What changed in this filing

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Item 1. Business

2025-02-27 compared with 2024-02-27 · 230 added, 249 removed, 343 unchanged (58% of the section changed)

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

Nelnet is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space.

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

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

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

The Company also makes and manages 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, reinsurance, and renewable energy (solar).

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

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

As of December 31, 2023, the Company had a $11.7 billion FFELP loan portfolio.

As of December 31, 2024, the Company had an $8.4 billion FFELP loan portfolio.

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

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

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

The Company is also actively expanding its private education and consumer 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.

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The Company has four reportable operating segments as summarized below.

Loan Servicing and Systems (LSS)

• Referred to as Nelnet Diversified Services (NDS)

Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS)

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

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

Education Technology Services and Payments (ETSP)

• Referred to as Nelnet Business Services (NBS)

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

Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS)

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

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

Asset Generation and Management (AGM)

• Included in the Nelnet Financial Services (NFS) division

Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division

• Focused on comprehensive asset management including strategic asset investing, asset allocation, risk management, and performance monitoring within a diverse portfolio

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

• Included in the Nelnet Financial Services (NFS) division

Nelnet Bank, part of the Nelnet Financial Services (NFS) division

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

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

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

• Providing outsourced services including contact center, processing, and administrative services

As of December 31, 2024, the Company serviced $532.4 billion of loans for 15.8 million borrowers.

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Servicing federally owned student loans for the Department

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

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

Nelnet Servicing, LLC (Nelnet Servicing), a subsidiary of the Company, earns loan servicing revenue from a servicing contract with the Department.

As of December 31, 2024, the Company was servicing $489.9 billion of student loans for 14.0 million borrowers for the Department.

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

The Department is the Company's largest customer, representing 26% of the Company's revenue and 74% of the LSS operating segment’s revenue in 2024.

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

In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department’s student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the “New Government Servicing Contract”) which will replace the existing legacy Department student loan servicing contract.

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

The Department’s total loan servicing volume of more than 40 million existing borrowers will be allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract.

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

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

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

Nelnet Servicing processes applications for the TPD discharge program and is responsible for discharge, monitoring, and servicing TPD loans.

Individuals who are totally and permanently disabled may qualify for a discharge of their federal student loans, and the Company processes applications under the program and receives a fee from the Department on a per application basis, as well as a monthly servicing fee during the monitoring period.

Nelnet Servicing is the exclusive provider of this service to the Department.

• Origination of consolidation loans.

The Department outsources the origination of consolidation loans whereby servicers receive Federal Direct Loan consolidation origination volume based on borrower choice.

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

Nelnet Servicing services the consolidation volume it originates.

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

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

In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department’s student aid recipients under a new Unified Servicing and Data Solution (USDS) contract which replaced its legacy Department student loan servicing contract.

The USDS contract has a five-year base period (through April 2028), with 2 two-year and 1 one-year possible extensions.

The Department’s total loan servicing volume of existing borrowers was allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract.

Servicing under the USDS contract went live on April 1, 2024, and the Company recognized revenue in accordance with this new contract beginning in the second quarter of 2024.

The Company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024.

Nelnet Servicing earns a monthly fee from the Department based on borrower volume it services on behalf of the Department.

The USDS contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contract was primarily based on borrower status.

Assuming borrower volume remains consistent under the USDS contract, revenue earned on a per borrower blended basis will decrease under the new contract versus the legacy contract.

However, consistent with the legacy contract, the Company expects to earn additional revenue from the Department for change requests and other support services.

Servicing FFELP loans

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

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

procedures, funds management reconciliations, and claim processing.

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

NDS services AGM’s FFELP student loan portfolio, as well as the portfolios of 93 third-party servicing customers as of December 31, 2024.

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

The Company uses proprietary systems to manage the servicing process.

These systems provide for automated compliance with most of the federal student loan regulations adopted under Title IV of the Higher Education Act of 1965, as amended (the “Higher Education Act”).

The Company serviced FFELP loans on behalf of 94 third-party servicing customers as of December 31, 2023.

The Company's FFELP servicing customers include national and regional banks, credit unions, and various state and nonprofit secondary markets.

The majority of the Company's external FFELP loan servicing activities are performed under “life of loan” contracts, which essentially provide that as long as the applicable loan exists, the Company shall be the sole servicer of that loan;

however, the agreement may contain “deconversion” provisions where, for a fee, the lender may move the loan to another servicer.

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

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

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

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

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

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

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

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

In both backup servicing and full servicing partnerships, the Company is a valuable resource for consumer lenders and asset holders as it allows for leveraged economies of scale, high compliance, and secure service to client partners.

For example, in July 2024, Discover Financial Services (Discover) announced the sale of its approximately $10 billion private education student loan portfolio, representing approximately 400,000 borrowers, to partnerships managed by two global investment firms with Firstmark Services, a division of the Company, assuming responsibility for servicing the portfolio upon the sale.

The conversion of these loans to the Company’s platform began in September 2024 with the majority of loan conversions completed in the fourth quarter of 2024.

In addition, Sofi Technologies, Inc.

(Sofi) selected the Company as a sub-servicer for its school and refinance loan programs.

Transfer of new and existing Sofi loans began in the fourth quarter of 2024, with the anticipated completion of all existing loans to be complete by the second quarter of 2025.

As of December 31, 2024, NDS serviced private education and consumer loans on behalf of 39 third-party servicing customers.

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

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

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

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

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

As of December 31, 2024, NDS provided backup servicing arrangements to 14 entities for more than 45 million borrowers.

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

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

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

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

NDS provides student loan and guaranty servicing software, data center services, and consulting and professional services to support technology platforms, including outsourcing technology expertise and capacity to supplement development needs in organizations.

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

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

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

As of December 31, 2024, 0.8 million borrowers were hosted on the Company's hosted servicing software solution platforms.

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

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

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

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

However, the Company has executed an agreement with a third-party servicer that was awarded a USDS contract with the Department to license its servicing software to such entity and the Company began earning remote hosted servicing revenue from this new customer during the second quarter of 2024.

The amount of revenue earned by this new customer will depend on the number of servicing borrowers allocated by the Department to this servicer.

Providing outsourced services including contact center, processing, and administrative services

NDS provides business process outsourcing primarily specializing in contact center management.

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Processing services include application processing and verification, payment processing, credit dispute, and account management services.

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

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

As of December 31, 2024, NDS provided business process outsourcing to 37 customers.

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

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

The Company has segmented its private

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

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

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Many student loan lenders and servicers utilize the Company's software either directly or indirectly.

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

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

Education Technology Services and Payments

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

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

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

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

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

FACTS solutions include the following products:

• Financial Management

• School Management

• Learning Management

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

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

• Education Technology

• Education Services

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

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

FACTS generated $308 million and $298 million in revenue for the years ended December 31, 2024 and 2023, respectively.

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

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

• Tuition Management

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

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

Education Technology - The Company’s education technology solutions include the following products:

• Student Information System (SIS)

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• School Site

• Learning Management

• Teacher Observance & Assessment

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

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

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

• Learning Management System

• Content Development

• Professional Development and Coaching

• School Evaluation & Observation

• Instructional Services

• ESSA Consulting

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

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

The Company’s teacher observation and assessment solution helps schools and districts retain and support their teachers with evidence-based growth opportunities, using video and AI to measure ongoing improvement.

The Company earns a subscription fee for this service.

Education Services - The Company’s education services include the following products:

• Instructional Services

• Federal Funds

• Professional Development

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

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

These services provide continuous advanced learning and professional development while helping private schools identify and attain equitable participation in Title I and Title II federal education programs under the Every Student Succeeds Act (ESSA).

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

spike in schools asking for services in these areas.

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

Federal pandemic-related funds under the Emergency Assistance to Non-Public Schools (EANS) program provided funding for these learning management solutions.

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

Nelnet Campus Commerce

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• Integrated Commerce

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

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

Nelnet Campus Commerce generated $141 million and $129 million in revenue for the years ended December 31, 2024 and 2023, respectively.

Tuition Management – Higher education institutions contract with the Company to administer tuition payment plans that allow the student and family to make recurring payments on either a semester or annual basis.

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

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

Tuition Management – Higher education institutions contract with the Company to administer tuition payment plans that allow students to make recurring payments on either a semester or annual basis.

The Company earns tuition payment plan services revenue by collecting a fee from the student or school to administer the plan.

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

Nelnet Billing & Payments allows schools to send automated bills for tuition and fees, housing, parking, and other campus service offerings and allows students to safely make online payments from anywhere.

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Nelnet Payment Services

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

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

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

Services rendered by Nelnet Payment Services are Payment Card Industry (PCI) compliant.

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

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

Nelnet Payment Services earns payment processing revenues through fees for credit card and ACH transactions.

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

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

Nelnet International offers the following products:

• Integrated Commerce

• Financial Management

• School Management

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

Nelnet International products include services and technology that align with the similarly named product categories for FACTS and Nelnet Campus Commerce, including an integrated commerce payment platform, financial management and tuition payment plan services, and a school management platform.

Nelnet International provides its services and technology to approximately 675 schools in 69 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region.

Nelnet International generated $9 million and $8 million in revenue for the years ended December 31, 2024 and 2023, respectively.

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

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

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

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

Financial Management – Tuition payment plans and other financial management services are provided to customers internationally using the FACTS brand and service platforms.

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

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

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

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

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

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

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Nelnet Financial Services

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

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

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

The Company formally established the NFS division in 2023 intended to focus on the Company’s key objective to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment by expanding its private education, consumer, and other loan portfolios while sustaining credit quality and maintaining cost-efficient funding sources to support the loan portfolios.

NFS includes the reportable operating segments of AGM and Nelnet Bank.

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

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

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

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

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

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

Asset Generation and Management

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

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

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

Origination and acquisition

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

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

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

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

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

During 2024, the Company purchased $599.5 million of consumer and other non-FFELP loans.

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

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

The Higher Education Act regulates every aspect of the federally insured student loan program.

Failure to service a student loan properly could jeopardize the guarantee on federal student loans.

In the case of death, disability, or bankruptcy of the borrower, the guarantee covers 100% of the loan's principal and accrued interest.

FFELP loans are guaranteed by state agencies or nonprofit companies designated as guarantors, with the Department providing reinsurance to the guarantor.

Guarantors are responsible for performing certain functions necessary to ensure the program's soundness and accountability.

Generally, the guarantor is responsible for ensuring that loans are serviced in compliance with the requirements of the Higher Education Act.

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

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

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

Interest rate risk management

Since the Company generates a significant portion of its earnings from its loan spread, the interest rate sensitivity of the Company's balance sheet is very important to its operations.

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

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

Beneficial interest in loan securitizations

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

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

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

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

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

The growth of Nelnet Bank is primarily driven by its ability to achieve loan growth by originating and purchasing loan portfolios while sustaining credit quality and maintaining cost-efficient funding sources to support the loan originations and portfolio purchases.

Nelnet Bank serves the private education and unsecured consumer loan markets.

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

Private education loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, federal loans, and borrowers’ personal resources.

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

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As of December 31, 2024, Nelnet Bank’s loan portfolio was $644.6 million.

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

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

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

Retail and other savings deposits include deposits from Educational 529 College Savings plans, Health Savings plans, retirement savings plans, Short Term Federal Investment Trust (STFIT), commercial and consumer savings, and Federal Deposit Insurance Corporation (FDIC) sweep deposits.

The intercompany deposits are deposits from Nelnet, Inc.

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

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

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

The Bank accepts, through various partners, non-brokered large omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors.

These omnibus accounts include the Educational 529 College Savings and Health Savings plans, STFIT, and FDIC sweep deposits.

A network of brokers provides brokered CDs as a stable source of funding.

Retail, commercial, and institutional deposits are sourced through a direct banking platform and a deposit marketplace and provide diversified funding sources.

As of December 31, 2024, Nelnet Bank had $1.25 billion of deposits, of which $68.5 million were intercompany deposits.

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

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

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

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

As new FFELP loans are not being originated, WRCM is beginning to transition away from FFELP asset-backed securities to additional asset-backed asset classes (consumer and collateralized loan obligations).

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

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

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Nelnet Insurance Services

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

and its subsidiaries.

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

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

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

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

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

The Nelnet Insurance Services operating segment leverages the Company’s captive insurance companies’ capital through multiple reinsurance treaties with third parties on property and casualty policies.

As of December 31, 2024, the Company had 6 treaties that reinsure risk on approximately 50 different insurance programs issued by 5 carriers.

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

For the year ended December 31, 2024, the Company recognized $62.9 million in reinsurance premiums (net of $63.0 million retroceded to a third party).

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

Conversely, if the total amount of expenses and eventual claim losses exceed premiums, the Company would recognize an underwriting loss.

Investments - real estate

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

As of December 31, 2024, the Company had approximately 45 real estate investments across the United States with a carrying value of $131.7 million.

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

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

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

Included in NFS’s debt securities portfolio are $97.5 million (par value) of the Company’s own asset-backed securities (bonds and notes payable) that were issued to finance student loans that the Company repurchased in the secondary market.

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

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As of December 31, 2024, the par value and fair value of the Company’s debt securities held in the NFS division, including its own asset backed securities, was $546.4 million and $505.7 million, respectively.

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

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

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

As of December 31, 2024, no amounts of debt were outstanding on any repurchase agreements.

Risk management

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

Such guarantees are further discussed in Risk Factors - “If we fail to comply with the requirements to maintain the federal guarantees for the FFELP loans we service for us and for third parties, we may lose our guarantees or incur penalties.”

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

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

In addition, AGM’s partial ownership in loan securitizations (beneficial interests) grants AGM the right to receive the corresponding percentage of cash flows generated by the securitization.

The cash flows generated from the securitizations are highly subject to credit risk (default).

For additional information on the Company’s credit risk, see “Risk Factors - Loan Portfolio - Credit risk - loans and Credit risk - beneficial interest in loan securitizations.”

Interest rate risk

Since the Company generates a significant portion of its earnings from its loan spread, the interest rate sensitivity of the Company's balance sheet is very important to its operations.

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

The Company is exposed to market risk through the management of the Company’s loan and investment portfolios.

These activities are closely tied to those related to the management of the Company’s funding and debt.

Interest rate risk is further outlined in the MD&A - “Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Spread Analysis” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”

Corporate and Other Activities

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

• The operating results of 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

• The operating results of solar tax equity investments made by the Company and administrative and management services provided by the Company on solar tax equity investments made by third parties

• The operating results of Nelnet Renewable Energy, the Company’s solar engineering, procurement, and construction business

• 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)

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

Nelnet Renewable Energy

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

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

Solar Tax Equity Investments

As of December 31, 2024, the Company has invested a total of $314.8 million and its third-party investors have invested $271.4 million in tax equity investments that remain outstanding in renewable energy solar partnerships that support the development and operations of solar projects throughout the country.

These investments provide a federal income tax credit under the Internal Revenue Code, currently equaling 30% to 70% of the eligible project cost, with the tax credit available when the project is placed in service.

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

Treasury based on the credits earned.

In addition to the credits, the Company structures the investments to receive quarterly distributions of cash from the operating earnings of the solar project for a period of at least five years (so the tax credits are not recaptured).

After that period, the contractual agreements typically provide for the Company’s interest in the projects to be purchased in an exit at the fair market value of the discounted forecasted future cash flows allocable to the Company.

Given the expected timing of cash flows and experience the Company has in underwriting these assets, the Company considers these investments a good use of its capital when looking at its capital deployment initiatives.

After that period, the contractual agreements typically provide for the Company’s entire interest in the projects to be sold at the fair market value of the discounted forecasted future cash flows allocable to the Company.

Given the net amount of capital funded to solar tax equity investments at any point in time is not significant and experience the Company has in underwriting these assets, the Company considers these investments a good use of its capital when looking at its capital deployment initiatives.

In addition to making these tax equity investments for the Company’s own portfolio, the Company is syndicating these investments with co-investors with similar tax attributes.

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

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

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

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

The Company earns upfront management fees and performance fees from co-investors which are typically five to six percent of the capital invested, in the aggregate.

The management fee is recognized as income over the duration of the investment (typically five years).

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

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

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

The Company invested a total of $77.0 million during 2024 on behalf of its co-investors.

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

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

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

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

As part of this strategy, on July 1, 2022, the Company acquired 80% of the ownership interest of two subsidiaries of GRNE Solutions, LLC named GRNE-Nelnet, LLC (GRNE) and ENRG-Nelnet, LLC (ENRG) (collectively referred to as “GRNE Solar”).

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

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

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

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

In addition, during 2024, third-party syndication partners invested directly in an additional $82.3 million in tax equity solar investments which are not included in the Company’s consolidated financial statements;

however, these investments are managed by the Company and the Company receives management and performance fees on such activity.

In 2024, the Company also began to provide consulting services to developers of solar projects and earns a contingent fee at time of monetization of the tax credit by the developer.

The fee is based on the increase in economic benefits realized by the project.

In 2024, the Company recognized $6.1 million for such consulting services.

Nelnet Renewable Energy (NRE)

The Company has a solar construction company (Nelnet Renewable Energy, formerly GRNE Solar) that provides full-service engineering, procurement, and construction (EPC) services to entities including utilities, governmental bodies, commercial companies, educational institutions, multi-unit landlords, and healthcare groups on a fixed fee contract basis.

In April 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and consequently discontinued its residential solar operations.

Residential solar construction revenue was $3.3 million and $10.7 million for the year ended December 31, 2024 and 2023, respectively.

The Company entered the EPC business with its July 2022 acquisition of GRNE Solar.

Since the acquisition, NRE has incurred low and, in some cases, negative margins on certain legacy projects.

During 2023 and 2024, NRE recognized a net loss before taxes of $54.7 million and $36.0 million, respectively.

These losses in 2023 and 2024 include impairment charges on goodwill, intangible assets, and other assets of $20.6 million and $1.9 million, respectively.

The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024.

As new projects are completed and the legacy contracts are substantially complete, the Company believes operating results will improve from prior historical periods.

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

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

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

As of December 31, 2024, ALLO is actively serving customers in 28 communities where fiber network construction is complete and is currently serving customers and building

their network in 19 additional communities.

The total households in these communities is approximately 490,000.

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

As of December 31, 2024, ALLO served approximately 135,000 residential customers and had approximately 61,000 business lines, increases from approximately 109,000 and approximately 49,000 as of December 31, 2023, respectively.

For the year ended December 31, 2024, ALLO recognized approximately $190 million in revenue.

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

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

As of December 31, 2024, ALLO had approximately $1.14 billion of debt outstanding, an increase from approximately $715 million as of December 31, 2023.

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

Nelnet continues to work with ALLO and SDC, a third-party global digital infrastructure investor that holds a significant investment in ALLO, to explore various funding and capital options to support ALLO’s growth.

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

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

As of December 31, 2024, the carrying amount of the Company’s voting membership interests was zero.

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

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

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

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

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

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

As of December 31, 2024, the carrying amount of the Company’s preferred membership interests of ALLO held by the Company was $225.6 million.

Venture capital investments

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

As of December 31, 2023, the Company has investments in 91 entities and funds and the carrying value of such investments was $285.5 million.

As of December 31, 2024, the Company has investments in approximately 75 entities and approximately 35 funds and the total carrying value of such investments was $289.1 million.

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

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

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

Hudl is a leading sports performance analysis company, and its software provides more than 300,000 teams across more than 40 sports and in 180 countries the insights to be more competitive.

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

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

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

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

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government agency that administers and enforces economic and trade sanctions

• Privacy regulations that enhance privacy rights and consumer protection in various states

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

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

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

The Company’s USDS contract with the Department that became effective in April 2023 requires the Company to comply with the Federal Acquisition Regulations, which regulates the procurement, award, administration, and performance of U.S.

government contracts.

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

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

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

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

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

The Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to remedy violations of state law.

The Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to remedy violations of state laws.

Most states also have statutes that prohibit unfair and deceptive practices.

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

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

government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Federal Reserve

Banks, the FDIC, and the CFPB, and to make recommendations to promote uniformity in the supervision of financial institutions.

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

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

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

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

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Education Technology Services and Payments

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

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

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

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

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

educational institution may properly disclose it.

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

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

Certain higher education institution clients may also qualify as financial institutions under the Gramm-Leach-Bliley Act (GLBA) and may be subject to its Safeguards Rule.

This rule requires such institutions to develop, implement, and maintain a comprehensive information security program to protect the privacy and security of customer financial information.

The Company’s compliance with GLBA requirements may be necessary where applicable agreements or regulations impose obligations related to safeguarding this information.

The Company may also be subject to similar state laws and regulations that restrict higher education institutions from disclosing certain personally identifiable student information.

Some of the Company's K-12 and higher education institution clients choose to charge convenience fees to students, parents, or other payers who make online payments using a credit or debit card.

Laws and regulations related to such fees vary from state to state and certain states have laws that to varying degrees prohibit the imposition of a surcharge on a cardholder who elects to use a credit or debit card in lieu of cash, check, or other means.

The Company provides services to K-12 institutions that involve the collection and processing of personal information about individuals under the age of 18.

Legislative focus on protecting children’s data, at varying ages, has increased at both the state and federal level.

This may subject the Company to compliance obligations under federal laws, such as the Children's Online Privacy Protection Act (COPPA), and various state privacy laws.

These laws impose strict requirements related to the collection, use, and disclosure of personal information from children at varying ages under the age of 18.

Non-compliance with COPPA and other state children’s privacy laws could result in significant fines and reputational harm.

Additionally, the Company offers services to some educational institution clients with a global presence, including in the European Union (EU).

The EU’s General Data Protection Regulation (GDPR), and international laws modeled after the GDPR, impose obligations on organizations that process personal data of individuals in those countries, regardless of whether such organizations have a physical presence in those countries.

The extraterritorial application of GDPR and similar laws could impose compliance costs or liability in the event of non-compliance.

The Company's contracts with higher education institution clients also require the Company to comply with regulations promulgated by the Department regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV of the HEA.

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

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

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

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

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

According to the CFPB, this report built on other work by the CFPB including reports on financial products and services offered by colleges or in college settings and recent supervisory examinations of institutional student lenders.

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

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

Nelnet Financial Services

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

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

Nelnet Bank is a Utah industrial bank that is regulated by the FDIC and the Utah Department of Financial Institutions (UDFI) and is subject to an extensive regulatory framework designed to ensure its safety and soundness, protect depositors, and promote compliance with applicable laws and regulations.

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

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

(the parent) is not a bank holding company under the Bank Holding Company Act and therefore is not subject to the federal regulations applicable to bank holding companies.

Some of the more significant laws and regulations applicable to Nelnet Bank include:

• Regulation W and Federal Reserve Act Sections 23A and 23B, which prevents losses to a bank resulting from affiliate engagement and transfer of a bank’s federal deposit insurance safety net to an affiliate

• Regulation W and Federal Reserve Act Sections 23A and 23B, which is designed to prevent losses to a bank resulting from affiliate engagement and transfer of a bank’s federal deposit insurance safety net to an affiliate

• Community Reinvestment Act, which encourages depository institutions to help meet the credit needs of the communities in which they operate

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• Right to Financial Privacy Act, which establishes specific procedures that government authorities must follow when requesting a customer’s financial records from a bank or other financial institution

• BSA/AML, which specifies the Bank’s commitment to compliance with the Bank Secrecy Act, Anti-Money Laundering (BSA/AML) laws and regulations, including the USA PATRIOT Act, that were enacted to require financial institutions in the United States to assist U.S.

• BSA/AML, which requires the Bank’s compliance with the Bank Secrecy Act, Anti-Money Laundering (BSA/AML) laws and regulations, including the USA PATRIOT Act, which were enacted to require financial institutions in the United States to assist U.S.

government agencies with detecting and preventing money laundering and terrorist financing

Regulation D, the Truth in Savings Act (reserve requirements), and Regulation DD (disclosure of deposit terms to customers) will be applicable to Nelnet Bank once consumer deposit products are launched, which is tentatively scheduled for the third quarter of 2024.

• Regulation D, which establishes requirements for depository institutions regarding reserve requirements

• Regulation DD, which requires depository institutions to provide clear and accurate disclosures about the terms, fees, and interest rates of deposit accounts to help consumers make informed decisions and compare financial products effectively

Nelnet Bank's deposits are insured by the FDIC up to the applicable legal limits under the Deposit Insurance Fund (DIF).

As an FDIC-insured institution, the Bank is subject to periodic examinations, reporting requirements, and supervision under the Federal Deposit Insurance Act (FDIA) and related rules.

Key areas of FDIC oversight include:

• Capital Requirements – The Bank must maintain minimum capital ratios as prescribed by the Community Bank Leverage Ratio (CBLR) framework.

See the MD&A - “Liquidity and Capital Resources - Sources and Needs of Liquidity - Nelnet Bank - Regulatory Capital.”

• Risk Management and Safety and Soundness Standards – The Bank must comply with risk management guidelines covering credit risk, liquidity risk, operational risk, and compliance with Interagency Guidelines Establishing Standards for Safety and Soundness under 12 CFR Part 364.

• Deposit Insurance Assessments – The FDIC assesses premiums based on the Bank’s risk classification and total assets.

Higher-risk institutions may be subject to increased assessment rates under the FDIC’s risk-based assessment system.

• Restrictions on Brokered Deposits – The Bank is subject to FDIC restrictions regarding brokered deposits if it falls below well-capitalized status under the FDIC's Prompt Corrective Action (PCA) framework.

• Stress Testing - The Bank is not currently subject to stress testing requirements under the Dodd-Frank Act.

However, under regulatory guidance, the Bank still conducts capital liquidity and interest rate risk stress tests which are shared with the Asset and Liability Management Committee and the Board of Directors.

These results are submitted to the Bank’s prudential regulators at their request.

As an industrial bank chartered in Utah, the Bank is subject to the supervision and regulatory authority of the UDFI, which enforces applicable state banking laws under the Utah Financial Institutions Act.

Key areas of UDFI oversight include:

• Industrial Bank Chartering and Permissible Activities – Under Utah Code Title 7, Chapter 8 ("Utah Industrial Bank Act"), industrial banks may engage in lending, deposit-taking, and other financial services, but are prohibited from offering demand deposits if they do not maintain Federal Reserve membership.

• Capital and Surplus Requirements – Utah law requires industrial banks to maintain minimum capital levels as determined by the UDFI, with additional capital adequacy standards imposed based on asset size and risk exposure.

• State Examination and Reporting – The UDFI conducts regular safety and soundness examinations, typically on a biennial basis, and requires periodic financial reporting in addition to FDIC filings.

• Holding Company and Ownership Structure – Unlike traditional commercial banks, industrial banks in Utah can be owned by non-financial companies.

However, controlling entities are subject to oversight and financial condition reporting requirements to ensure continued safety and soundness.

• Fiduciary and Lending Regulations – The Bank must comply with Utah’s lending limits, fiduciary requirements, and corporate governance rules, including loan-to-one-borrower limits and fair lending laws.

As a bank with assets now exceeding $1 billion, beginning in 2025, the Bank is subject to enhanced regulatory obligations under Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), including management’s attestation to the effectiveness of internal controls over financial reporting.

In addition, the internal controls are tested by an independent public accountant and the independent public accountant issues a report on the effectiveness of the institution’s internal control structure over financial reporting.

Our reinsurance business is structured as a state-chartered captive insurance company, authorized under Utah Code Title 31A, Chapter 37 ("Captive Insurance Companies Act") to provide reinsurance coverage and accept third-party reinsurance premiums.

As a captive insurer domiciled in Utah, we are regulated by the Utah Insurance Department (UID).

Our business operations are subject to the Utah Captive Insurance Companies Act and applicable regulations promulgated by the UID, which provides regulatory oversight in the following areas:

• Licensing and Approval – The Company operates under a certificate of authority issued by the UID, which grants approval for reinsurance transactions, business plans, and risk management frameworks.

• Minimum Capital and Surplus Requirements – Utah law requires captive reinsurance companies to maintain minimum capital and surplus, which varies based on business volume, risk profile, and regulatory classification.

The Company must also comply with any additional financial security requirements set by the UID.

• Annual Reporting and Audits – The Company must submit annual financial reports, including independently audited financial statements, actuarial opinions, and regulatory compliance filings to the UID.

• Examinations and Compliance Reviews – The UID conducts periodic financial and operational examinations, generally every three to five years, to ensure compliance with statutory solvency, risk management, and corporate governance standards.

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

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

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

under certain circumstances.

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

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

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

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

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

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

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

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

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

For example, several states where the Company does business have adopted comprehensive data privacy laws.

The federal government may also pass data privacy or data protection legislation.

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

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

The Company’s renewable energy business is subject to and depends upon complex federal, state, and other laws and regulations, including the Inflation Reduction Act and related guidance from the U.S.

Treasury and Internal Revenue Service, which regulate and, in some instances, incentivize the production of renewable energy.

Intellectual Property

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

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

The Company owns a significant number of trademarks and service marks (“Marks”) to identify its various products and services.

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

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Headcount data

Total associate headcount by reportable segment as of December 31, 2023, follows:

Total associate headcount as of December 31, 2024, follows:

Number Percent of total

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NBS 2,242 33.3

Nelnet Bank 56 0.7

Corporate and other 664 9.9

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Employee recruitment, engagement, and retention

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

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

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

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

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

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

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

In 2023, the Company conducted an associate culture survey, the results of which were an overall engagement score of 74 out of 100, which was slightly better than the survey provider’s industry benchmark.

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

The Company will conduct its next associate culture survey in the second quarter of 2025.

For 2024, associate voluntary turnover was 23%, a decrease from 24% in 2023 and 25% in 2022.

The average associate has nearly eight years of service.

Diversity and inclusion

The Company embraces diversity among its associates, including their unique backgrounds, experiences, and talents, and the Company strives to cultivate a culture and vision that supports and enhances its ability to recruit, develop, and retain diverse talent at every level.

The Company demonstrates its commitment to diversity, equity, and inclusion at the highest levels of the Company.

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

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

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

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

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

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

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

To further Nelnet’s objective of creating an inspiring work environment and furthering associate development, the Company developed and launched the Better Together Council (the “Council”), sponsored by the Chief Executive Officer and the Executive Director of People Services.

This Council of 25 members represents locations, functions, and business segments across the entire Company.

Its top priorities include:

• Implementing a comprehensive diversity and inclusion learning and development plan to build awareness and drive inclusive behaviors;

• Developing the Company’s diversity pipeline through recruiting, hiring, developing, mentoring, and retaining diverse top talent;

• Promoting a work environment that enables associates to feel safe to authentically express their ideas and perspectives and feel they belong.

The Council supports multiple highly active associate resource groups for racial and ethnic minorities, women, people with disabilities, and associates who identify as LGBTQIA+, where associates can go for community, support, and collaboration.

The Council has partnered with Nelnet University, the Company’s learning and development program for associates, to launch a robust mentoring program.

The program is available to all associates, prioritizing mentorships for associates from underrepresented racial and ethnic groups.

Associates participating in this program are partnered with tenured Nelnet leaders for guidance, support, and coaching.

The Council has also provided training sessions for all associates on cultural competence and unconscious bias.

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

The average associate has nearly eight years of tenure.

Talent, development, and training

The Company’s talent strategy is focused on attracting the best talent from a diverse range of sources, recognizing and rewarding associates for their performance, and continually developing, engaging, and retaining associates.

The Company’s talent strategy is focused on attracting the best talent from a broad range of sources, recognizing and rewarding associates for their performance, and continually developing, engaging, and retaining associates.

The Company is committed to the continued development of its people.

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

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

Nelnet’s Associate Experience team offers programs like resource groups, mentoring, and educational topics that support our core value of creating a great workplace.

These initiatives foster a culturally competent organization where innovation, diversity of thought, and teamwork thrive, driving our success.

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

The Company emphasizes individual development planning as part of its annual goal setting process, and offers mentoring programs, along with change management and project management upskilling opportunities.

The Company has leadership development resources for all leaders across the organization and continues to build tools for leaders to develop their teams on the job and in roles to create new opportunities to learn and grow.

The Company emphasizes individual development planning as part of its annual goal setting process.

Training is provided in a number of formats to accommodate the learner’s style, location, and technological knowledge and access, including instructor-led courses and hundreds of online courses in the Company’s learning management system.

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

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

Competitive pay, benefits, and wellness

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

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

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

The holistic wellness program focuses on four pillars:

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

Culture, values, and ethics

The Company believes acting ethically and responsibly is the right thing to do, and embraces core values of open, honest communication in work environments.

The Company also believes it must do its part to improve the world for current and future generations;

and as part of this philosophy, the Company contributes time, talent, and resources to strengthen the communities in which the Company does business and promotes the transition to a clean-energy economy.

The Company’s associates participate in many initiatives focused on supporting and the sustainability of their communities, both financially and with their time.

Ethics are deeply embedded in the Company’s values and business processes.

The Company has a Code of Ethics and Conduct that includes the Company’s core values and guiding principles by which every associate is expected to abide and honor.

The Company regularly reinforces its commitment to ethics and integrity in associate communications, in its everyday actions, and in processes and controls.

The Company believes acting ethically and responsibly is the right thing to do, and it embraces core values of open, honest communication in work environments.

The Company is also committed to strengthen the communities in which the Company does business;

and as part of this philosophy, encourages and supports its associates to contribute time, talent, and resources to support causes and organizations within their local area.

The Company has a Code of Ethics and Conduct that includes the Company’s core values and guiding principles by which every associate is expected to abide by and honor.

As part of the Company’s ongoing efforts to ensure its associates conduct business with the highest levels of ethics and integrity, the Company has compliance training programs.

The Company also maintains an Ask Ethics email through which associates can raise concerns they may have about business behavior they do not feel comfortable discussing personally with managers or human resources personnel.

The Company also maintains an Ask Ethics email through which associates can raise concerns they may have about business behavior.

In addition, the Company maintains a separate anonymous portal for any associate concerns about the Company's financial reporting, internal controls, and related matters.

Available Information

The Company's internet website address is www.nelnet.com, and the Company's investor relations website address is www.nelnetinvestors.com.

The Company's internet website address is www.nelnetinc.com and the Company's investor relations website address is www.nelnetinvestors.com.

Copies of the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports are available on the Company's investor relations website free of charge as soon as reasonably practicable after such reports are filed with or furnished to the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business