What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-08 · 346 added, 235 removed, 686 unchanged (46% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three months ended March 31, 2025 and 2024.

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and six months ended June 30, 2025 and 2024.

All dollars are in thousands, except per share amounts, unless otherwise noted.)

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These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements.

These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” section of the 2024 Annual Report and include such risks and uncertainties as:

These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” sections of the 2024 Annual Report and this report and include such risks and uncertainties as:

• risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans;

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• risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration;

• risks related to the expected benefits to the Company from its continuing investment in ALLO, and risks related to solar tax equity investments, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities;

• risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, solar construction, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;

• risks related to the Company's solar tax equity investments and solar construction business, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits;

• risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;

• risks and uncertainties associated with climate change;

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In the Nelnet Financial Services division, which includes Nelnet Bank, the Company is also actively expanding its private education, consumer, and other loan portfolios.

Reclassification and Immaterial Error Corrections

The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations gives effect to the immaterial error corrections made to the previously reported consolidated financial statements for the three months ended March 31, 2024.

For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments

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A reconciliation of the Company's GAAP net income to Non-GAAP net income excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, are provided below.

Three months ended March 31,

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

2025 2024 2025 2024

GAAP net income attributable to Nelnet, Inc.

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GAAP net income attributable to Nelnet, Inc.

$ 4.97 1.23 7.24 3.22

Realized and unrealized derivative market value adjustments (a) 0.11 (0.04) 0.28 (0.26)

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The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met.

Management has structured all of the Company’s

derivative transactions with the intent that each is economically effective;

however, the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements.

As a result, the change in fair value of derivative instruments is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item.

Management has structured all of the Company’s derivative transactions with the intent that each is economically effective;

however, the majority of the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements.

As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item.

Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will equal zero over the life of the contract.

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Recent Development - Partial Redemption of ALLO Investment

The Company has both a voting and preferred membership interest investment in ALLO.

The Company's 45% voting membership interest in ALLO is accounted for under the Hypothetical Liquidation at Book Value (HLBV) method of accounting and as of March 31, 2025 has a carrying value of $0.

As of March 31, 2025, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $225.6 million and $8.4 million, respectively.

The Company earns a preferred return of 13.50% and 20.00% on $169.1 million and $56.5 million, respectively, of the Company's preferred membership interests of ALLO.

In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests.

The Company expects ALLO to redeem all of the Company's outstanding preferred membership interests, including the accrued preferred return earned through the closing date, and a portion of the Company's voting membership interest.

The transaction is expected to close in late May 2025.

The Company expects to receive cash proceeds of approximately $410.0 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175.0 million.

As a result of this transaction, Nelnet's ownership of ALLO will decrease from 45% to approximately 26%.

Nelnet will continue to account for its remaining voting membership interest of ALLO under the HLBV method of accounting, with the carrying value of such interest remaining at $0 as of the closing date of the transaction.

Nelnet had both voting and preferred membership interest investments in ALLO.

On June 4, 2025, Nelnet redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025.

The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction.

See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction.

Operating Segments

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

Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions, certain investment

activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), and solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services.

Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions, certain investment activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services.

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

The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three months ended March 31, 2025 and 2024.

See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.

Three months ended March 31, Certain Items Impacting Comparability

Three months ended June 30, Six months ended June 30, Certain Items Impacting Comparability

(All dollar amounts below are pre-tax)

2025 2024 2025 2024

NDS $ 19,959 2,243 38,471 18,234 • An increase in before tax operating margin due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures.

This was partially offset by a decrease in government loan servicing revenue due to lower revenue earned on a per borrower blended basis under the new government servicing contract (which the Company began recognizing revenue under on April 1, 2024).

NBS 47,462 47,635 • ETSP revenue increased to $147.3 million for the three months ended March 31, 2025 compared with $143.5 million for the same period in 2024.

This was partially offset for the six months ended June 30, 2025 compared with the same period in 2024 due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract.

NBS 23,542 25,599 71,005 73,235 • ETSP revenue increased to $118.2 million and $265.5 million for the three and six months ended June 30, 2025 compared with $116.9 million and $260.4 million for the same periods in 2024.

However, NBS experienced a decrease in before tax operating margin due to a decrease in FACTS education services revenue and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies.

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Nelnet Financial Services division:

AGM 29,834 33,743 • The recognition of $13.0 million and $6.5 million in provision for loan losses for the three months ended March 31, 2025 and 2024, respectively.

Increase was due to an increase of loan acquisitions in the first quarter of 2025.

• A decrease of $9.1 million in investment interest income for the three months ended March 31, 2025 compared with the same period in 2024, due to a decrease of interest earned on restricted cash driven by lower balances and a decrease in interest rates and a decrease of interest income from beneficial interest investments.

• A net loss of $3.8 million and net income of $5.7 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.

• An increase in net loan interest income of $16.6 million for the three months ended March 31, 2025 compared with the same period in 2024, due to an increase in loan spread driven by an increase in consumer loans funded with operating cash (versus funded with debt), partially offset by a decrease in the average balance of loans.

Nelnet Bank 1,952 1,147 • An increase of $4.8 million in net interest income for the three months ended March 31, 2025 compared with the same period in 2024 due to an increase in the average balance of loans and investments and an increase in net interest margin.

• A net loss of $2.5 million and net income of $2.3 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.

• The recognition of $2.3 million and $4.4 million of provision for loan losses for the three months ended March 31, 2025 and 2024, respectively.

NFS other operating segments 10,060 13,762 • Net interest income earned on investment debt securities (primarily student loan and other asset-backed securities) was $6.8 million for the three months ended March 31, 2025 compared with $12.2 million for the same period in 2024.

Unallocated corporate costs (9,988) (10,045)

AGM 27,393 24,310 57,226 58,055 • The recognition of $11.1 million in provision for loan losses and $4.2 million in negative provision for loan losses for the three months ended June 30, 2025 and 2024, respectively, and $24.1 million and $2.2 million in provision for loan losses for the six months ended June 30, 2025 and 2024, respectively.

Increase was due to an increase of loan acquisitions in the first half of 2025.

• A decrease of $1.1 million and $10.1 million in investment interest income for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to a decrease of interest earned on restricted cash driven by lower balances and a decrease in interest rates, which, for the three month period, was partially offset by an increase of interest income from beneficial interest investments.

• A net loss of $2.2 million compared to net income of $0.9 million, and a net loss of $6.0 million compared to net income of $6.6 million, for the three and six months ended June 30, 2025 and 2024, respectively, related to changes in the fair values of derivative instruments that do not qualify for hedge accounting.

• An increase in net loan interest income of $10.1 million and $26.6 million for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in loan spread driven by an increase in loans funded with operating cash (versus funded with debt), partially offset by a decrease in the average balance of loans.

Nelnet Bank (465) (3,718) 1,487 (2,571) • An increase of $5.6 million and $10.4 million in net interest income for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in the average balance of loans and investments and an increase in net interest margin.

• A net loss of $1.7 million compared to net income of $0.6 million, and a net loss of $4.2 million compared to net income of $2.9 million, for the three and six months ended June 30, 2025 and 2024, respectively, related to changes in the fair values of derivative instruments that do not qualify for hedge accounting.

NFS other operating segments 10,091 16,525 20,152 30,286 • Net interest income earned on investment debt securities (primarily student loan and other asset-backed securities) was $6.4 million and $13.2 million for the three and six months ended June 30, 2025, respectively, compared with $12.2 million and $24.4 million for the same periods in 2024.

This decrease was due to a decrease in the average balance of investments outstanding and a decrease in interest rates.

Unallocated corporate costs (11,923) (9,056) (21,911) (19,101) • During the second quarter 2025, the Company recognized a non-cash impairment charge of $3.3 million related to operating lease assets as a result of the Company consolidating office space.

Solar tax equity investments (1,892) (2,580) (686) (266) • Includes operating results of the Company's tax equity investments in renewable energy solar partnerships.

The Company accounts for these investments under the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment.

In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years).

These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments made by third parties.

Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings.

These results include results attributable to third-party noncontrolling interest investors.

See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

Nelnet Renewable Energy - solar construction (6,575) (4,037) • Since the acquisition of GRNE Solar in 2022, the Company has incurred low and, in some cases, negative margins on certain legacy solar construction projects.

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

Uncertain economic conditions have impacted the costs to complete existing construction contracts and new construction projects being initiated which may continue to negatively impact margins and revenue, respectively, in future periods.

ALLO investment 8,416 (8,593) • The recognition of no loss in the three months ended March 31, 2025 compared with a loss of $10.7 million for the same period in 2024 related to the Company's ALLO voting membership interest investment.

Nelnet Renewable Energy - solar construction (17,601) (4,752) (24,175) (8,788) • Includes the operating results of Nelnet Renewable Energy (NRE), the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to commercial entities.

Since the acquisition of GRNE Solar in 2022, NRE has incurred low and, in many cases, negative margins on legacy projects.

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

During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts.

In addition, uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue.

See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill.

ALLO investment 185,236 3,940 193,651 (4,653) • The recognition of a $175.0 million gain in the three months ended June 30, 2025 on a partial redemption of the Company's investment in ALLO.

• The recognition of no loss in the six months ended June 30, 2025 compared with a loss of $10.7 million for the same period in 2024 related to the Company's ALLO voting membership interest investment.

The loss recognized in the first quarter of 2024 reduced the Company's carrying value of its voting membership interest to $0.

Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO.

• The recognition of income of $8.4 million on the Company's preferred membership interests in ALLO for the three months ended March 31, 2025 compared with $2.4 million for the same period in 2024.

• The recognition of income of $6.0 million and $14.4 million for the three and six months ended June 30, 2025 compared with $4.2 million and $6.6 million for the same periods in 2024 on the Company's preferred membership interests in ALLO.

All preferred membership interests were redeemed as part of the second quarter 2025 redemption transaction;

thus, no preferred return will be recognized in future periods.

Venture capital investments 1,340 3,417 5,560 2,711 • Includes operating results of the Company's venture capital investments.

During the first quarter of 2025, the Company recognized income, net of losses, of $2.1 million from equity method investees, $1.7 million related to the periodic adjustment of certain fund investments to their respective fair value, and $0.6 million on certain measurement alternative investments as a result of observable price changes.

These investments may create volatility in earnings from recognizing results of certain equity method investees, periodic adjustment of certain fund investments to their respective fair value, and, when applicable, observable price changes on certain measurement alternative investments.

Other corporate activities 1,586 2,500 2,531 5,225

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CONSOLIDATED RESULTS OF OPERATIONS

An analysis of the Company's consolidated operating results for the three months ended March 31, 2025 compared with the same period in 2024 is provided below.

An analysis of the Company's consolidated operating results for the three and six months ended June 30, 2025 compared with the same periods in 2024 is provided below.

The Company operates as distinct reportable operating segments as described above.

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Since the Company monitors and assesses its operations and results based on these segments, the discussion following the consolidated results of operations is presented on a reportable segment basis.

Three months ended

Three months ended Six months ended

June 30, June 30,

2025 2024 2025 2024 Additional information

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Investment interest 40,185 40,737 81,574 92,814 Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations.

Decrease was due to a decrease of interest earned on restricted cash in asset-backed securitizations due to lower balances and a decrease in interest rates and a decrease in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.

Decrease was due to a decrease in interest earned on restricted cash in asset-backed securitizations due to lower balances and a decrease in interest rates.

The decrease was partially offset for the three month period due to an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.

Total interest income 212,289 242,866 420,117 511,667

Interest expense 125,114 194,580 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds.

Interest expense 132,854 176,459 257,968 371,039 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds, partially offset by an increase in interest expense on a larger deposit balance at Nelnet Bank.

Net interest income 79,435 66,407 162,149 140,628

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Increase was primarily due to an increase in overall property volume and new business.

Solar construction revenue 3,995 13,726 Represents revenue earned from Nelnet Renewable Energy (NRE) providing solar construction services, including design and installations of commercial solar systems.

Solar construction revenue 1,259 9,694 5,254 23,420 Represents revenue earned from NRE providing solar EPC services.

Uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue.

See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill.

Other, net 22,976 14,020 46,670 18,103 See table below for the components of "other, net."

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See NFS division - results of operations - AGM operating segment.

Gain on partial redemption of ALLO investment 175,044 — 175,044 — Represents a gain recognized from the partial redemption of the ALLO investment.

See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

Derivative settlements, net 744 1,649 1,489 3,406 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility.

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Cost to provide solar construction services 14,050 8,072 21,878 22,300 Represents direct costs related to NRE providing solar construction services.

Since the acquisition of GRNE Solar in 2022, it has incurred low and, in some cases, negative margins on certain legacy projects.

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

Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects.

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

During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts.

Total cost of services 55,739 48,490 113,247 111,328

Salaries and benefits 138,223 143,875 Decrease was primarily due to staff reductions announced in June 2024 in LSS after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan serving volume to one platform.

Salaries and benefits 134,699 139,634 272,922 283,509 Decrease was primarily due to staff reductions announced in June 2024 in LSS after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan servicing volume to one platform.

These staff reductions took place during the second half of 2024.

Depreciation and amortization 7,624 15,142 16,879 31,911 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions.

Decrease was primarily due to reduction in depreciation due to prior year non-cash impairment charges recognized for lease, buildings, and associated improvements as the Company continues to evaluate the use of office space as it modifies its hybrid work model for associates.

Decrease was primarily due to (i) reduction in depreciation as a result of prior year non-cash impairment charges recognized for lease, buildings, and associated improvements as the Company consolidated office space;

and (ii) certain information technology activities moved to cloud computing and such expenses classified as other expenses.

Reinsurance losses and underwriting expenses 25,662 10,988 47,874 22,305 Represents case reserve, estimated loss reserve, and amortization of acquisition costs, which consist primarily of commissions and brokerage expenses, net of ceded portion, from reinsurance treaties on property and casualty policies.

Increase was primarily due to an increase in overall property volume and new business.

Other expenses 48,226 45,528 Includes expenses such as postage and distribution, consulting and professional fees, occupancy, servicing fees, marketing, travel, communications, and certain information technology-related costs.

Other expenses 51,306 48,608 99,532 94,136 Includes expenses such as postage and distribution, consulting and professional fees, servicing fees, marketing, travel, communications, and certain information technology-related costs.

Total operating expenses 219,291 214,372 437,207 431,861

Impairment expense and provision for beneficial interests 1,591 37 During 2025, the Company recorded an additional allowance of $1.5 million for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations.

Impairment expense and provision for beneficial interests 10,288 7,776 11,879 7,813 Represents the provision expense of recognized non-cash allowances for the Company's beneficial interest in certain loan securitizations due primarily to an increase in cumulative loss expectations and impairment expenses primarily related to operating lease assets.

See note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

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Income before income taxes 237,364 58,428 343,504 152,365

Income tax expense 25,010 23,181 The effective tax rate was 23.25% and 24.00% for the three months ended March 31, 2025 and 2024, respectively.

Income tax expense 59,510 14,753 84,521 37,936 The effective tax rate was 24.70% for the three months ended June 30, 2025 compared with 24.65% for the same period in 2024 and 24.25% for each of the six months ended June 30, 2025 and 2024, respectively.

The Company expects its tax rate will range between 23% and 25% for the remainder of 2025.

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

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

ALLO preferred return $ 8,416 2,409 See Corporate - results of operations.

Investment activity, net (a) $ 8,852 217 14,012 (1,082) See note (b) below for additional information.

ALLO preferred return 5,985 4,160 14,400 6,569 See Corporate - results of operations.

Borrower late fee income 1,642 2,584 3,231 5,718 See NFS division - results of operations - AGM operating segment.

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Administration/sponsor fee income 1,293 1,482 2,598 3,028 See NFS division - results of operations - AGM operating segment.

Gain from solar investments, net (a) 456 2,780 See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loss from ALLO voting membership interest investment (a) — (10,693) See Corporate - results of operations.

Loss from ALLO voting membership interest investment — — — (10,693) See Corporate - results of operations.

(Loss) gain from solar investments, net (1,502) (2,610) (1,046) 170 See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Other 5,202 6,663 10,498 11,360

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Real Estate Venture Capital and Funds Equity / Bonds Total Real Estate Venture Capital and Funds Equity / Bonds Total

Three months ended March 31,

Three months ended June 30,

NFS - AGM $ — 4,213 — 4,213 — (2,700) — (2,700)

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$ 453 5,910 2,489 8,852 (1,832) 981 1,068 217

Six months ended June 30,

NFS - AGM $ — 5,260 — 5,260 — (2,378) — (2,378)

NFS - Nelnet Bank — (127) 435 308 — (189) 1,285 1,096

NFS - Other Operating Segments (1,190) — 3,380 2,190 (3,626) — 524 (3,102)

Corporate — 6,254 — 6,254 — 3,302 — 3,302

$ (1,190) 11,387 3,815 14,012 (3,626) 735 1,809 (1,082)

LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS

Loan Servicing Volumes

2025 March 31,

2025 December 31,

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Summary and Comparison of Operating Results

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

Interest income $ 624 1,258 1,345 3,152 Represents interest income on cash balances primarily collected from borrower remittances that are subsequently disbursed to servicing customers (lenders).

Decrease was due to decrease in average balance of loan repayment funds held in custody for lenders and a decrease in interest rates.

Decrease was due to a decrease in average balance of loan repayment funds held in custody for lenders and a decrease in interest rates.

Loan servicing and systems revenue 120,724 109,052 241,465 236,252 See table below for additional information.

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Depreciation 1,821 5,342 4,474 10,450 Decrease was due to certain information technology activities moved to cloud computing and incurred at the corporate level and such costs are classified as other expenses and intercompany expenses, respectively.

Postage expense 7,575 10,605 Decrease was due to a non-recurring volume based credit earned from the Company's mail provider and recognized in the first quarter of 2025.

The volume increase was a result of additional mailings as borrowers returned to repayment under the government servicing contract and consumer borrower growth.

Postage expense 9,551 9,277 17,127 19,883 Increase during the three months ended June 30, 2025 compared with the same period in 2024 was primarily due to an increase in consumer loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp.

during the fourth quarter of 2024 and first quarter of 2025 and higher postage rates.

The decrease in the six months ended June 30, 2025 compared with the same period in 2024 was due to a non-recurring volume-based credit earned from the Company's mail provider and recognized in the first quarter of 2025.

Other expenses 11,099 11,188 21,931 20,119 The total of other expenses and intercompany expenses decreased due to moving to one platform in 2024 and continued focus on expense reductions.

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The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.

Before tax operating margin increased due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures executed in 2024.

This was partially offset by a decrease in government loan servicing revenue due to lower revenue earned on a per borrower blended basis under the new government servicing contract.

Loan servicing and systems revenue

The following table presents disaggregated revenue by service offering for each reporting period:

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

Government loan servicing $ 85,737 87,014 173,100 192,490 Represents revenue from the Company's servicing contract with the Department.

The Company recognized revenue under the new government servicing USDS contract beginning April 1, 2024.

Decrease was due to lower revenue earned on a per borrower blended basis under the new contract as compared with the government legacy contract and a decrease in the number of borrowers serviced.

The Company expects the number of borrowers serviced under this contract will continue to decrease as volume is transferred from the Company to its remote hosted servicing customer.

Decrease was due to a decrease in the number of borrowers serviced, and for the six months ended June 30, 2025 compared to the same period in 2024 was also due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract.

The Company expects the number of borrowers serviced under this contract will continue to decrease through the fourth quarter of 2025 as volume is transferred from the Company to its remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer.

In addition, volume is expected to decrease beginning in the fourth quarter of 2025 due to borrowers exiting the CARES forbearance period that have not made payments.

These borrowers are expected to be transferred to the Debt Management and Collections System who is responsible for managing and facilitating the collection of defaulted federal student loans.

Private education and consumer loan servicing 22,733 12,959 45,426 25,577 Increase was due to an increase in loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp.

loan portfolios during the fourth quarter of 2024 and first quarter of 2025.

Over time, revenue earned on the Discover Financial Services portfolio will decrease as borrowers pay off their loans.

FFELP loan servicing 2,241 3,245 4,873 6,624 Represents revenue from servicing third-party customers' FFELP portfolios.

2 unchanged sentences

Increase was primarily due to the Company's recognition of revenue beginning in the second quarter of 2024 from a new remote hosted servicing customer awarded a USDS contract.

The Company expects software services revenue to increase in future periods as additional volume is transferred from the Company to this new remote hosted servicing customer.

The Company expects software services revenue to increase through the fourth quarter of 2025 as additional volume is transferred from the Company to this new remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer.

Outsourced services 561 955 1,622 2,141 Represents revenue from providing contact center and back office operational outsourcing services.

4 unchanged sentences

Summary and Comparison of Operating Results

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

8 unchanged sentences

Depreciation and amortization 2,505 2,712 4,936 5,395

Other expenses 9,048 7,558 Increase was due to an increase in technology services and professional fees.

Other expenses 9,904 8,600 18,952 16,158 Increase was due to an increase in professional fees and technology services.

Intersegment expenses, net 6,273 4,811 11,877 9,612 Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.

9 unchanged sentences

The following table presents disaggregated revenue by service offering and before tax operating margin for each reporting period:

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

1 unchanged sentence

Payment processing 37,515 34,326 89,051 82,113 Increase was due to an increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.

Education technology services 55,695 56,021 Decrease was due to a decrease in FACTS education services revenue which resulted from the wind down of economic aid provided to private schools in response to the COVID 19 pandemic.

Education technology services 44,481 47,205 100,177 103,227 Decrease was due to a decrease in FACTS education services revenue which resulted from the winding down of economic aid provided to private schools in response to the COVID-19 pandemic.

Instructional services revenue provided to private schools has been funded by the Emergency Assistance to Non-Public Schools (EANS) program.

The EANS II program funding ended on September 30, 2024.

Although schools still have allocated funds to spend, future instructional services revenue will be adversely impacted compared to recent historical results as a result of the EANS funding ending in 2024.

Revenue earned under the EANS program was $10.1 million for the three months ended March 31, 2024 compared with $1.6 million for the three months ended March 31, 2025.

Although schools still have allocated funds to spend, future instructional services revenue will be adversely impacted compared to recent historical results due to the EANS funding ending in 2024.

Revenue earned under the EANS program was $0.1 million and $1.7 million for the three and six months ended June 30, 2025 compared with $8.8 million and $18.9 million for the same periods in 2024.

This decrease was partially offset by an increase in revenue from the Company’s professional development services, financial aid management, enrollment services, and instructional services from non-EANS funding sources.

Other 175 1,214 202 2,066

Education technology services and payments revenue 118,184 116,909 265,515 260,449

11 unchanged sentences

Loan Portfolio

As of March 31, 2025, the AGM operating segment had a $9.3 billion loan portfolio, consisting primarily of federally insured loans.

For a summary of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of June 30, 2025, the AGM operating segment had an $8.9 billion loan portfolio, consisting primarily of federally insured loans.

For a summary of the Company’s loan portfolio as of June 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Activity

1 unchanged sentence

FFELP Private Consumer and other Total

Three months ended March 31, 2025

Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868

Three months ended June 30, 2025

Balance as of March 31, 2025 $ 8,670,284 208,507 381,215 9,260,006

Loan acquisitions 626 — 142,503 143,129

2 unchanged sentences

Loans sold (241) — — (241)

Loans contributed to Nelnet Bank — (42,173) — (42,173)

Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169

Three months ended June 30, 2024

Balance as of March 31, 2024 $ 10,383,052 261,582 155,308 10,799,942

Three months ended March 31, 2024

Loan acquisitions — — 195,279 195,279

Repayments, claims, capitalized interest, participations, and other, net (325,263) (13,367) (37,352) (375,982)

Loans lost to external parties (574,056) (778) — (574,834)

Loans sold — — (133,788) (133,788)

Balance as of June 30, 2024 $ 9,483,733 247,437 179,447 9,910,617

Six months ended June 30, 2025

Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868

3 unchanged sentences

Loans sold (131,999) — (148) (132,147)

Balance as of March 31, 2024 $ 10,383,052 261,582 155,308 10,799,942

Loans contributed to Nelnet Bank — (42,173) — (42,173)

Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169

Six months ended June 30, 2024

Balance as of December 31, 2023 $ 11,686,207 277,320 85,935 12,049,462

Loan acquisitions — — 276,009 276,009

Repayments, claims, capitalized interest, participations, and other, net (650,216) (27,958) (48,304) (726,478)

Loans lost to external parties (1,352,564) (1,925) — (1,354,489)

Loans sold (199,694) — (134,193) (333,887)

Balance as of June 30, 2024 $ 9,483,733 247,437 179,447 9,910,617

The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements.

As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company’s ownership correlates to approximately $1.82 billion of loans included in these securitizations.

As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2025, the Company’s ownership correlates to approximately $1.70 billion of loans included in these securitizations.

The loans held in these securitizations are not included in the above table.

3 unchanged sentences

Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs

For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of AGM’s loan portfolios as of March 31, 2025 and December 31, 2024;

and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Spread Analysis

1 unchanged sentence

The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net loan interest income, including settlements on derivatives" below, divided by the average balance of loans or debt outstanding.

Three months ended March 31,

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

2025 2024 2025 2024

Variable loan yield, gross 7.77 % 8.16 % 7.59 % 8.07 %

19 unchanged sentences

A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows.

Three months ended March 31,

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

2025 2024 2025 2024

Core loan spread 1.27 % 0.98 % 1.23 % 0.90 %

6 unchanged sentences

See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM’s FFELP student loan assets and related funding for those assets.

In an increasing interest rate environment, student loan spread on FFELP loans increases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly.

This also results in student loan spread decreasing in the short term in a decreasing interest rate environment.

Variable loan spread was higher during the three months ended March 31, 2025 compared with the same period in 2024 due to an increase in consumer loans funded by the Company with operating cash (versus funded with debt).

In a decreasing interest rate environment, student loan spread on FFELP loans decreases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly.

This also results in student loan spread increasing in the short term in an increasing interest rate environment.

Variable loan spread was higher during the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in loans funded by the Company with operating cash (versus funded with debt).

As of June 30, 2025, AGM had $576.1 million (par value) of unencumbered federally insured, private education, consumer, and other loans (as compared to $253.5 million, $194.1 million, and $77.0 million as of December 31, 2024, June 30, 2024, and December 31, 2023, respectively).

The difference between variable loan spread and core loan spread is fixed rate floor income earned on a portion of AGM's federally insured student loan portfolio.

1 unchanged sentence

Summary and Comparison of Operating Results

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

2 unchanged sentences

Investment interest 12,641 13,709 25,411 35,544 Represents primarily investment interest earned on beneficial interest investments and restricted cash included in student loan securitizations and other secured borrowings.

Decrease was due to a decrease of interest earned on restricted cash due to lower balances and a decrease in interest rates and a decrease of interest earned on beneficial interest investments.

AGM earned $8.7 million and $13.1 million of interest income on beneficial interest investments for the three months ended March 31, 2025 and 2024, respectively.

Decrease was due to a decrease of interest earned on restricted cash due to lower balances and a decrease in interest rates, which was partially offset for the three months period by an increase of interest earned on beneficial interest investments.

AGM earned $7.7 million and $3.8 million of interest income on beneficial interest investments for the three months ended June 30, 2025 and 2024, respectively, and $16.4 million and $17.0 million for the six months ended June 30, 2025 and 2024, respectively.

Total interest income 169,941 207,416 337,179 438,879

6 unchanged sentences

Net interest income 49,875 35,784 102,810 76,342

Less provision for loan losses 13,012 6,455 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision for loan losses for the periods presented.

Less provision (negative provision) for loan losses 11,133 (4,225) 24,144 2,230 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision (negative provision) for loan losses for the periods presented.

Net interest income after provision for loan losses 38,742 40,009 78,666 74,112

1 unchanged sentence

See "Overview - Consolidated Results of Operations" for further detail included in other income.

Decrease was primarily due to a decrease in borrower late fees due to the continued amortization of the Company's FFELP portfolio.

Gain (loss) on sale of loans, net 909 (141) The Company recognizes gains/losses from selling portfolios of loans.

See above under "Loan Activity" for loans sold during the three months ended March 31, 2025 and 2024.

Increase was due to an increase in income from investments, partially offset by a decrease in borrower late fees due to the continued amortization of the Company's FFELP portfolio.

(Loss) gain on sale of loans, net — (1,438) 909 (1,579) The Company recognizes gains/losses from selling portfolios of loans.

See above under "Loan Activity" for loans sold during the three and six months ended June 30, 2025 and 2024.

Derivative settlements, net 581 1,442 1,162 2,997 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility.

4 unchanged sentences

Total other income, net 5,923 2,277 7,612 14,381

Salaries and benefits 1,221 1,195

Salaries and benefits 1,469 1,113 2,690 2,308 Increase was due to an increase in headcount as the Company actively expands into new asset loan classes.

Servicing fees 7,102 8,541 14,013 17,492 Represents servicing fees paid to (i) third parties and (ii) LSS for the servicing of AGM’s loans.

1 unchanged sentence

Decrease was due to the amortization of the FFELP student loan portfolio, the majority of which is serviced by LSS.

Intercompany servicing expense of $4.9 million and $6.6 million during the three months ended March 31, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.

Other expenses 888 1,109

Intercompany servicing expense of $4.8 million and $5.9 million during the three months ended June 30, 2025 and 2024, respectively, and $9.7 million and $12.5 million during the six months ended June 30 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.

Other expenses 2,464 1,139 3,352 2,246 Increase was due to an increase in costs associated with the Company actively expanding into new asset loan classes.

Intersegment expenses 1,260 1,272 2,510 2,481 Includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.

Total operating expenses 10,270 12,463 Total operating expenses were 43 basis points of the average balance of loans in each of 2025 and 2024, respectively.

Provision for beneficial interests 1,510 — During 2025, the Company recorded an additional allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations.

Total operating expenses 12,295 12,065 22,565 24,527 Total operating expenses were 53 and 46 basis points of the average balance of loans for the three months ended June 30, 2025 and 2024, respectively, and 48 and 45 for the six months ended June 30, 2025 and 2024, respectively.

Increase in expenses compared to the average balance of loans is due to upfront costs associated with the Company actively expanding into new asset classes.

Provision for beneficial interests 4,977 5,911 6,487 5,911 During the periods presented, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations.

See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

13 unchanged sentences

The following table summarizes the components of "loan interest," "loan interest expense," and "derivative settlements, net:"

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

1 unchanged sentence

Consolidation rebate fees (18,897) (21,126) (37,645) (44,182) Decrease was due to a decrease in the average consolidation loan balance.

Premium and deferred origination costs amortization, net of discount accretion (3,064) 2,288 Net premium amortization in the three months ended March 31, 2025 was due to consumer and other loans purchased at a premium during 2024 and the first quarter of 2025 that have a short estimated life, offset by purchases of loans at a net discount over the last several years that have substantially longer estimated lives.

Net discount accretion for the three months ended March 31, 2024 was due to the Company's purchases of loans at a net discount over the last several years.

Premium and deferred origination costs amortization, net of discount accretion (3,406) 1,705 (6,471) 3,994 Net premium amortization in the three and six months ended June 30, 2025 was due to consumer and other loans purchased at a premium during 2024 and the first half of 2025 that have a short estimated life, offset by purchases of loans at a net discount over the last several years that have substantially longer estimated lives.

Net discount accretion for the three and six months ended June 30, 2024 was due to the Company's purchases of loans at a net discount over the last several years.

Variable interest income, net 156,303 193,548 309,796 402,997

11 unchanged sentences

Loan Portfolio

As of March 31, 2025, Nelnet Bank had a $761.6 million loan portfolio.

For a summary of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of June 30, 2025, Nelnet Bank had an $827.6 million loan portfolio.

For a summary of the Company’s loan portfolio as of June 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Activity

1 unchanged sentence

FFELP Private Consumer and other Total

Three months ended March 31, 2025

Balance as of December 31, 2024 $ — 482,445 162,152 644,597

Three months ended June 30, 2025

Balance as of March 31, 2025 $ 110,187 489,451 161,995 761,633

Loan acquisitions and originations 38 8,354 50,175 58,567

Repayments (3,670) (23,315) (7,747) (34,732)

Loans contributed from AGM — 42,173 — 42,173

Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641

Three months ended June 30, 2024

Balance as of March 31, 2024 $ — 364,766 118,957 483,723

Three months ended March 31, 2024

Loan acquisitions and originations — 1,390 82,998 84,388

Repayments — (11,744) (14,016) (25,760)

Balance as of June 30, 2024 $ — 354,412 187,939 542,351

Six months ended June 30, 2025

Balance as of December 31, 2024 $ — 482,445 162,152 644,597

1 unchanged sentence

Repayments (4,485) (45,351) (12,459) (62,295)

Balance as of March 31, 2024 $ — 364,766 118,957 483,723

Loans contributed from AGM — 42,173 — 42,173

Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641

Six months ended June 30, 2024

Balance as of December 31, 2023 $ — 360,520 72,352 432,872

Loan acquisitions and originations — 18,106 139,843 157,949

Repayments — (24,214) (24,256) (48,470)

Balance as of June 30, 2024 $ — 354,412 187,939 542,351

Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs

For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of March 31, 2025 and December 31, 2024;

and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of March 31, 2025, Nelnet Bank had $1.38 billion of deposits, which included $68.6 million from Nelnet, Inc.

and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of June 30, 2025, Nelnet Bank had $1.53 billion of deposits, which included $149.9 million from Nelnet, Inc.

(parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes.

For a summary of deposits as of March 31, 2025 and December 31, 2024, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

For a summary of deposits as of June 30, 2025 and December 31, 2024, see note 10 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Average Balance Sheet

The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities:

Three months ended March 31, (a)

Balance Rate Balance Rate

Three months ended June 30, (a)

Six months ended June 30, (a)

2025 2024 2025 2024

Balance Rate Balance Rate Balance Rate Balance Rate

Average assets

18 unchanged sentences

Summary and Comparison of Operating Results

Three months ended March 31,

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

2025 2024 2025 2024 Additional information

8 unchanged sentences

Net interest income 14,066 8,464 26,456 16,031

Provision for loan losses 2,325 4,373 Decrease was due to the mix of loans originated, acquired, and outstanding during each period.

See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

Provision for loan losses 6,797 7,836 9,123 12,210 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision for loan losses for the periods presented.

Net interest income after provision for loan losses 7,269 628 17,333 3,821

Other income, net 392 775 534 1,150 Represents primarily net gains and income from investments.

Derivative settlements, net 164 202 Nelnet Bank uses derivatives to hedge its exposure related to variable rate intercompany deposits to minimize volatility from future changes in interest rates.

Nelnet Bank has designated its derivative instruments as cash flow hedges;

however, because the hedged items are intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements.

Accordingly, all changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations.

"Derivative settlements" represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms.

Derivative settlements, net 163 207 327 409 Nelnet Bank uses derivatives to hedge its exposure related to variable rate deposits to minimize volatility from future changes in interest rates.

Nelnet Bank has designated all of its derivative instruments as cash flow hedges;

however, because certain hedged items are intercompany deposits, the corresponding derivative instruments are not eligible for hedge accounting in the consolidated financial statements.

Accordingly, changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations.

"Derivative settlements, net" represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments that do not qualify for hedge accounting based on their contractual terms.

For additional information on Nelnet Bank's derivative portfolio, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

4 unchanged sentences

Servicing fees 824 193 1,491 426 Represents primarily fees paid to LSS for servicing certain of Nelnet Bank's loans.

Intercompany servicing of $0.5 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.

Other expenses 1,358 1,111 Represents various expenses such as marketing, consulting and professional fees, software, insurance, and management fees.

Increase was due to the overall growth of Nelnet Bank activities.

Intercompany servicing expense of $0.7 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, and $1.2 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.

Other expenses 1,969 2,002 3,327 3,113 Represents various expenses such as marketing, consulting and professional fees, collection costs, software, FDIC insurance, and management fees.

Intersegment expenses 652 591 1,362 1,148 Intersegment expenses include costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.

Total operating expenses 6,588 5,925 12,478 10,806

Income before income taxes 1,952 1,147

Income tax expense (434) (259) Represents income tax expense at an effective tax rate of 22.2% and 22.6% for the three months ended March 31, 2025 and 2024, respectively.

Net income $ 1,518 888

(Loss) income before income taxes (465) (3,718) 1,487 (2,571)

Income tax benefit (expense) 101 916 (333) 657 Represents income tax expense at an effective tax rate of 21.6% and 24.6% for the three months ended June 30, 2025 and 2024, respectively, and 22.4% and 25.6% for the six months ended June 30, 2025 and 2024, respectively.

Net (loss) income $ (364) (2,802) 1,154 (1,914)

Additional information:

Net income $ 1,518 888

Net (loss) income $ (364) (2,802) 1,154 (1,914)

See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP financial information.

7 unchanged sentences

WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total

Three months ended March 31, 2025

Three months ended June 30, 2025

Investment interest $ 4 2,464 — 6,402 8,870

7 unchanged sentences

Intersegment expenses, net (4) (182) (103) (32) (321)

Impairment expense — — (81) — (81)

Income (loss) before income taxes 1,413 (31) 108 8,601 10,091

2 unchanged sentences

Net income (loss) $ 967 (23) 102 6,536 7,582

Three months ended March 31, 2024

Three months ended June 30, 2024

Investment interest $ 4 1,521 145 14,210 15,880

7 unchanged sentences

Intersegment expenses, net (4) (99) (110) (35) (248)

Income (loss) before income taxes 1,408 4,914 (2,046) 12,249 16,525

Income tax (expense) benefit (304) (1,179) 488 (2,940) (3,935)

Net (income) loss attributable to noncontrolling interests (141) — 12 — (129)

Net income (loss) $ 963 3,735 (1,546) 9,309 12,461

WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total

Six months ended June 30, 2025

Investment interest $ 7 4,457 — 13,226 17,690

Interest expense — (2,196) — (2) (2,198)

Net interest income 7 2,261 — 13,224 15,492

Reinsurance premiums earned — 50,799 — — 50,799

Other income, net 2,980 1,647 (1,190) 2,939 6,376

Salaries and benefits (62) (546) (409) — (1,017)

Reinsurance losses and underwriting expenses — (47,874) — — (47,874)

Other expenses (125) (2,790) (60) (3) (2,978)

Intersegment expenses, net (7) (291) (202) (65) (565)

Impairment expense — — (81) — (81)

3 unchanged sentences

Net income (loss) $ 1,911 2,436 (1,445) 12,233 15,135

Six months ended June 30, 2024

Investment interest $ 7 2,339 286 28,863 31,495

Interest expense — (589) — (4,435) (5,024)

Net interest income 7 1,750 286 24,428 26,471

Reinsurance premiums earned — 27,631 — — 27,631

Other income, net 3,009 1,346 (3,626) 284 1,013

Salaries and benefits (107) (237) (388) — (732)

Reinsurance losses and underwriting expenses — (22,305) — — (22,305)

Other expenses (145) (1,059) (120) (3) (1,327)

Intersegment expenses, net (7) (146) (240) (72) (465)

Income (loss) before income taxes 2,757 6,980 (4,088) 24,637 30,286

Income tax (expense) benefit (595) (1,675) 975 (5,914) (7,209)

Net (income) loss attributable to noncontrolling interests (276) — 27 — (249)

Net income (loss) $ 1,886 5,305 (3,086) 18,723 22,828

(a) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements.

WRCM earned management and performance fees of $1.5 million for each of the three months ended March 31, 2025 and 2024.

WRCM earned management and performance fees of $1.5 million for each of the three months ended June 30, 2025 and 2024, respectively, and $3.0 million for each of the six months ended June 30, 2025 and 2024, respectively.

Fees earned by WRCM are included in "other income, net" in the table above.

(b) Represents the operating results of the Company’s reinsurance treaties on property and casualty policies and the Company’s Nebraska chartered life and health company, which is in run-off mode and reinsures a decreasing term life insurance product distributed to FACTS.

Increase in insurance premiums in the first quarter of 2025 compared with the same period in 2024 was primarily due to an increase in overall property volume and new business.

(b) Represents primarily the operating results of the Company’s reinsurance treaties on property and casualty policies.

The increase in reinsurance premiums and associated reinsurance losses and underwriting expenses in the three and six months ended June 30, 2025 compared with the same periods in 2024 was primarily due to an increase in overall property volume and new business.

Reinsurance losses and underwriting expenses also increased related to several commercial auto programs, which the Company has exited;

however, adverse development of related expenses may continue to be recognized in future periods.

All other operating expenses also increased to support the growth of this business.

(c) Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio.

The Company recognized net losses from its real estate investments of $1.6 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively, which are included in "other income, net" in the table above.

The net losses recognized relates primarily to the Company's proportionate share of certain real estate investments accounted for under the equity method.

Included in "other income, net" in the table above are primarily the net losses recognized related to the Company's proportionate share of certain real estate investments accounted for under the equity method.

Operating results for the three and six months ended June 30, 2025 also includes a realized gain of $1.6 million as a result of the sale of a certain real estate investment during the second quarter.

(d) Represents interest income earned on investment debt securities (primarily student loan and other asset-backed securities, including Nelnet-owned asset-backed securities which it has repurchased and are eliminated in consolidation), interest income on certain notes receivable, unrealized gains/losses on marketable equity securities, realized gains/losses on marketable equity securities and investment debt securities, and other costs to manage these investments.

Also includes interest expense incurred on debt used to finance such investments.

The decrease in interest income and interest expense in 2025 compared with 2024 was primarily due to a decrease in the average balance of investments and debt outstanding, respectively, and a decrease in interest rates.

The decrease in investment interest income and interest expense in 2025 compared with 2024 was primarily due to a decrease in the average balance of investment debt securities and debt outstanding, respectively, and a decrease in interest rates.

As of December 31, 2024, the majority of debt used to finance such investments had been repaid.

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Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total

Three months ended March 31, 2025

Three months ended June 30, 2025

Investment interest $ — 1 — — — 2,660 2,661

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Other income, net 598 (1,228) — 5,300 1,762 3,171 9,603

Gain on partial redemption of ALLO investment — — — 175,044 — — 175,044

Cost to provide solar construction services — — (14,050) — — — (14,050)

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Net (loss) income $ (9,061) 1,479 (13,377) 140,779 1,019 (462) 120,377

Three months ended March 31, 2024

Three months ended June 30, 2024

Investment interest $ — 1 12 — — 2,633 2,646

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Net (loss) income $ (6,882) (1,512) (2,909) 2,994 2,597 1,485 (4,227)

Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total

Six months ended June 30, 2025

Investment interest $ — 6 — — — 4,967 4,973

Interest expense — — (3) — — (1,281) (1,284)

Net interest income (expense) — 6 (3) — — 3,686 3,689

Solar construction revenue — — 5,254 — — — 5,254

Other income, net 1,217 502 — 13,715 6,254 6,152 27,840

Gain on partial redemption of ALLO investment — — — 175,044 — — 175,044

Cost to provide solar construction services — — (21,878) — — — (21,878)

Salaries and benefits (37,320) (761) (3,494) — (436) (3,268) (45,279)

Depreciation and amortization (6,185) — (517) — (1) (75) (6,778)

Other expenses (27,586) (302) (828) 4,892 (31) (3,426) (27,281)

Intersegment expenses, net 51,232 (131) (807) — (86) (538) 49,670

Impairment expense (3,269) — (1,902) — (140) — (5,311)

(Loss) income before income taxes (21,911) (686) (24,175) 193,651 5,560 2,531 154,970

Income tax benefit (expense) 5,259 (1,146) 5,802 (46,476) (1,334) (1,503) (39,398)

Net loss attributable to noncontrolling interests — 5,461 — — — — 5,461

Net (loss) income $ (16,652) 3,629 (18,373) 147,175 4,226 1,028 121,033

Six months ended June 30, 2024

Investment interest $ — 1 31 — — 6,429 6,461

Interest expense — — (708) — — (701) (1,409)

Net interest income (expense) — 1 (677) — — 5,728 5,052

Solar construction revenue — — 23,420 — — — 23,420

Other income, net 1,456 1,242 93 (4,043) 3,302 6,174 8,224

Cost to provide solar construction services — — (22,300) — — — (22,300)

Salaries and benefits (39,243) (1,284) (4,631) — (476) (2,673) (48,307)

Depreciation and amortization (14,727) — (539) — (14) (184) (15,464)

Other expenses (20,332) (368) (1,228) (606) (26) (3,683) (26,243)

Intersegment expenses, net 53,745 143 (1,061) (4) (38) (137) 52,648

Impairment expense — — (1,865) — (37) — (1,902)

(Loss) income before income taxes (19,101) (266) (8,788) (4,653) 2,711 5,225 (24,872)

Income tax benefit (expense) 4,584 (564) 1,711 1,117 (651) (1,686) 4,511

Net loss attributable to noncontrolling interests — 2,617 1,655 — — — 4,272

Net (loss) income $ (14,517) 1,787 (5,422) (3,536) 2,060 3,539 (16,089)

(a) Includes corporate activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing.

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

During the second quarter 2025, the Company recognized a non-cash impairment charge of $3.3 million related to operating lease assets as a result of the Company consolidating office space.

(b) Includes operating results of the Company's tax equity investments in renewable energy solar partnerships.

The Company accounts for these investments under the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment.

The Company accounts for these investments using the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment.

In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years).

These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments made by third parties.

Due to the recognition pattern

(accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings.

These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments syndicated to third parties.

Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings.

For additional information on the results of this operating segment, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

(c) Nelnet Renewable Energy (NRE) is the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities.

(c) Nelnet Renewable Energy (NRE) is the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to commercial entities.

The Company entered this business from its acquisition of 80% of GRNE Solar in June 2022.

Since the acquisition of GRNE Solar, it has incurred low and, in some cases, negative margins on certain legacy projects.

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

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

As a result, residential revenue will decline from recent historical amounts as existing customer contracts are completed.

Residential solar construction revenue was $1.8 million for the three months ended March 31, 2024.

The amount of residential construction revenue earned in 2025 was insignificant.

On June 30, 2024, the Company acquired the remaining 20% of GRNE Solar for $0.3 million.

Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects.

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

During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts.

The loss reserve expense is included in "costs to provide solar construction services" in the table above.

In addition, uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue.

See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill.

(d) Represents primarily the Company's share of loss on its voting membership interest and income on its preferred membership interests in ALLO.

For additional information on the results of these investments, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests.

The Company expects ALLO to redeem all of the Company's outstanding preferred membership interests, including the accrued preferred return on such membership interests through the closing date, and a portion of the Company's voting membership interest.

The transaction is expected to close in late May 2025.

As a result of this transaction, the Company expects to receive cash proceeds of approximately $410 million and recognize a pre-tax gain of approximately $175 million.

For additional information on this transaction, see note 16 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

On June 4, 2025, the Company redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025, and recognized a pre-tax gain of $175.0 million as a result of this transaction.

See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

(e) Represents the operating results of the Company’s venture capital investments, including Hudl which the Company accounts for using the measurement alternative method, and the administrative costs to manage this portfolio.

LIQUIDITY AND CAPITAL RESOURCES

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Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Nelnet Financial Services division, which includes the Asset Generation and Management and Nelnet Bank reportable operating segments, and the Company's other initiatives to pursue additional strategic investments.

On July 4, 2025, the One Big Beautiful Bill (the "Bill") was enacted into law.

Among other substantial changes to the tax code, the Bill makes numerous changes to the federal student loan program.

Graduate students and parents of undergraduates will be subject to new caps on federal lending.

Overall, we expect these changes will boost privatization of student lending and may create opportunities for the Company to expand its private education loan originations and acquisitions.

Sources of Liquidity

As of March 31, 2025, the Company's sources of liquidity included:

As of June 30, 2025, the Company's sources of liquidity included:

Cash and cash equivalents $ 225,753

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Unencumbered AFS debt securities (investments) - at fair value 169,384

Unencumbered private, consumer, and other loans (Non-Nelnet Bank) - at par 327,744

Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par 576,072

Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) 238,840

Unused capacity on unsecured line of credit (e) 495,000

Sources of liquidity as of March 31, 2025

Sources of liquidity as of June 30, 2025

(a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank.

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(e) The Company has a $495.0 million unsecured line of credit that matures on September 22, 2026.

As of March 31, 2025, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use.

As of June 30, 2025, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use.

The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or investment interests therein);

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Recent Development - Partial Redemption of ALLO Investment

The Company has both a voting and preferred membership interest investment in ALLO.

In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests.

The transaction is expected to close in late May 2025.

The Company expects to receive cash proceeds of approximately $410 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175 million.

Nelnet had both voting and preferred membership interest investments in ALLO.

The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction.

See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction.

The majority of the proceeds from this transaction were used by the Company to pay down third-party debt that was used to fund loan assets and repurchase certain of the Company's own asset-backed securities (bonds and notes payable) in the secondary market.

The Company has historically generated positive cash flow from operations.

During the three months ended March 31, 2025 and 2024, the Company generated $91.2 million and $211.6 million, respectively, in cash from operating activities.

During the six months ended June 30, 2025 and 2024, the Company generated $172.9 million and $345.3 million, respectively, in cash from operating activities.

The decrease in 2025 compared with 2024 was due to:

• Adjustments to net income for the non-cash change in gain on investments, loan discount and deferred lender fees accretion, and depreciation and amortization;

• The impact of changes to accrued interest receivable, accounts receivable, and other assets during the three months ended March 31, 2025 compared with the same period in 2024.

• Adjustments to net income for certain non-cash items, including the gain recognized on the partial redemption of the Company's ALLO investment, deferred income tax benefit, loan discount and deferred lender fees accretion, and gain/loss on investments;

• The impact of changes to accrued interest receivable during the six months ended June 30, 2025 compared with the same period in 2024.

These factors were partially offset by:

• An increase in net income;

• Adjustments to net income for the non-cash change in derivative market value adjustments, deferred income tax expense, and provision for loan losses;

• The impact of changes to other liabilities during the three months ended March 31, 2025 compared with the same period in 2024.

The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, and the purchase of other investments (primarily solar investments).

• Adjustments to net income for the non-cash change in derivative market value adjustments and provision for loan losses;

• The impact of changes to other liabilities during the six months ended June 30, 2025 compared with the same period in 2024.

During June 2025, the Company received cash proceeds of $410.9 million from the redemption of its membership interests in ALLO.

The proceeds from the ALLO redemption are included in investing activities on the statement of cash flows.

The primary items included in financing activities are the payments on bonds and notes payable, the change in deposits at Nelnet Bank used to fund loans and investment activity at Nelnet Bank, and the change in due to customers.

Cash provided by investing activities and used in financing activities for the three months ended March 31, 2025 was $136.4 million and $326.4 million, respectively.

Cash provided by investing activities and used in financing activities for the three months ended March 31, 2024 was $1.09 billion and $1.38 billion, respectively.

Cash provided by investing activities and used in financing activities for the six months ended June 30, 2025 was $709.8 million and $1.01 billion, respectively.

Cash provided by investing activities and used in financing activities for the six months ended June 30, 2024 was $1.82 billion and $2.25 billion, respectively.

Investing and financing activities are further addressed in the discussion that follows.

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The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral:

As of March 31, 2025

As of June 30, 2025

Carrying amount

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The majority of AGM’s portfolio of student loans is funded in asset-backed securitizations that are structured to substantially match the maturity of the funded assets, thereby minimizing liquidity risk.

Cash generated from student loans funded in asset-backed securitizations provides the sources of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations.

In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees AGM earns from these transactions, AGM has created a portfolio that will generate earnings and significant cash flow over the life of these transactions.

As of March 31, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio to be approximately $1.02 billion as detailed below.

The actual timing of cash flows released from the securitizations

could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold.

The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of March 31, 2025, the majority of which are federally insured student loans.

As of March 31, 2025, AGM had $8.0 billion of loans included in asset-backed securitizations, which represented 86.1% of its total loan portfolio.

The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to March 31, 2025, and loans owned by Nelnet Bank.

Cash generated from student loans funded in asset-backed securitizations provides the source of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations.

In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees that AGM earns from these transactions, AGM has created a portfolio that will generate earnings and significant cash flow over the life of these transactions.

As of June 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio to be approximately $1.07 billion as detailed below.

The actual timing of cash flows released from the securitizations could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold.

The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of June 30, 2025, the majority of which are federally insured student loans.

As of June 30, 2025, AGM had $7.9 billion of loans included in asset-backed securitizations, which represented 88.7% of its total loan portfolio.

The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered federally insured, private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to June 30, 2025, and loans owned by Nelnet Bank.

Asset-backed Securitization Cash Flow Forecast

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(dollars in millions)

The forecasted future undiscounted cash flows of approximately $1.02 billion include approximately $0.74 billion (as of March 31, 2025) of overcollateralization included in the asset-backed securitizations.

These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.28 billion, or approximately $0.21 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2025 balance.

The forecasted future undiscounted cash flows of approximately $1.07 billion include approximately $0.74 billion (as of June 30, 2025) of overcollateralization included in the asset-backed securitizations.

These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.33 billion, or approximately $0.25 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2025 balance.

The Company uses various assumptions, including prepayments and future interest rates, when preparing its cash flow forecast.

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Prepayments :

The primary variable in establishing a life of loan estimate is the level and timing of prepayments.

The primary variables in establishing a life of loan estimate are the level and timing of prepayments.

Prepayment rates equal the amount of loans that prepay annually as a percentage of the beginning-of-period balance, net of scheduled principal payments.

A number of factors can affect estimated prepayment rates, including the level of consolidation activity, borrower default rates, and utilization of debt management options such as income-based repayment, deferments, and forbearance.

Should any of these factors change, management may revise its assumptions, which in turn would impact the

projected future cash flow.

Should any of these factors change, management may revise its assumptions, which in turn would impact the projected future cash flow.

The Company’s cash flow forecast above assumes prepayment rates of 6% for both federally insured consolidation and Stafford loans.

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$0.99 billion

4x $0.19 billion

$0.83 billion

If the entire AGM student loan portfolio prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.74 billion (as of March 31, 2025);

4x $0.20 billion $0.87 billion

If the entire AGM student loan portfolio was prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.74 billion (as of June 30, 2025);

however, the Company would not receive the $0.33 billion ($0.25 billion after tax) of estimated future earnings from the portfolio.

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

For a summary of the Company's warehouse facilities outstanding as of March 31, 2025, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

For a summary of the Company's warehouse facilities outstanding as of June 30, 2025, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Upon termination or expiration of the warehouse facilities, the Company would expect to access the securitization market, obtain replacement warehouse facilities, use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations.

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Such asset-backed securitization transactions would be used to refinance loans included in its warehouse facilities and existing asset-backed securitizations and/or finance loans purchased from third parties and loans that are currently unencumbered.

There were no asset-backed securitization transactions completed during the three months ended March 31, 2025.

There were no asset-backed securitization transactions completed during the six months ended June 30, 2025.

Other Uses of Liquidity

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proceeds from the sale of certain investments;

its unsecured line of credit, its Union Bank student loan participation agreement, and its Union Bank student loan asset-backed securities participation agreement (each as described below), and/or

establishing similar secured and unsecured borrowing facilities;

its unsecured line of credit, its Union Bank student loan participation agreement, and its Union Bank student loan asset-backed securities participation agreement (each as described below), and/or establishing similar secured and unsecured borrowing facilities;

using its existing warehouse facilities (as described above);

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The Company maintains an agreement with Union Bank, a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans.

As of March 31, 2025, $597.2 million of loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

As of June 30, 2025, $583.2 million of loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

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

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As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheets as "investments at fair value" and the participation interests outstanding have been accounted for by the Company as a secured borrowing.

As of March 31, 2025, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

As of June 30, 2025, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

Liquidity Impact Related to Beneficial Interest in Loan Securitizations

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These residual interests were acquired by the Company or have been received by the Company as consideration from selling portfolios of loans to unrelated third parties who securitized such loans.

As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company's ownership correlates to approximately $1.82 billion of loans included in these securitizations.

As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2025, the Company's ownership correlates to approximately $1.70 billion of loans included in these securitizations.

Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.

As of March 31, 2025, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $206.4 million.

As of June 30, 2025, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $190.9 million.

For a summary of this investment balance, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

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

As of March 31, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $310.2 million.

As of June 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $279.7 million.

The vast majority of these cash flows are expected to be received over the next 5 years.

The difference between the total estimated future undiscounted cash flows from these residual interests ($310.2 million) and the investment carrying value ($206.4 million) of $103.8 million, or $78.9 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2025 balance.

The difference between the total estimated future undiscounted cash flows from these residual interests ($279.7 million) and the investment carrying value ($190.9 million) of $88.8 million, or $67.5 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2025 balance.

The undiscounted future cash flows from the consumer and private education loan securitizations are highly subject to credit risk (defaults).

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Nelnet Bank was funded by the Company with an initial capital contribution of $100 million and the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC as discussed below.

The Company has contributed an additional $82 million to Nelnet Bank since its inception.

The Company has contributed an additional $118 million, including $42 million of private education loans, to Nelnet Bank since its inception.

Based on Nelnet Bank's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to the bank in future periods.

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Brokered deposits are sourced through a network of brokers and provide a stable source of funding.

In addition, Nelnet Bank accepts certain deposits considered non-brokered that are held in large accounts structured to allow FDIC insurance to flow through to underlying individual depositors.

In addition, Nelnet

Bank accepts certain deposits considered non-brokered that are held in large accounts structured to allow FDIC insurance to flow through to underlying individual depositors.

The deposits are diversified with deposits from Educational 529 College Savings and Health Savings plans, STFIT, and FDIC sweep deposits.

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and (iv) establish and maintain a pledged deposit of $40.0 million with Nelnet Bank.

As of March 31, 2025, Nelnet Bank's leverage ratio of capital to total assets was 12.6%.

As of June 30, 2025, Nelnet Bank's leverage ratio of capital to total assets was 12.8%.

Liquidity Impact Related to Solar Tax Equity Investments

The Company makes solar tax equity investments in renewable energy solar partnerships that support the development and operations of solar projects.

As of March 31, 2025, the Company has funded a total of $309.9 million in tax equity investments which remain outstanding for itself and $280.4 million on behalf of its syndication partners, for a funded total of $590.3 million.

As of June 30, 2025, the Company has funded a total of $300.6 million in tax equity investments which remain outstanding for itself and $285.8 million on behalf of its syndication partners, for a funded total of $586.4 million.

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.

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Treasury due to earning of the tax credit, the net amount of capital funded to solar tax equity investments at any point in time is not significant and has a minimal impact on the Company’s liquidity.

As of March 31, 2025, the Company is committed to fund an additional $56.0 million directly in solar tax equity investments and $44.0 million will be funded by its syndication partners, for a total commitment of $100.0 million.

As of June 30, 2025, the Company is committed to fund an additional $63.5 million directly in solar tax equity investments and $115.7 million will be funded by its syndication partners, for a total commitment of $179.2 million.

Liquidity Impact Related to Hedging Activities

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

market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default.

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

Nelnet Bank derivative contracts have protection against counterparty risk provided by International Swaps and Derivatives Association, Inc.

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The Company’s exposure related to the Nelnet Bank derivatives is limited to the value of the derivative contracts in a gain position, less any collateral held by us.

Based on the derivative portfolio outstanding as of March 31, 2025, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives.

Based on the derivative portfolio outstanding as of June 30, 2025, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives.

Unsecured Line of Credit

As discussed above, the Company has a $495.0 million unsecured line of credit with a maturity date of September 22, 2026.

As of March 31, 2025, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use.

As of June 30, 2025, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use.

Upon the maturity date of this facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary.

Stock Repurchases

In 2022, the Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2025.

On March 20, 2025, the Board of Directors authorized a new stock repurchase program that will be effective when the now current program expires to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028.

The five million shares authorized under the new program will include any remaining unpurchased shares from the prior program, which the new program will replace.

As of March 31, 2025, 3,341,735 shares remained authorized for repurchase under the Company's stock repurchase program.

That program expired on May 8, 2025.

On May 8, 2025, the Company announced that its Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028.

The five million shares authorized under the new program include the remaining unpurchased shares from the prior program, which the new program replaces.

As of June 30, 2025, 4,822,191 shares remained authorized for repurchase under the Company's stock repurchase program.

Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity.

Shares repurchased by the Company during the three months ended March 31, 2025 are shown below.

For additional information on stock repurchases during the first quarter of 2025, see "Stock Repurchases" under Part II, Item 2 of this report.

Total shares repurchased Purchase price (in thousands) Average price of shares repurchased (per share)

Shares repurchased by the Company during the first half of 2025 are shown below.

Certain of these repurchases were made pursuant to trading plans adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.

For additional information on stock repurchases during the second quarter of 2025, see "Stock Repurchases" under Part II, Item 2 of this report.

Total shares repurchased Purchase price (in thousands) Average price of shares repurchased (per share) (a)

Quarter ended March 31, 2025 38,491 $ 4,458 115.81

On March 14, 2025, the Company paid a first quarter 2025 cash dividend on the Company's Class A and Class B common stock of $0.28 per share.

In addition, the Company's Board of Directors has declared a second quarter 2025 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.28 per share.

The second quarter cash dividend will be paid on June 16, 2025 to shareholders of record at the close of business on June 2, 2025.

Quarter ended June 30, 2025 183,554 21,360 116.37

Total 222,045 $ 25,818 116.28

(a) The average price of shares repurchased for the three months ended June 30, 2025 includes excise taxes.

On June 16, 2025, the Company paid a second quarter 2025 cash dividend on the Company's Class A and Class B common stock of $0.28 per share.

In addition, the Company's Board of Directors has declared a third quarter 2025 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.30 per share.

The third quarter cash dividend will be paid on September 16, 2025 to shareholders of record at the close of business on September 2, 2025.

The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors.

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Note 2 of the notes to consolidated financial statements included in the Company’s 2024 Annual Report includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements.

On an on-going basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are most “critical” - that is, they are most important to the portrayal of the Company’s financial condition and results of operations and they require management’s most difficult, subjective, or complex judgments, often as a result of

the need to make estimates about the effect of matters that are inherently uncertain.

Management has identified the allowance for loan losses as a critical accounting estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Allowance for Loan Losses” in the Company’s 2024 Annual Report.

For additional information regarding changes in the Company’s allowance for loan losses for the three months ended March 31, 2025 and 2024, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

On an on-going basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are most “critical” — that is, they are most important to the portrayal of the Company’s financial condition and results of operations and they require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Management has identified the allowance for loan losses as a critical accounting policy and estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Allowance for Loan Losses” in the Company’s 2024 Annual Report.

For additional information regarding changes in the Company’s allowance for loan losses for the three and six months ended June 30, 2025 and 2024, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

There have been no material changes to the Company’s critical accounting policy and estimate since December 31, 2024.

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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-Q

Item 2. Management’s Discussion and Analysis