31, 2023
6 unchanged sentences
Greater than 794 15,057 77,996 58,695 5,226 156,974
+Added: No FICO score available or required (a) 4,052 — — — 4,052
$ 46,907 190,466 114,278 8,869 360,520
8 unchanged sentences
$ 209,846 133,788 10,248 353,882
+Added: Nelnet Bank Consumer and Other Loans
+Added: Loan balance as of December 31, 2023
+Added: 2023 2022 2021 Total
+Added: FICO at origination:
+Added: Less than 720 $ 21,412 — — 21,412
+Added: 720 - 769 33,571 51 — 33,622
+Added: Greater than 769 16,484 109 — 16,593
+Added: No FICO score available or required (a) 386 284 55 725
+Added: $ 71,853 444 55 72,352
+Added: (a) Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program.
+Added: Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.
Nonaccrual Status
23 unchanged sentences
Total private education loans and accrued interest receivable, net of allowance for loan losses $ 256,186
+Added: Gross charge-offs - year ended December 31, 2023 $ — 39 10 297 615 2,345 3,306
Consumer and other loans - Non-Nelnet Bank:
11 unchanged sentences
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 72,580
+Added: Gross charge-offs - year ended December 31, 2023 $ 3,995 6,850 830 36 292 464 12,467
Private education loans - Nelnet Bank (a):
12 unchanged sentences
Total private education loans and accrued interest receivable, net of allowance for loan losses $ 364,804
+Added: Gross charge-offs - year ended December 31, 2023 $ 23 869 285 37 — — 1,214
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: 2023 2022 2021 2020 2019 Prior years Total
+Added: Consumer and other loans - Nelnet Bank (a):
+Added: Loans in deferment $ 103 — — — — — 103
+Added: Loans in repayment status:
+Added: Loans current 69,085 444 55 — — — 69,584
+Added: Loans delinquent 30-59 days 1,075 — — — — — 1,075
+Added: Loans delinquent 60-89 days 941 — — — — — 941
+Added: Loans delinquent 90 days or greater 649 — — — — — 649
+Added: Total loans in repayment 71,750 444 55 — — — 72,249
+Added: Total consumer and other loans $ 71,853 444 55 — — — 72,352
+Added: Accrued interest receivable 575
+Added: Loan discount ( 6 )
+Added: Allowance for loan losses ( 5,351 )
+Added: Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 67,570
+Added: Gross charge-offs - year ended December 31, 2023 $ 1,775 — — — — — 1,775
(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.
16 unchanged sentences
10/25/67 - 8/27/68
−Removed: FFELP loan warehouse facility 978,956 4.69 % / 4.71 %
−Removed: Private education loan warehouse facility 64,356 4.72 % 12/31/23
+Added: FFELP loan warehouse facilities 1,398,485 5.41 % - 5.70 %
+Added: 4/2/25 / 5/22/25
Consumer loan warehouse facility 23,691 5.70 % 11/14/25
1 unchanged sentence
6/25/49 / 11/25/53
−Removed: Fixed-rate bonds and notes issued in private education loan asset-backed securitization 23,032 3.60 % / 5.35 %
+Added: Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 80,130 5.35 % / 7.15 %
12/28/43 / 11/25/53
Unsecured line of credit — — 9/22/26
−Removed: Participation agreement 395,432 5.02 % 5/4/23
−Removed: Repurchase agreements 567,254 0.97 % - 5.60 %
+Added: Participation agreements 10,063 5.58 % - 6.08 %
3/12/24 / 5/4/24
+Added: Repurchase agreement 208,164 6.35 % - 6.81 %
+Added: 1/22/24 - 12/20/24
Other - due to related party 5,778 5.00 % - 6.05 %
16 unchanged sentences
Private education loan warehouse facility 64,356 4.72 % 12/31/23
+Added: Consumer loan warehouse facility 89,000 4.73 % 11/14/25
Variable-rate bonds and notes issued in private education loan asset-backed securitizations 19,865 5.90 % / 6.14 %
12/26/40 / 6/25/49
−Removed: Fixed-rate bonds and notes issued in private education loan asset-backed securitization 28,613 3.60 % / 5.35 %
+Added: Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 23,032 3.60 % / 5.35 %
12/26/40 / 12/28/43
3 unchanged sentences
1/4/23 - 11/27/24
−Removed: Secured line of credit 5,000 1.91 % 5/30/22
+Added: Other - due to related party 6,187 3.55 % / 6.05 %
+Added: 3/1/24 - 11/15/30
Discount on bonds and notes payable and debt issuance costs ( 148,088 )
6 unchanged sentences
Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements.
−Removed: FFELP loan warehouse facility
−Removed: As of December 31, 2022, the Company’s FFELP warehouse facility had an aggregate maximum financing amount available of $ 1.2 billion, liquidity provisions through May 22, 2023, and a final maturity of May 22, 2024.
−Removed: As of December 31, 2022, $ 979.0 million was outstanding under this facility, $ 221.0 million was available for future funding, and the Company had $ 67.0 million advanced as equity support.
−Removed: In the event the Company is unable to renew the liquidity provisions by May 22, 2023, the facility would become a term facility at a stepped-up cost, with no additional student loans being eligible for financing, and the Company would be required to refinance the existing loans in the facility by the facility's final maturity date.
−Removed: Private education loan warehouse facility
−Removed: As of December 31, 2022, the Company’s private education warehouse facility had an aggregate maximum financing amount available of $ 64.4 million, an advance rate of 75 %, liquidity provisions through June 30, 2023, and a final maturity of December 31, 2023.
−Removed: As of December 31, 2022, $ 64.4 million was outstanding under this facility with no amount available for future funding, and the Company had $ 22.4 million advanced as equity support.
−Removed: Consumer loan warehouse facility
−Removed: On November 14, 2022, the Company closed on a consumer loan warehouse facility that had an aggregate maximum financing amount available of $ 250.0 million, an advance rate of 70 %, liquidity provisions through November 14, 2024, and a final maturity date of November 14, 2025.
−Removed: As of December 31, 2022, $ 89.0 million was outstanding under this facility, $ 161.0 million was available for future funding, and the Company had $ 36.6 million advanced as equity support.
+Added: The following table summarizes the Company's warehouse facilities as of December 31, 2023.
+Added: Type of loans Maximum financing amount Amount outstanding Amount available Expiration of liquidity provisions Final maturity date Advance rate Advanced as equity support
+Added: FFELP $ 1,250,000 1,016,023 233,977 5/22/2024 5/22/2025 note (a) $ 70,739
+Added: FFELP 432,000 382,462 49,538 4/2/2024 4/2/2025 92 % 31,955
+Added: $ 1,682,000 1,398,485 283,515 $ 102,694
+Added: Consumer 200,000 23,691 176,309 11/14/2024 11/14/2025 70 % 10,352
+Added: (a) This facility has a static advance rate until the expiration date of the liquidity provisions.
+Added: The maximum advance rates for this facility are 90 % to 96 %, and the minimum advance rates are 84 % to 90 %.
+Added: In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor.
+Added: The loans would then be funded at this new advance rate until the final maturity date of the facility.
Asset-backed securitizations
3 unchanged sentences
The bonds and notes payable are primarily secured by the loans receivable, related accrued interest, and by the amounts on deposit in the accounts established under the respective financing agreements.
−Removed: The following table summarizes the asset-backed securitization transactions completed in 2021.
−Removed: There were no asset-backed securitization transactions completed during the year ended December 31, 2022.
−Removed: 2021-1 2021-2 Total
−Removed: Date securities issued 6/30/21 8/31/21
−Removed: Total original principal amount $ 797,000 531,300 1,328,300
−Removed: Class A senior notes:
−Removed: Total principal amount $ 781,000 520,600 1,301,600
−Removed: Cost of funds 1-month LIBOR plus 0.50 %
−Removed: 1-month LIBOR plus 0.50 %
−Removed: Final maturity date 7/25/69 9/25/69
−Removed: Class B subordinated notes:
−Removed: Total principal amount $ 16,000 10,700 26,700
−Removed: Cost of funds 1-month LIBOR plus 1.25 %
−Removed: 1-month LIBOR plus 1.20 %
−Removed: Final maturity date 7/25/69 9/25/69
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: On November 16, 2023, the Company completed a $ 189.6 million (par value) private education loan asset-backed securitization.
+Added: The notes issued have a final maturity date of November 25, 2053.
+Added: Upon completion of this securitization, the Company terminated its private education loan warehouse facility.
Unsecured Line of Credit
The Company has a $ 495.0 million unsecured line of credit that has a maturity date of September 22, 2026.
−Removed: The line of credit provides that the Company may increase the aggregate financing commitments, through the existing lenders and/or through new lenders, up to a total of $ 737.5 million, subject to certain conditions.
As of December 31, 2023, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.
−Removed: Interest on amounts borrowed under the line of credit is payable, at the Company's election, at an alternate base rate or a Eurodollar rate, plus a variable rate (LIBOR), in each case as defined in the credit agreement.
−Removed: The current margin applicable to Eurodollar borrowings is 150 basis points and may vary from 100 to 175 basis points depending on the Company's credit rating.
The line of credit agreement contains certain financial covenants that, if not met, lead to an event of default under the agreement.
−Removed: The covenants include, among others, maintaining:
+Added: The covenants, which exclude Nelnet Bank, include, among others, maintaining:
• A minimum consolidated net worth
8 unchanged sentences
A default on the Company's other debt facilities would result in an event of default on the Company's unsecured line of credit that would result in the outstanding balance on the line of credit, if any, becoming immediately due and payable.
−Removed: Participation Agreement
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Participation Agreements
The Company has an agreement with Union Bank, a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (bond investments).
−Removed: As of December 31, 2022, $ 395.4 million of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.
+Added: As of December 31, 2023 and 2022, $ 63,000 (par value) and $ 395.4 million (par value), respectively, of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.
The agreement automatically renews annually and is terminable by either party upon five business days' notice.
2 unchanged sentences
As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheets as "investments and notes receivable" and the participation interests outstanding have been accounted for by the Company as a secured borrowing.
−Removed: See note 7 for additional information about the FFELP loan asset-backed securities investments serving as collateral under this participation agreement.
+Added: On December 21, 2023, the Company entered into a $ 10.0 million participation agreement with a non-affiliated third-party, the proceeds of which are collateralized by consumer loans.
+Added: The third-party participant does not have the right to pledge, transfer, or otherwise dispose of their participation interest in all or any portion of the loans subject to this agreement.
+Added: As such, the consumer loans subject to this agreement are included on the Company's consolidated balance sheet and the participation interests outstanding have been accounted for by the Company as a secured borrowing.
+Added: This participation agreement will amortize as the consumer loans subject to the participation pay down.
Repurchase Agreements
−Removed: On May 3, 2021 and June 23, 2021, the Company entered into repurchase agreements with non-affiliated third parties, the proceeds of which are collateralized by certain private education and FFELP loan asset-backed securities (bond investments).
−Removed: The first agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the second agreement has various maturity dates (as of December 31, 2022) from January 4, 2023 through January 25, 2023.
−Removed: Subsequent to December 31, 2022, the maturities on this agreement were extended, and as of February 28, 2023, the maturity dates vary from March 8, 2023 through November 27, 2024.
−Removed: The Company incurs interest on amounts outstanding under these agreements based on three-month LIBOR plus an applicable spread.
−Removed: Under the first agreement, the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date, and under the second agreement, the Company
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: could be subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities and the counter-party provides notice requiring such payment.
−Removed: Included in “bonds and notes payable” in the consolidated balance sheets as of December 31, 2022 was $ 299.8 million subject to the first agreement and $ 267.5 million subject to the second agreement.
−Removed: See note 7 and below under “Debt Repurchases” for additional information about the private education and FFELP loan asset-backed securities investments, respectively, serving as collateral for these repurchase agreements.
−Removed: Nelnet Bank has Federal Funds lines of credit with correspondent banks totaling $ 30.0 million at a stated interest rate at the time of borrowing.
−Removed: As of December 31, 2022, no amounts were drawn on these lines of credit.
+Added: On May 3, 2021, the Company entered into a repurchase agreement with a non-affiliated third party, the proceeds of which are collateralized by certain private education and FFELP loan asset-backed securities (bond investments).
+Added: The agreement has various maturity dates through December 20, 2024 or earlier if either party provides 180 days’ prior written notice, and the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date.
+Added: Included in “bonds and notes payable” in the consolidated balance sheets as of December 31, 2023 and 2022 was $ 208.2 million and $ 299.8 million, respectively, subject to this agreement.
+Added: See note 6 and below under “Debt Repurchases” for additional information about the private education and FFELP loan asset-backed securities investments, respectively, serving as collateral for this repurchase agreement.
+Added: On June 23, 2021, the Company entered into a separate repurchase agreement with a non-affiliated third party, which was collateralized by certain private education and FFELP loan asset-backed securities (bond investments).
+Added: The outstanding balance of this facility as of December 31, 2022 was $ 267.5 million.
+Added: The outstanding balance of this facility was paid in full during the third quarter of 2023.
+Added: Nelnet Bank has unsecured Federal Funds lines of credit with correspondent banks totaling $ 40.0 million at a stated interest rate at the time of borrowing.
+Added: Nelnet Bank has also established accounts at the Federal Reserve Bank (FRB) and the Federal Home Loan Bank (FHLB), which are secured and accept pledges of eligible securities.
+Added: In addition, FFELP and private education loans are accepted as collateral for FRB borrowings.
+Added: As of December 31, 2023 and 2022, Nelnet Bank had no amounts drawn on their Federal Funds, FRB, or FHLB lines of credit.
+Added: As of December 31, 2023, the Bank has $ 145.0 million of collateral pledged with the FRB that it may borrow against.
Debt Covenants
1 unchanged sentence
The Company is in compliance with all covenants of the bond indentures and related credit agreements as of December 31, 2023.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Maturity Schedule
17 unchanged sentences
Remaining unamortized cost of issuance ( 14 ) ( 821 ) ( 6,163 )
−Removed: Gain (loss) $ 1,231 ( 6,775 ) 1,924
+Added: Gain (loss), net $ 815 1,231 ( 6,775 )
The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market.
For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements.
−Removed: However, these securities remain legally outstanding at the trust level and the Company could sell these
+Added: 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.
+Added: Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale.
+Added: As of December 31, 2023, the Company holds $ 312.0 million (par value) of its own FFELP asset-backed securities.
+Added: As of December 31, 2023, $ 118.9 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreement.
+Added: In the second quarter of 2023, the Company redeemed $ 188.6 million of FFELP loan asset-backed debt securities (bonds and notes payable) prior to their maturity, of which the Company owned $ 140.5 million of the bonds that were redeemed.
+Added: The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $ 25.9 million non-cash expense recognized in the second quarter of 2023.
+Added: This expense is included in "interest expense on bonds and notes payable and bank deposits" on the consolidated statements of income.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: notes to third parties or redeem the notes at par as cash is generated by the trust estate.
−Removed: Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale.
−Removed: As of December 31, 2022, the Company holds $ 417.2 million (par value) of its own FFELP asset-backed securities.
−Removed: As of December 31, 2022, $ 331.6 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreements (as discussed above).
Derivative Financial Instruments
−Removed: The Company uses derivative financial instruments primarily to manage interest rate risk.
+Added: Non-Nelnet Bank Derivatives
+Added: The Company uses settled-to-market derivative financial instruments to manage interest rate risk.
The Company is exposed to interest rate risk in the form of basis risk and repricing risk because the interest rate characteristics of the Company's assets do not match the interest rate characteristics of the funding for those assets.
The Company periodically reviews the mismatch related to the interest rate characteristics of its assets and liabilities together with the Company's outlook as to current and future market conditions.
−Removed: Based on those factors, the Company uses derivative instruments as part of its overall risk management strategy.
−Removed: Derivative instruments used as part of the Company's interest rate risk management strategy are discussed below.
−Removed: Interest earned on the majority of the Company's FFELP student loan assets is indexed to the one-month LIBOR rate.
−Removed: Meanwhile, the Company funds a portion of its FFELP loan assets with three-month LIBOR indexed floating rate securities.
+Added: Based on those factors, the Company uses settled-to-market derivative instruments as part of its overall risk management strategy.
+Added: Settled-to-market derivative instruments used as part of the Company's interest rate risk management strategy are discussed below.
+Added: Interest earned on the majority of the Company's FFELP student loan assets was indexed to the one-month LIBOR rate.
+Added: Meanwhile, the Company funded a portion of its FFELP loan assets with three-month LIBOR indexed floating rate securities.
+Added: Subsequent to the discontinuation of LIBOR on June 30, 2023, the Company now earns interest on the majority of the Company’s FFELP student loan assets based on 30-day average SOFR while a portion of its FFELP loan assets are funded with 90-day average SOFR and 3-month CME term SOFR.
The differing interest rate characteristics of the Company's loan assets versus the liabilities funding these assets results in basis risk, which impacts the Company's excess spread earned on its loans.
The Company also faces repricing risk due to the timing of the interest rate resets on its liabilities, which may occur as infrequently as once a quarter, in contrast to the timing of the interest rate resets on its assets, which generally occur daily.
−Removed: As of December 31, 2022, the Company’s AGM operating segment had $ 12.7 billion, $ 0.5 billion, and $ 0.4 billion of FFELP loans indexed to the one-month LIBOR rate, three-month commercial paper rate, and the three-month treasury bill rate, respectively, the indices for which reset daily, and $ 3.8 billion of debt indexed to three-month LIBOR, the indices for which reset quarterly, and $ 8.1 billion of debt indexed to one-month LIBOR, the indices for which reset monthly.
+Added: As of December 31, 2023, the Company’s AGM operating segment had $ 10.9 billion, $ 0.4 billion, and $ 0.4 billion of FFELP loans indexed to the 30-day average SOFR rate, three-month commercial paper rate, and the three-month treasury bill rate, respectively, the indices for which reset daily, and $ 2.8 billion of debt indexed to 90-day average SOFR and 3-month CME term SOFR, the indices for which reset quarterly, and $ 6.8 billion of debt indexed to 30-day average SOFR and 1-month CME term SOFR, the indices for which reset monthly.
The Company has used derivative instruments to hedge its basis risk and repricing risk.
−Removed: The Company has entered into basis swaps in which the Company receives three-month LIBOR set discretely in advance and pays one-month LIBOR plus or minus a spread as defined in the agreements (the “1:3 Basis Swaps”).
+Added: The Company has entered into basis swaps in which the Company received three-month LIBOR set discretely in advance and paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").
+Added: Subsequent to the discontinuation of LIBOR on June 30, 2023, the Company now receives and pays the term adjusted SOFR rate on these derivatives (plus the tenor spread adjustment to LIBOR).
The following table summarizes the Company’s 1:3 Basis Swaps outstanding:
6 unchanged sentences
$ 3,150,000 3,900,000
−Removed: $ 3,900,000 5,900,000
−Removed: The weighted average rate paid by the Company on the 1:3 Basis Swaps as of December 31, 2022 and 2021, was one-month LIBOR plus 9.7 basis points and 9.1 basis points, respectively.
+Added: The weighted average rate paid by the Company on the 1:3 Basis Swaps as of December 31, 2023 was the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.1 basis points and as of December 31, 2022 was one-month LIBOR plus 9.7 basis points, respectively.
Interest Rate Swaps – Floor Income Hedges
13 unchanged sentences
In higher interest rate environments, where the interest rate rises above the borrower rate and fixed rate loans effectively become variable rate loans, the impact of the rate fluctuations is reduced.
−Removed: As of December 31, 2022 and 2021, the Company had $ 0.9 billion and $ 7.2 billion, respectively, of FFELP student loan assets that were earning fixed rate floor income.
+Added: As of December 31, 2023, 2022, and 2021, the Company had $ 0.3 billion, $ 0.9 billion, and $ 7.2 billion, respectively, of FFELP student loan assets that were earning fixed rate floor income.
+Added: The decrease in loans earning fixed rate floor income was due to an increase in interest rates.
The following table summarizes the outstanding derivative instruments used by the Company to economically hedge loans earning fixed rate floor income.
−Removed: As of December 31, 2022 As of December 31, 2021
−Removed: Maturity Notional amount Weighted average fixed rate paid by the Company (a) Notional amount Weighted average fixed rate paid by the Company (a)
−Removed: 2022 $ — — % $ 500,000 0.94 %
+Added: As of December 31, 2023 As of December 31, 2022 (a)
+Added: Maturity Notional amount Weighted average fixed rate paid by the Company (b) Notional amount Weighted average fixed rate paid by the Company (b)
2024 $ — — % $ 2,000,000 0.35 %
1 unchanged sentence
2028 50,000 3.56 — —
+Added: 2029 (c) 50,000 3.17 — —
+Added: 2030 (d) 100,000 3.63 — —
2031 — — 100,000 1.53
2032 — — 200,000 2.92
−Removed: 2032 (b) 200,000 2.92 — —
$ 400,000 3.71 % $ 2,800,000 0.70 %
−Removed: (a) For the interest rate derivatives maturing in 2032, the Company receives payments based on Secured Overnight Financing Rate (SOFR) that resets quarterly.
−Removed: For all other interest rate derivatives, the Company receives payments based on three-month LIBOR that resets quarterly.
−Removed: (b) These derivatives have forward effective start dates in November 2024.
−Removed: In March 2022, the Company terminated $ 650 million in notional amount of derivatives ($ 500 million and $ 150 million that had maturity dates in 2022 and 2023, respectively) for net payments of $ 0.1 million.
−Removed: On April 29, 2022, the Company terminated $ 1.25 billion in notional amount of derivatives ($ 500 million, $ 250 million, and $ 500 million that had maturity dates in 2023, 2024, and 2025, respectively) for total proceeds of $ 68.1 million.
−Removed: On August 26, 2022, the Company terminated $ 500 million in notional amount of derivatives ($ 250 million that had maturity dates in each of 2023 and 2024) for total proceeds of $ 23.8 million.
+Added: (a) On March 15, 2023, to minimize the Company's exposure to market volatility and increase liquidity, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($ 2.8 billion in notional amount of derivatives) prior to their maturity.
+Added: Through March 15, 2023, the Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the $ 2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $ 183.2 million, which included $ 19.1 million related to current period settlements.
+Added: In 2022, the Company terminated $ 2.4 billion in notional amount of derivatives prior to their maturity for net proceeds of $ 91.8 million.
+Added: (b) For all interest rate derivatives, the Company receives payments based on SOFR, the majority of which reset quarterly.
+Added: (c) This $ 50 million notional amount derivative has a forward effective start date in January 2026.
+Added: (d) A $ 50 million notional amount derivative maturing in 2030 has a forward effective start date in November 2025.
+Added: Nelnet Bank Derivatives
+Added: Interest Rate Swaps
+Added: Non-centrally cleared derivative instruments are used by Nelnet Bank to hedge the exposure to variability in cash flows of variable rate intercompany deposits primarily to minimize the exposure to volatility in cash flows from future changes in interest rates.
+Added: Nelnet Bank has structured these derivatives so that each is economically effective;
+Added: however, because these derivatives are hedging intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements.
+Added: As a result, the change in market value of these derivative instruments is reported in current
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: period earnings and presented in "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income.
+Added: The following table summarizes the outstanding derivative instruments used by Nelnet Bank to hedge exposure to variability in cash flows related to variable rate intercompany deposits.
+Added: As of December 31, 2023
+Added: Maturity Notional amount Weighted average fixed rate paid by the Company (a)
+Added: 2028 $ 40,000 3.33 %
+Added: 2030 (b) 50,000 3.06
+Added: 2032 (c) 25,000 4.03
+Added: 2033 (d) 25,000 3.90
+Added: $ 140,000 3.46 %
+Added: (a) For all interest rate derivatives, the Company receives payments based on SOFR that reset monthly or quarterly.
+Added: (b) These $ 25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.
+Added: (c) This $ 25 million notional amount derivative has a forward effective start date in February 2027.
+Added: (d) This $ 25 million notional amount derivative has a forward effective start date in November 2025.
+Added: Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse.
+Added: As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset or liability measured at fair value.
+Added: As of December 31, 2023, the gross fair value of Nelnet Bank's interest rate swap derivatives in an asset position was $ 0.5 million and in a liability position was $ 2.0 million.
+Added: These amounts are included in “other assets” and “other liabilities,” respectively, on the consolidated balance sheet.
Consolidated Financial Statement Impact Related to Derivatives - Statements of Income
4 unchanged sentences
Interest rate swaps - floor income hedges 23,044 33,149 ( 19,729 )
+Added: Interest rate swaps - Nelnet Bank 484 — —
Total settlements - income (expense) 25,072 32,943 ( 21,367 )
2 unchanged sentences
Interest rate swaps - floor income hedges ( 39,683 ) 229,429 87,786
−Removed: Total change in fair value - income (expense) 231,691 92,813 ( 28,144 )
−Removed: Derivative market value adjustments and derivative settlements, net - income (expense)
−Removed: $ 264,634 71,446 ( 24,465 )
−Removed: Derivative Instruments - Credit and Market Risk
−Removed: Interest rate movements have an impact on the amount of variation margin the Company may be required to pay to its third-party clearinghouse.
+Added: Interest rate swaps - Nelnet Bank ( 1,523 ) — —
+Added: Total change in fair value - (expense) income ( 41,773 ) 231,691 92,813
+Added: Derivative market value adjustments and derivative settlements, net - (expense) income $ ( 16,701 ) 264,634 71,446
+Added: Derivative Instruments - Market Risk
+Added: Interest rate movements have an impact on the amount of variation margin and collateral the Company may be required to pay to its third-party clearinghouse and counterparties, respectively.
The Company attempts to manage market risk associated with interest rates by establishing and monitoring limits as to the types and degree of risk that may be undertaken.
−Removed: The Company's derivative portfolio and hedging strategy is reviewed periodically by its internal risk committee and board of directors' Risk and Finance Committee.
−Removed: With the Company's current derivative portfolio, the Company does not currently anticipate any movement in interest rates having a material impact on its liquidity or capital resources, nor expects future movements in interest rates to have a material impact on its ability to meet variation margin payments to its third-party clearinghouse.
+Added: The Company's derivative portfolio and hedging strategy is reviewed periodically by its internal risk committee, Board of Directors' Risk and Finance Committee, and Nelnet Bank’s Board of Directors (for Nelnet Bank derivatives).
+Added: With the Company's current derivative portfolio, the Company does not currently anticipate any movement in interest rates having a material impact on its liquidity or capital resources, nor expects future movements in interest rates to have a material impact on its ability to meet variation margin and collateral payments .
AND SUBSIDIARIES
2 unchanged sentences
Investments and Notes Receivable
−Removed: A summary of the Company's investments and notes receivable follows:
+Added: A summary of the Company's “restricted investments” and “investments and notes receivable” follows:
As of December 31, 2023 As of December 31, 2022
−Removed: Amortized cost Gross unrealized gains Gross unrealized losses (a) Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value
+Added: Amortized cost Gross unrealized gains Gross unrealized losses Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value
+Added: Restricted investments (at fair value):
+Added: FFELP loan asset-backed securities $ 16,993 1,069 ( 93 ) 17,969 — — — —
Investments (at fair value):
−Removed: FFELP loan asset-backed securities- available-for-sale (b) $ 813,716 4,453 ( 19,958 ) 798,211 480,691 14,710 ( 719 ) 494,682
−Removed: Private education loan asset-backed securities - available-for-sale (c) 337,844 — ( 29,560 ) 308,284 414,286 507 ( 2,241 ) 412,552
−Removed: Other debt securities - available-for-sale (d) 290,070 169 ( 7,697 ) 282,542 22,435 — — 22,435
−Removed: Total available-for-sale debt securities $ 1,441,630 4,622 ( 57,215 ) 1,389,037 917,412 15,217 ( 2,960 ) 929,669
+Added: Available-for-sale asset-backed securities
+Added: Non-Nelnet Bank:
+Added: FFELP loan $ 271,479 4,883 ( 5,393 ) 270,969 463,861 3,498 ( 11,105 ) 456,254
+Added: Private education loan (a) 281,791 — ( 28,874 ) 252,917 335,903 — ( 29,438 ) 306,465
+Added: Other debt securities 41,693 2,020 ( 1,275 ) 42,438 158,589 151 ( 3,790 ) 154,950
+Added: Total Non-Nelnet Bank 594,963 6,903 ( 35,542 ) 566,324 958,353 3,649 ( 44,333 ) 917,669
+Added: FFELP loan (b) 321,638 4,508 ( 2,296 ) 323,850 349,855 955 ( 8,853 ) 341,957
+Added: Other debt securities 49,284 117 ( 1,641 ) 47,760 133,422 18 ( 4,029 ) 129,411
+Added: Total Nelnet Bank 370,922 4,625 ( 3,937 ) 371,610 483,277 973 ( 12,882 ) 471,368
+Added: Total available-for-sale asset-backed securities $ 965,885 11,528 ( 39,479 ) 937,934 1,441,630 4,622 ( 57,215 ) 1,389,037
Equity securities 50,907 39,082
1 unchanged sentence
Other Investments and Notes Receivable (not measured at fair value):
−Removed: Other debt securities - held-to-maturity (e) 18,774 8,200
+Added: Held to maturity investments
+Added: Non-Nelnet Bank:
+Added: Debt securities (c) 4,700 18,554
+Added: FFELP loan asset-backed securities (b) 158,038 —
+Added: Other debt securities — 220
+Added: Total Nelnet Bank 158,038 220
+Added: Total held to maturity investments 162,738 18,774
Venture capital and funds:
−Removed: Measurement alternative (f)(g) 160,052 157,609
+Added: Measurement alternative (d) 194,084 160,052
Equity method 91,464 89,332
2 unchanged sentences
Investment in ALLO:
−Removed: Voting interest/equity method (h) 67,538 87,247
−Removed: Preferred membership interest and accrued and unpaid preferred return (i) 145,926 137,342
+Added: Voting interest/equity method (e) 10,693 67,538
+Added: Preferred membership interest (f) 155,047 145,926
Total investment in ALLO 165,740 213,464
−Removed: Beneficial interest in loan securitizations (j):
+Added: Beneficial interest in loan securitizations (g):
+Added: Consumer loans 134,113 39,249
Private education loans 68,372 75,261
−Removed: Consumer loans and other 39,249 28,366
Federally insured student loans 22,594 24,228
Total beneficial interest in loan securitizations 225,079 138,738
−Removed: Solar (k) ( 55,448 ) ( 42,457 )
+Added: Solar (h) ( 121,779 ) ( 55,448 )
Notes receivable 53,747 31,106
2 unchanged sentences
Total investments and notes receivable $ 1,870,968 $ 2,111,917
−Removed: (a) As of December 31, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $ 1.2 billion.
−Removed: The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.
−Removed: (b) A portion of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 5 under "Participation Agreement." As of December 31, 2022, the par value and fair value of these securities was $ 395.4 million and $ 370.7 million, respectively.
−Removed: The Company’s FFELP loan asset-backed securities classified as available-for-sale with a fair value of $ 105.5 million, $ 9.3 million, $ 77.0 million, and $ 606.4 million as of December 31, 2022 were scheduled to mature within the next one year, 1-5 years, 6-10 years, and greater than 10 years, respectively.
−Removed: (c) In December 2020, Wells Fargo announced the sale of its approximately $ 10.0 billion portfolio of private education loans.
−Removed: The Company entered into a joint venture with other investors to acquire the loans.
−Removed: Under the terms of the joint venture agreements, the Company serves as the sponsor and administrator for the loan securitizations completed by the joint venture to permanently finance the loans acquired.
−Removed: As sponsor of the loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: The bonds purchased to satisfy the risk retention requirement are included in “private education loan asset-backed securities – available for sale” in the above table and as of December 31, 2022, the par value and fair value of these bonds was $ 336.5 million and $ 306.5 million, respectively.
−Removed: These securities were subject to repurchase agreements with third parties, as discussed in note 5 under “Repurchase Agreements.” The Company must retain these investment securities until the latest of (i) two years from the closing date of the securitization, (ii) the date the aggregate outstanding principal balance of the loans in the securitization is 33 % or less of the initial loan balance, and (iii) the date the aggregate outstanding principal balance of the bonds is 33 % or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party.
−Removed: As of December 31, 2022, the stated maturities for all the Company’s private education loan asset-backed securities classified as available-for-sale were greater than 10 years.
−Removed: (d) Other debt securities include mortgage-backed and consumer-backed securities and collateralized loan obligations.
−Removed: These debt securities classified as available-for-sale with a fair value of $ 23.4 million, $ 186.0 million, and $ 73.1 million as of December 31, 2022 were scheduled to mature in 1-5 years, 6-10 years, and greater than 10 years, respectively.
−Removed: (e) As of December 31, 2022, securities classified as held-to-maturity of $ 1.5 million, $ 3.5 million and $ 13.8 million were scheduled to mature within one year, 1-5 years, and greater than 10 years, respectively.
−Removed: As of December 31, 2022, the fair value of these securities approximated their carrying value.
−Removed: (f) The Company has an investment in Agile Sports Technologies, Inc.
+Added: (a) In December 2020, Wells Fargo announced the sale of its approximately $ 10 billion portfolio of private education loans.
+Added: The Company entered into a joint venture with other investors to acquire the loans.
+Added: Under the terms of the joint venture agreements, the Company serves as the sponsor and administrator for the loan securitizations completed by the joint venture to permanently finance the loans acquired.
+Added: As sponsor of the loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement.
+Added: The bonds purchased to satisfy the risk retention requirement are included in the above table and as of December 31, 2023, the par value and fair value of these securities was $ 282.2 million and $ 252.9 million, respectively.
+Added: The Company must retain these investment securities until the latest of (i) two years from the closing date of the securitization, (ii) the date the aggregate outstanding principal balance of the loans in the securitization is 33 % or less of the initial loan balance, and (iii) the date the aggregate outstanding principal balance of the bonds is 33 % or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party.
+Added: A portion of the private education loan asset-backed securities were subject to a repurchase agreement with third parties, as discussed in note 4 under “Repurchase Agreements.” As of December 31, 2023, the par value and fair value of securities subject to the participation was $ 155.9 million and $ 134.1 million, respectively.
+Added: (b) On March 31, 2023, securities at Nelnet Bank with a fair value of $ 149.2 million were transferred from available-for-sale to held to maturity.
+Added: The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction.
+Added: Accumulated other comprehensive income as of March 31, 2023 included pre-tax unrealized losses of $ 3.7 million related to the transfer.
+Added: These unrealized losses are being amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.
+Added: (c) On March 31, 2023, certain Non-Nelnet Bank debt securities were transferred from held to maturity to available-for-sale.
+Added: (d) The Company has an investment in Agile Sports Technologies, Inc.
(doing business as “Hudl”) that is included in “venture capital and funds” in the above table.
−Removed: In May 2020, the Company made an additional equity investment of approximately $ 26 million in Hudl, as one of the participants in an equity raise completed by Hudl.
−Removed: Prior to the additional 2020 investment, the Company had direct and indirect equity ownership interests in Hudl of less than 20 %, which did not materially change as a result of this transaction.
−Removed: The Company accounts for its investment in Hudl using the measurement alternative method, which requires it to adjust its carrying value of the investment for changes resulting from observable market transactions.
−Removed: As a result of Hudl’s equity raise, the Company recognized a $ 51.0 million gain during the second quarter of 2020 to adjust its carrying value to reflect the May 2020 transaction value.
−Removed: This gain is included in “other, net” in “other income (expense)” on the consolidated statements of income.
−Removed: In May 2021, the Company made an additional $ 5 million investment in Hudl.
−Removed: For accounting purposes, the May 2021 equity raise transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities and the price was contractually agreed to during Hudl's prior May 2020 equity raise.
−Removed: Accordingly, the Company did not adjust its carrying value of its Hudl investment to the May 2021 transaction value.
+Added: During the first quarter of 2023, the Company acquired additional ownership interests in Hudl for $ 31.5 million from existing Hudl investors.
+Added: This transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities.
+Added: Accordingly, the Company did not adjust its carrying value of its Hudl investment to the transaction value.
As of December 31, 2023, the carrying amount of the Company's investment in Hudl is $ 165.5 million.
Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl.
−Removed: (g) In October 2021, CompanyCam Inc., an entity in which the Company has an equity investment, completed an additional equity raise.
−Removed: The Company accounts for its investment in this entity using the measurement alternative method, which requires it to adjust its carrying value of the investment for changes resulting from observable market transactions.
−Removed: As a result of this entity’s equity raise, the Company recognized a $ 10.3 million gain during the fourth quarter of 2021 to adjust its carrying value to reflect the October 2021 transaction value.
−Removed: As of December 31, 2022, the carrying amount of this investment is $ 11.5 million.
−Removed: (h) The Company accounts for its voting membership interests in ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO") under the HLBV method of accounting.
−Removed: During the years ended December 31, 2022, 2021, and 2020, the Company recognized losses of $ 68.0 million, $ 42.1 million, and $ 3.6 million, respectively, under the HLBV method of accounting on its ALLO voting membership interests investment.
−Removed: Losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income.
−Removed: During 2022, the Company contributed $ 48.3 million of additional equity to ALLO.
+Added: The Company's equity ownership interests in Hudl consist of preferred stock with certain liquidation preferences that are considered substantive.
+Added: Accordingly, for accounting purposes, the Company's equity ownership interests are not considered in-substance common stock and the Company is accounting for its equity investment in Hudl using the measurement alternative method.
+Added: (e) During the first quarter of 2023, the Company contributed $ 8.4 million of additional equity in ALLO.
As a result of this equity contribution, the Company's voting membership interests percentage in ALLO did not materially change.
−Removed: Assuming ALLO continues its planned growth in existing and new communities, it will continue to invest substantial amounts in property and equipment to build the network and connect customers.
−Removed: The resulting recognition of depreciation and development costs could result in continuing net operating losses by ALLO under GAAP.
−Removed: Applying the HLBV method of accounting, the Company will continue to recognize a significant portion of ALLO’s anticipated losses over the next several years.
−Removed: (i) The preferred membership interests of ALLO held by the Company earn a preferred annual return of 6.25 %.
−Removed: During the years ended December 31, 2022, 2021, and 2020, the Company recognized income on its ALLO preferred membership interests of $ 8.6 million, $ 8.4 million, and $ 0.4 million, respectively, which are included in "other, net" in "other income (expense)" on the consolidated statements of income.
+Added: The Company recognized losses under the HLBV method of accounting on its ALLO voting membership interests investment of $ 65.3 million, $ 68.0 million, and $ 42.1 million during the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: Losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income.
+Added: (f) As of December 31, 2023, the outstanding preferred membership interests of ALLO held by the Company was $ 155.0 million.
+Added: Accrued and unpaid preferred return capitalizes to preferred membership interests annually on each December 31.
+Added: The preferred membership interests of ALLO held by the Company currently earn a preferred annual return of 6.25 % that will increase to 10.00 % in April 2024.
+Added: The Company recognized income on its ALLO preferred membership interests of $ 9.1 million, $ 8.6 million, and $ 8.4 million during the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.
+Added: (g) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations.
+Added: 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 $ 910 million, $ 515 million, and $ 335 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.
+Added: (h) The solar investment balance as of December 31, 2023 represents the sum of total tax credits earned on solar projects placed-in-service through December 31, 2023 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Under October 2020 recapitalization agreements for ALLO, the parties have agreed to use commercially reasonable efforts (which expressly excludes requiring ALLO to raise any additional equity financing or sell any assets) to cause ALLO to redeem, on or before April 2024, the remaining preferred membership interests of ALLO held by the Company, plus the amount of accrued and unpaid preferred return on such interests.
−Removed: (j) The Company has partial ownership in certain federally insured student, private education, and consumer and other loan securitizations.
−Removed: As of the latest remittance reports filed by the various trusts prior to or as of December 31, 2022, the Company's ownership correlates to approximately $ 390 million, $ 620 million, and $ 310 million of federally insured student, private education, and consumer and other loans, respectively, included in these securitizations.
−Removed: (k) The Company makes investments in entities that promote renewable energy sources (solar).
−Removed: The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits, operating cash flows, and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods which range from 5 to 6 years.
−Removed: As of December 31, 2022, the Company has funded a total of $ 278.4 million in solar investments, which includes $ 102.8 million funded by syndication partners.
−Removed: The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed-in-service.
−Removed: The solar investment balance at December 31, 2022 represents the sum of total tax credits earned on solar projects placed-in-service through December 31, 2022 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.
−Removed: As of December 31, 2022, the Company is committed to fund an additional $ 30.3 million on these projects, of which $ 22.5 million will be provided by syndication partners.
−Removed: The Company accounts for its solar investments using the HLBV method of accounting.
−Removed: For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment.
−Removed: During the years ended December 31, 2022, 2021, and 2020, the Company recognized losses on its solar investments of $ 9.5 million, $ 10.1 million, and $ 37.4 million, respectively.
−Removed: These losses, which include losses attributable to third-party noncontrolling interest investors (syndication partners), are included in “other, net” in "other income (expense)" on the consolidated statements of income.
−Removed: Solar losses attributed to noncontrolling interest investors was $ 10.9 million, $ 7.4 million, and $ 3.8 million, for the years ended December 31, 2022, 2021, and 2020, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.
−Removed: Business Combinations
−Removed: HigherSchool Publishing Company ("HigherSchool")
−Removed: On December 31, 2020, the Company acquired 100 % of the outstanding stock of HigherSchool for total cash consideration of $ 24.7 million.
−Removed: HigherSchool provides supplemental instructional services and educational professional development for K-12 schools.
−Removed: The acquisition of HigherSchool has expanded the Company's professional development and educational instruction services.
−Removed: The operating results of HigherSchool are included in the Education Technology, Services, and Payment Processing reportable operating segment from the date of acquisition.
−Removed: The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.
−Removed: Cash and cash equivalents $ 7
−Removed: Accounts receivable 5,711
−Removed: Intangible assets 24,200
−Removed: Excess cost over fair value of net assets acquired (goodwill) 6,292
−Removed: Other liabilities ( 11,510 )
−Removed: Net assets acquired $ 24,700
−Removed: The acquired intangible assets were customer relationships of $ 24.2 million ( 10 -year useful life).
−Removed: The $ 6.3 million of goodwill was assigned to the Education Technology, Services, and Payment Processing operating segment and is not expected to be deductible for tax purposes.
−Removed: The amount allocated to goodwill was primarily attributed to the deferred tax liability related to the difference between the carrying amount and tax basis of acquired identifiable intangible assets.
−Removed: The pro forma impacts of the HigherSchool acquisition on the Company's historical results prior to the acquisition were not material.
+Added: The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of December 31, 2023:
+Added: As of December 31, 2023
+Added: 1 year or less After 1 year through 5 years After 5 years through 10 years After 10 years Total
+Added: Available-for-sale asset-backed securities
+Added: Restricted Investments:
+Added: FFELP loan $ — — — 16,993 16,993
+Added: Fair value — — — 17,969 17,969
+Added: Non-Nelnet Bank:
+Added: FFELP loan — 15,025 27,366 229,088 271,479
+Added: Private education loan — — — 281,791 281,791
+Added: Other debt securities — 99 — 41,594 41,693
+Added: Total Non-Nelnet Bank — 15,124 27,366 552,473 594,963
+Added: Fair value — 14,821 26,502 525,001 566,324
+Added: FFELP loan 64,623 12,671 58,903 185,441 321,638
+Added: Other debt securities — 20,499 11,862 16,923 49,284
+Added: Total Nelnet Bank 64,623 33,170 70,765 202,364 370,922
+Added: Fair value 64,596 32,693 70,255 204,066 371,610
+Added: Total available-for-sale asset-backed securities at amortized cost $ 64,623 48,294 98,131 771,830 982,878
+Added: Total available-for-sale asset-backed securities at fair value $ 64,596 47,514 96,757 747,036 955,903
+Added: Held to maturity investments
+Added: Non-Nelnet Bank:
+Added: Debt securities $ 4,700 — — — 4,700
+Added: Fair value 4,700 — — — 4,700
+Added: FFELP loan asset-backed securities — 3,452 1,524 153,062 158,038
+Added: Other debt securities — — — — —
+Added: Total Nelnet Bank — 3,452 1,524 153,062 158,038
+Added: Fair value — 3,506 1,539 153,877 158,922
+Added: Total held-to-maturity investments at amortized cost $ 4,700 3,452 1,524 153,062 162,738
+Added: Total held-to-maturity investments at fair value $ 4,700 3,506 1,539 153,877 163,622
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: The following table presents securities classified as available-for-sale that have gross unrealized losses at December 31, 2023 and the fair value of such securities as of December 31, 2023.
+Added: These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis.
+Added: All securities in the table below have been evaluated to determine if a credit loss exists.
+Added: As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.
+Added: As of December 31, 2023
+Added: Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total
+Added: Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value
+Added: Available-for-sale asset-backed securities
+Added: Restricted Investments:
+Added: FFELP loan $ ( 93 ) 2,392 — — ( 93 ) 2,392
+Added: Non-Nelnet Bank:
+Added: FFELP loan ( 966 ) 28,912 ( 4,427 ) 146,613 ( 5,393 ) 175,525
+Added: Private education loan — — ( 28,874 ) 252,916 ( 28,874 ) 252,916
+Added: Other debt securities — — ( 1,275 ) 20,144 ( 1,275 ) 20,144
+Added: Total Non-Nelnet Bank ( 966 ) 28,912 ( 34,576 ) 419,673 ( 35,542 ) 448,585
+Added: FFELP loan ( 1,168 ) 77,677 ( 1,128 ) 53,397 ( 2,296 ) 131,074
+Added: Other debt securities ( 90 ) 19,821 ( 1,551 ) 14,822 ( 1,641 ) 34,643
+Added: Total Nelnet Bank ( 1,258 ) 97,498 ( 2,679 ) 68,219 ( 3,937 ) 165,717
+Added: Total available-for-sale asset-backed securities $ ( 2,317 ) 128,802 ( 37,255 ) 487,892 ( 39,572 ) 616,694
+Added: The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.
+Added: Year ended December 31,
+Added: 2023 2022 2021
+Added: Gross proceeds from sales $ 963,117 511,124 160,976
+Added: Gross realized gains $ 4,517 6,702 3,127
+Added: Gross realized losses ( 8,021 ) ( 800 ) ( 432 )
+Added: Net (losses) gains $ ( 3,504 ) 5,902 2,695
+Added: Business Combinations
NGWeb Solutions, LLC
4 unchanged sentences
For segment reporting, this gain is included in Corporate and Other Activities.
−Removed: Subsequent to the acquisition, the Company has consolidated the operating results of NextGen and such results are included in the Education Technology, Services, and Payment Processing reportable operating segment.
+Added: Subsequent to the acquisition, the Company has consolidated the operating results of NextGen and such results are included in the Education Technology Services and Payments reportable operating segment.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.
12 unchanged sentences
The intangible assets that made up this amount include customer relationships of $ 12.8 million ( 15 -year useful life), computer software of $ 1.7 million ( 5 -year useful life), and a trade name of $ 0.8 million ( 10 -year useful life).
−Removed: The $ 15.9 million of goodwill was assigned to the NextGen reporting unit and is not expected to be deductible for tax purposes.
+Added: The $ 15.9 million of goodwill was assigned to the NextGen reporting unit that is included in the Education Technology Services and Payments operating segment and is not expected to be deductible for tax purposes.
The amount allocated to goodwill was primarily attributed to the synergies and economies of scale expected from combining the operations of the Company and NextGen.
1 unchanged sentence
On July 1, 2022, the Company acquired 80 % of the ownership interests of two subsidiaries of GRNE Solutions, LLC named GRNE-Nelnet, LLC (GRNE) and ENRG-Nelnet, LLC (ENRG) (collectively referred to as "GRNE Solar") for total cash consideration of $ 28.9 million.
−Removed: GRNE designs and installs residential, commercial, and utility-scale solar systems in the Midwest.
+Added: GRNE designs and installs residential and commercial solar systems in the Midwest.
ENRG owns certain assets that generate and sell solar energy.
2 unchanged sentences
As part of the acquisition, the Company agreed to pay $ 5.0 million in future capital contributions on behalf of the minority interest members.
−Removed: Any amount of the $ 5.0 million not paid as capital contributions to GRNE Solar by June 30, 2025 will be paid by the Company directly to the minority interest members.
−Removed: The $ 5.0 million liability is included in “other liabilities” and the Company recognized an additional $ 5.0 million in “goodwill” on the consolidated balance sheet as a result of the future capital contribution commitment.
+Added: Any amount of the $ 5.0 million not paid as capital contributions to GRNE Solar by June 30, 2025 was to be paid by the Company directly to the minority interest members.
+Added: On the acquisition date, the Company recorded a liability and increased goodwill by $ 5.0 million as a result of the future capital contribution commitment.
+Added: The future capital contribution commitment had been fully satisfied as of December 31, 2023.
AND SUBSIDIARIES
15 unchanged sentences
The $ 11.7 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 8 years.
−Removed: The intangible assets that made up this amount include a trade name of $ 8.1 million ( 10 -year useful life), customer relationships of $ 1.1 million ( 3 -year useful life), and other separably identified intangibles of $ 2.4 million ( 5 -year useful life).
−Removed: The $ 18.9 million of goodwill was assigned to the GRNE operating segment and is expected to be deductible for tax purposes.
+Added: The intangible assets that made up this amount include a trade name of $ 8.1 million ( 10 -year useful life), customer relationships of $ 1.1 million ( 3 -year useful life), and other separately identified intangibles of $ 2.5 million ( 5 -year useful life).
+Added: The $ 18.9 million of goodwill was assigned to the GRNE operating segment that is included in Corporate and Other Activities for segment reporting and is expected to be deductible for tax purposes.
The amount allocated to goodwill was attributed to synergies from combining the operations of the Company and GRNE Solar and intangible assets that do not qualify for separate recognition.
1 unchanged sentence
Intangible Assets
−Removed: Intangible assets consist of the following:
+Added: Intangible assets consisted of the following:
Weighted average remaining useful life as of
4 unchanged sentences
104 $ 43,031 51,738
−Removed: Trade names (net of accumulated amortization of $ 617 )
+Added: Trade names (net of accumulated amortization of $ 8,268 and $ 617 , respectively)
+Added: 100 642 8,293
Computer software (net of accumulated amortization of $ 574 and $ 6,400 , respectively)
5 unchanged sentences
As of December 31, 2023, the Company estimates it will record amortization expense as follows:
−Removed: 2023 $ 10,344
2029 and thereafter 13,149
3 unchanged sentences
The change in the carrying amount of goodwill by reportable operating segment was as follows:
−Removed: Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management (a) Nelnet Bank Corporate and Other Activities Total
−Removed: Balance as of December 31, 2020 and 2021 $ 23,639 76,570 41,883 — — 142,092
−Removed: Goodwill acquired (NextGen) — 15,937 — — — 15,937
−Removed: Goodwill acquired (GRNE Solar) — — — — 18,873 18,873
+Added: Nelnet Financial Services
+Added: Loan Servicing and Systems Education Technology Services and Payments Asset Generation and Management (a) Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Total
Balance as of December 31, 2021 $ 23,639 76,570 41,883 — — — 142,092
+Added: Goodwill acquired — 15,937 — — — 18,873 34,810
+Added: Balance as of December 31, 2022 23,639 92,507 41,883 — — 18,873 176,902
+Added: Impairment (see note 11) — — — — — ( 18,873 ) ( 18,873 )
+Added: Balance as of December 31, 2023 $ 23,639 92,507 41,883 — — — 158,029
(a) As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans, and net interest income from the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down.
As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio.
−Removed: Management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units.
+Added: Management believes the elimination of FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units.
Property and Equipment
8 unchanged sentences
17,197 22,386
−Removed: Leasehold improvements 1 - 15 years
−Removed: 10,410 10,537
−Removed: Transportation equipment 5 - 10 years
Solar facilities 5 - 35 years
+Added: Transportation equipment 5 - 10 years
+Added: Leasehold improvements 1 - 15 years
Land — 3,279 3,181
7 unchanged sentences
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Impairment Expense and Provision for Beneficial Interests
−Removed: The following table presents the non-cash impairment charges by asset and reportable operating segment recognized by the Company during 2022, 2021, and 2020.
−Removed: The Company’s non-cash impairment charges are included in “impairment expense and provision for beneficial interest, net” in the consolidated statements of income.
−Removed: Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset
+Added: Impairment Expense
+Added: The following table presents the impairment charges by asset and reportable operating segment recognized by the Company during 2023, 2022, and 2021.
+Added: The Company’s impairment charges are included in “impairment expense” in the consolidated statements of income.
+Added: Nelnet Financial Services
+Added: Loan Servicing and Systems Education Technology Services and Payments Asset
Generation and
−Removed: Management Nelnet Bank Corporate and Other Activities Total
+Added: Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Total
Year ended December 31, 2023
−Removed: Investments - venture capital and funds (a) $ — — — — 6,561 6,561
−Removed: Property and equipment - internally developed software 3,737 — — 214 — 3,951
+Added: Goodwill (a) $ — — — — — 18,873 18,873
Leases, buildings, and associated improvements (b) 296 — — — — 4,678 4,974
−Removed: Intangible asset - computer software — 2,239 — — — 2,239
+Added: Property and equipment - internally developed software — 4,310 — — — — 4,310
+Added: Investments - venture capital and funds (c) — — — — — 2,060 2,060
+Added: Intangible assets (a) — — — — — 1,708 1,708
$ 296 4,310 — — — 27,319 31,925
Year ended December 31, 2022
−Removed: Investments - venture capital and funds (a) $ — — — — 4,637 4,637
Leases, buildings, and associated improvements (b) $ 1,774 — — — — 998 2,772
−Removed: Beneficial interest in loan securitizations (c) — — ( 2,436 ) — — ( 2,436 )
+Added: Property and equipment - internally developed software 3,737 — — 214 — — 3,951
+Added: Investments - venture capital and funds (c) — — — — — 6,561 6,561
+Added: Intangible asset — 2,239 — — — — 2,239
$ 5,511 2,239 — 214 — 7,559 15,523
Year ended December 31, 2021
−Removed: Investments - venture capital and funds (a) $ — — — — 8,116 8,116
−Removed: Beneficial interest in loan securitizations (c) — — 16,607 — — 16,607
+Added: Leases, buildings, and associated improvements (b) $ 13,243 — — — — 916 14,159
+Added: Investments - venture capital and funds (c) — — — — — 4,637 4,637
+Added: Beneficial interest in loan securitizations — — ( 2,436 ) — — — ( 2,436 )
$ 13,243 — ( 2,436 ) — — 5,553 16,360
−Removed: (a) The Company recorded non-cash impairment charges related to several of its venture capital investments accounted for under the measurement alternative method.
−Removed: (b) The Company continues to evaluate the use of office space as a large number of employees continue to work from home due to COVID-19.
+Added: (a) As part of the November 2023 annual goodwill impairment assessment completed in conjunction with the Company’s annual November budget process, the Company determined it was more likely than not that the estimated fair value of the GRNE operating segment was less than its carrying amount.
+Added: As part of the qualitative assessment, the Company used the discounted cash flow method under the income approach to estimate the fair value of the reporting unit, which concluded that the estimated fair value was less than its carrying amount.
+Added: As a result, the Company recorded a non-cash impairment charge in the fourth quarter of 2023.
+Added: No remaining goodwill is attributable to the GRNE operating segment.
+Added: The Company also recorded a non-cash impairment charge for GRNE operating segment’s remaining intangible assets.
+Added: (b) The Company continues to evaluate the use of office space as a large number of employees continue to work from home.
As a result, the Company recorded non-cash impairment charges related to operating lease assets and associated leasehold improvements and to building and building improvements.
−Removed: (c) During the first quarter of 2020, the Company recorded an allowance for credit losses (and related provision expense) related to the Company’s beneficial interest in consumer loan securitizations as a result of the expectation of increased consumer loan defaults within such securitizations due to the distressed economic conditions resulting from the COVID-19 pandemic.
−Removed: During the fourth quarter of 2020 and the first quarter of 2021, due to improved economic conditions, the Company reduced the allowance for credit losses related to the consumer loan beneficial interests.
−Removed: As of December 31, 2022 and 2021, there is no allowance for credit losses on the Company’s beneficial interest investments.
+Added: The Corporate and Other Activities amount for the year ended December 31, 2023 includes a $ 2.4 million lease termination fee paid to Union Bank, a related party.
+Added: (c) The Company recorded non-cash impairment charges related to several of its venture capital investments accounted for under the measurement alternative method.
AND SUBSIDIARIES
3 unchanged sentences
The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits.
+Added: As of December 31, 2023 and December 31, 2022, Nelnet Bank had intercompany deposits from Nelnet, Inc.
+Added: and its subsidiaries totaling $ 104.0 million and $ 98.3 million, respectively, including a $ 40.0 million pledged deposit from Nelnet, Inc.
+Added: as required under a Capital and Liquidity Maintenance Agreement with the FDIC.
+Added: All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.
As of December 31,
Brokered CDs, net of brokered deposit fees $ 203,522 254,817
−Removed: Retail and other savings (529 and HSA) 410,556 243,759
+Added: Commercial 2,057 —
+Added: Retail and other savings (529, STFIT, and HSA) 517,960 410,556
Retail and other CDs (commercial and institutional) 20,060 25,949
1 unchanged sentence
Brokered deposit fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method.
−Removed: The Bank recognized brokered deposit fee expense of $ 0.3 million and $ 0.1 million during the years ended December 31, 2022 and 2021, respectively.
−Removed: Brokered deposit fee expense was not significant in 2020.
+Added: The Bank recognized brokered deposit fee expense of $ 0.2 million, $ 0.3 million, and $ 0.1 million during the years ended December 31, 2023, 2022, and 2021, respectively.
Fees paid to third-party brokers related to these CDs were $ 0.6 million and $ 0.4 million during the years ended December 31, 2022 and 2021, respectively.
−Removed: These fees were not significant in 2020.
−Removed: Certificates of deposit remaining maturities as of December 31, 2022 are summarized as follows:
+Added: There were no fees paid to third-party brokers for the year ended December 31, 2023.
+Added: The following table presents certificates of deposit remaining maturities as of December 31, 2023:
One year or less $ —
5 unchanged sentences
Total $ 223,582
−Removed: The Educational 529 College Savings and Health Savings plan deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors.
−Removed: Except for the pledged deposit from Nelnet, Inc.
−Removed: and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of December 31, 2022 and 2021.
−Removed: Accrued interest on deposits was $ 0.7 million and $ 0.1 million on December 31, 2022 and 2021, respectively, which is included in “accrued interest payable” on the consolidated balance sheets.
+Added: The Educational 529 College Savings, STFIT, and Health Savings plan deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors.
+Added: Except for the commercial deposit, the pledged deposit from Nelnet, Inc., and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of December 31, 2023 and 2022.
+Added: Accrued interest on deposits was $ 0.7 million as of each December 31, 2023 and 2022, respectively, which is included in “accrued interest payable” on the consolidated balance sheets.
Shareholders’ Equity
9 unchanged sentences
In accordance with the corporate laws of the state in which the Company is incorporated, all shares repurchased by the Company are legally retired upon acquisition by the Company.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Total shares repurchased Purchase price
−Removed: (in thousands) Average price of shares repurchased (per share)
+Added: (in thousands) Average price of shares repurchased (per share) (a)
Year ended December 31, 2023 336,943 $ 28,028 $ 83.18
1 unchanged sentence
Year ended December 31, 2021 713,274 58,111 81.47
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: (a) The average price of shares repurchased for the year ended December 31, 2023 includes excise taxes.
Earnings per Common Share
12 unchanged sentences
These shares are included in the Company's weighted average shares outstanding calculation.
−Removed: The Company is subject to income taxes in the United States, Canada, Australia, Puerto Rico, and Philippines.
+Added: The Company is subject to income taxes in the United States and certain foreign countries.
Significant judgment is required in evaluating the Company's tax positions and determining the provision for income taxes.
2 unchanged sentences
It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of such change.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
As of December 31, 2023, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $ 17.1 million, which is included in “other liabilities” on the consolidated balance sheet.
4 unchanged sentences
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows:
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Year ended December 31,
9 unchanged sentences
As of December 31, 2023 and 2022, $ 4.8 million and $ 4.0 million in accrued interest and penalties, respectively, were included in “other liabilities” on the consolidated balance sheets.
−Removed: The Company recognized interest benefit of $ 1.1 million and $ 0.3 million, and expense of $ 0.4 million related to uncertain tax positions for the years ended December 31, 2022, 2021, and 2020, respectively.
+Added: The Company recognized interest expense of $ 0.8 million, and interest benefits of $ 1.1 million and $ 0.3 million related to uncertain tax positions for the years ended December 31, 2023, 2022, and 2021, respectively.
The impact to the consolidated statements of income related to penalties for uncertain tax positions was not significant for the years 2023, 2022, and 2021.
18 unchanged sentences
Provision for income tax expense $ 19,753 113,224 115,822
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
The differences between the income tax provision computed at the statutory federal corporate tax rate and the financial statement provision for income taxes are shown below:
5 unchanged sentences
Tax credits ( 4.1 ) ( 0.6 ) ( 0.8 )
−Removed: Provision for uncertain federal and state tax matters — ( 0.1 ) ( 0.2 )
−Removed: Basis difference ( 0.6 ) — —
Change in valuation allowance 0.4 ( 0.5 ) —
1 unchanged sentence
Effective tax rate 17.8 % 21.8 % 22.8 %
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:
3 unchanged sentences
Student loans 16,489 20,569
−Removed: Accrued expenses 10,824 10,712
State tax credit carryforwards 12,190 9,431
+Added: Accrued expenses 9,623 10,824
Stock compensation 6,584 5,345
−Removed: Lease liability 3,432 3,685
Net operating losses 4,563 2,613
+Added: Lease liability 2,929 3,432
+Added: Intangible assets 987 —
Debt and equity investments — 1,430
6 unchanged sentences
Depreciation 9,526 11,306
−Removed: Loan origination services 3,264 4,930
+Added: Debt and equity investments 4,711 —
Lease right of use asset 2,770 3,073
−Removed: Intangible assets 1,474 4,772
+Added: Loan origination services 2,635 3,264
Securitization 267 363
−Removed: Debt and equity investments — 12,859
+Added: Intangible assets — 1,474
Other 3,784 2,679
5 unchanged sentences
Management considers the scheduled reversals of deferred tax liabilities, projected taxable income, carry back opportunities, and tax planning strategies in making the assessment of the amount of the valuation allowance.
+Added: With the exception of a portion of the Company's state net operating losses, it is management's opinion that it is more likely than not that the deferred tax assets will be realized and should not be reduced by a valuation allowance.
+Added: The amount of deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
+Added: As of December 31, 2023 and 2022, net deferred tax liabilities of $ 75.3 million and $ 140.1 million, respectively, and net deferred tax assets of $ 21.8 million and $ 34.4 million, respectively, were included in “other liabilities” and “other assets,” respectively, on the consolidated balance sheets.
+Added: As of December 31, 2023 and 2022, the Company had a current income tax receivable of $ 67.4 million and payable of $ 5.2 million, respectively, that is included in “other assets" and “other liabilities,” respectively, on the consolidated balance sheets.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: exception of a portion of the Company's state net operating losses, it is management's opinion that it is more likely than not that the deferred tax assets will be realized and should not be reduced by a valuation allowance.
−Removed: The amount of deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
−Removed: As of December 31, 2022 and 2021, net deferred tax liabilities of $ 140.1 million and $ 117.9 million, respectively, and net deferred tax assets of $ 34.4 million and $ 27.3 million, respectively, were included in “other liabilities” and “other assets,” respectively, on the consolidated balance sheets.
−Removed: As of December 31, 2022 and 2021, the Company had a current income tax payable of $ 5.2 million and receivable of $ 8.1 million, respectively, that is included in “other liabilities” and "other assets," respectively, on the consolidated balance sheets.
Segment Reporting
1 unchanged sentence
• Loan Servicing and Systems
−Removed: • Education Technology, Services, and Payment Processing
−Removed: • Asset Generation and Management
−Removed: • Nelnet Bank
−Removed: • Communications
−Removed: The Company earns fee-based revenue through its Loan Servicing and Systems and Education Technology, Services, and Payment Processing operating segments;
+Added: • Education Technology Services and Payments
+Added: • Asset Generation and Management, part of the NFS division as described below
+Added: • Nelnet Bank, part of the NFS division as described below
+Added: The Company earns fee-based revenue through its Loan Servicing and Systems and Education Technology Services and Payments operating segments;
and earns interest income on its loan portfolio in its Asset Generation and Management and Nelnet Bank operating segments.
−Removed: In addition, the Company earned revenue from its Communications operating segment prior to its deconsolidation on December 21, 2020.
−Removed: See note 2 for a description of the transaction and a summary of the deconsolidation impact.
−Removed: As a result of ALLO’s deconsolidation, there are no operating results for the (former) Communications operating segment in 2021 and 2022.
The Company’s operating segments are defined by the products and services they offer and the types of customers they serve, and they reflect the manner in which financial information is currently evaluated by management.
2 unchanged sentences
Executive management (the "chief operating decision maker") evaluates the performance of the Company’s operating segments based on their financial results prepared in conformity with U.S.
+Added: In 2023, the Company created the Nelnet Financial Services division 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 non-FFELP loan portfolios and its other financial product and service offerings.
+Added: The creation of the Nelnet Financial Services division resulted in financial results grouped and reported differently to the chief operating decision maker.
+Added: The reporting change did not impact the performance measures or the methodology used by management to evaluate performance and allocate resources.
+Added: All prior periods have been restated to conform to the current-period presentation.
+Added: These reclassifications had no effect on the Company’s consolidated financial statements.
+Added: The Nelnet Financial Services division includes the reportable segments of AGM and Nelnet Bank and the following other non-reportable operating segments that were previously presented in Corporate and Other Activities.
+Added: • The operating results of WRCM, the Company's SEC-registered investment advisor subsidiary
+Added: • The operating results of Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and causality policies
+Added: • The operating results of the Company’s investment activities in real estate
+Added: • 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
The accounting policies of the Company’s operating segments are the same as those described in the summary of significant accounting policies.
3 unchanged sentences
The difference between the consolidated income tax expense and the sum of taxes calculated for each operating segment is included in income taxes in Corporate and Other Activities.
−Removed: Corporate and Other Activities
−Removed: Other business activities and operating segments that are not reportable are combined and included in Corporate and Other Activities.
−Removed: Corporate and Other Activities include the following items:
−Removed: • The results of the majority of the Company’s investment activities, including early-stage and emerging growth companies and real estate
−Removed: • Interest income earned on cash and investment debt securities (primarily student loan and other asset-backed securities)
−Removed: • Interest expense incurred on unsecured and certain other corporate related debt transactions
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: • Other product and service offerings that are not considered reportable operating segments including, but not limited to, WRCM, the SEC-registered investment advisor subsidiary, and Nelnet Renewable Energy, which includes 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
−Removed: Corporate and Other Activities also includes certain activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing.
+Added: Corporate and Other Activities
+Added: 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.
+Added: Corporate and Other Activities include the following items:
+Added: • 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
−Removed: Certain shared service costs incurred to support Nelnet Bank will not be allocated to Nelnet Bank until the end of the Bank’s de novo period (November 2023).
−Removed: 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.
+Added: • Corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs
+Added: • 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 construction and development
+Added: • 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)
+Added: • Interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions
+Added: • Other product and service offerings that are not considered reportable operating segments
Segment Results
−Removed: The following tables include the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.
+Added: The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.
AND SUBSIDIARIES
2 unchanged sentences
Year ended December 31, 2023
−Removed: Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset
+Added: Nelnet Financial Services
+Added: Loan Servicing and Systems Education Technology Services and Payments Asset
Generation and
−Removed: Management Nelnet Bank Corporate and Other Activities Eliminations Total
+Added: Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Eliminations Total
Total interest income $ 4,845 26,962 977,158 57,859 74,857 12,141 ( 44,021 ) 1,109,800
6 unchanged sentences
Intersegment revenue 28,911 253 — — — — ( 29,164 ) —
−Removed: Education technology, services, and payment processing revenue — 408,543 — — — — 408,543
+Added: Education technology services and payments revenue — 463,311 — — — — — 463,311
Solar construction revenue — — — — — 31,669 — 31,669
1 unchanged sentence
Gain on sale of loans, net — — 39,673 — — — — 39,673
−Removed: Gain from deconsolidation of ALLO — — — — — — —
−Removed: Impairment expense and provision for beneficial interests, net ( 5,511 ) ( 2,239 ) — ( 214 ) ( 7,559 ) — ( 15,523 )
+Added: Impairment expense ( 296 ) ( 4,310 ) — — — ( 27,319 ) — ( 31,925 )
Derivative settlements, net — — 24,588 484 — — — 25,072
Derivative market value adjustments, net — — ( 40,250 ) ( 1,523 ) — — — ( 41,773 )
−Removed: Total other income (expense) 565,661 406,385 288,707 2,411 16,131 ( 33,251 ) 1,246,045
+Added: Total other income (expense), net 549,156 459,254 35,280 56 26,648 ( 86,035 ) ( 29,164 ) 955,194
Cost of services:
−Removed: Cost to provide education technology, services, and payment processing services — 148,403 — — — — 148,403
+Added: Cost to provide education technology services and payments — 171,183 — — — — — 171,183
Cost to provide solar construction services — — — — — 48,576 — 48,576
9 unchanged sentences
Net income (loss) 59,063 69,210 61,283 ( 215 ) 38,799 ( 173,705 ) — 54,435
−Removed: Net (income) loss attributable to noncontrolling interests — ( 3 ) — — 11,109 — 11,106
+Added: Net loss (income) attributable to noncontrolling interests — 109 — — ( 568 ) 37,556 — 37,097
Net income (loss) attributable to Nelnet, Inc.
5 unchanged sentences
Year ended December 31, 2022
−Removed: Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset
+Added: Nelnet Financial Services
+Added: Loan Servicing and Systems Education Technology Services and Payments Asset
Generation and
−Removed: Management Nelnet Bank Corporate and Other Activities Eliminations Total
+Added: Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Eliminations Total
Total interest income $ 2,722 9,377 676,557 25,973 40,377 2,199 ( 14,399 ) 742,806
6 unchanged sentences
Intersegment revenue 33,170 81 — — — — ( 33,251 ) —
−Removed: Education technology, services, and payment processing revenue — 338,234 — — — — 338,234
+Added: Education technology services and payments revenue — 408,543 — — — — — 408,543
Solar construction revenue — — — — — 24,543 — 24,543
1 unchanged sentence
Gain on sale of loans, net — — 2,903 — — — — 2,903
−Removed: Gain from deconsolidation of ALLO — — — — — — —
−Removed: Impairment expense and provision for beneficial interests, net ( 13,243 ) — 2,436 — ( 5,553 ) — ( 16,360 )
+Added: Impairment expense ( 5,511 ) ( 2,239 ) — ( 214 ) — ( 7,559 ) — ( 15,523 )
Derivative settlements, net — — 32,943 — — — — 32,943
Derivative market value adjustments, net — — 231,691 — — — — 231,691
−Removed: Total other income (expense) 510,383 338,246 126,903 713 34,803 ( 33,968 ) 977,079
+Added: Total other income (expense), net 565,661 406,385 288,707 2,411 35,259 ( 19,128 ) ( 33,251 ) 1,246,045
Cost of services:
−Removed: Cost to provide education technology, services, and payment processing services — 108,660 — — — — 108,660
+Added: Cost to provide education technology services and payments — 148,403 — — — — — 148,403
Cost to provide solar construction services — — — — — 19,971 — 19,971
9 unchanged sentences
Net income (loss) 48,986 56,320 345,591 3,344 39,265 ( 97,268 ) — 396,241
−Removed: Net (income) loss attributable to noncontrolling interests — — — — 7,003 — 7,003
+Added: Net loss (income) attributable to noncontrolling interests — ( 3 ) — — ( 516 ) 11,625 — 11,106
Net income (loss) attributable to Nelnet, Inc.
5 unchanged sentences
Year ended December 31, 2021
−Removed: Loan Servicing and Systems Education Technology, Services, and Payment Processing Communications (a) Asset
+Added: Nelnet Financial Services
+Added: Loan Servicing and Systems Education Technology Services and Payments Asset
Generation and
−Removed: Management Nelnet Bank (b) Corporate and Other Activities Eliminations Total
+Added: Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Eliminations Total
Total interest income $ 137 1,075 506,901 7,721 9,466 336 ( 1,800 ) 523,835
6 unchanged sentences
Intersegment revenue 33,956 12 — — — — ( 33,968 ) —
−Removed: Education technology, services, and payment processing revenue — 282,196 — — — — — 282,196
−Removed: Communications revenue — — 76,643 — — — — 76,643
+Added: Education technology services and payments revenue — 338,234 — — — — — 338,234
Solar construction revenue — — — — — — — —
1 unchanged sentence
Gain on sale of loans, net — — 18,715 — — — — 18,715
−Removed: Gain from deconsolidation of ALLO — — — — — 258,588 — 258,588
−Removed: Impairment expense and provision for beneficial interests, net — — — ( 16,607 ) — ( 8,116 ) — ( 24,723 )
+Added: Impairment expense ( 13,243 ) — 2,436 — — ( 5,553 ) — ( 16,360 )
Derivative settlements, net — — ( 21,367 ) — — — — ( 21,367 )
Derivative market value adjustments, net — — 92,813 — — — — 92,813
−Removed: Total other income (expense) 497,502 282,589 78,204 ( 860 ) 48 289,441 ( 36,540 ) 1,110,384
+Added: Total other income (expense), net 510,383 338,246 126,903 713 38,449 ( 3,646 ) ( 33,968 ) 977,079
Cost of services:
−Removed: Cost to provide education technology, services, and payment processing services — 82,206 — — — — — 82,206
−Removed: Cost to provide communications services — — 22,812 — — — — 22,812
+Added: Cost to provide education technology services and payments — 108,660 — — — — — 108,660
Cost to provide solar construction services — — — — — — — —
9 unchanged sentences
Net income (loss) 47,458 55,262 321,948 ( 617 ) 32,948 ( 70,716 ) — 386,283
−Removed: Net (income) loss attributable to noncontrolling interests — — — — — 2,817 — 2,817
+Added: Net loss (income) attributable to noncontrolling interests — — — — ( 726 ) 7,729 — 7,003
Net income (loss) attributable to Nelnet, Inc.
1 unchanged sentence
Total assets as of December 31, 2021 $ 296,618 443,788 18,965,371 535,948 1,208,430 754,602 ( 526,716 ) 21,678,041
−Removed: (a) On December 21, 2020, the Company deconsolidated ALLO from the Company’s consolidated financial statements.
−Removed: Accordingly, the operating results for the Communications operating segment in the table above are for the period from January 1, 2020 through December 21, 2020.
−Removed: (b) Nelnet Bank launched operations on November 2, 2020.
−Removed: Accordingly, the operating results for the Nelnet Bank operating segment in the table above are for the period from November 2, 2020 through December 31, 2020.
AND SUBSIDIARIES
17 unchanged sentences
Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits.
−Removed: The following table provides disaggregated revenue by service offering:
+Added: The following table presents disaggregated revenue by service offering:
Year ended December 31,
6 unchanged sentences
Loan servicing and systems revenue $ 517,954 535,459 486,363
−Removed: Education Technology, Services, and Payment Processing Revenue
−Removed: Education technology, services, and payment processing revenue consists of the following items:
+Added: Education Technology Services and Payments Revenue
+Added: Education technology services and payments revenue consists of the following items:
• Tuition payment plan services - Tuition payment plan services consideration is determined from individual plan agreements, which are governed by plan service agreements, and includes access to a remote hosted environment and management of payment processing.
10 unchanged sentences
In addition, the Company has the unilateral ability to accept or reject a transaction based on criteria established by the Company.
−Removed: The Company is liable for the costs of processing the transactions and records such costs within "cost to provide education technology, services, and payment processing services" in the consolidated statements of income.
−Removed: • Education technology and services - Education technology and services consideration is determined from individual contracts with customers and is based on the services selected by the customer.
+Added: The Company is liable for the costs of processing the transactions and records such costs within "cost to provide education technology services and payments" in the consolidated statements of income.
+Added: • Education technology services - Education technology services consideration is determined from individual contracts with customers and is based on the services selected by the customer.
Services in K-12 private and faith-based markets primarily includes (i) assistance with financial needs assessment, (ii) school information system software that automates administrative processes such as admissions, enrollment, scheduling, cafeteria management, attendance, and grade book management, and (iii) professional development and educational instruction services.
3 unchanged sentences
Revenue for each performance obligation is allocated to the distinct service period, typically a month or based on when each transaction is completed, and recognized as control transfers as customers simultaneously receive and consume benefits.
−Removed: The following table provides disaggregated revenue by service offering:
+Added: The following table presents disaggregated revenue by service offering:
Year ended December 31,
2 unchanged sentences
Payment processing 163,859 148,212 127,080
−Removed: Education technology and services 146,679 105,975 66,716
+Added: Education technology services 170,754 146,679 105,975
Other 3,372 2,850 1,209
−Removed: Education technology, services, and payment processing revenue $ 408,543 338,234 282,196
−Removed: Cost to provide education technology, services, and payment processing services is primarily associated with providing professional development and educational instruction and payment processing services.
+Added: Education technology services and payments revenue $ 463,311 408,543 338,234
+Added: Cost to provide education technology services and payments is primarily associated with providing professional development and educational instruction and payment processing services.
Items included in the cost to provide professional development and educational instruction services include salaries and benefits and third-party professional services directly related to providing these services to teachers, school leaders, and students.
6 unchanged sentences
Revenue for this service is recognized based on the project progress to date.
−Removed: Progress towards completion of the contract is measured by the percentage of total costs incurred to date compared to the estimated total costs to complete the contract.
−Removed: GRNE Solar will recognize a contract asset or liability depending on the progression of the project to date compared to the amount billed to date.
+Added: Progress towards completion of the contract is measured by the percentage of total costs incurred to date compared with the estimated total costs to complete the contract.
+Added: The Company recognizes changes in estimated total costs on a cumulative catch-up basis in the period in which the changes are identified.
+Added: Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods.
+Added: Changes in estimates may also result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate.
+Added: GRNE Solar will recognize a contract asset or liability depending on the progression of the project to date compared with the amount billed to date.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: The following table provides disaggregated revenue by service offering and customer type.
+Added: The following table presents disaggregated revenue by service offering and customer type.
The amounts listed for 2022 reflect activity subsequent to GRNE Solar acquisition on July 1, 2022.
−Removed: Period from July 1, 2022 - December 31, 2022
+Added: Year ended December 31, 2023 Period from July 1, 2022 - December 31, 2022
Solar construction $ 31,474 24,386
3 unchanged sentences
Residential revenue 11,830 7,495
+Added: Other 1,298 157
Solar construction revenue $ 31,669 24,543
Cost to provide solar construction services include direct costs associated with completing a solar facility, including labor, third-party contractor fees, permitting, engineering fees, and construction material.
−Removed: Communications Revenue
−Removed: Communications revenue was derived principally from internet, television, and telephone services and is billed as a flat fee in advance of providing the service.
−Removed: Revenues for usage-based services, such as access charges billed to other telephone carriers for originating and terminating long-distance calls on ALLO’s network, were billed in arrears.
−Removed: These are each considered distinct performance obligations.
−Removed: Revenue was recognized monthly for the consideration the Company had a right to invoice, the amount of which corresponds directly with the value provided to the customer based on the performance completed.
−Removed: The Company recognized revenue from these services in the period the services were rendered rather than billed.
−Removed: Revenue received or receivable in advance of the delivery of services was included in deferred revenue.
−Removed: Earned but unbilled usage-based services were recorded in accounts receivable.
−Removed: The following table provides disaggregated revenue by service offering and customer type.
−Removed: The amounts listed for 2020 reflect activity prior to ALLO’s deconsolidation on December 21, 2020.
−Removed: Period from January 1 2020 - December 21, 2020
−Removed: Internet $ 48,362
−Removed: Television 17,091
−Removed: Telephone 11,037
−Removed: Communications revenue $ 76,643
−Removed: Residential revenue $ 58,029
−Removed: Business revenue 18,038
−Removed: Communications revenue $ 76,643
−Removed: Cost to provide communications services was primarily associated with television programming costs.
−Removed: ALLO had various contracts to obtain television programming from programming vendors whose compensation is typically based on a flat fee per customer.
−Removed: The cost of the right to exhibit network programming under such arrangements was recorded in the month the programming was available for exhibition.
−Removed: Programming costs were paid each month based on calculations performed by ALLO and are subject to periodic audits performed by the programmers.
−Removed: Other items in cost to provide communications services include connectivity, franchise, and other regulatory costs directly related to providing internet and telephone services.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: In addition, if the Company estimates that a project will have costs in excess of revenue, the Company will recognize the total loss in the period it is identified.
Other Income/Expense
−Removed: The following table provides the components of "other, net" in “other income (expense)” on the consolidated statements of income:
+Added: The following table presents the components of "other, net" in “other income (expense)” on the consolidated statements of income:
Year ended December 31,
2023 2022 2021
−Removed: Income/gains from investments, net $ 51,552 91,593 56,402
−Removed: Borrower late fee income 10,809 3,444 5,194
+Added: Reinsurance premiums $ 20,067 157 —
ALLO preferred return 9,120 8,584 8,427
+Added: Borrower late fee income 8,997 10,809 3,444
Administration/sponsor fee income 6,793 7,898 3,656
−Removed: Investment advisory services 6,026 7,773 10,875
+Added: Investment advisory services (WRCM) 6,760 6,026 7,773
Management fee revenue 2,587 2,543 3,307
1 unchanged sentence
Loss from solar investments ( 46,702 ) ( 9,479 ) ( 10,132 )
+Added: Investment activity, net ( 8,586 ) 51,493 91,593
Other 17,454 15,421 12,761
6 unchanged sentences
The Company earns monthly fees based on the monthly outstanding balance of investments and certain performance measures, which are recognized monthly as the uncertainty of the transaction price is resolved.
−Removed: • Management fee revenue - Management fee revenue is earned for providing administrative support and marketing services, which primarily was to Great Lakes' former parent company under a contract that expired in January 2021.
+Added: • Management fee revenue - Management fee revenue is earned by the LSS operating segment for providing administrative support.
Revenue is allocated to the distinct service period, based on when each transaction is completed.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Deferred Revenue
Activity in the deferred revenue balance, which is included in "other liabilities" on the consolidated balance sheets, is shown below:
−Removed: Loan Servicing and Systems Education, Technology, Services, and Payment Processing Communications Corporate and Other Activities Total
+Added: Loan Servicing and Systems Education Technology Services and Payments Corporate and Other Activities Total
Balance as of December 31, 2020 $ 1,378 33,267 1,551 36,196
1 unchanged sentence
Recognition of revenue ( 4,844 ) ( 105,801 ) ( 5,316 ) ( 115,961 )
−Removed: Deconsolidation of ALLO — — ( 3,925 ) — ( 3,925 )
−Removed: Business acquisition — 1,419 — — 1,419
Balance as of December 31, 2021 2,416 36,744 2,010 41,170
1 unchanged sentence
Recognition of revenue ( 2,713 ) ( 129,433 ) ( 12,940 ) ( 145,086 )
+Added: Business acquisitions — 3,917 1,997 5,914
Balance as of December 31, 2022 2,310 49,314 5,030 56,654
1 unchanged sentence
Recognition of revenue ( 2,808 ) ( 147,405 ) ( 40,676 ) ( 190,889 )
−Removed: Business acquisition — 3,917 — 1,997 5,914
Balance as of December 31, 2023 $ 3,456 51,724 17,373 72,553
+Added: Major Customer
+Added: Government Loan Servicing
+Added: The Company earns loan servicing revenue from a servicing contract with the Department.
+Added: Revenue earned by the Company related to this contract was $ 412.5 million, $ 423.1 million, and $ 360.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: The Company's current student loan servicing contract with the Department was scheduled to expire on December 14, 2023.
+Added: In April 2023, Nelnet Servicing, a subsidiary of the Company, received a contract award from the Department, pursuant to which it was selected to provide continuing 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.
+Added: The New Government Servicing Contract became effective April 24, 2023 and has a five year base period, with 2 two-year and 1 one-year possible extensions.
+Added: The Department's total loan servicing volume of existing borrowers will be allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract based on service and performance levels.
+Added: Under the New Government Servicing Contract, Nelnet Servicing immediately began to make required servicing platform enhancements, for which it will be compensated from the Department on certain of these investments.
+Added: Until servicing under the USDS contracts 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.
+Added: The new USDS servicing contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contract is primarily based on borrower status.
+Added: Assuming borrower volume remains consistent under the USDS servicing contract, the Company expects revenue earned on a per borrower blended basis will decrease under the USDS contract versus the current legacy contract.
+Added: However, consistent with the current legacy contract, the Company expects to earn additional revenue from the Department under the USDS servicing contract for change requests and other support services.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: Major Customer
−Removed: The Company earns loan servicing revenue from servicing contracts with the Department.
−Removed: Revenues earned by the Company related to these contracts in 2022, 2021, and 2020 was $ 423.1 million, $ 360.8 million, and $ 326.7 million, respectively.
−Removed: The Company’s student loan servicing contracts with the Department are scheduled to expire on December 14, 2023.
−Removed: 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.
−Removed: 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.
−Removed: In the second quarter of 2022, the Department released a solicitation entitled Unified Servicing and Data Solution (USDS) for the new servicing framework.
−Removed: The Company responded to the USDS solicitation.
−Removed: The Company cannot predict the timing, nature, or ultimate outcome of this or any other contract procurement process by the Department.
−Removed: 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.
−Removed: 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.
−Removed: On August 24, 2022, the Department issued a bulletin which indicated the Department will provide targeted student debt cancellation to borrowers with loans held by the Department, and that borrowers whose annual income for either 2020 or 2021 was under $125,000 (for single or married, filing separately) or under $250,000 (for married couples, filing jointly or heads of household) will be eligible for otherwise unconditional loan cancellation in amounts of up to $20,000 for eligible borrowers who received a Pell Grant, or of up to $10,000 for eligible borrowers who did not receive a Pell Grant.
−Removed: Decisions by the U.S.
−Removed: Courts of Appeals for the Eighth Circuit and Fifth Circuit in October 2022 and November 2022, respectively, in response to legal challenges that were initiated by certain parties (not the Company) have blocked implementation of the Department's broad based student debt relief plan.
−Removed: These cases have been appealed to the U.S.
−Removed: Supreme Court.
−Removed: As of the filing of this report, the Supreme Court has not ruled on, and the Company cannot predict the timing, nature, or ultimate outcome of, this case.
−Removed: As of December 31, 2022, the Company was servicing 15.8 million borrowers under its government servicing contracts.
−Removed: The Company cannot currently estimate how many borrowers meet the eligibility requirements and other terms and conditions for one-time debt relief under the Department’s August 24, 2022 bulletin and subsequent publicly available guidance provided by the Department.
−Removed: However, revenue earned by the Company under its contracts will be negatively impacted if the Department’s student debt relief plan or other broad based loan forgiveness is implemented.
−Removed: The following table provides supplemental balance sheet information related to leases:
+Added: The following table presents supplemental balance sheet information related to leases:
As of December 31,
5 unchanged sentences
$ 14,291 16,414
−Removed: The following table provides components of lease expense:
+Added: The following table presents components of lease expense:
Year ended December 31,
2023 2022 2021
−Removed: Rental expense, which is included in "other, net" in "other income (expense)" on the consolidated statements of income (a) $ 6,841 9,386 11,885
−Removed: Rental expense, which is included in "cost to provide communications
−Removed: services" on the consolidated statements of income (a) — — 1,997
−Removed: Total operating rental expense $ 6,841 9,386 13,882
+Added: Rental expense, which is included in “other expenses” on the consolidated statements of income (a)
+Added: $ 7,495 6,841 9,386
(a) Includes short-term and variable lease costs, which are immaterial.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
Weighted average remaining lease term and discount rate are shown below:
12 unchanged sentences
The Company made contributions to the plan of $ 14.2 million, $ 12.9 million, and $ 11.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Stock Based Compensation Plans
8 unchanged sentences
Non-vested shares at end of year 786,762 752,622 660,166
−Removed: As of December 31, 2022, there was $ 29.5 million of unrecognized compensation cost included in equity on the consolidated balance sheets related to restricted stock, which is expected to be recognized as compensation expense in future periods as shown in the table below.
+Added: As of December 31, 2023, there was $ 31.5 million of unrecognized compensation cost included in equity on the consolidated balance sheet related to restricted stock, which is expected to be recognized as compensation expense in future periods as shown in the table below.
2024 $ 12,586
1 unchanged sentence
For the years ended December 31, 2023, 2022, and 2021, the Company recognized compensation expense of $ 16.2 million, $ 13.9 million, and $ 10.4 million, respectively, related to shares issued under the restricted stock plan, which is included in "salaries and benefits" on the consolidated statements of income.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
Employee Share Purchase Plan
1 unchanged sentence
During the years ended December 31, 2023, 2022, and 2021, the Company recognized compensation expense of $ 0.1 million, $ 0.1 million, and $ 0.2 million, respectively, in connection with issuing 26,585 shares, 26,011 shares, and 24,205 shares, respectively, under this plan, which is included in "salaries and benefits" on the consolidated statements of income.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Directors Compensation Plan
2 unchanged sentences
Directors who choose to receive Class A common stock may also elect to defer receipt of the Class A common stock until termination of their service on the board of directors.
−Removed: For the years ended December 31, 2022, 2021, and 2020, the Company recognized $ 1.7 million, $ 1.4 million, and $ 1.2 million, respectively, of expense related to this plan, which is included in "other, net" in "other income (expense)" on the consolidated statements of income.
−Removed: The following table provides the number of shares awarded under this plan for the years ended December 31, 2022, 2021, and 2020.
+Added: For the years ended December 31, 2023, 2022, and 2021, the Company recognized $ 1.6 million, $ 1.7 million, and $ 1.4 million, respectively, of expense related to this plan, which is included in "other expenses" on the consolidated statements of income.
+Added: The following table presents the number of shares awarded under this plan for the years ended December 31, 2023, 2022, and 2021.
Shares issued -
13 unchanged sentences
Muhleisen, along with her spouse and children, also owns or controls a significant portion of F&M stock.
−Removed: Dunlap serves as a Director and Chairman of F&M, and as a Director of Union Bank.
−Removed: Muhleisen serves as a Director and Chief Executive Officer of F&M and as a Director, Chairperson, President, and Chief Executive Officer of Union Bank.
+Added: Dunlap serves as a Director and Co-Chairman of F&M, and as a Director of Union Bank.
+Added: Muhleisen serves as a Director, Co-Chairman, and Chief Executive Officer of F&M and as a Director, Chairperson, and member of the executive committee of Union Bank.
Union Bank is deemed to have beneficial ownership of a significant number of shares of the Company because it serves in a capacity of trustee or account manager for various trusts and accounts holding shares of the Company, and may share voting and/or investment power with respect to such shares.
4 unchanged sentences
Loan Purchases
−Removed: The Company purchased $ 8.1 million (par value), $ 22.3 million (par value), and $ 144.9 million (par value) of private education loans from Union Bank in 2022, 2021, and 2020, respectively.
−Removed: The net premiums paid by the Company on these loan acquisitions was $ 0.2 million, $ 0.4 million, and $ 2.6 million in 2022, 2021, and 2020, respectively.
+Added: The Company purchased $ 467.6 million (par value) of federally insured loans in 2023 and $ 8.1 million (par value) and $ 22.3 million (par value) of private education loans in 2022, and 2021, respectively, from Union Bank.
+Added: The net premiums paid by the Company on these loan acquisitions was $ 0.2 million and $ 0.4 million in 2022 and 2021, respectively.
+Added: The premium paid by the Company for loan purchases in 2023 were insignificant.
The Company has an agreement with Union Bank in which the Company provides marketing, origination, and loan servicing services to Union Bank related to private education loans.
−Removed: Union Bank paid $ 0.1 million, $ 0.1 million, and $ 2.0 million in marketing fees to the Company in 2022, 2021, and 2020, respectively, under this agreement.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Union Bank paid $ 0.1 million in marketing fees to the Company in both 2022 and 2021 under this agreement.
+Added: The amount paid to Union Bank for these services in 2023 was insignificant.
Loan Servicing
1 unchanged sentence
Servicing and origination fee revenue earned by the Company from servicing loans for Union Bank was $ 0.3 million, $ 0.4 million, and $ 0.5 million in 2023, 2022, and 2021, respectively.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Funding - Participation Agreements
−Removed: The Company maintains an agreement with Union Bank, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans (the “FFELP Participation Agreement”).
+Added: The Company maintains an agreement with Union Bank, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans.
The Company uses this facility as a source to fund FFELP student loans.
5 unchanged sentences
Accordingly, the participation interests sold are not included on the Company's consolidated balance sheets.
−Removed: The Company maintains an agreement with Union Bank, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities.
+Added: The Company maintains an agreement with Union Bank, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (and investments).
As of December 31, 2023 and 2022, $ 0.1 million and $ 395.4 million, respectively, of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.
The FFELP loan asset-backed securities under this agreement have been accounted for by the Company as a secured borrowing.
−Removed: See note 5 for additional information.
Funding - Real Estate
7 unchanged sentences
The promissory note carries an interest rate of 6.00 % and has a maturity date of December 1, 2032.
−Removed: 12100.5 West Center, LLC ("West Center") is an entity that was established in 2016 for the sole purpose of acquiring, developing, and owning a commercial real estate property in Omaha, Nebraska.
−Removed: The Company owns 33.33 % of West Center.
−Removed: On October 29, 2019, Union Bank, as lender, received a $ 2.9 million promissory note from West Center.
−Removed: The promissory note carries an interest rate of 3.85 % and has a maturity date of October 30, 2024.
TDP Phase III (“TDP”) is an entity that was established in 2015 for the sole purpose of acquiring, developing, and owning a commercial real estate property in Lincoln, Nebraska.
4 unchanged sentences
The majority of the Company's cash operating accounts are maintained at Union Bank.
−Removed: The Company also invests amounts in the Short term Federal Investment Trust (STFIT) of the Student Loan Trust Division of Union Bank, which are included in “cash and cash equivalents - held at a related party” and “restricted cash - due to customers” on the accompanying consolidated balance sheets.
+Added: The Company also invests amounts in the Short term Federal Investment Trust (STFIT) of the Student Loan Trust Division of Union Bank, which are included in “cash and cash equivalents - held at a related party” and “restricted cash - due to customers” on the consolidated balance sheets.
As of December 31, 2023 and 2022, the Company had $ 459.1 million and $ 362.0 million, respectively, invested in the STFIT or deposited at Union Bank in operating accounts, of which $ 325.9 million and $ 268.4 million as of December 31, 2023 and 2022, respectively, represented cash collected for customers.
Interest income earned by the Company on the amounts invested in the STFIT and in cash operating accounts in 2023, 2022, and 2021, was $ 4.7 million, $ 1.2 million, and $ 0.2 million, respectively.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
Educational 529 College Savings Plan
2 unchanged sentences
For the years ended December 31, 2023, 2022, and 2021, the Company has received fees of $ 2.5 million, $ 2.1 million, and $ 3.5 million, respectively, from Union Bank related to the administration services provided to the College Savings Plans.
−Removed: During 2021 and 2020, certain call center services were provided by the Company to Union Bank for College Savings Plan clients.
+Added: During 2021, certain call center services were provided by the Company to Union Bank for College Savings Plan clients.
For services provided in 2021, the Company received $ 0.4 million from Union Bank.
−Removed: fees received for services provided in 2020 were not significant.
−Removed: The Company did not provide these services to Union Bank in 2022.
+Added: The Company did not provide these services to Union Bank in 2023 and 2022.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
Additionally, Union Bank, as the program manager for the College Savings Plans, has agreed to allocate plan bank deposits to Nelnet Bank.
1 unchanged sentence
Lease Arrangements
−Removed: Union Bank leases approximately 4,100 square feet in the Company's corporate headquarters building.
+Added: Prior to the lease agreement expiration in 2023, Union Bank leased approximately 4,100 square feet in the Company's corporate headquarters building.
Union Bank paid the Company approximately $ 55,000 , $ 82,000 , and $ 81,000 for commercial rent and storage income during 2023, 2022, and 2021, respectively.
−Removed: The lease agreement expires on June 30, 2023.
+Added: During 2023, the Company entered into a lease agreement with Union Bank for office space in Omaha, Nebraska.
+Added: The Company paid Union Bank $ 1.1 million in rent pursuant to this agreement prior to terminating the lease, at which time the Company paid a $ 2.4 million termination fee to Union Bank.
Other Fees Paid to Union Bank
−Removed: During the years ended December 31, 2022, 2021, and 2020, the Company paid Union Bank approximately $ 177,000 , $ 280,000 , and $ 279,000 , respectively, in cash and flexible spending accounts management, trustee and health savings account maintenance fees, including investment custodial and correspondent services for Nelnet Bank.
+Added: During the years ended December 31, 2023, 2022, and 2021, the Company paid Union Bank approximately $ 592,000 , $ 177,000 , and $ 280,000 , respectively, in cash and flexible spending accounts management, trustee and health savings account maintenance fees, and investment custodial and correspondent services for Nelnet Bank.
Other Fees Received from Union Bank
During the years ended December 31, 2023, 2022, and 2021, Union Bank paid the Company approximately $ 351,000 , $ 342,000 , and $ 342,000 , respectively, under certain employee sharing arrangements.
−Removed: During the year ended December 31, 2020, Union Bank paid the Company approximately $ 273,000 for communications services.
401(k) Plan Administration
3 unchanged sentences
Union Bank has established various trusts whereby Union Bank serves as trustee for the purpose of purchasing, holding, managing, and selling investments in student loan asset-backed securities.
−Removed: WRCM, an SEC-registered investment advisor and a subsidiary of the Company, has a management agreement with Union Bank under which WRCM performs various advisory and management services on behalf of Union Bank with respect to investments in securities by the trusts, including identifying securities for purchase or sale by the trusts.
+Added: WRCM, an SEC-registered investment advisor and a non-wholly owned subsidiary of the Company, has a management agreement with Union Bank under which WRCM performs various advisory and management services on behalf of Union Bank with respect to investments in securities by the trusts, including identifying securities for purchase or sale by the trusts.
The agreement provides that Union Bank will pay to WRCM annual fees of 10 basis points to 25 basis points on the outstanding balance of the investments in the trusts.
8 unchanged sentences
As of December 31, 2023, WRCM was the investment advisor with respect to a total 501,786 shares and 4.5 million shares of the Company's Class A and Class B common stock, respectively, held directly by these trusts.
−Removed: For the years ended December 31,
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
−Removed: 2022, 2021, and 2020, the Company earned approximately $ 216,000 , $ 213,000 , and $ 141,000 , respectively, of fees under these agreements.
+Added: For the years ended December 31, 2023, 2022, and 2021, the Company earned approximately $ 249,000 , $ 216,000 , and $ 213,000 , respectively, of fees under these agreements.
WRCM has established private investment funds for the primary purpose of purchasing, selling, investing, and trading, directly or indirectly, in student loan asset-backed securities, and to engage in financial transactions related thereto.
3 unchanged sentences
Based upon the current level of holdings by non-affiliated limited partners, the management agreements provide non-affiliated limited partners the ability to remove WRCM as manager without cause.
−Removed: WRCM earns 50 basis points (annually) on the outstanding balance of the investments in these funds, of which WRCM pays approximately 50 % of such amount to Union Bank as custodian.
+Added: WRCM earns 50 basis points (annually) on the outstanding balance of the investments in these funds, of which WRCM pays approximately 50 % of such amount to
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements
+Added: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Union Bank as custodian.
As of December 31, 2023, the outstanding balance of investments in these funds was $ 131.7 million.
3 unchanged sentences
David Graff, who has served on the Company's Board of Directors since 2014, is CEO, co-founder, and a director of Hudl.
−Removed: On each of May 20, 2020 and May 27, 2021, the Company made additional equity investments in Hudl, as one of the participants in equity raises completed by Hudl.
−Removed: See note 7 for additional information on these transactions.
As of December 31, 2023, the Company and Mr.
−Removed: Dunlap, along with his children, hold a combined direct and indirect equity ownership interests in Hudl of 19.3 % and 3.8 %, respectively, which did not materially change as a result of the May 2020 and May 2021 transactions.
−Removed: Subsequent to December 31, 2022, on February 6, 2023, the Company purchased stock from existing Hudl shareholders for total consideration of $ 31.5 million which increased Nelnet’s ownership percentage.
−Removed: This was not considered an observable market transaction, thus the Company was not required to adjust its carrying value of Hudl to the February 2023 transaction value.
−Removed: The Company's and Mr.
−Removed: Dunlap's direct and indirect equity ownership interests in Hudl consist of preferred stock with certain liquidation preferences that are considered substantive.
−Removed: Accordingly, for accounting purposes, the Company's and Mr.
−Removed: Dunlap's equity ownership interests are not considered in-substance common stock and the Company is accounting for its equity investment in Hudl using the measurement alternative method.
+Added: Dunlap, along with his children, held a combined direct and indirect equity ownership interests in Hudl of approximately 21 % and 4 %, respectively.
+Added: In May 2020 and May 2021, the Company made additional investments in Hudl of approximately $ 26 million and approximately $ 5 million, respectively, as one of the participants in an equity raise completed by Hudl.
+Added: In addition, in February 2023, the Company purchased stock from existing Hudl shareholders for total consideration of $ 31.5 million.
+Added: See note 6 for additional information on the 2023 transaction and the Company’s accounting for its investment in Hudl.
The Company makes investments to further diversify the Company both within and outside of its historical core education-related businesses, including investments in real estate.
1 unchanged sentence
The Company owns 25 % of TDP, which is the entity that developed and owns a building in Lincoln's Haymarket District that is the headquarters of Hudl, in which Hudl is the primary tenant and Nelnet is a tenant in this building.
−Removed: During 2022, the Company paid Hudl approximately $ 158,000 to provide lunches for Nelnet’s associates in Hudl’s employee cafeteria.
−Removed: Transactions with Assurity Life Insurance Company ("Assurity")
−Removed: Thomas Henning, who has served on the Company's Board of Directors since 2003, was President and Chief Executive Officer of Assurity until December 31, 2021, at which point he retired and then served as the Non-Executive Chairman of Assurity’s board of directors until his retirement from the Assurity board on December 31, 2022.
−Removed: During the years ended December 31, 2022, 2021, and 2020, Nelnet Business Services paid $ 2.0 million, $ 2.1 million, and $ 1.8 million, respectively, to Assurity for insurance premiums for insurance on certain tuition payment plans.
−Removed: As part of providing the tuition payment plan insurance to Nelnet Business Services, Assurity entered into a reinsurance agreement with the Company's insurance subsidiary, under which Assurity paid the Company's insurance subsidiary reinsurance premiums of $ 1.7 million, $ 1.8 million and $ 1.4 million in 2022, 2021 and 2020, respectively, and the Company's insurance subsidiary paid claims on such reinsurance to Assurity of $ 1.3 million, $ 1.5 million, and $ 1.0 million in 2022, 2021, and 2020, respectively.
−Removed: In addition, Assurity paid Nelnet Business Services a partial refund annually based on claim experience, which was approximately $ 51,000 $ 41,000 and $ 64,000 for the years ended December 31, 2022, 2021, and 2020, respectively.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements
−Removed: (Dollars in thousands, except share amounts, unless otherwise noted)
+Added: During 2023 and 2022, the Company paid Hudl approximately $ 558,000 and $ 158,000 , respectively, to provide lunches for Nelnet’s associates in Hudl’s employee cafeteria.
Nelnet Renewable Energy
4 unchanged sentences
2023 2022 2021 2023 2022 2021
+Added: Union Bank $ 18,456,829 4,881,063 — 152,757 66,568 —
F&M — 3,487,000 7,913,000 123,077 123,077 29,491
−Removed: Assurity (Board member Thomas Henning) 2,195,790 5,421,659 1,150,000 67,956 16,027 11,538
North Central Bancorp, Inc.
12 unchanged sentences
Union Bank has provided funding for the following Nelnet Renewable Energy properties and solar fields.
−Removed: Building/solar field Original loan amount Loan amount outstanding as of December 31, 2022 Fixed interest rate Maturity date
+Added: Building/solar field Original loan amount Loan amount outstanding as of December 31, 2023
+Added: Fixed interest rate Maturity date
Office space - Palatine, Illinois $ 287,000 $ 274,860 6.05 % 12/30/2027
Warehouse - Elk Grove Village, Illinois 332,000 278,403 5.35 3/1/2024
−Removed: Warehouse - Indianapolis, Illinois 168,000 161,075 3.55 10/14/2028
Solarfield - Round Lake, Illinois 900,000 882,449 5.00 11/15/2030
7 unchanged sentences
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Stock Repurchase
+Added: On November 13, 2023, the Company repurchased, in a privately negotiated transaction under the Company’s existing stock repurchase program, a total of 283,112 shares of the Company’s Class A common stock from certain family members of Mr.
+Added: The shares were repurchased at a discount to the closing market price of the Company’s Class A common stock as of November 10, 2023, and the transaction was separately approved by the Company’s Board of Directors and its Nominating and Corporate Governance Committee.
The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.
3 unchanged sentences
Investments (a):
−Removed: FFELP loan asset-backed debt securities - available-for-sale $ — 798,211 798,211 — 494,682 494,682
−Removed: Private education loan asset-backed securities - available for sale — 308,284 308,284 — 412,552 412,552
−Removed: Other debt securities - available for sale 100 282,442 282,542 100 22,335 22,435
+Added: Asset-backed debt securities - available-for-sale $ 99 955,804 955,903 100 1,388,937 1,389,037
Equity securities 73 — 73 6,719 — 6,719
1 unchanged sentence
Total investments 172 955,804 1,006,810 6,819 1,388,937 1,428,119
+Added: Derivative instruments (c) — 452 452 — — —
Total assets $ 172 956,256 1,007,262 6,819 1,388,937 1,428,119
+Added: Derivative instruments (c) $ — 1,976 1,976 — — —
+Added: Total liabilities $ — 1,976 1,976 — — —
(a) Investments represent investments recorded at fair value on a recurring basis.
4 unchanged sentences
(b) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
+Added: (c) Nelnet Bank derivatives are accounted for at fair value on a recurring basis.
+Added: The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves and volatilities from active markets.
+Added: When determining the fair value of derivatives, Nelnet Bank takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held.
+Added: The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.
AND SUBSIDIARIES
9 unchanged sentences
Investments (at fair value) 1,006,810 1,006,810 172 955,804 —
+Added: Investments - held to maturity 163,622 162,738 — 163,622 —
Notes receivable 53,747 53,747 — 53,747 —
2 unchanged sentences
Restricted cash – due to customers 368,656 368,656 368,656 — —
+Added: Derivative instruments 452 452 — 452 —
Financial liabilities:
3 unchanged sentences
Due to customers 425,507 425,507 425,507 — —
+Added: Derivative instruments 1,976 1,976 — 1,976 —
As of December 31, 2022
5 unchanged sentences
Investments (at fair value) 1,428,119 1,428,119 6,819 1,388,937 —
+Added: Investments - held to maturity 18,996 18,774 — 18,996 —
+Added: Notes receivable 31,106 31,106 — 31,106 —
Beneficial interest in loan securitizations 162,360 138,738 — — 162,360
12 unchanged sentences
A number of significant inputs into the models are internally derived and not observable to market participants.
−Removed: Notes Receivable
−Removed: Fair values for notes receivable were determined by using model-derived valuations with observable inputs, including current market rates.
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: Investments - Held to Maturity
+Added: Fair values for investments classified as held to maturity were determined by using indicative quotes from broker-dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.
+Added: Notes Receivable
+Added: Fair values for notes receivable were determined by using model-derived valuations with observable inputs, including current market rates.
Beneficial Interest in Loan Securitizations
22 unchanged sentences
The Company cooperates with these inquiries and responds to the requests or demands.
−Removed: While the Company cannot predict the ultimate outcome of any claim, regulatory examination, inquiry, or investigation, the Company believes its activities have materially complied with applicable law, including the Higher Education Act, the rules and regulations adopted by the Department thereunder, and the Department's guidance regarding those rules and regulations, and applicable consumer protection laws and regulations.
−Removed: On the basis of present information, anticipated insurance coverage, and advice received from counsel, it is the opinion of the Company's management that the disposition or ultimate determination of claims, lawsuits, and proceedings such as those discussed above will not have a material adverse effect on the Company's business, financial position, or results of operations.
+Added: While the Company cannot predict the ultimate outcome of any claim, regulatory examination, inquiry, or investigation, the Company believes its activities have materially complied with applicable law, including the Higher Education Act, the rules and regulations adopted by the Department thereunder, and the Department's guidance regarding those rules and regulations, and applicable consumer protection laws and
AND SUBSIDIARIES
1 unchanged sentence
(Dollars in thousands, except share amounts, unless otherwise noted)
+Added: On the basis of present information, anticipated insurance coverage, and advice received from counsel, it is the opinion of the Company's management that the disposition or ultimate determination of claims, lawsuits, and proceedings such as those discussed above will not have a material adverse effect on the Company's business, financial position, or results of operations.
Condensed Parent Company Financial Statements
20 unchanged sentences
Retained earnings 3,279,273 3,234,844
−Removed: Accumulated other comprehensive (loss) earnings, net ( 37,366 ) 9,304
+Added: Accumulated other comprehensive loss, net ( 20,119 ) ( 37,366 )
Total Nelnet, Inc.
shareholders' equity 3,262,621 3,198,959
−Removed: Noncontrolling interest 281 319
+Added: Noncontrolling interests 2,871 281
Total equity 3,265,492 3,199,240
12 unchanged sentences
Other, net ( 57,959 ) ( 42,625 ) 38,761
−Removed: Gain (loss) from debt repurchases, net 1,324 ( 6,530 ) 1,962
Equity in subsidiaries income 103,959 228,169 313,451
−Removed: 228,169 313,451 132,101
−Removed: Gain from deconsolidation of ALLO — — 258,588
Impairment expense ( 2,060 ) ( 6,561 ) ( 4,637 )
Derivative market value adjustments and derivative settlements, net ( 15,662 ) 264,634 71,446
−Removed: 264,634 71,446 ( 24,465 )
−Removed: Total other income (expense) 443,617 419,021 409,090
+Added: Total other income (expense), net 28,278 443,617 419,021
Operating expenses 5,445 14,552 7,632
Income before income taxes 78,387 458,041 420,329
−Removed: Income tax expense 50,732 27,101 43,577
+Added: Income tax benefit (expense) 12,935 ( 50,732 ) ( 27,101 )
Net income 91,322 407,309 393,228
−Removed: Net loss attributable to noncontrolling interest
+Added: Net loss attributable to noncontrolling interests 210 38 58
Net income attributable to Nelnet, Inc.
5 unchanged sentences
Net income $ 91,322 407,309 393,228
−Removed: Other comprehensive (loss) income:
−Removed: Net changes related to equity in subsidiaries other comprehensive income $ ( 11,713 ) 6,692 —
−Removed: Net changes related to available-for-sale securities:
−Removed: Unrealized holding (losses) gains arising during period, net ( 42,793 ) ( 4,220 ) 6,637
−Removed: Reclassification of gains recognized in net income, net of losses ( 3,894 ) ( 372 ) ( 2,521 )
−Removed: Income tax effect 11,205 ( 35,482 ) 1,102 ( 3,490 ) ( 986 ) 3,130
−Removed: Net changes related to equity method investee's other comprehensive income:
−Removed: Gain on cash flow hedges 691 — —
+Added: Other comprehensive income (loss):
+Added: Net changes related to equity in subsidiaries other comprehensive income (loss) $ 9,473 ( 11,188 ) 6,692
+Added: Net changes related to available-for-sale debt securities:
+Added: Unrealized holding gains (losses) arising during period, net 6,412 ( 42,793 ) ( 4,220 )
+Added: Reclassification of losses (gains) recognized in net income, net 3,818 ( 3,894 ) ( 372 )
Income tax effect ( 2,456 ) 7,774 11,205 ( 35,482 ) 1,102 ( 3,490 )
−Removed: Other comprehensive (loss) income ( 46,670 ) 3,202 3,130
+Added: Other comprehensive income (loss) 17,247 ( 46,670 ) 3,202
Comprehensive income 108,569 360,639 396,430
13 unchanged sentences
Net income 91,322 407,309 393,228
−Removed: Adjustments to reconcile net income to net cash provided by (used in) operating activities:
+Added: Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization 620 619 591
Derivative market value adjustments 40,250 ( 231,691 ) ( 92,813 )
−Removed: Payments to terminate derivative instruments, net 91,786 — —
−Removed: Proceeds from (payments to) clearinghouse - initial and variation margin, net 148,691 91,294 ( 26,747 )
+Added: Proceeds from termination of derivative instruments 164,079 91,786 —
+Added: (Payments to) proceeds from clearinghouse - initial and variation margin, net ( 213,923 ) 148,691 91,294
Equity in earnings of subsidiaries ( 103,959 ) ( 228,169 ) ( 313,451 )
−Removed: Gain from deconsolidation of ALLO, including cash impact — — ( 287,579 )
−Removed: (Gain) loss from repurchases of debt, net ( 1,324 ) 6,530 ( 1,962 )
−Removed: Loss (gain) on investments, net 51,175 721 ( 46,019 )
−Removed: Proceeds from sale (purchases) of equity securities, net 42,841 ( 42,916 ) —
−Removed: Deferred income tax expense 39,997 47,423 23,747
+Added: Loss on investments, net 64,584 51,175 721
+Added: Proceeds from sale of equity securities, net of purchases 75 42,841 ( 42,916 )
+Added: Deferred income tax (benefit) expense ( 71,056 ) 39,997 47,423
Non-cash compensation expense 16,476 14,176 10,673
Impairment expense 2,060 6,561 4,637
−Removed: Other — — ( 329 )
−Removed: Decrease (increase) in other assets 16,140 ( 9,108 ) ( 17,410 )
+Added: (Increase) decrease in other assets ( 18,181 ) 14,816 ( 2,578 )
Increase in other liabilities 11,049 10,590 1,784
−Removed: Net cash provided by (used in) operating activities 368,701 98,593 ( 56,752 )
+Added: Net cash (used in) provided by operating activities ( 16,604 ) 368,701 98,593
Cash flows from investing activities:
4 unchanged sentences
(Increase) decrease in notes receivable from subsidiaries ( 35,682 ) ( 66,698 ) 20,895
−Removed: Purchases of subsidiary debt, net ( 36,104 ) ( 335,184 ) ( 25,085 )
+Added: Proceeds from (payments on) subsidiary debt, net 122,999 ( 36,104 ) ( 335,184 )
Purchases of other investments ( 60,707 ) ( 122,236 ) ( 110,184 )
−Removed: Proceeds from other investments 20,358 129,899 8,564
−Removed: Net cash used in investing activities ( 474,739 ) ( 507,354 ) ( 123,993 )
+Added: Proceeds from other investments and repayments of notes receivable 32,732 20,358 129,899
+Added: Net cash provided by (used in) investing activities 784,658 ( 474,739 ) ( 507,354 )
Cash flows from financing activities:
5 unchanged sentences
Proceeds from issuance of common stock 1,780 1,633 1,465
−Removed: Acquisition of noncontrolling interest — — ( 600 )
Issuance of noncontrolling interest 2,580 — —
−Removed: Net cash provided by financing activities 93,522 400,340 260,992
−Removed: Net (decrease) increase in cash, cash equivalents, and restricted cash ( 12,516 ) ( 8,421 ) 80,247
+Added: Net cash (used in) provided by financing activities ( 817,395 ) 93,522 400,340
+Added: Net decrease in cash, cash equivalents, and restricted cash ( 49,341 ) ( 12,516 ) ( 8,421 )
Cash, cash equivalents, and restricted cash, beginning of period 142,021 154,537 162,958
3 unchanged sentences
Income taxes, net of refunds and credits $ 47,589 57,705 18,659
−Removed: Noncash investing activities:
−Removed: (Distribution from) contribution to subsidiary, net $ ( 6,068 ) ( 835 ) 49,066
−Removed: Description of
−Removed: The Federal Family Education Loan Program
−Removed: The Federal Family Education Loan Program
−Removed: The Higher Education Act provided for a program of federal insurance for student loans as well as reinsurance of student loans guaranteed or insured by state agencies or private non-profit corporations.
−Removed: The Higher Education Act authorized certain student loans to be insured and reinsured under the Federal Family Education Loan Program (“FFELP”).
−Removed: The Student Aid and Fiscal Responsibility Act, enacted into law on March 30, 2010, as part of the Health Care and Education Reconciliation Act of 2010, terminated the authority to make FFELP loans.
−Removed: As of July 1, 2010, no new FFELP loans have been made.
−Removed: Generally, a student was eligible for loans made under the Federal Family Education Loan Program only if he or she:
−Removed: • Had been accepted for enrollment or was enrolled in good standing at an eligible institution of higher education;
−Removed: • Was carrying or planning to carry at least one-half the normal full-time workload, as determined by the institution, for the course of study the student was pursuing;
−Removed: • Was not in default on any federal education loans;
−Removed: • Had not committed a crime involving fraud in obtaining funds under the Higher Education Act which funds had not been fully repaid;
−Removed: • Met other applicable eligibility requirements.
−Removed: Eligible institutions included higher educational institutions and vocational schools that complied with specific federal regulations.
−Removed: Each loan is evidenced by an unsecured note.
−Removed: The Higher Education Act also establishes maximum interest rates for each of the various types of loans.
−Removed: These rates vary not only among loan types, but also within loan types depending upon when the loan was made or when the borrower first obtained a loan under the Federal Family Education Loan Program.
−Removed: The Higher Education Act allows lesser rates of interest to be charged.
−Removed: Types of loans
−Removed: Four types of loans were available under the Federal Family Education Loan Program:
−Removed: • Subsidized Stafford Loans
−Removed: • Unsubsidized Stafford Loans
−Removed: • Consolidation Loans
−Removed: These loan types vary as to eligibility requirements, interest rates, repayment periods, loan limits, eligibility for interest subsidies, and special allowance payments.
−Removed: Some of these loan types have had other names in the past.
−Removed: References to these various loan types include, where appropriate, their predecessors.
−Removed: The primary loan under the Federal Family Education Loan Program is the Subsidized Stafford Loan.
−Removed: Students who were not eligible for Subsidized Stafford Loans based on their economic circumstances might have obtained Unsubsidized Stafford Loans.
−Removed: Graduate or professional students and parents of dependent undergraduate students might have obtained PLUS Loans.
−Removed: Consolidation Loans were available to borrowers with existing loans made under the Federal Family Education Loan Program and other federal programs to consolidate repayment of the borrower's existing loans.
−Removed: Prior to July 1, 1994, the Federal Family Education Loan Program also offered Supplemental Loans for Students (“SLS Loans”) to graduate and professional students and independent undergraduate students and, under certain circumstances, dependent undergraduate students, to supplement their Stafford Loans.
−Removed: Subsidized Stafford Loans
−Removed: Subsidized Stafford Loans were eligible for insurance and reinsurance under the Higher Education Act if the eligible student to whom the loan was made was accepted or was enrolled in good standing at an eligible institution of higher education or vocational school and carried at least one-half the normal full-time workload at that institution.
−Removed: Subsidized Stafford Loans had limits as to the maximum amount which could be borrowed for an academic year and in the aggregate for both undergraduate and graduate or professional study.
−Removed: Both annual and aggregate limitations excluded loans made under the PLUS Loan Program.
−Removed: The Secretary of Education had discretion to raise these limits to accommodate students undertaking specialized training requiring exceptionally high costs of education.
−Removed: Subsidized Stafford Loans were made only to student borrowers who met the needs tests provided in the Higher Education Act.
−Removed: Provisions addressing the implementation of needs analysis and the relationship between unmet need for financing and the availability of Subsidized Stafford Loan Program funding have been the subject of frequent and extensive amendments.
−Removed: Interest rates for Subsidized Stafford Loans.
−Removed: For Stafford Loans first disbursed to a “new” borrower (a “new” borrower is defined for purposes of this section as one who had no outstanding balance on a FFELP loan on the date the new promissory note was signed) for a period of enrollment beginning before January 1, 1981, the applicable interest rate is fixed at 7%.
−Removed: For Stafford Loans first disbursed to a “new” borrower, for a period of enrollment beginning on or after January 1, 1981, but before September 13, 1983, the applicable interest rate is fixed at 9%.
−Removed: For Stafford Loans first disbursed to a “new” borrower, for a period of enrollment beginning on or after September 13, 1983, but before July 1, 1988, the applicable interest rate is fixed at 8%.
−Removed: For Stafford Loans first disbursed to a borrower with an outstanding balance on a PLUS, SLS, or Consolidation Loan, but not on a Stafford Loan, where the new loan is intended for a period of enrollment beginning before July 1, 1988, the applicable interest rate is fixed at 8%.
−Removed: For Stafford Loans first disbursed before October 1, 1992, to a “new” borrower or to a borrower with an outstanding balance on a PLUS, SLS, or Consolidation Loan, but not a Stafford Loan, where the new loan is intended for a period of enrollment beginning on or after July 1, 1988, the applicable interest rate is as follows:
−Removed: • Original fixed interest rate of 8% for the first 48 months of repayment.
−Removed: Beginning on the first day of the 49 th month of repayment, the interest rate increased to a fixed rate of 10% thereafter.
−Removed: Loans in this category were subject to excess interest rebates and have been converted to a variable interest rate based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.25%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for loans in this category is 10%.
−Removed: For Stafford Loans first disbursed on or after July 23, 1992, but before July 1, 1994, to a borrower with an outstanding Stafford Loan made with a 7%, 8%, 9%, or 8%/10% fixed interest rate, the original, applicable interest rate is the same as the rate provided on the borrower's previous Stafford Loan (i.e., a fixed rate of 7%, 8%, 9%, or 8%/10%).
−Removed: Loans in this category were subject to excess interest rebates and have been converted to a variable interest rate based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for a loan in this category is equal to the loan's previous fixed rate (i.e., 7%, 8%, 9%, or 10%).
−Removed: For Stafford Loans first disbursed on or after October 1, 1992, but before December 20, 1993, to a borrower with an outstanding balance on a PLUS, SLS, or Consolidation Loan, but not on a Stafford Loan, the original, applicable interest rate is fixed at 8%.
−Removed: Loans in this category were subject to excess interest rebates and have been converted to a variable interest rate based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for a loan in this category is 8%.
−Removed: For Stafford Loans first disbursed on or after October 1, 1992, but before July 1, 1994, to a “new” borrower, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for a loan in this category is 9%.
−Removed: For Stafford Loans first disbursed on or after December 20, 1993, but before July 1, 1994, to a borrower with an outstanding balance on a PLUS, SLS, or Consolidation Loan, but not on a Stafford Loan, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for a loan in this category is 9%.
−Removed: For Stafford Loans first disbursed on or after July 1, 1994, but before July 1, 1995, where the loan is intended for a period of enrollment that includes or begins on or after July 1, 1994, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate for a loan in this category is 8.25%.
−Removed: For Stafford Loans first disbursed on or after July 1, 1995, but before July 1, 1998, the applicable interest rate is as follows:
−Removed: • When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.5%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 8.25%.
−Removed: • When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 8.25%.
−Removed: For Stafford Loans first disbursed on or after July 1, 1998, but before July 1, 2006, the applicable interest rate is as follows:
−Removed: • When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 1.7%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 8.25%.
−Removed: • When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.3%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 8.25%.
−Removed: For Stafford Loans first disbursed on or after July 1, 2006, the applicable interest rate is fixed at 6.80%.
−Removed: However, for Stafford Loans for undergraduates, the applicable interest rate was reduced in phases for which the first disbursement was made on or after:
−Removed: • July 1, 2008 and before July 1, 2009, the applicable interest rate is fixed at 6.00%,
−Removed: • July 1, 2009 and before July 1, 2010, the applicable interest rate is fixed at 5.60%.
−Removed: Unsubsidized Stafford Loans
−Removed: The Unsubsidized Stafford Loan program was created by Congress in 1992 for students who did not qualify for Subsidized Stafford Loans due to parental and/or student income and assets in excess of permitted amounts.
−Removed: These students were entitled to borrow the difference between the Stafford Loan maximum for their status (dependent or independent) and their Subsidized Stafford Loan eligibility through the Unsubsidized Stafford Loan Program.
−Removed: The general requirements for Unsubsidized Stafford Loans, including special allowance payments, are essentially the same as those for Subsidized Stafford Loans.
−Removed: However, the terms of the Unsubsidized Stafford Loans differ materially from Subsidized Stafford Loans in that the federal government will not make interest subsidy payments and the loan limitations were determined without respect to the expected family contribution.
−Removed: The borrower is required to either pay interest from the time the loan is disbursed or the accruing interest is capitalized when repayment begins at the end of a deferment or forbearance, when the borrower is determined to no longer have a partial financial hardship under the Income-Based Repayment plan or when the borrower leaves the plan.
−Removed: Unsubsidized Stafford Loans were not available before October 1, 1992.
−Removed: A student meeting the general eligibility requirements for a loan under the Federal Family Education Loan Program was eligible for an Unsubsidized Stafford Loan without regard to need.
−Removed: Interest rates for Unsubsidized Stafford Loans.
−Removed: Unsubsidized Stafford Loans are subject to the same interest rate provisions as Subsidized Stafford Loans, with the exception of Unsubsidized Stafford Loans first disbursed on or after July 1, 2008, which retain a fixed interest rate of 6.80%.
−Removed: PLUS Loans were made to parents, and under certain circumstances spouses of remarried parents, of dependent undergraduate students.
−Removed: Effective July 1, 2006, graduate and professional students were eligible borrowers under the PLUS Loan program.
−Removed: For PLUS Loans made on or after July 1, 1993, the borrower could not have an adverse credit history as determined by criteria established by the Secretary of Education.
−Removed: The basic provisions applicable to PLUS Loans are similar to those of Stafford Loans with respect to the involvement of guarantee agencies and the Secretary of Education in providing federal insurance and reinsurance on the loans.
−Removed: However, PLUS Loans differ significantly, particularly from the Subsidized Stafford Loans, in that federal interest subsidy payments are not available under the PLUS Loan Program and special allowance payments are more restricted.
−Removed: Interest rates for PLUS Loans.
−Removed: For PLUS Loans first disbursed on or after January 1, 1981, but before October 1, 1981, the applicable interest rate is fixed at 9%.
−Removed: For PLUS Loans first disbursed on or after October 1, 1981, but before November 1, 1982, the applicable interest rate is fixed at 14%.
−Removed: For PLUS Loans first disbursed on or after November 1, 1982, but before July 1, 1987, the applicable interest rate is fixed at 12%.
−Removed: Beginning July 1, 2001, for PLUS Loans first disbursed on or after July 1, 1987, but before October 1, 1992, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury bill yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.25%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 12%.
−Removed: Prior to July 1, 2001, PLUS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.25%.
−Removed: The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 12%.
−Removed: PLUS Loans originally made at a fixed interest rate, which have been refinanced for purposes of securing a variable interest rate, are subject to the variable interest rate calculation described in this paragraph.
−Removed: Beginning July 1, 2001, for PLUS Loans first disbursed on or after October 1, 1992, but before July 1, 1994, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 10%.
−Removed: Prior to July 1, 2001, PLUS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.1%.
−Removed: The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 10%.
−Removed: Beginning July 1, 2001, for PLUS Loans first disbursed on or after July 1, 1994, but before July 1, 1998, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 9%.
−Removed: Prior to July 1, 2001, PLUS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.1%.
−Removed: The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 9%.
−Removed: For PLUS Loans first disbursed on or after July 1, 1998, but before July 1, 2006, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1 of each year, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 9%.
−Removed: For PLUS Loans first disbursed on or after July 1, 2006, the applicable interest rate is fixed at 8.5%.
−Removed: SLS Loans were limited to graduate or professional students, independent undergraduate students, and dependent undergraduate students, if the students' parents were unable to obtain a PLUS Loan.
−Removed: Except for dependent undergraduate students, eligibility for SLS Loans was determined without regard to need.
−Removed: SLS Loans were similar to Stafford Loans with respect to the involvement of guarantee agencies and the Secretary of Education in providing federal insurance and reinsurance on the loans.
−Removed: However, SLS Loans differed significantly, particularly from Subsidized Stafford Loans, because federal interest subsidy payments were not available under the SLS Loan Program and special allowance payments were more restricted.
−Removed: The SLS Loan Program was discontinued on July 1, 1994.
−Removed: Interest rates for SLS Loans.
−Removed: The applicable interest rates on SLS Loans made before October 1, 1992, and on SLS Loans originally made at a fixed interest rate, which have been refinanced for purposes of securing a variable interest rate, are identical to the applicable interest rates described for PLUS Loans made before October 1, 1992.
−Removed: For SLS Loans first disbursed on or after October 1, 1992, but before July 1, 1994, the applicable interest rate is as follows:
−Removed: • Beginning July 1, 2001, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.1%.
−Removed: The variable interest rate is adjusted annually on July 1.
−Removed: The maximum interest rate is 11%.
−Removed: Prior to July 1, 2001, SLS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.1%.
−Removed: The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 11%.
−Removed: Consolidation Loans
−Removed: The Higher Education Act authorized a program under which certain borrowers could consolidate their various federally insured education loans into a single loan insured and reinsured on a basis similar to Stafford Loans.
−Removed: Consolidation Loans could be obtained in an amount sufficient to pay outstanding principal, unpaid interest, late charges, and collection costs on federally insured or reinsured student loans incurred under the Federal Family Education Loan and Direct Loan Programs, including PLUS Loans made to the consolidating borrower, as well as loans made under the Perkins Loan (formally National Direct Student Loan Program), Federally Insured Student Loan (FISL), Nursing Student Loan (NSL), Health Education Assistance Loan (HEAL), and Health Professions Student Loan (HPSL) Programs.
−Removed: To be eligible for a FFELP Consolidation Loan, a borrower had to:
−Removed: • Have outstanding indebtedness on student loans made under the Federal Family Education Loan Program and/or certain other federal student loan programs;
−Removed: • Be in repayment status or in a grace period on loans to be consolidated.
−Removed: Borrowers who were in default on loans to be consolidated had to first make satisfactory arrangements to repay the loans to the respective holder(s) or had to agree to repay the consolidating lender under an income-based repayment arrangement in order to include the defaulted loans in the Consolidation Loan.
−Removed: For applications received on or after January 1, 1993, borrowers could add additional loans to a Consolidation Loan during the 180-day period following the origination of the Consolidation Loan.
−Removed: A married couple who agreed to be jointly liable on a Consolidation Loan for which the application was received on or after January 1, 1993, but before July 1, 2006, was treated as an individual for purposes of obtaining a Consolidation Loan.
−Removed: Interest rates for Consolidation Loans.
−Removed: For Consolidation Loans disbursed before July 1, 1994, the applicable interest rate is fixed at the greater of:
−Removed: • The weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent.
−Removed: For Consolidation Loans disbursed on or after July 1, 1994, based on applications received by the lender before November 13, 1997, the applicable interest rate is fixed and is based on the weighted average of the interest rates on the loans consolidated, rounded up to the nearest whole percent.
−Removed: For Consolidation Loans on which the application was received by the lender between November 13, 1997, and September 30, 1998, inclusive, the applicable interest rate is variable according to the following:
−Removed: • For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the variable interest rate is based on the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction before the preceding June 1, plus 3.1%.
−Removed: The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1.
−Removed: The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
−Removed: • For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the variable interest rate is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending June 30, plus 3.0%.
−Removed: The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1.
−Removed: There is no maximum interest rate for the portion of a Consolidation Loan that is represented by HEAL Loans.
−Removed: For Consolidation Loans on which the application was received by the lender on or after October 1, 1998, the applicable interest rate is determined according to the following:
−Removed: • For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the applicable interest rate is fixed and is based on the weighted average of the interest rates on the non-HEAL loans being consolidated, rounded up to the nearest one-eighth of one percent.
−Removed: The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
−Removed: • For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the applicable interest rate is variable and is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending June 30, plus 3.0%.
−Removed: The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1.
−Removed: There is no maximum interest rate for the portion of the Consolidation Loan that is represented by HEAL Loans.
−Removed: For a discussion of required payments that reduce the return on Consolidation Loans, see “Fees - Rebate fee on Consolidation Loans” in this Appendix.
−Removed: Interest rate during active duty
−Removed: The Higher Education Opportunity Act of 2008 revised the Servicemembers Civil Relief Act to include FFEL Program loans.
−Removed: Interest charges on FFEL Program loans are capped at 6% during a period of time on or after August 14, 2008, in which a borrower has served or is serving on active duty in the Armed Forces, National Oceanic and Atmospheric Administration, Public Health Services, or National Guard.
−Removed: The interest charge cap includes the interest rate in addition to any fees, service charges, and other charges related to the loan.
−Removed: The cap is applicable to loans made prior to the date the borrower was called to active duty.
−Removed: Maximum loan amounts
−Removed: Each type of loan was subject to certain limits on the maximum principal amount, with respect to a given academic year and in the aggregate.
−Removed: Consolidation Loans were limited only by the amount of eligible loans to be consolidated.
−Removed: PLUS Loans were limited to the difference between the cost of attendance and the other aid available to the student.
−Removed: Stafford Loans, subsidized and unsubsidized, were subject to both annual and aggregate limits according to the provisions of the Higher Education Act.
−Removed: Loan limits for Subsidized Stafford and Unsubsidized Stafford Loans.
−Removed: Dependent and independent undergraduate students were subject to the same annual loan limits on Subsidized Stafford Loans;
−Removed: independent students were allowed greater annual loan limits on Unsubsidized Stafford Loans.
−Removed: A student who had not successfully completed the first year of a program of undergraduate education could borrow up to $3,500 in Subsidized Stafford Loans in an academic year.
−Removed: A student who had successfully completed the first year, but who had not successfully completed the second year, could borrow up to $4,500 in Subsidized Stafford Loans per academic year.
−Removed: An undergraduate student who had successfully completed the first and second years, but who had not successfully completed the remainder of a program of undergraduate education, could borrow up to $5,500 in Subsidized Stafford Loans per academic year.
−Removed: Dependent students could borrow an additional $2,000 in Unsubsidized Stafford Loans for each year of undergraduate study.
−Removed: Independent students could borrow an additional $6,000 of Unsubsidized Stafford Loans for each of the first two years and an additional $7,000 for the third, fourth, and fifth years of undergraduate study.
−Removed: For students enrolled in programs of less than an academic year in length, the limits were generally reduced in proportion to the amount by which the programs were less than one year in length.
−Removed: A graduate or professional student could borrow up to $20,500 in an academic year where no more than $8,500 was representative of Subsidized Stafford Loan amounts.
−Removed: The maximum aggregate amount of Subsidized Stafford and Unsubsidized Stafford Loans, including that portion of a Consolidation Loan used to repay such loans, which a dependent undergraduate student may have outstanding is $31,000 (of which only $23,000 may be Subsidized Stafford Loans).
−Removed: An independent undergraduate student may have an aggregate maximum of $57,500 (of which only $23,000 may be Subsidized Stafford Loans).
−Removed: The maximum aggregate amount of Subsidized Stafford and Unsubsidized Stafford Loans, including the portion of a Consolidation Loan used to repay such loans, for a graduate or professional student, including loans for undergraduate education, is $138,500, of which only $65,500 may be Subsidized Stafford Loans.
−Removed: In some instances, schools could certify loan amounts in excess of the limits, such as for certain health profession students.
−Removed: Loan limits for PLUS Loans.
−Removed: For PLUS Loans made on or after July 1, 1993, the annual amounts of PLUS Loans were limited only by the student's unmet need.
−Removed: There was no aggregate limit for PLUS Loans.
−Removed: Repayment periods.
−Removed: Loans made under the Federal Family Education Loan Program, other than Consolidation Loans and loans being repaid under an income-based or extended repayment schedule, must provide for repayment of principal in periodic installments over a period of not less than five, nor more than ten years.
−Removed: A borrower may request, with concurrence of the lender, to repay the loan in less than five years with the right to subsequently extend the minimum repayment period to five years.
−Removed: Since the 1998 Amendments, lenders have been required to offer extended repayment schedules to new borrowers disbursed on or after October 7, 1998 who accumulate outstanding FFELP Loans of more than $30,000, in which case the repayment period may extend up to 25 years, subject to certain minimum repayment amounts.
−Removed: Consolidation Loans must be repaid within maximum repayment periods which vary depending upon the principal amount of the borrower's outstanding student loans, but may not exceed 30 years.
−Removed: For Consolidation Loans for which the application was received prior to January 1, 1993, the repayment period cannot exceed 25 years.
−Removed: Periods of authorized deferment and forbearance are excluded from the maximum repayment period.
−Removed: In addition, if the repayment schedule on a loan with a variable interest rate does not provide for adjustments to the amount of the monthly installment payment, the maximum repayment period may be extended for up to three years.
−Removed: Repayment of principal on a Stafford Loan does not begin until a student drops below at least a half-time course of study.
−Removed: For Stafford Loans for which the applicable rate of interest is fixed at 7%, the repayment period begins between nine and twelve months after the borrower ceases to pursue at least a half-time course of study, as indicated in the promissory note.
−Removed: For other Stafford Loans, the repayment period begins six months after the borrower ceases to pursue at least a half-time course of study.
−Removed: These periods during which payments of principal are not due are the “grace periods.”
−Removed: In the case of SLS, PLUS, and Consolidation Loans, the repayment period begins on the date of final disbursement of the loan, except that the borrower of a SLS Loan who also has a Stafford Loan may postpone repayment of the SLS Loan to coincide with the commencement of repayment of the Stafford Loan.
−Removed: During periods in which repayment of principal is required, unless the borrower is repaying under an income-based repayment schedule, payments of principal and interest must in general be made at a rate of at least $600 per year, except that a borrower and lender may agree to a lesser rate at any time before or during the repayment period.
−Removed: However, at a minimum, the payments must satisfy the interest that accrues during the year.
−Removed: Borrowers may make accelerated payments at any time without penalty.
−Removed: Income-sensitive repayment schedule.
−Removed: Since 1993, lenders have been required to offer income-sensitive repayment schedules, in addition to standard and graduated repayment schedules, for Stafford, SLS, and Consolidation Loans.
−Removed: Beginning in 2000, lenders have been required to offer income-sensitive repayment schedules to PLUS borrowers as well.
−Removed: Use of income-sensitive repayment schedules may extend the maximum repayment period for up to five years if the payment amount established from the borrower's income will not repay the loan within the maximum applicable repayment period.
−Removed: Income-based repayment schedule.
−Removed: Effective July 1, 2009, a borrower in the Federal Family Education Loan Program or Federal Direct Loan Program, other than a PLUS Loan made to a parent borrower or any Consolidation Loan that repaid one or more parent PLUS loans, may qualify for an income-based repayment schedule regardless of the disbursement dates of the loans if he or she has a partial financial hardship.
−Removed: A borrower has a financial hardship if the annual loan payment amount based on a 10-year repayment schedule exceeds 15% of the borrower's adjusted gross income, minus 150% of the poverty line for the borrower's actual family size.
−Removed: Interest will be paid by the Secretary of Education for subsidized loans for the first three years for any borrower whose scheduled monthly payment is not sufficient to cover the accrued interest.
−Removed: Interest will capitalize at the end of the partial financial hardship period, or when the borrower begins making payments under a standard repayment schedule.
−Removed: The Secretary of Education will cancel any outstanding balance after 25 years if a borrower who has made payments under this schedule meets certain criteria.
−Removed: Deferment periods.
−Removed: No principal payments need be made during certain periods of deferment prescribed by the Higher Education Act.
−Removed: For a borrower who first obtained a Stafford or SLS loan which was disbursed before July 1, 1993, deferments are available:
−Removed: • During a period not exceeding three years while the borrower is a member of the Armed Forces, an officer in the Commissioned Corps of the Public Health Service or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, an active duty member of the National Oceanic and Atmospheric Administration Corps;
−Removed: • During a period not exceeding three years while the borrower is a volunteer under the Peace Corps Act;
−Removed: • During a period not exceeding three years while the borrower is a full-time paid volunteer under the Domestic Volunteer Act of 1973;
−Removed: • During a period not exceeding three years while the borrower is a full-time volunteer in service which the Secretary of Education has determined is comparable to service in the Peace Corp or under the Domestic Volunteer Act of 1970 with an organization which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code;
−Removed: • During a period not exceeding two years while the borrower is serving an internship necessary to receive professional recognition required to begin professional practice or service, or a qualified internship or residency program;
−Removed: • During a period not exceeding three years while the borrower is temporarily totally disabled, as established by sworn affidavit of a qualified physician, or while the borrower is unable to secure employment because of caring for a dependent who is so disabled;
−Removed: • During a period not exceeding two years while the borrower is seeking and unable to find full-time employment;
−Removed: • During any period that the borrower is pursuing a full-time course of study at an eligible institution (or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, is pursuing at least a half-time course of study);
−Removed: • During any period that the borrower is pursuing a course of study in a graduate fellowship program;
−Removed: • During any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
−Removed: • During a period not exceeding six months per request while the borrower is on parental leave;
−Removed: • Only with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, during a period not exceeding three years while the borrower is a full-time teacher in a public or nonprofit private elementary or secondary school in a “teacher shortage area” (as prescribed by the Secretary of Education), and during a period not exceeding one year for mothers, with preschool age children, who are entering or re-entering the work force and who are paid at a rate of no more than $1 per hour more than the federal minimum wage;
−Removed: • For loans that are in repayment status on or before September 28, 2018, the borrower is eligible for deferment during periods the borrower is undergoing treatment for cancer and the 6 months following treatment.
−Removed: For a borrower who first obtained a loan on or after July 1, 1993, deferments are available:
−Removed: • During any period that the borrower is pursuing at least a half-time course of study at an eligible institution;
−Removed: • During any period that the borrower is pursuing a course of study in a graduate fellowship program;
−Removed: • During any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
−Removed: • During a period not exceeding three years while the borrower is seeking and unable to find full-time employment;
−Removed: • During a period not exceeding three years for any reason which has caused or will cause the borrower economic hardship.
−Removed: Economic hardship includes working full-time and earning an amount that does not exceed the greater of the federal minimum wage or 150% of the poverty line applicable to a borrower's family size and state of residence.
−Removed: Additional categories of economic hardship are based on the receipt of payments from a state or federal public assistance program, service in the Peace Corps, or until July 1, 2009, the relationship between a borrower's educational debt burden and his or her income;
−Removed: • For loans that are in repayment status on or before September 28, 2018, the borrower is eligible for deferment during periods the borrower is undergoing treatment for cancer and the 6 months following treatment.
−Removed: Effective October 1, 2007, a borrower serving on active duty during a war or other military operation or national emergency, or performing qualifying National Guard duty during a war or other military operation or national emergency may obtain a military deferment for all outstanding Title IV loans in repayment.
−Removed: For all periods of active duty service that include October 1, 2007 or begin on or after that date, the deferment period includes the borrower's service period and 180 days following the demobilization date.
−Removed: A borrower serving on or after October 1, 2007, may receive up to 13 months of active duty student deferment after the completion of military service if he or she meets the following conditions:
−Removed: • Is a National Guard member, Armed Forces reserves member, or retired member of the Armed Forces;
−Removed: • Is called or ordered to active duty;
−Removed: • Is enrolled at the time of, or was enrolled within six months prior to, the activation in a program at an eligible institution.
−Removed: The active duty student deferment ends the earlier of when the borrower returns to an enrolled status, or at the end of 13 months.
−Removed: PLUS Loans first disbursed on or after July 1, 2008, are eligible for the following deferment options:
−Removed: • A parent PLUS borrower, upon request, may defer the repayment of the loan during any period during which the student for whom the loan was borrowed is enrolled at least half time.
−Removed: Also upon request, the borrower can defer the loan for the six-month period immediately following the date on which the student for whom the loan was borrowed ceases to be enrolled at least half time, or if the parent borrower is also a student, the date after he or she ceases to be enrolled at least half time.
−Removed: • A graduate or professional student PLUS borrower may defer the loan for the six-month period immediately following the date on which he or she ceases to be enrolled at least half time.
−Removed: This option does not require a request and may be granted each time the borrower ceases to be enrolled at least half time.
−Removed: Prior to the 1992 Amendments, only some of the deferments described above were available to PLUS and Consolidation Loan borrowers.
−Removed: Prior to the 1986 Amendments, PLUS Loan borrowers were not entitled to certain deferments.
−Removed: Forbearance periods.
−Removed: The Higher Education Act also provides for periods of forbearance during which the lender, in case of a borrower's temporary financial hardship, may postpone any payments.
−Removed: A borrower is entitled to forbearance for a period not exceeding three years while the borrower's debt burden under Title IV of the Higher Education Act (which includes the Federal Family Education Loan Program) equals or exceeds 20% of the borrower's gross income.
−Removed: A borrower is also entitled to forbearance while he or she is serving in a qualifying internship or residency program, a “national service position” under the National and Community Service Trust Act of 1993, a qualifying position for loan forgiveness under the Teacher Loan Forgiveness Program, or a position that qualifies him or her for loan repayment under the Student Loan Repayment Program administered by the Department of Defense.
−Removed: In addition, administrative forbearances are provided in circumstances such as, but not limited to, a local or national emergency, a military mobilization, or when the geographical area in which the borrower or endorser resides has been designated a disaster area by the President of the United States or Mexico, the Prime Minister of Canada, or by the governor of a state.
−Removed: Interest payments during grace, deferment, forbearance, and applicable income-based repayment ("IBR") periods.
−Removed: The Secretary of Education makes interest payments on behalf of the borrower for Subsidized loans while the borrower is in school, grace, deferment, and during the first 3 years of the IBR plan for any remaining interest that is not satisfied by the IBR payment amount.
−Removed: Interest that accrues during forbearance periods, and, if the loan is not eligible for interest subsidy payments during school, grace, deferment, and IBR periods, may be paid monthly or quarterly by the borrower.
−Removed: At the appropriate time, any unpaid accrued interest may be capitalized by the lender.
−Removed: For a borrower who is eligible for the Cancer Treatment Deferment, interest that accrues during the period of deferment on any subsidized loan is subsidized.
−Removed: For cancer treatment deferment periods on any Unsubsidized Stafford Loan, the interest during such periods is not charged to the borrower.
−Removed: Guarantee fee and Federal default fee.
−Removed: For loans for which the date of guarantee of principal was on or after July 1, 2006, a guarantee agency was required to collect and deposit into the Federal Student Loan Reserve Fund a Federal default fee in an amount equal to 1% of the principal amount of the loan.
−Removed: The fee was collected either by deduction from the proceeds of the loan or by payment from other non-Federal sources.
−Removed: Federal default fees could not be charged to borrowers of Consolidation Loans.
−Removed: Origination fee .
−Removed: Beginning with loans first disbursed on or after July 1, 2006, the maximum origination fee which could be charged to a Stafford Loan borrower decreased according to the following schedule:
−Removed: • 1.5% with respect to loans for which the first disbursement was made on or after July 1, 2007, and before July 1, 2008;
−Removed: • 1.0% with respect to loans for which the first disbursement was made on or after July 1, 2008, and before July 1, 2009;
−Removed: • 0.5% with respect to loans for which the first disbursement was made on or after July 1, 2009, and before July 1, 2010.
−Removed: A lender could charge a lesser origination fee to Stafford Loan borrowers as long as the lender did so consistently with respect to all borrowers who resided in or attended school in a particular state.
−Removed: Regardless of whether the lender passed all or a portion of the origination fee on to the borrower, the lender had to pay the origination fee owed on each loan it made to the Secretary of Education.
−Removed: An eligible lender was required to charge the borrower of a PLUS Loan an origination fee equal to 3% of the principal amount of the loan.
−Removed: This fee had to be deducted proportionately from each disbursement of the PLUS Loan and had to be remitted to the Secretary of Education.
−Removed: The lender of any loan made under the Federal Family Education Loan Program was required to pay a fee to the Secretary of Education.
−Removed: For loans made on or after October 1, 2007, the fee was equal to 1.0% of the principal amount of such loan.
−Removed: This fee could not be charged to the borrower.
−Removed: Rebate fee on Consolidation Loans.
−Removed: The holder of any Consolidation Loan made on or after October 1, 1993, was required to pay to the Secretary of Education a monthly rebate fee.
−Removed: For loans made on or after October 1, 1993, from applications received prior to October 1, 1998, and after January 31, 1999, the fee is equal to 0.0875% (1.05% per annum) of the principal and accrued interest on the Consolidation Loan.
−Removed: For loans made from applications received during the period beginning on or after October 1, 1998, through January 31, 1999, the fee is 0.0517% (0.62% per annum).
−Removed: Interest subsidy payments
−Removed: Interest subsidy payments are interest payments paid on the outstanding principal balance of an eligible loan before the time the loan enters repayment and during deferment periods.
−Removed: The Secretary of Education and the guarantee agencies enter into interest subsidy agreements whereby the Secretary of Education agrees to pay interest subsidy payments on a quarterly basis to the holders of eligible guaranteed loans for the benefit of students meeting certain requirements, subject to the holders' compliance with all requirements of the Higher Education Act.
−Removed: Subsidized Stafford Loans are eligible for interest payments.
−Removed: Consolidation Loans for which the application was received on or after January 1, 1993, are eligible for interest subsidy payments.
−Removed: Consolidation Loans made from applications received on or after August 10, 1993, are eligible for interest subsidy payments only if all underlying loans consolidated were Subsidized Stafford Loans.
−Removed: Consolidation Loans for which the application is received by an eligible lender on or after November 13, 1997, are eligible for interest subsidy payments on that portion of the Consolidation Loan that repaid subsidized FFELP Loans or similar subsidized loans made under the Direct Loan Program.
−Removed: The portion of the Consolidation Loan that repaid HEAL Loans is not eligible for interest subsidy, regardless of the date the Consolidation Loan was made.
−Removed: Special allowance payments
−Removed: The Higher Education Act provides for special allowance payments (SAP) to be made by the Secretary of Education to eligible lenders.
−Removed: The rates for special allowance payments are based on formulas that differ according to the type of loan, the date the loan was originally made or insured, and the type of funds used to finance the loan (taxable or tax-exempt).
−Removed: Replacement of LIBOR with SOFR
−Removed: Lenders who did not elect the alternate calculation formula provided by the Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2012 and are still using the 1 Month London Inter Bank Offered Rate (LIBOR) rate for SAP calculations will need to switch to a new calculation formula by July 1, 2023 as the publication of the LIBOR index is being discontinued.
−Removed: The Department of Education published Dear Colleague Letter GEN-22-12 to detail the process for lenders to transition from LIBOR to the Secured Overnight Financing Rate (SOFR).
−Removed: Lenders can transition to the new formula prior to July 1, 2023 or will be automatically be changed beginning for the 3 rd quarter on 2023.
−Removed: Stafford Loans.
−Removed: The effective formulas for special allowance payment rates for Subsidized Stafford and Unsubsidized Stafford Loans are summarized in the following chart.
−Removed: The T-Bill Rate mentioned in the chart refers to the average of the bond equivalent yield of the 91-day Treasury bills auctioned during the preceding quarter.
−Removed: Date of Loans Annualized SAP Rate
−Removed: On or after October 1, 1981 T-Bill Rate less Applicable Interest Rate + 3.5%
−Removed: On or after November 16, 1986 T-Bill Rate less Applicable Interest Rate + 3.25%
−Removed: On or after October 1, 1992 T-Bill Rate less Applicable Interest Rate + 3.1%
−Removed: On or after July 1, 1995 T-Bill Rate less Applicable Interest Rate + 3.1% (1)
−Removed: On or after July 1, 1998 T-Bill Rate less Applicable Interest Rate + 2.8% (2)
−Removed: On or after January 1, 2000 3 Month Commercial Paper Rate less Applicable Interest Rate + 2.34% (3)(6)
−Removed: On or after October 1, 2007 and held by a Department of Education certified not-for-profit holder or Eligible Lender Trustee holding on behalf of a Department of Education certified not-for-profit entity 3 Month Commercial Paper Rate less Applicable Interest Rate + 1.94% (4)(6)
−Removed: All other loans on or after October 1, 2007 3 Month Commercial Paper Rate less Applicable Interest Rate + 1.79% (5)(6)
−Removed: (1) Substitute 2.5% in this formula while such loans are in-school, grace, or deferment status
−Removed: (2) Substitute 2.2% in this formula while such loans are in-school, grace, or deferment status.
−Removed: (3) Substitute 1.74% in this formula while such loans are in-school, grace, or deferment status.
−Removed: (4) Substitute 1.34% in this formula while such loans are in-school, grace, or deferment status.
−Removed: (5) Substitute 1.19% in this formula while such loans are in-school, grace, or deferment status.
−Removed: (6) The Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2012 provides an alternate calculation method that substitutes for 3 Month Commercial Paper Rate “1 Month London Inter Bank Offered Rate (LIBOR) for United States dollars in effect for each of the days in such quarter as compiled and released by the British Banker's Association." This method has to be selected by each lender or beneficial holder before April 1, 2012 and applies to all loans held under the same lender identification number for the quarter beginning April 1, 2012 and all succeeding 3-month periods.
−Removed: PLUS, SLS, and Consolidation Loans.
−Removed: The formula for special allowance payments on PLUS, SLS, and Consolidation Loans are as follows:
−Removed: Date of Loans Annualized SAP Rate
−Removed: On or after October 1, 1992 T-Bill Rate less Applicable Interest Rate + 3.1%
−Removed: On or after January 1, 2000 3 Month Commercial Paper Rate less Applicable Interest Rate + 2.64% (1)
−Removed: PLUS loans on or after October 1, 2007 and held by a Department of Education certified not-for-profit holder or Eligible Lender Trustee holding on behalf of a Department of Education certified not-for-profit entity 3 Month Commercial Paper Rate less Applicable Interest Rate + 1.94% (1)
−Removed: All other PLUS loans on or after October 1, 2007 3 Month Commercial Paper Rate less Applicable Interest Rate + 1.79% (1)
−Removed: Consolidation loans on or after October 1, 2007 and held by a Department of Education certified not-for-profit holder or Eligible Lender Trustee holding on behalf of a Department of Education certified not-for-profit entity 3 Month Commercial Paper Rate less Applicable Interest Rate + 2.24% (1)
−Removed: All other Consolidation loans on or after October 1, 2007 3 Month Commercial Paper Rate less Applicable Interest Rate + 2.09% (1)
−Removed: (1) The Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2012 provides an alternate calculation method that substitutes for 3 Month Commercial Paper Rate “1 Month London Inter Bank Offered Rate (LIBOR) for United States dollars in effect for each of the days in such quarter as compiled and released by the British Banker's Association." This method has to be selected by each lender or beneficial holder before April 1, 2012 and applies to all loans held under the same lender identification number for the quarter beginning April 1, 2012 and all succeeding 3-month periods.
−Removed: For PLUS and SLS Loans made prior to July 1, 1994, and PLUS loans made on or after July 1, 1998, which bear interest at rates adjusted annually, special allowance payments are made only in quarters during which the interest rate ceiling on such loans operates to reduce the rate that would otherwise apply based upon the applicable formula.
−Removed: See “Interest Rates for PLUS Loans” and “Interest Rates for SLS Loans.” Special allowance payments are available on variable rate PLUS Loans and SLS Loans made on or after July 1, 1987, and before July 1, 1994, and on any PLUS Loans made on or after July 1, 1998, and before January 1, 2000, only if the variable rate, which is reset annually, based on the weekly average one-year constant maturity Treasury yield for loans made before July 1, 1998, and based on the 91-day or 52-week Treasury bill, as applicable for loans made on or after July 1, 1998, exceeds the applicable maximum borrower rate.
−Removed: The maximum borrower rate is between 9% and 12% per annum.
−Removed: The portion, if any, of a Consolidation Loan that repaid a HEAL Loan is ineligible for special allowance payments.
−Removed: Recapture of excess interest .
−Removed: The Higher Education Reconciliation Act of 2005 provides that, with respect to a loan for which the first disbursement of principal was made on or after April 1, 2006, if the applicable interest rate for any three-month period exceeds the special allowance support level applicable to the loan for that period, an adjustment must be made by calculating the excess interest and crediting such amounts to the Secretary of Education not less often than annually.
−Removed: The amount of any adjustment of interest for any quarter will be equal to:
−Removed: • The applicable interest rate minus the special allowance support level for the loan, multiplied by
−Removed: • The average daily principal balance of the loan during the quarter, divided by
−Removed: Special allowance payments for loans financed by tax-exempt bonds .
−Removed: The effective formulas for special allowance payment rates for Stafford Loans and Unsubsidized Stafford Loans differ depending on whether loans to borrowers were acquired or originated with the proceeds of tax-exempt obligations.
−Removed: The formula for special allowance payments for loans financed with the proceeds of tax-exempt obligations originally issued prior to October 1, 1993 is:
−Removed: T-Bill Rate less Applicable Interest Rate + 3.5%
−Removed: provided that the special allowance applicable to the loans may not be less than 9.5% less the Applicable Interest Rate.
−Removed: Special rules apply with respect to special allowance payments made on loans
−Removed: • Originated or acquired with funds obtained from the refunding of tax-exempt obligations issued prior to October 1, 1993, or
−Removed: • Originated or acquired with funds obtained from collections on other loans made or purchased with funds obtained from tax-exempt obligations initially issued prior to October 1, 1993.
−Removed: Amounts derived from recoveries of principal on loans eligible to receive a minimum 9.5% special allowance payment may only be used to originate or acquire additional loans by a unit of a state or local government, or non-profit entity not owned or controlled by or under common ownership of a for-profit entity and held directly or through any subsidiary, affiliate or trustee, which entity has a total unpaid balance of principal equal to or less than $100,000,000 on loans for which special allowances were paid in the most recent quarterly payment prior to September 30, 2005.
−Removed: Such entities may originate or acquire additional loans with amounts derived from recoveries of principal until December 31, 2010.
−Removed: Loans acquired with the proceeds of tax-exempt obligations originally issued after October 1, 1993, receive special allowance payments made on other loans.
−Removed: Beginning October 1, 2006, in order to receive 9.5% special allowance payments, a lender must undergo an audit arranged by the Secretary of Education attesting to proper billing for 9.5% payments on only eligible “first generation” and “second generation” loans.
−Removed: First generation loans include those loans acquired using funds directly from the issuance of the tax-exempt obligation.
−Removed: Second-generation loans include only those loans acquired using funds obtained directly from first-generation loans.
−Removed: Furthermore, the lender must certify compliance of its 9.5% billing on such loans with each request for payment.
−Removed: Adjustments to special allowance payments .
−Removed: Special allowance payments and interest subsidy payments are reduced by the amount which the lender is authorized or required to charge as an origination fee.
−Removed: In addition, the amount of the lender origination fee is collected by offset to special allowance payments and interest subsidy payments.
−Removed: The Higher Education Act provides that if special allowance payments or interest subsidy payments have not been made within 30 days after the Secretary of Education receives an accurate, timely, and complete request, the special allowance payable to the lender must be increased by an amount equal to the daily interest accruing on the special allowance and interest subsidy payments due the lender.
+Added: Non-cash investing and financing activities:
+Added: (Contributions to) distributions from subsidiary, net $ ( 6,888 ) 6,068 835
+Added: Issuance of noncontrolling interest $ 220 — —
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.