NELNET INC 10-Q

ITEM 1. FINANCIAL STATEMENTS NELNET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (unaudited) As of As of June 30, 2025 December 31, 2024 Assets: Loans and accrued interest receivable (net of allowance for loan losses of $ 125,349 and $ 114,890 , respectively) $ 10,155,483 9,992,744 Cash and cash equivalents: Cash and cash equivalents - not held at a related party 135,256 48,838 Cash and cash equivalents - held at a related party 90,497 145,680 Total cash and cash equivalents 225,753 194,518 Investments and notes receivable: Investments at fair value 1,286,729 1,160,320 Other investments and notes receivable, net 818,210 1,040,376 Total investments and notes receivable 2,104,939 2,200,696 Restricted cash 317,958 332,100 Restricted cash - due to customers 258,065 404,402 Accounts receivable (net of allowance for doubtful accounts of $ 2,999 and $ 2,877 , respectively) 127,490 159,934 Goodwill 158,029 158,029 Intangible assets, net 33,278 36,328 Property and equipment, net 85,040 95,185 Other assets 245,053 203,817 Total assets $ 13,711,088 13,777,753 Liabilities: Bonds and notes payable $ 7,903,561 8,309,797 Accrued interest payable 19,296 21,046 Bank deposits 1,382,042 1,186,131 Other liabilities 494,387 483,193 Due to customers 429,109 478,469 Total liabilities 10,228,395 10,478,636 Commitments and contingencies Equity: Nelnet, Inc. shareholders' equity: Preferred stock, $ 0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding — — Common stock: Class A, $ 0.01 par value. Authorized 600,000,000 shares; issued and outstanding 25,538,730 shares and 25,634,748 shares, respectively 255 256 Class B, convertible, $ 0.01 par value. Authorized 60,000,000 shares; issued and outstanding 10,658,604 shares 107 107 Additional paid-in capital 637 7,389 Retained earnings 3,576,192 3,340,540 Accumulated other comprehensive (loss) earnings, net ( 2,208 ) 1,470 Total Nelnet, Inc. shareholders' equity 3,574,983 3,349,762 Noncontrolling interests ( 92,290 ) ( 50,645 ) Total equity 3,482,693 3,299,117 Total liabilities and equity $ 13,711,088 13,777,753 Supplemental information - assets and liabilities of consolidated education and other lending variable interest entities: Loans and accrued interest receivable $ 8,783,481 9,122,609 Restricted cash 297,566 287,389 Bonds and notes payable ( 8,198,240 ) ( 8,452,614 ) Accrued interest payable and other liabilities ( 70,575 ) ( 88,200 ) Net assets of consolidated education and other lending variable interest entities $ 812,232 869,184 See accompanying notes to consolidated financial statements. 2 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (unaudited) Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Interest income: Loan interest $ 172,104 202,129 338,543 418,853 Investment interest 40,185 40,737 81,574 92,814 Total interest income 212,289 242,866 420,117 511,667 Interest expense on bonds and notes payable and bank deposits 132,854 176,459 257,968 371,039 Net interest income 79,435 66,407 162,149 140,628 Less provision for loan losses 17,930 3,611 33,267 14,440 Net interest income after provision for loan losses 61,505 62,796 128,882 126,188 Other income (expense): Loan servicing and systems revenue 120,724 109,052 241,465 236,252 Education technology services and payments revenue 118,184 116,909 265,515 260,449 Reinsurance premiums earned 26,112 14,851 50,799 27,631 Solar construction revenue 1,259 9,694 5,254 23,420 Other, net 22,976 14,020 46,670 18,103 Gain (loss) on sale of loans, net — ( 1,438 ) 909 ( 1,579 ) Gain on partial redemption of ALLO investment 175,044 — 175,044 — Derivative market value adjustments and derivative settlements, net ( 3,122 ) 3,182 ( 8,701 ) 12,903 Total other income (expense), net 461,177 266,270 776,955 577,179 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 1,845 196 3,478 196 Cost to provide education technology services and payments 39,844 40,222 87,891 88,832 Cost to provide solar construction services 14,050 8,072 21,878 22,300 Total cost of services 55,739 48,490 113,247 111,328 Salaries and benefits 134,699 139,634 272,922 283,509 Depreciation and amortization 7,624 15,142 16,879 31,911 Reinsurance losses and underwriting expenses 25,662 10,988 47,874 22,305 Other expenses 51,306 48,608 99,532 94,136 Total operating expenses 219,291 214,372 437,207 431,861 Impairment expense and provision for beneficial interests 10,288 7,776 11,879 7,813 Total expenses 285,318 270,638 562,333 551,002 Income before income taxes 237,364 58,428 343,504 152,365 Income tax expense 59,510 14,753 84,521 37,936 Net income 177,854 43,675 258,983 114,429 Net loss attributable to noncontrolling interests 3,605 1,416 5,035 4,069 Net income attributable to Nelnet, Inc. $ 181,459 45,091 264,018 118,498 Earnings per common share: Net income attributable to Nelnet, Inc. shareholders - basic and diluted $ 4.97 1.23 7.24 3.22 Weighted average common shares outstanding - basic and diluted 36,485,605 36,525,482 36,482,035 36,841,227 See accompanying notes to consolidated financial statements. 3 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (unaudited) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Net income $ 177,854 43,675 258,983 114,429 Other comprehensive (loss) income: Net changes related to foreign currency translation adjustments $ ( 131 ) ( 21 ) ( 147 ) ( 16 ) Net changes related to available-for-sale debt securities: Unrealized holding (losses) gains arising during period, net ( 657 ) 8,874 ( 3,425 ) 25,635 Reclassification of gains recognized in net income, net ( 595 ) ( 1,053 ) ( 1,077 ) ( 1,605 ) Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 94 51 141 122 Income tax effect 278 ( 880 ) ( 1,890 ) 5,982 1,047 ( 3,314 ) ( 5,797 ) 18,355 Net changes related to cash flow hedges: Fair value adjustments during period, net ( 625 ) — ( 625 ) — Income tax effect 150 ( 475 ) — — 150 ( 475 ) — — Net changes related to equity method investee's other comprehensive income: (Loss) gain on cash flow hedge ( 385 ) 335 340 ( 632 ) Income tax effect 92 ( 293 ) ( 80 ) 255 ( 82 ) 258 152 ( 480 ) Other comprehensive (loss) income ( 1,779 ) 6,216 ( 3,678 ) 17,859 Comprehensive income 176,075 49,891 255,305 132,288 Comprehensive loss attributable to noncontrolling interests 3,605 1,416 5,035 4,069 Comprehensive income attributable to Nelnet, Inc. $ 179,680 51,307 260,340 136,357 See accompanying notes to consolidated financial statements. 4 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except share data) (unaudited) Nelnet, Inc. Shareholders Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interests Total equity Class A Class B Balance as of March 31, 2024 — 26,055,314 10,663,088 $ — 261 107 1,101 3,304,197 ( 8,476 ) ( 61,470 ) 3,235,720 Net income (loss) — — — — — — — 45,091 — ( 1,416 ) 43,675 Other comprehensive income — — — — — — — — 6,216 — 6,216 Issuance of noncontrolling interests — — — — — — — — — 6,618 6,618 Distribution to noncontrolling interests — — — — — — — — — ( 19,864 ) ( 19,864 ) Cash dividends on Class A and Class B common stock - $ 0.28 per share — — — — — — — ( 10,158 ) — — ( 10,158 ) Issuance of common stock, net of forfeitures — 18,506 — — — — 2,171 — — — 2,171 Compensation expense for stock based awards — — — — — — 2,733 — — — 2,733 Repurchase of common stock — ( 487,980 ) — — ( 5 ) — ( 5,348 ) ( 41,489 ) — — ( 46,842 ) Acquisition of remaining 20 % of GRNE Solar, net of tax — — — — — — — ( 2,340 ) — 2,093 ( 247 ) Balance as of June 30, 2024 — 25,585,840 10,663,088 $ — 256 107 657 3,295,301 ( 2,260 ) ( 74,039 ) 3,220,022 Balance as of March 31, 2025 — 25,697,581 10,658,604 $ — 257 107 6,649 3,412,939 ( 429 ) ( 56,514 ) 3,363,009 Net income (loss) — — — — — — — 181,459 — ( 3,605 ) 177,854 Other comprehensive loss — — — — — — — — ( 1,779 ) — ( 1,779 ) Issuance of noncontrolling interests — — — — — — — — — 3,882 3,882 Distribution to noncontrolling interests — — — — — — — — — ( 30,670 ) ( 30,670 ) Cash dividends on Class A and Class B common stock - $ 0.28 per share — — — — — — — ( 10,162 ) — — ( 10,162 ) Issuance of common stock, net of forfeitures — 24,703 — — — — 2,153 — — — 2,153 Compensation expense for stock based awards — — — — — — 3,296 — — — 3,296 Repurchase of common stock — ( 183,554 ) — — ( 2 ) — ( 11,461 ) ( 9,897 ) — — ( 21,360 ) Acquisition of remaining 20 % of NextGen, net of tax — — — — — — — 1,853 — ( 5,383 ) ( 3,530 ) Balance as of June 30, 2025 — 25,538,730 10,658,604 $ — 255 107 637 3,576,192 ( 2,208 ) ( 92,290 ) 3,482,693 See accompanying notes to consolidated financial statements. 5 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except share data) (unaudited) Nelnet, Inc. Shareholders Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interests Total equity Class A Class B Balance as of December 31, 2023 — 26,400,630 10,663,088 $ — 264 107 3,096 3,270,403 ( 20,119 ) ( 53,644 ) 3,200,107 Net income (loss) — — — — — — — 118,498 — ( 4,069 ) 114,429 Other comprehensive income — — — — — — — — 17,859 — 17,859 Issuance of noncontrolling interests — — — — — — — — — 8,151 8,151 Distribution to noncontrolling interests — — — — — — — — — ( 26,570 ) ( 26,570 ) Cash dividends on Class A and Class B common stock - $ 0.56 per share — — — — — — — ( 20,528 ) — — ( 20,528 ) Issuance of common stock, net of forfeitures — 69,914 — — 1 — 3,297 — — — 3,298 Compensation expense for stock based awards — — — — — — 5,834 — — — 5,834 Repurchase of common stock — ( 884,704 ) — — ( 9 ) — ( 11,570 ) ( 70,732 ) — — ( 82,311 ) Acquisition of remaining 20 % of GRNE Solar, net of tax — — — — — — — ( 2,340 ) — 2,093 ( 247 ) Balance as of June 30, 2024 — 25,585,840 10,663,088 $ — 256 107 657 3,295,301 ( 2,260 ) ( 74,039 ) 3,220,022 Balance as of December 31, 2024 — 25,634,748 10,658,604 $ — 256 107 7,389 3,340,540 1,470 ( 50,645 ) 3,299,117 Net income (loss) — — — — — — — 264,018 — ( 5,035 ) 258,983 Other comprehensive loss — — — — — — — — ( 3,678 ) — ( 3,678 ) Issuance of noncontrolling interests — — — — — — — — — 6,179 6,179 Distribution to noncontrolling interests — — — — — — — — — ( 37,406 ) ( 37,406 ) Cash dividends on Class A and Class B common stock - $ 0.56 per share — — — — — — — ( 20,322 ) — — ( 20,322 ) Issuance of common stock, net of forfeitures — 126,027 — — 1 — 2,816 — — — 2,817 Compensation expense for stock based awards — — — — — — 6,351 — — — 6,351 Repurchase of common stock — ( 222,045 ) — — ( 2 ) — ( 15,919 ) ( 9,897 ) — — ( 25,818 ) Acquisition of remaining 20 % of NextGen, net of tax — — — — — — — 1,853 — ( 5,383 ) ( 3,530 ) Balance as of June 30, 2025 — 25,538,730 10,658,604 $ — 255 107 637 3,576,192 ( 2,208 ) ( 92,290 ) 3,482,693 See accompanying notes to consolidated financial statements. 6 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Six months ended June 30, 2025 2024 Net income attributable to Nelnet, Inc. $ 264,018 118,498 Net loss attributable to noncontrolling interests ( 5,035 ) ( 4,069 ) Net income 258,983 114,429 Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions: Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs 52,406 69,623 Loan discount and deferred lender fees accretion ( 42,502 ) ( 22,538 ) Provision for loan losses 33,267 14,440 Derivative market value adjustments 10,190 ( 9,497 ) (Payments to) proceeds from clearinghouse - initial and variation margin, net ( 4,030 ) 5,716 Gain on partial redemption of ALLO investment ( 175,044 ) — (Gain) loss on sale of loans, net ( 909 ) 1,579 (Gain) loss on investments, net ( 19,650 ) 6,985 Deferred income tax benefit ( 88,924 ) ( 4,814 ) Non-cash compensation expense 6,513 6,004 Impairment expense and provision for beneficial interests 11,879 7,813 Changes in operating assets and liabilities: Decrease in loan and investment accrued interest receivable 15,218 150,907 Decrease in accounts receivable 32,523 36,329 Decrease in other assets 23,510 39,667 Decrease in the carrying amount of ROU asset 1,958 1,911 Decrease in accrued interest payable ( 6,072 ) ( 8,250 ) Increase (decrease) in other liabilities 65,986 ( 62,638 ) Decrease in the carrying amount of lease liability ( 3,384 ) ( 1,982 ) Other 1,011 ( 365 ) Total adjustments ( 86,054 ) 230,890 Net cash provided by operating activities 172,929 345,319 Cash flows from investing activities, net of acquisitions: Purchases and originations of loans, including cash paid for student loan trusts, net of cash and restricted cash acquired ( 368,499 ) ( 430,575 ) Purchases of loans from a related party ( 136,667 ) — Net proceeds from loan repayments, claims, and capitalized interest 881,096 2,125,052 Proceeds from sale of loans 72,626 111,316 Proceeds from sale of loans to a related party 60,181 199,694 Purchases of available-for-sale securities ( 240,476 ) ( 295,319 ) Proceeds from sales of available-for-sale securities 109,609 266,547 Proceeds from beneficial interest in loan securitizations 38,235 19,513 Purchases of other investments and issuance of notes receivable ( 161,828 ) ( 197,440 ) Proceeds from other investments and repayments of notes receivable 454,829 53,635 Redemption of held-to-maturity debt securities 7,796 5,041 Purchases of property and equipment ( 7,074 ) ( 33,842 ) Net cash provided by investing activities $ 709,828 1,823,622 7 NELNET, INC. AND SUBSIDIARIES (Continued) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Six months ended June 30, 2025 2024 Cash flows from financing activities, net of acquisitions: Payments on bonds and notes payable $ ( 1,117,852 ) ( 2,283,381 ) Proceeds from issuance of bonds and notes payable 25 37 Payments of debt issuance costs ( 3,999 ) ( 693 ) Increase in bank deposits, net 195,911 146,873 Decrease in due to customers ( 49,489 ) ( 36,642 ) Dividends paid ( 20,322 ) ( 20,528 ) Repurchases of common stock ( 25,818 ) ( 82,311 ) Proceeds from issuance of common stock 920 967 Acquisition of noncontrolling interest ( 3,944 ) ( 325 ) Issuance of noncontrolling interests 15,580 27,396 Distribution to noncontrolling interests ( 3,351 ) ( 2,335 ) Net cash used in financing activities ( 1,012,339 ) ( 2,250,942 ) Effect of exchange rate changes on cash and restricted cash 338 ( 87 ) Net decrease in cash, cash equivalents, and restricted cash ( 129,244 ) ( 82,088 ) Cash, cash equivalents, and restricted cash, beginning of period 931,020 1,025,491 Cash, cash equivalents, and restricted cash, end of period $ 801,776 943,403 Supplemental disclosures of cash flow information: Cash disbursements made for interest $ 244,109 355,943 Cash disbursements made for income taxes, net of refunds and credits received (a) $ 26,886 11,932 Cash disbursements made for operating leases $ 2,604 2,451 Non-cash operating, investing, and financing activity: ROU assets obtained in exchange for lease obligations $ 6,495 49 Receipt of beneficial interest in consumer loan securitizations as consideration from sale of loans $ — 13,693 Distribution to noncontrolling interests $ 34,055 24,235 Issuance of noncontrolling interests $ 9,401 19,245 (a) The Company utilized $ 36.6 million and $ 20.3 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2025 and 2024, respectively. Supplemental disclosures of non-cash activities regarding the Company's acquisition of certain student loan trusts are contained in note 3. The following table presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows: As of As of As of As of June 30, 2025 December 31, 2024 June 30, 2024 December 31, 2023 Total cash and cash equivalents $ 225,753 194,518 145,478 168,112 Restricted cash 317,958 332,100 538,446 488,723 Restricted cash - due to customers 258,065 404,402 259,479 368,656 Cash, cash equivalents, and restricted cash $ 801,776 931,020 943,403 1,025,491 See accompanying notes to consolidated financial statements. 8 NELNET, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts, unless otherwise noted) (unaudited) 1. Basis of Financial Reporting The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company” or "Nelnet") as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2024 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results for the year ending December 31, 2025. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report"). 2. Partial Redemption of ALLO Investment Nelnet had both voting and preferred membership interest investments in ALLO Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO"). In June 2025, ALLO executed a financing transaction that resulted in gross proceeds to ALLO of $ 500 million (the “Financing”). In conjunction with the Financing, Nelnet, ALLO, and certain other ALLO investors entered into a Membership Unit Redemption Agreement (the “Redemption Agreement”) pursuant to which ALLO agreed to redeem certain of its membership interests from certain investors in ALLO, including Nelnet (the “Transaction”). As part of the Transaction, ALLO redeemed all of Nelnet's outstanding preferred membership interests on June 4, 2025, including the preferred return accrued on such membership interests through the Transaction's closing date. In addition, ALLO redeemed a portion of Nelnet’s voting membership interest in ALLO. Upon closing, Nelnet received cash proceeds of $ 410.9 million from ALLO for these redemptions and recognized a pre-tax gain of $ 175.0 million, which is included in "gain on partial redemption of ALLO investment" on the Company's consolidated statements of income. Following the closing of the Transaction, Nelnet no longer owns any preferred membership interests in ALLO, but maintains a significant voting equity investment in ALLO. Nelnet’s ownership of voting membership interest in ALLO decreased from 45 % to 27 %. Nelnet will continue to account for its remaining 27 % voting membership interest in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting, with the carrying value of such interest remaining at $ 0 . As part of the ALLO recapitalization transaction completed in December 2020, Nelnet and SDC (a third-party global digital infrastructure investor and member of ALLO) entered into an agreement in which Nelnet has a contingent obligation to pay SDC in the event Nelnet disposes of its voting membership interests in ALLO that it holds, and realizes from such disposition certain targeted return levels. Upon closing of the Transaction described above, Nelnet recalculated its contingent obligation to reflect the reduction in Nelnet's voting membership interests that are subject to the contingency. This resulted in a reduction in the estimated fair value of the contingent payment liability of $ 4.9 million during the second quarter of 2025, which is included in (and decreased) "other expenses" on the Company's consolidated statements of income. Based on Nelnet's remaining voting membership interests in ALLO, the maximum contingent obligation that Nelnet may owe SDC upon future disposals of Nelnet's voting membership interests in ALLO is $ 9 million (down from $ 35 million). The estimated fair value of the contingent payment as of June 30, 2025 is $ 3.4 million, which is included in "other liabilities" on the consolidated balance sheet. 9 3. Loans and Accrued Interest Receivable and Allowance for Loan Losses Loans and accrued interest receivable consisted of the following: As of As of June 30, 2025 December 31, 2024 Non-Nelnet Bank: Federally insured loans: Stafford and other $ 2,039,136 2,108,960 Consolidation 6,327,949 6,279,604 Total 8,367,085 8,388,564 Private education loans (a) 156,614 221,744 Consumer and other loans 411,470 345,560 Non-Nelnet Bank loans 8,935,169 8,955,868 Nelnet Bank: Federally insured loans: Stafford and other 10,040 — Consolidation 96,515 — Total 106,555 — Private education loans (a) 516,663 482,445 Consumer and other loans 204,423 162,152 Nelnet Bank loans 827,641 644,597 Accrued interest receivable 560,927 549,283 Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs ( 42,905 ) ( 42,114 ) Allowance for loan losses: Non-Nelnet Bank: Federally insured loans ( 47,627 ) ( 49,091 ) Private education loans ( 7,406 ) ( 11,130 ) Consumer and other loans ( 48,028 ) ( 38,468 ) Non-Nelnet Bank allowance for loan losses ( 103,061 ) ( 98,689 ) Nelnet Bank: Federally insured loans ( 355 ) — Private education loans ( 12,360 ) ( 10,086 ) Consumer and other loans ( 9,573 ) ( 6,115 ) Nelnet Bank allowance for loan losses ( 22,288 ) ( 16,201 ) $ 10,155,483 9,992,744 (a) During the second quarter of 2025, the Asset Generation and Management operating segment (Non-Nelnet Bank) contributed $ 42.2 million of private education loans to Nelnet Bank. The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios: As of As of June 30, 2025 December 31, 2024 Non-Nelnet Bank: Federally insured loans (a) 0.57 % 0.59 % Private education loans 4.73 % 5.02 % Consumer and other loans 11.67 % 11.13 % Nelnet Bank: Federally insured loans (a) 0.33 % — Private education loans 2.39 % 2.09 % Consumer and other loans 4.68 % 3.77 % (a) The allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 20.4 % and 20.6 % as of June 30, 2025 and December 31, 2024, respectively, and for Nelnet Bank was 16.5 % as of June 30, 2025. 10 Student Loan Trust Acquisitions In March 2025, the Company acquired the ownership interests in certain trusts giving the Company rights to the residual interest. The trusts included $ 646.9 million (par value) of federally insured Stafford and consolidation loans funded to term with $ 721.3 million (par value) of bonds and notes payable, $ 32.2 million of cash and restricted cash, and $ 27.4 million of other net assets. The Company has consolidated these trusts on its consolidated balance sheet as the Company is the primary beneficiary of the trusts. Upon acquisition, the Company recorded the student loans and bonds and notes payable at fair value, resulting in the recognition of a student loan net discount of $ 6.6 million and a bonds and notes payable discount of $ 31.1 million. These net discounts will be accreted using the effective interest method over the lives of the underlying assets and liabilities. Activity in the Allowance for Loan Losses The following table presents the activity in the allowance for loan losses by portfolio segment: Balance at beginning of period Provision (negative provision) for loan losses (a) Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration Balance at end of period Three months ended June 30, 2025 Non-Nelnet Bank: Federally insured loans $ 48,906 2,112 ( 3,391 ) — — 47,627 Private education loans 10,394 ( 2,760 ) ( 523 ) 295 — 7,406 Consumer and other loans 43,904 11,781 ( 7,967 ) 310 — 48,028 Nelnet Bank: Federally insured loans 362 9 ( 16 ) — — 355 Private education loans 9,893 2,839 ( 1,739 ) 307 1,060 12,360 Consumer and other loans 6,617 3,731 ( 878 ) 103 — 9,573 $ 120,076 17,712 ( 14,514 ) 1,015 1,060 125,349 Three months ended June 30, 2024 Non-Nelnet Bank: Federally insured loans $ 61,723 ( 1,970 ) ( 5,573 ) — — 54,180 Private education loans 14,736 — ( 1,827 ) 156 — 13,065 Consumer and other loans 18,761 ( 2,255 ) ( 2,634 ) 263 — 14,135 Nelnet Bank: Private education loans 3,660 255 ( 460 ) 104 — 3,559 Consumer and other loans 7,128 7,519 ( 2,837 ) 15 — 11,825 $ 106,008 3,549 ( 13,331 ) 538 — 96,764 Six months ended June 30, 2025 Non-Nelnet Bank: Federally insured loans $ 49,091 4,746 ( 6,210 ) — — 47,627 Private education loans 11,130 ( 2,760 ) ( 1,457 ) 493 — 7,406 Consumer and other loans 38,468 22,158 ( 13,143 ) 545 — 48,028 Nelnet Bank: Federally insured loans — 374 ( 19 ) — — 355 Private education loans 10,086 3,925 ( 3,134 ) 423 1,060 12,360 Consumer and other loans 6,115 4,734 ( 1,447 ) 171 — 9,573 $ 114,890 33,177 ( 25,410 ) 1,632 1,060 125,349 Six months ended June 30, 2024 Non-Nelnet Bank: Federally insured loans $ 68,453 ( 3,840 ) ( 10,433 ) — — 54,180 Private education loans 15,750 ( 265 ) ( 2,840 ) 420 — 13,065 Consumer and other loans 11,742 6,335 ( 4,586 ) 644 — 14,135 Nelnet Bank: Private education loans 3,347 1,012 ( 906 ) 106 — 3,559 Consumer and other loans 5,351 11,236 ( 4,804 ) 42 — 11,825 $ 104,643 14,478 ( 23,569 ) 1,212 — 96,764 11 (a) Once a loan is classified as held for sale, any allowance for loan losses that existed immediately prior to the reclassification to held for sale is reversed through provision. The following table presents the reduction to provision for loan losses as a result of the contribution of Non-Nelnet Bank private education loans to Nelnet Bank during the second quarter of 2025 and the consumer and other loan sales during 2024: Provision for current period Reduction to provision Provision (negative provision) for loan losses Three months ended June 30, 2025 Non-Nelnet Bank Private education loans $ ( 994 ) ( 1,766 ) ( 2,760 ) Three months ended June 30, 2024 Non-Nelnet Bank Consumer and other loans $ 10,340 ( 12,595 ) ( 2,255 ) Six months ended June 30, 2025 Non-Nelnet Bank Private education loans $ ( 994 ) ( 1,766 ) ( 2,760 ) Six months ended June 30, 2024 Non-Nelnet Bank Consumer and other loans $ 19,030 ( 12,695 ) 6,335 The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Non-Nelnet Bank: Federally insured loans 0.16 % 0.22 % 0.14 % 0.19 % Private education loans 0.55 % 2.64 % 1.02 % 1.85 % Consumer and other loans 7.62 % 4.62 % 6.58 % 4.98 % Nelnet Bank: Federally insured loans 0.06 % — 0.06 % — Private education loans 1.10 % 0.40 % 1.08 % 0.44 % Consumer and other loans (a) 1.71 % 7.44 % 1.49 % 7.66 % (a) Decrease in annualized net charge-offs as a percentage of average loans was due to a change in mix of consumer loan portfolios that resulted in a portfolio of loans with an overall higher credit quality in 2025 compared with 2024 and Nelnet Bank exiting a consumer loan program in December 2024 that had previously incurred significant charge-offs. During the periods presented above, the primary item impacting provision for loan losses was the establishment of an initial allowance for loans originated and acquired during the periods. Provision for loan losses was also impacted by the reversal of provision for consumer and other loans sold in 2024. The Company recorded a negative provision for loan losses for its federally insured loan portfolio in 2024 due to an increase in prepayment assumptions. Unfunded Loan Commitments As of June 30, 2025 and December 31, 2024, Nelnet Bank had a liability of approximately $ 416,000 and $ 326,000 , respectively, related to $ 62.2 million and $ 40.7 million, respectively, of unfunded private education, consumer, and other loan commitments. When a new loan commitment is made, the Company records an allowance that is included in "other liabilities" on the consolidated balance sheet by recording a provision for loan losses. When the loan is funded, the Company transfers the liability to the allowance for loan losses. Below is a reconciliation of the provision for loan losses reported in the consolidated statements of income. Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Provision for loan losses from allowance activity table above $ 17,712 3,549 33,177 14,478 Provision (negative provision) for unfunded loan commitments 218 62 90 ( 38 ) Provision for loan losses reported in consolidated statements of income $ 17,930 3,611 33,267 14,440 12 Key Credit Quality Indicators Loan Status and Delinquencies Key credit quality indicators for the Company’s federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but for purposes of the following tables, do not include those loans while they are in forbearance). The following table presents the Company’s loan status and delinquency amounts: As of June 30, 2025 As of December 31, 2024 As of June 30, 2024 Federally insured loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 393,460 4.7 % $ 376,765 4.5 % $ 440,891 4.6 % Loans in forbearance 555,469 6.6 586,412 7.0 702,539 7.4 Loans in repayment status: Loans current 6,378,571 86.0 % 6,374,897 85.9 % 7,012,655 84.1 % Loans delinquent 31-60 days 261,809 3.5 243,348 3.3 339,262 4.1 Loans delinquent 61-90 days 175,562 2.4 166,474 2.2 234,746 2.8 Loans delinquent 91-120 days 111,678 1.5 113,838 1.5 151,447 1.8 Loans delinquent 121-270 days 360,754 4.9 380,823 5.1 377,660 4.5 Loans delinquent 271 days or greater 129,782 1.7 146,007 2.0 224,533 2.7 Total loans in repayment 7,418,156 88.7 100.0 % 7,425,387 88.5 100.0 % 8,340,303 88.0 100.0 % Total federally insured loans 8,367,085 100.0 % 8,388,564 100.0 % 9,483,733 100.0 % Accrued interest receivable 545,288 540,272 612,374 Loan discount, net of unamortized premiums and deferred origination costs ( 26,523 ) ( 21,513 ) ( 24,222 ) Allowance for loan losses ( 47,627 ) ( 49,091 ) ( 54,180 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 8,838,223 $ 8,858,232 $ 10,017,705 Private education loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 4,433 2.8 % $ 5,997 2.7 % $ 7,906 3.2 % Loans in forbearance 1,530 1.0 2,089 0.9 2,248 0.9 Loans in repayment status: Loans current 147,690 98.0 % 206,825 96.8 % 230,512 97.1 % Loans delinquent 31-60 days 1,246 0.8 3,424 1.6 2,814 1.2 Loans delinquent 61-90 days 564 0.4 1,275 0.6 1,395 0.6 Loans delinquent 91 days or greater 1,151 0.8 2,134 1.0 2,562 1.1 Total loans in repayment 150,651 96.2 100.0 % 213,658 96.4 100.0 % 237,283 95.9 100.0 % Total private education loans 156,614 100.0 % 221,744 100.0 % 247,437 100.0 % Accrued interest receivable 1,299 2,019 2,407 Loan discount, net of unamortized premiums ( 5,162 ) ( 6,350 ) ( 7,194 ) Allowance for loan losses ( 7,406 ) ( 11,130 ) ( 13,065 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 145,345 $ 206,283 $ 229,585 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ 1,355 0.3 % $ 150 0.0 % $ 122 0.1 % Loans in repayment status: Loans current 399,263 97.3 % 335,355 97.1 % 174,295 97.2 % Loans delinquent 31-60 days 3,731 0.9 3,667 1.1 2,100 1.2 Loans delinquent 61-90 days 3,096 0.8 2,143 0.6 1,857 1.0 Loans delinquent 91 days or greater 4,025 1.0 4,245 1.2 1,073 0.6 Total loans in repayment 410,115 99.7 100.0 % 345,410 100.0 100.0 % 179,325 99.9 100.0 % Total consumer and other loans 411,470 100.0 % 345,560 100.0 % 179,447 100.0 % Accrued interest receivable 2,260 1,868 763 Loan discount and deferred lender fees, net of unamortized premiums ( 6,296 ) ( 10,713 ) ( 9,205 ) Allowance for loan losses ( 48,028 ) ( 38,468 ) ( 14,135 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 359,406 $ 298,247 $ 156,870 13 As of June 30, 2025 As of December 31, 2024 As of June 30, 2024 Federally insured loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 2,665 2.5 % Loans in forbearance 5,550 5.2 Loans in repayment status: Loans current 88,408 89.9 % Loans delinquent 30-59 days 2,806 2.9 Loans delinquent 60-89 days 2,001 2.0 Loans delinquent 90-119 days 1,683 1.7 Loans delinquent 120-270 days 2,495 2.5 Loans delinquent 271 days or greater 947 1.0 Total loans in repayment 98,340 92.3 100.0 % Total federally insured loans 106,555 100.0 % Accrued interest receivable 5,194 Loan premium 1,221 Allowance for loan losses ( 355 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 112,615 Private education loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 45,107 8.7 % $ 31,674 6.6 % $ 41,394 11.7 % Loans in forbearance 1,926 0.4 3,061 0.6 1,985 0.6 Loans in repayment status: Loans current 460,426 98.0 % 439,569 98.2 % 308,591 99.2 % Loans delinquent 30-59 days 3,102 0.7 4,327 1.0 934 0.3 Loans delinquent 60-89 days 2,710 0.6 1,497 0.3 444 0.2 Loans delinquent 90 days or greater 3,392 0.7 2,317 0.5 1,064 0.3 Total loans in repayment 469,630 90.9 100.0 % 447,710 92.8 100.0 % 311,033 87.7 100.0 % Total private education loans 516,663 100.0 % 482,445 100.0 % 354,412 100.0 % Accrued interest receivable 5,540 4,103 2,709 Loan discount, net of unamortized premiums and deferred origination costs ( 8,589 ) ( 4,581 ) 5,501 Allowance for loan losses ( 12,360 ) ( 10,086 ) ( 3,559 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 501,254 $ 471,881 $ 359,063 Consumer and other loans - Nelnet Bank (a): Loans in deferment $ 8,538 4.2 % $ 5,186 3.2 % $ 1,414 0.8 % Loans in repayment status: Loans current 194,507 99.3 % 155,772 99.2 % 181,558 97.3 % Loans delinquent 30-59 days 1,001 0.5 803 0.5 1,516 0.8 Loans delinquent 60-89 days 193 0.1 243 0.2 1,814 1.0 Loans delinquent 90 days or greater 184 0.1 148 0.1 1,637 0.9 Total loans in repayment 195,885 95.8 100.0 % 156,966 96.8 100.0 % 186,525 99.2 100.0 % Total consumer and other loans 204,423 100.0 % 162,152 100.0 % 187,939 100.0 % Accrued interest receivable 1,346 1,021 1,219 Loan premium, net of unaccreted discount 2,444 1,043 ( 1,037 ) Allowance for loan losses ( 9,573 ) ( 6,115 ) ( 11,825 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 198,640 $ 158,101 $ 176,296 (a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation. 14 FICO Scores An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination or purchase. The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination or purchase: Nelnet Bank Private Education Loans Loan balance as of June 30, 2025 Six months ended June 30, 2025 2024 2023 2022 2021 Prior years Total Percent of total FICO at origination or purchase: Less than 705 $ 2,057 2,986 3,197 4,408 3,857 22,149 38,654 7.5 % 705 - 734 2,753 5,017 8,301 18,528 7,076 15,980 57,655 11.2 735 - 764 4,251 5,693 7,795 27,968 11,821 23,990 81,518 15.8 765 - 794 4,260 6,576 5,416 43,694 22,369 29,537 111,852 21.6 Greater than 794 6,154 14,728 13,632 62,114 44,955 77,929 219,512 42.5 No FICO score available or required (a) — 2,367 5,105 — — — 7,472 1.4 $ 19,475 37,367 43,446 156,712 90,078 169,585 516,663 100.0 % Loan balance as of December 31, 2024 2024 2023 2022 2021 2020 Prior years Total Percent of total FICO at origination or purchase: Less than 705 $ 2,566 3,578 4,759 4,182 331 15,485 30,901 6.4 % 705 - 734 3,736 8,874 19,666 7,531 426 12,349 52,582 10.9 735 - 764 4,398 8,629 29,918 12,775 1,286 17,920 74,926 15.5 765 - 794 4,600 6,115 46,340 24,073 1,105 23,867 106,100 22.0 Greater than 794 9,971 15,471 67,454 49,408 4,406 63,258 209,968 43.5 No FICO score available or required (a) 2,476 5,492 — — — — 7,968 1.7 $ 27,747 48,159 168,137 97,969 7,554 132,879 482,445 100.0 % Nelnet Bank Consumer and Other Loans Loan balance as of June 30, 2025 Six months ended June 30, 2025 2024 2023 2022 2021 Prior years Total Percent of total FICO at origination: Less than 720 $ 6,132 17,946 1,627 — 295 1,463 27,463 13.4 % 720 - 769 12,060 39,184 3,981 17 5,770 7,662 68,674 33.6 Greater than 769 28,891 52,873 6,252 98 5,597 3,566 97,277 47.6 No FICO score available or required (a) 2,124 8,123 434 274 54 — 11,009 5.4 $ 49,207 118,126 12,294 389 11,716 12,691 204,423 100.0 % Loan balance as of December 31, 2024 2024 2023 2022 2021 2020 Prior years Total Percent of total FICO at origination: Less than 720 $ 19,264 1,762 — 376 675 1,170 23,247 14.3 % 720 - 769 41,217 4,502 19 6,152 5,448 3,105 60,443 37.3 Greater than 769 57,323 6,577 103 5,834 2,755 1,165 73,757 45.5 No FICO score available or required (a) 3,936 437 277 55 — — 4,705 2.9 $ 121,740 13,278 399 12,417 8,878 5,440 162,152 100.0 % (a) Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk. 15 Nonaccrual Status The Company does not place federally insured loans on nonaccrual status due to the government guaranty. The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of June 30, 2025 and December 31, 2024, was not material. Amortized Cost Basis by Origination Year The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of June 30, 2025 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the Federal Family Education Loan Program (the "FFEL Program" or FFELP) and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all of the Company’s federally insured loans were originated prior to July 1, 2010. Six months ended June 30, 2025 2024 2023 2022 2021 Prior years Total Private education loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ — — — 332 2,124 1,977 4,433 Loans in forbearance — — — 29 375 1,126 1,530 Loans in repayment status: Loans current — — 185 3,868 5,031 138,606 147,690 Loans delinquent 31-60 days — — — 23 31 1,192 1,246 Loans delinquent 61-90 days — — — — 5 559 564 Loans delinquent 91 days or greater — — — — 84 1,067 1,151 Total loans in repayment — — 185 3,891 5,151 141,424 150,651 Total private education loans $ — — 185 4,252 7,650 144,527 156,614 Accrued interest receivable 1,299 Loan discount, net of unamortized premiums ( 5,162 ) Allowance for loan losses ( 7,406 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 145,345 Gross charge-offs - six months ended June 30, 2025 $ — — — — 52 1,405 1,457 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ — 453 902 — — — 1,355 Loans in repayment status: Loans current 191,184 174,221 31,379 1,891 307 281 399,263 Loans delinquent 31-60 days 423 2,348 751 190 19 — 3,731 Loans delinquent 61-90 days 254 1,750 865 224 — 3 3,096 Loans delinquent 91 days or greater 9 3,019 706 291 — — 4,025 Total loans in repayment 191,870 181,338 33,701 2,596 326 284 410,115 Total consumer and other loans $ 191,870 181,791 34,603 2,596 326 284 411,470 Accrued interest receivable 2,260 Loan discount and deferred lender fees, net of unamortized premiums ( 6,296 ) Allowance for loan losses ( 48,028 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 359,406 Gross charge-offs - six months ended June 30, 2025 $ 3,774 4,426 4,745 184 9 5 13,143 16 Six months ended June 30, 2025 2024 2023 2022 2021 Prior years Total Private education loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 8,171 20,707 8,999 5,413 354 1,463 45,107 Loans in forbearance — 25 262 414 165 1,060 1,926 Loans in repayment status: Loans current 11,189 16,157 33,073 150,025 88,331 161,651 460,426 Loans delinquent 30-59 days 66 246 364 268 184 1,974 3,102 Loans delinquent 60-89 days — 31 305 290 289 1,795 2,710 Loans delinquent 90 days or greater 49 201 443 302 755 1,642 3,392 Total loans in repayment 11,304 16,635 34,185 150,885 89,559 167,062 469,630 Total private education loans $ 19,475 37,367 43,446 156,712 90,078 169,585 516,663 Accrued interest receivable 5,540 Loan discount, net of unamortized premiums and deferred origination costs ( 8,589 ) Allowance for loan losses ( 12,360 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 501,254 Gross charge-offs - six months ended June 30, 2025 $ — 191 498 335 259 1,851 3,134 Consumer and other loans - Nelnet Bank (a): Loans in deferment $ 5,092 3,446 — — — — 8,538 Loans in repayment status: Loans current 44,054 113,832 12,180 389 11,468 12,584 194,507 Loans delinquent 30-59 days 61 573 114 — 156 97 1,001 Loans delinquent 60-89 days — 183 — — — 10 193 Loans delinquent 90 days or greater — 92 — — 92 — 184 Total loans in repayment 44,115 114,680 12,294 389 11,716 12,691 195,885 Total consumer and other loans $ 49,207 118,126 12,294 389 11,716 12,691 204,423 Accrued interest receivable 1,346 Loan premium, net of unaccreted discount 2,444 Allowance for loan losses ( 9,573 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 198,640 Gross charge-offs - six months ended June 30, 2025 $ — 784 283 — 214 166 1,447 (a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation. 17 4. Bonds and Notes Payable The following tables summarize the Company’s outstanding debt obligations by type of instrument: As of June 30, 2025 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 6,611,844 4.69 % - 6.43 % 8/26/30 - 9/25/69 Bonds and notes based on auction 321,880 5.42 % - 6.92 % 3/22/32 - 11/1/47 Total FFELP variable-rate bonds and notes 6,933,724 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 324,392 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facilities 553,313 5.19 % - 5.31 % 7/31/26 / 5/1/27 Consumer loan warehouse facilities 68,026 5.69 % - 6.43 % 11/13/27 - 2/29/28 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 44,793 5.90 % / 6.56 % 6/25/49 / 11/25/53 Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 35,152 7.15 % 11/25/53 Unsecured line of credit — — 9/22/26 Participation agreements 2,051 5.06 % - 5.82 % 5/4/26 / 7/28/32 7,961,451 Discount on bonds and notes payable and debt issuance costs ( 57,890 ) Total $ 7,903,561 As of December 31, 2024 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 6,923,824 4.89 % - 6.45 % 8/26/30 - 9/25/69 Bonds and notes based on auction 36,395 5.71 % - 5.72 % 3/22/32 - 8/25/37 Total FFELP variable-rate bonds and notes 6,960,219 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 346,359 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facilities 853,165 4.41 % - 4.69 % 1/31/26 / 4/1/26 Consumer loan warehouse facilities 90,000 4.46 % / 4.57 % 8/1/26 / 11/13/27 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 54,973 5.90 % / 6.82 % 6/25/49 / 11/25/53 Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 50,415 5.35 % / 7.15 % 12/28/43 / 11/25/53 Unsecured line of credit — — 9/22/26 Participation agreements 3,320 5.27 % - 5.82 % 5/4/25 / 1/30/33 8,358,451 Discount on bonds and notes payable and debt issuance costs ( 48,654 ) Total $ 8,309,797 18 Warehouse Facilities The Company funds a portion of its loan acquisitions through the use of warehouse facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. The following table summarizes the Company's warehouse facilities as of June 30, 2025: Type of loans Maximum financing amount Amount outstanding Amount available Expiration of liquidity provisions Final maturity date Advance rate Advanced as equity support FFELP (a) $ 600,000 403,872 196,128 7/31/2025 7/31/2026 note (b) $ 30,511 FFELP (c) 375,000 149,441 225,559 5/1/2026 5/1/2027 92 % 12,574 $ 975,000 553,313 421,687 $ 43,085 Consumer $ 100,000 3,001 96,999 11/13/2026 11/13/2027 70 % $ 1,394 Consumer (d) 125,000 65,000 60,000 7/31/2027 2/29/2028 60 % - 80 % 21,071 Consumer (e) 2,000 25 1,975 7/15/2027 1/15/2028 50 % - 90 % 5 $ 227,000 68,026 158,974 $ 22,470 (a) On January 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to July 31, 2025 and July 31, 2026, respectively. On July 17, 2025, the Company increased the maximum financing amount from $ 600 million to $ 800 million and extended the liquidity provisions and final maturity date to January 30, 2026 and January 29, 2027, respectively. (b) This facility has a static advance rate until the expiration date of the liquidity provisions. The maximum advance rates for this facility are 90 % to 96 %, and the minimum advance rates are 84 % to 90 %. In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor. The loans would then be funded at this new advance rate until the final maturity date of the facility. (c) On March 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to May 1, 2025 and May 1, 2026, respectively, and on April 10, 2025, extended the liquidity provisions and final maturity to May 1, 2026 and May 1, 2027, respectively. (d) On June 16, 2025, the Company extended the liquidity provisions and final maturity date on this facility to July 31, 2027 and February 29, 2028, respectively. (e) The Company closed on this facility on May 15, 2025. Unsecured Line of Credit The Company has a $ 495.0 million unsecured line of credit that has a maturity date of September 22, 2026. As of June 30, 2025, no amount was outstanding on the line of credit and $ 495.0 million was available for future use. Debt Repurchases The following table summarizes the Company's repurchases of its own debt. Gains/losses recorded by the Company from the repurchase of debt are included in "other, net" in "other income (expense)" on the Company's consolidated statements of income. Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Purchase price $ ( 141,998 ) ( 4,199 ) ( 142,869 ) ( 4,199 ) Par value 142,396 4,190 143,320 4,190 Remaining unamortized cost of issuance ( 10 ) — ( 12 ) — Gain (loss), net $ 388 ( 9 ) 439 ( 9 ) The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. As of June 30, 2025, the Company holds $ 238.8 million (par value) of its own FFELP asset-backed securities. 19 5. Derivative Financial Instruments Non-Nelnet Bank Derivatives The Company uses settled-to-market derivative financial instruments to manage interest rate risk. Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 5 of the notes to consolidated financial statements included in the 2024 Annual Report. Basis Swaps The following table summarizes the Company’s outstanding basis swaps as of June 30, 2025 and December 31, 2024 used to hedge its basis risk and repricing risk on a portion of its FFELP student loan assets. For these derivative instruments, the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements (the "Basis Swaps"). Maturity Notional amount 2026 $ 1,150,000 2027 250,000 $ 1,400,000 Interest Rate Swaps – Floor Income Hedges The following table summarizes the outstanding derivative instruments used by the Company as of June 30, 2025 and December 31, 2024 to economically hedge loans earning fixed rate floor income. For these derivative instruments, the Company receives payments based on SOFR, the majority of which reset quarterly. Maturity Notional amount Weighted average fixed rate paid by the Company 2026 $ 200,000 3.92 % 2028 50,000 3.56 2029 (a) 50,000 3.17 2030 (b) 100,000 3.63 $ 400,000 3.71 % (a) This $ 50 million notional amount derivative has a forward effective start date in January 2026. (b) A $ 50 million notional amount derivative maturing in 2030 has a forward effective start date in November 2025. 20 Nelnet Bank Derivatives Nelnet Bank uses non-centrally cleared derivative instruments to hedge exposure to variability in cash flows from variable rate intercompany and third-party deposits to minimize volatility from future changes in interest rates. Nelnet Bank has designated all of its derivative instruments as cash flow hedges; however, the derivatives that hedge intercompany deposits are not eligible for hedge accounting in the consolidated financial statements. Interest Rate Swaps - Intercompany Deposits The following table summarizes the outstanding derivative instruments used by Nelnet Bank to hedge intercompany deposits. For these derivative instruments, the Company receives monthly or quarterly payments based on SOFR that reset daily. As of June 30, 2025 As of December 31, 2024 Maturity Notional amount Weighted average fixed rate paid by the Company Notional amount Weighted average fixed rate paid by the Company 2028 $ 40,000 3.33 % $ 40,000 3.33 % 2029 25,000 3.37 25,000 3.37 2030 (a) 50,000 3.06 50,000 3.06 2032 (b) 25,000 4.03 25,000 4.03 2033 (c) 25,000 3.90 25,000 3.90 2035 (d) 30,000 3.79 — — $ 195,000 3.50 % $ 165,000 3.44 % (a) These $ 25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively. (b) This $ 25 million notional amount derivative has a forward effective start date in February 2027. (c) This $ 25 million notional amount derivative has a forward effective start date in November 2025. (d) This $ 30 million notional amount derivative has a forward effective start date in May 2028. Interest Rate Swaps - Third-Party Deposits The following table summarizes the outstanding derivative instruments used by Nelnet Bank to hedge third-party deposits. For these derivative instruments, the Company receives monthly payments based on SOFR that reset monthly. As of June 30, 2025 Maturity Notional amount Weighted average fixed rate paid by the Company 2030 $ 25,000 3.57 % 2035 25,000 3.87 $ 50,000 3.72 % Changes in the fair value of derivatives that hedge third-party deposits and qualify as cash flow hedges in the consolidated financial statements are recognized in other comprehensive income, net of tax. Derivative settlements for cash flow hedges are included in "interest expense" on the consolidated statements of income, which were not material for the three and six months ended June 30, 2025. 21 Consolidated Financial Statement Impact Related to Derivatives Balance Sheets Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse. As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset (included in "other assets") or liability (included in "other liabilities") measured at fair value. The following table summarizes the fair value of the Company's Nelnet Bank derivatives as reflected in the consolidated balance sheets: Fair value of asset derivatives Fair value of liability derivatives As of June 30, 2025 As of December 31, 2024 As of June 30, 2025 As of December 31, 2024 Interest rate swaps - intercompany deposits $ 402 3,232 1,452 53 Interest rate swaps - third-party deposits (cash flow hedges) — — 625 — $ 402 3,232 2,077 53 Statements of Income The following table summarizes the components of "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income related to derivative instruments that do not qualify for hedge accounting: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Settlements: Basis swaps $ 154 249 307 614 Interest rate swaps - floor income hedges 427 1,193 855 2,383 Interest rate swaps - intercompany deposits 163 207 327 409 Total settlements - income 744 1,649 1,489 3,406 Change in fair value: Basis swaps ( 143 ) ( 232 ) ( 281 ) ( 586 ) Interest rate swaps - floor income hedges ( 2,022 ) 1,168 ( 5,680 ) 7,228 Interest rate swaps - intercompany deposits ( 1,701 ) 597 ( 4,229 ) 2,855 Total change in fair value - (expense) income ( 3,866 ) 1,533 ( 10,190 ) 9,497 Derivative market value adjustments and derivative settlements, net - (expense) income $ ( 3,122 ) 3,182 ( 8,701 ) 12,903 22 6. Investments and Notes Receivable “Total investments and notes receivable” consisted of the following: As of June 30, 2025 As of December 31, 2024 Amortized cost Gross unrealized gains Gross unrealized losses Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value Investments at fair value: Available-for-sale asset-backed securities Non-Nelnet Bank: FFELP loan $ 128,213 3,977 ( 3,056 ) 129,134 188,386 5,804 ( 896 ) 193,294 FFELP loan and other debt securities - restricted (a) 119,014 3,350 ( 450 ) 121,914 98,914 3,151 ( 78 ) 101,987 Private education loan (b) 216,233 52 ( 16,339 ) 199,946 237,288 — ( 18,118 ) 219,170 Other debt securities 44,617 2,245 ( 15 ) 46,847 32,552 2,500 — 35,052 Total Non-Nelnet Bank 508,077 9,624 ( 19,860 ) 497,841 557,140 11,455 ( 19,092 ) 549,503 Nelnet Bank: FFELP loan 234,438 5,862 ( 714 ) 239,586 231,543 6,060 ( 270 ) 237,333 Private education loan 15,250 — ( 1 ) 15,249 1,596 — — 1,596 Other debt securities 451,116 1,309 ( 2,121 ) 450,304 296,944 1,775 ( 1,325 ) 297,394 Total Nelnet Bank 700,804 7,171 ( 2,836 ) 705,139 530,083 7,835 ( 1,595 ) 536,323 Total available-for-sale asset-backed securities $ 1,208,881 16,795 ( 22,696 ) 1,202,980 1,087,223 19,290 ( 20,687 ) 1,085,826 Equity securities and funds measured at net asset value 83,749 74,494 Total investments at fair value 1,286,729 1,160,320 Other investments and notes receivable (not measured at fair value): Nelnet Bank: Held-to-maturity asset-backed securities FFELP loan 201,806 203,439 Private education loan 1,785 7,335 Total Nelnet Bank held-to-maturity asset-backed securities 203,591 210,774 Venture capital, funds, and other: Measurement alternative (c) 207,086 200,782 Equity method 172,935 170,258 Total venture capital and funds 380,021 371,040 Real estate equity method 176,411 131,745 Investment in ALLO (d): Voting interest/equity method — — Preferred membership interests and accrued and unpaid preferred return — 225,614 Total investment in ALLO — 225,614 Beneficial interest in loan securitizations (e): Consumer loans, net of allowance for credit losses of $ 41,008 and $ 38,590 as of June 30, 2025 and December 31, 2024, respectively 127,729 142,764 Private education loans, net of allowance for credit losses of $ 4,970 and $ 901 as of June 30, 2025 and December 31, 2024, respectively 44,502 52,824 Federally insured student loans 18,622 18,221 Total beneficial interest in loan securitizations, net of allowance 190,853 213,809 Solar (f) ( 200,784 ) ( 155,048 ) Notes receivable 54,603 32,258 Tax liens, affordable housing, and other 13,515 10,184 Total other investments and notes receivable (not measured at fair value) 818,210 1,040,376 Total investments and notes receivable $ 2,104,939 $ 2,200,696 23 (a) Represent investments held in third-party trusts as collateral for the Company’s reinsurance business. (b) As sponsor of certain private education loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement. The bonds purchased to satisfy the risk retention requirement are included in the above table. The Company must retain these investment securities until the latest of (i) the date the aggregate outstanding principal balance of the loans in the securitization is 33 % or less of the initial loan balance, and (ii) the date the aggregate outstanding principal balance of the bonds is 33 % or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party. (c) The Company has an investment in Agile Sports Technologies, Inc. (doing business as “Hudl”). During the first quarter of 2025, the Company acquired additional ownership interests in Hudl for $ 3.8 million from existing Hudl investors. This transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities. Accordingly, the Company did not adjust its carrying value of its Hudl investment to the transaction value. As of June 30, 2025, the carrying amount of the Company's investment in Hudl was $ 172.5 million. David S. Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl. (d) 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. See note 2 for additional information. The Company's voting membership interest in ALLO is accounted for using the HLBV method of accounting. Using the HLBV method of accounting, the Company recognized $ 10.7 million of losses during the three months ended March 31, 2024, reducing the carrying value of the voting membership interest investment 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 Company recognized income on its ALLO preferred membership interests of $ 6.0 million and $ 4.2 million during the three months ended June 30, 2025 and 2024, respectively, and $ 14.4 million and $ 6.6 million during the six months ended June 30, 2025 and 2024, respectively. The income statement activity from the Company's investment in ALLO is included in "other, net" in "other income (expense)" on the consolidated statements of income. (e) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations, which are accounted for as held-to-maturity beneficial interest investments. 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 $ 1.00 billion, $ 420 million, and $ 280 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations. The Company recorded a $ 1.5 million and $ 5.0 million allowance for credit losses (and related provision expense) during the first and second quarters of 2025, respectively, on these investments. This expense is included in "impairment expense and provision for beneficial interests" on the consolidated statements of income. (f) The Company invests in solar tax equity investments through investment partnerships. Due to the management and control of each of these investment partnerships, such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the third-party co-investor’s portion being presented as noncontrolling interests. As of June 30, 2025, the Company has invested a total of $ 300.6 million and its third-party investors have invested $ 285.8 million in tax equity investments that remain outstanding in renewable energy solar partnerships that support the development and operations of solar projects. The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed in service. As of June 30, 2025, the Company and its third-party co-investors have earned $ 334.2 million and $ 290.7 million, respectively, of tax credits on those projects that remain outstanding. The solar investment negative carrying value on the consolidated balance sheet of $ 200.8 million as of June 30, 2025 represents the sum of total tax credits earned on solar projects placed in service through June 30, 2025 and the calculated HLBV cumulative net losses being larger than the total investment contributions made by the Company and its syndication partners on such projects. The solar investment negative carrying value as of June 30, 2025, excluding the portion owned by syndication partners that is reflected as "noncontrolling interests" on the consolidated balance sheet, was $ 97.7 million. The Company accounts for its solar investments using the HLBV method of accounting. For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment. The following table presents (i) the Company's recognized HLBV losses and gains recognized from sales of certain investments at the end of the contractual agreement (typically five years ), which include losses and gains attributable to third-party noncontrolling interest investors (syndication partners), included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses and gains attributed to noncontrolling interest investors included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the Company's recognized net gain excluding amounts attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company): Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Losses from HLBV accounting (gross) $ ( 6,463 ) ( 6,818 ) ( 9,079 ) ( 4,038 ) Gains from sales (gross) 4,961 4,208 8,033 4,208 (Losses) gains from solar investments, net ( 1,502 ) ( 2,610 ) ( 1,046 ) 170 Less: (losses) gains attributable to noncontrolling members, net ( 3,159 ) 8 ( 4,204 ) ( 1,633 ) Net gain (loss), excluding amounts attributed to noncontrolling interest investors $ 1,657 ( 2,618 ) 3,158 1,803 24 The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of June 30, 2025: As of June 30, 2025 1 year or less After 1 year through 5 years After 5 years through 10 years After 10 years Total Available-for-sale asset-backed securities Non-Nelnet Bank: FFELP loan $ — 204 2,520 125,489 128,213 FFELP loan and other debt securities - restricted — 5,500 15,081 98,433 119,014 Private education loan — — — 216,233 216,233 Other debt securities — 4,819 12,281 27,517 44,617 Total Non-Nelnet Bank — 10,523 29,882 467,672 508,077 Fair value — 10,632 29,921 457,288 497,841 Nelnet Bank: FFELP loan 51,575 13,304 27,983 141,576 234,438 Private education loan — — 14,210 1,040 15,250 Other debt securities — 39,249 75,189 336,678 451,116 Total Nelnet Bank 51,575 52,553 117,382 479,294 700,804 Fair value 51,214 52,572 117,649 483,704 705,139 Total available-for-sale asset-backed securities at amortized cost $ 51,575 63,076 147,264 946,966 1,208,881 Total available-for-sale asset-backed securities at fair value $ 51,214 63,204 147,570 940,992 1,202,980 Held-to-maturity asset-backed securities Nelnet Bank: FFELP loan $ — 2,632 11,730 187,444 201,806 Private education loan — — — 1,785 1,785 Total held-to-maturity asset-backed securities at amortized cost $ — 2,632 11,730 189,229 203,591 Total held-to-maturity asset-backed securities at fair value $ — 2,686 11,576 194,202 208,464 Beneficial interest in loan securitizations (a): Amortized cost $ — — — — 190,853 Fair value $ — — — — 201,025 (a) The Company's beneficial interest in loan securitizations are not due at a single maturity date. The following table summarizes the unrealized positions for held-to-maturity asset-backed securities investments and the beneficial interest in loan securitizations as of June 30, 2025: Carrying value Gross unrealized gains Gross unrealized losses Fair value Asset-backed securities $ 203,591 5,523 ( 650 ) 208,464 Beneficial interest in loan securitizations 190,853 11,643 ( 1,471 ) 201,025 25 The following table presents securities classified as available-for-sale that have gross unrealized losses as of June 30, 2025 and the fair value of such securities as of June 30, 2025. These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis. All securities in the table below have been evaluated to determine if a credit loss exists. As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses. As of June 30, 2025 Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value Available-for-sale asset-backed securities Non-Nelnet Bank: FFELP loan $ ( 245 ) 9,992 ( 2,811 ) 45,914 ( 3,056 ) 55,906 FFELP loan and other debt securities - restricted ( 129 ) 21,535 ( 321 ) 8,014 ( 450 ) 29,549 Private education loan — — ( 16,339 ) 175,268 ( 16,339 ) 175,268 Other debt securities ( 15 ) 1,985 — — ( 15 ) 1,985 Total Non-Nelnet Bank ( 389 ) 33,512 ( 19,471 ) 229,196 ( 19,860 ) 262,708 Nelnet Bank: FFELP loan ( 481 ) 58,186 ( 233 ) 16,216 ( 714 ) 74,402 Private education loan ( 1 ) 14,208 — — ( 1 ) 14,208 Other debt securities ( 975 ) 169,486 ( 1,146 ) 13,778 ( 2,121 ) 183,264 Total Nelnet Bank ( 1,457 ) 241,880 ( 1,379 ) 29,994 ( 2,836 ) 271,874 Total available-for-sale asset-backed securities $ ( 1,846 ) 275,392 ( 20,850 ) 259,190 ( 22,696 ) 534,582 The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities: Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Gross proceeds from sales $ 34,828 113,173 109,609 266,547 Gross realized gains $ 622 1,516 1,555 2,571 Gross realized losses ( 27 ) ( 463 ) ( 478 ) ( 966 ) Net gains $ 595 1,053 1,077 1,605 26 7. Intangible Assets Intangible assets consisted of the following: Weighted average remaining useful life as of June 30, 2025 (months) As of As of June 30, 2025 December 31, 2024 Amortizable intangible assets, net: Customer relationships (net of accumulated amortization of $ 55,723 and $ 54,644 , respectively) 92 $ 32,121 34,960 Trade name (net of accumulated amortization of $ 244 and $ 205 , respectively) 82 526 565 Computer software (net of accumulated amortization of $ 1,089 and $ 917 , respectively) 22 631 803 Total amortizable intangible assets, net 90 $ 33,278 36,328 The Company recorded amortization expense on its intangible assets of $ 1.5 million and $ 2.1 million for the three months ended June 30, 2025 and 2024, respectively, and $ 3.1 million and $ 4.3 million during the six months ended June 30, 2025 and 2024, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of June 30, 2025, the Company estimates it will record amortization expense as follows: 2025 (July 1 - December 31) $ 3,049 2026 6,012 2027 5,714 2028 5,354 2029 4,008 2030 and thereafter 9,141 $ 33,278 8. Goodwill The following table presents the carrying amount of goodwill as of June 30, 2025 and December 31, 2024 by reportable operating segment: Nelnet Financial Services Loan Servicing and Systems Education Technology Services and Payments Asset Generation and Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Total Total goodwill $ 23,639 92,507 41,883 — — — 158,029 27 9. Impairment Expense and Provision for Beneficial Interests The following table presents the impairment charges and provision for beneficial interests by asset and reportable operating segment recognized by the Company. These expense items are included in “impairment expense and provision for beneficial interests” in the consolidated statements of income. Nelnet Financial Services Loan Servicing and Systems Education Technology Services and Payments Asset Generation and Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Total Three months ended June 30, 2025 Investments - beneficial interest in loan securitizations (a) $ — — 4,977 — — — 4,977 Leases, buildings, and associated improvements (b) — — — — — 3,269 3,269 Property and equipment - solar facilities (c) — — — — — 1,902 1,902 Investments - venture capital — — — — — 140 140 $ — — 4,977 — — 5,311 10,288 Three months ended June 30, 2024 Investments - beneficial interest in loan securitizations (a) $ — — 5,911 — — — 5,911 Property and equipment - solar facilities (c) — — — — — 1,170 1,170 Other assets - solar inventory (c) — — — — — 695 695 $ — — 5,911 — — 1,865 7,776 Six months ended June 30, 2025 Investments - beneficial interest in loan securitizations (a) $ — — 6,487 — — — 6,487 Leases, buildings, and associated improvements (b) — — — — 81 3,269 3,350 Property and equipment - solar facilities (c) — — — — — 1,902 1,902 Investments - venture capital — — — — — 140 140 $ — — 6,487 — 81 5,311 11,879 Six months ended June 30, 2024 Investments - beneficial interest in loan securitizations (a) $ — — 5,911 — — — 5,911 Property and equipment - solar facilities (c) — — — — — 1,170 1,170 Other assets - solar inventory (c) — — — — — 695 695 Investments - venture capital — — — — — 37 37 $ — — 5,911 — — 1,902 7,813 (a) The Company recorded a non-cash allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations due primarily to an increase in cumulative loss expectations. See note 6 for additional information. (b) The Company recorded non-cash impairment charges related to operating lease assets and associated leasehold improvements as a result of the Company consolidating office space. (c) In the second quarter of 2025, the Company received notification of a customer contract cancellation. As a result, the Company recorded an impairment charge related to construction in progress for a solar facility. In April 2024, the Company announced a change in its solar engineering, procurement, and construction (EPC) operations to focus exclusively on the commercial solar market and discontinued its residential solar operations. As a result, the Company recognized non-cash impairment charges on certain solar facilities and inventory related to the residential solar operations. 28 10. Bank Deposits The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits: As of As of June 30, 2025 December 31, 2024 Retail and other savings $ 1,092,175 916,475 Brokered CDs, net of brokered deposit fees 269,058 247,872 Retail and other CDs, net of issuance fees 20,809 21,784 Total interest-bearing deposits $ 1,382,042 1,186,131 As of June 30, 2025 and December 31, 2024, Nelnet Bank had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $ 149.9 million and $ 68.5 million, respectively, including a $ 40.0 million pledged deposit from Nelnet, Inc. as required under a Capital and Liquidity Maintenance Agreement with the FDIC. All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes. The following table presents certificates of deposit remaining maturities as of June 30, 2025: One year or less $ 149,010 After one year to two years 74,863 After two years to three years 454 After three years to four years 42,910 After four years to five years 1,579 After five years 21,051 Total $ 289,867 Retail and other savings deposits included deposits from Educational 529 College Savings and Health Savings plans, retirement savings plans, Short Term Federal Investment Trust (STFIT), and FDIC sweep deposits. These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. Deposits that exceeded the FDIC insurance limits as of June 30, 2025 were $ 44.3 million, the majority of which were intercompany deposits from Nelnet, Inc. and its subsidiaries. Union Bank, a related party, is the program manager for certain of the Educational 529 College Savings plans and trustee for the STFIT. 29 11. Earnings per Common Share The following table presents the components used to calculate basic and diluted earnings per share. The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total Three months ended June 30, 2025 2024 Numerator: Net income attributable to Nelnet, Inc. $ 178,170 3,289 181,459 44,239 852 45,091 Denominator: Weighted-average common shares outstanding - basic and diluted 35,824,313 661,292 36,485,605 35,835,387 690,095 36,525,482 Earnings per share - basic and diluted $ 4.97 4.97 4.97 1.23 1.23 1.23 Six months ended June 30, 2025 2024 Numerator: Net income attributable to Nelnet, Inc. $ 259,158 4,860 264,018 116,178 2,320 118,498 Denominator: Weighted-average common shares outstanding - basic and diluted 35,810,499 671,536 36,482,035 36,119,876 721,351 36,841,227 Earnings per share - basic and diluted $ 7.24 7.24 7.24 3.22 3.22 3.22 30 12. Segment Reporting See note 16 of the notes to consolidated financial statements included in the 2024 Annual Report for a description of the Company's operating segments. The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements: Three months ended June 30, 2025 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 157,300 14,804 172,104 — — — 172,104 Investment interest 624 5,417 12,641 13,934 32,616 8,870 2,661 ( 3,963 ) 40,185 Total interest income 624 5,417 169,941 28,738 204,720 8,870 2,661 ( 3,963 ) 212,289 Interest expense — — 120,066 14,672 134,738 1,428 651 ( 3,963 ) 132,854 Net interest income 624 5,417 49,875 14,066 69,982 7,442 2,010 — 79,435 Less provision (negative provision) for loan losses — — 11,133 6,797 17,930 — — — 17,930 Net interest income after provision for loan losses 624 5,417 38,742 7,269 52,052 7,442 2,010 — 61,505 Other income (expense): LSS revenue 120,724 — — — 120,724 — — — 120,724 Intersegment revenue 5,603 65 — — 5,668 — — ( 5,668 ) — ETSP revenue — 118,184 — — 118,184 — — — 118,184 Reinsurance premiums earned — — — — — 26,112 — — 26,112 Solar construction revenue — — — — — — 1,259 — 1,259 Other, net 113 — 7,507 392 8,012 5,265 9,603 96 22,976 Gain (loss) on sale of loans, net — — — — — — — — — Gain on partial redemption of ALLO investment — — — — — — 175,044 — 175,044 Derivative settlements, net — — 581 163 744 — — — 744 Derivative market value adjustments, net — — ( 2,165 ) ( 1,701 ) ( 3,866 ) — — — ( 3,866 ) Total other income (expense), net 126,440 118,249 5,923 ( 1,146 ) 249,466 31,377 185,906 ( 5,572 ) 461,177 Cost of services and expenses: Total cost of services 1,845 39,844 — — 41,689 — 14,050 — 55,739 Salaries and benefits 65,549 41,598 1,469 2,791 111,407 539 22,784 ( 30 ) 134,699 Depreciation and amortization 1,821 2,505 — 352 4,678 — 2,946 — 7,624 Reinsurance losses and underwriting expenses — — — — — 25,662 — — 25,662 Postage expense 9,551 9,551 ( 9,551 ) — Servicing fees 7,102 824 7,926 ( 7,926 ) — Other expenses (a) 11,099 9,904 2,464 1,969 25,436 2,206 11,695 11,969 51,306 Intersegment expenses, net 17,240 6,273 1,260 652 25,425 321 ( 25,616 ) ( 130 ) — Total operating expenses 105,260 60,280 12,295 6,588 184,423 28,728 11,809 ( 5,668 ) 219,291 Impairment expense and provision for beneficial interests — — 4,977 — 4,977 — 5,311 — 10,288 Total expenses 107,105 100,124 17,272 6,588 231,089 28,728 31,170 ( 5,668 ) 285,318 Income (loss) before income taxes 19,959 23,542 27,393 ( 465 ) 70,429 10,091 156,746 96 237,364 Income tax (expense) benefit ( 4,790 ) ( 5,650 ) ( 6,569 ) 101 ( 16,908 ) ( 2,395 ) ( 40,207 ) — ( 59,510 ) Net income (loss) 15,169 17,892 20,824 ( 364 ) 53,521 7,696 116,539 96 177,854 Net (income) loss attributable to noncontrolling interests — — ( 23 ) — ( 23 ) ( 114 ) 3,838 ( 96 ) 3,605 Net income (loss) attributable to Nelnet, Inc. $ 15,169 17,892 20,801 ( 364 ) 53,498 7,582 120,377 — 181,459 Total assets as of June 30, 2025 $ 168,435 533,317 10,036,454 1,767,193 12,505,399 1,077,523 541,471 ( 413,305 ) 13,711,088 (a) Other expenses for each reportable segment includes: LSS - communications, professional fees, collection costs, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and travel. AGM - trustee fees and professional fees. Nelnet Bank - marketing, consulting and professional fees, collection costs, software, FDIC insurance, and management fee expense. 31 Three months ended June 30, 2024 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 193,707 8,422 202,129 — — — 202,129 Investment interest 1,258 5,715 13,709 10,811 31,493 15,880 2,646 ( 9,282 ) 40,737 Total interest income 1,258 5,715 207,416 19,233 233,622 15,880 2,646 ( 9,282 ) 242,866 Interest expense — — 171,632 10,769 182,401 2,606 733 ( 9,282 ) 176,459 Net interest income 1,258 5,715 35,784 8,464 51,221 13,274 1,913 — 66,407 Less provision (negative provision) for loan losses — — ( 4,225 ) 7,836 3,611 — — — 3,611 Net interest income after provision for loan losses 1,258 5,715 40,009 628 47,610 13,274 1,913 — 62,796 Other income (expense): LSS revenue 109,052 — — — 109,052 — — — 109,052 Intersegment revenue 6,106 56 — — 6,162 — — ( 6,162 ) — ETSP revenue — 116,909 — — 116,909 — — — 116,909 Reinsurance premiums earned — — — — — 14,851 — — 14,851 Solar construction revenue — — — — — — 9,694 — 9,694 Other, net 685 — 1,337 775 2,797 851 10,372 — 14,020 Gain (loss) on sale of loans, net — — ( 1,438 ) — ( 1,438 ) — — — ( 1,438 ) Gain on partial redemption of ALLO investment — — — — — — — — — Derivative settlements, net — — 1,442 207 1,649 — — — 1,649 Derivative market value adjustments, net — — 936 597 1,533 — — — 1,533 Total other income (expense), net 115,843 116,965 2,277 1,579 236,664 15,702 20,066 ( 6,162 ) 266,270 Cost of services and expenses: Total cost of services 196 40,222 — — 40,418 — 8,072 — 48,490 Salaries and benefits 70,631 40,736 1,113 2,798 115,278 374 24,786 ( 804 ) 139,634 Depreciation and amortization 5,342 2,712 — 341 8,395 — 6,748 — 15,142 Reinsurance losses and underwriting expenses — — — — — 10,988 — — 10,988 Postage expense 9,277 9,277 ( 9,277 ) — Servicing fees 8,541 193 8,734 ( 8,734 ) — Other expenses (a) 11,188 8,600 1,139 2,002 22,929 841 12,842 11,996 48,608 Intersegment expenses, net 18,224 4,811 1,272 591 24,898 248 ( 25,803 ) 657 — Total operating expenses 114,662 56,859 12,065 5,925 189,511 12,451 18,573 ( 6,162 ) 214,372 Impairment expense and provision for beneficial interests — — 5,911 — 5,911 — 1,865 — 7,776 Total expenses 114,858 97,081 17,976 5,925 235,840 12,451 28,510 ( 6,162 ) 270,638 Income (loss) before income taxes 2,243 25,599 24,310 ( 3,718 ) 48,434 16,525 ( 6,531 ) — 58,428 Income tax (expense) benefit ( 538 ) ( 6,150 ) ( 5,835 ) 916 ( 11,607 ) ( 3,935 ) 788 — ( 14,753 ) Net income (loss) 1,705 19,449 18,475 ( 2,802 ) 36,827 12,590 ( 5,743 ) — 43,675 Net (income) loss attributable to noncontrolling interests — 29 — — 29 ( 129 ) 1,516 — 1,416 Net income (loss) attributable to Nelnet, Inc. $ 1,705 19,478 18,475 ( 2,802 ) 36,856 12,461 ( 4,227 ) — 45,091 Total assets as of June 30, 2024 $ 264,381 478,077 11,315,210 1,185,302 13,242,970 1,038,068 778,549 ( 558,394 ) 14,501,193 (a) Other expenses for each reportable segment includes: LSS - communications, professional fees, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, travel, and provision for losses. AGM - trustee fees and professional fees. Nelnet Bank - marketing, consulting and professional fees, software, FDIC insurance, and management fee expense. 32 Six months ended June 30, 2025 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 311,768 26,775 338,543 — — — 338,543 Investment interest 1,345 12,356 25,411 26,430 65,542 17,690 4,973 ( 6,632 ) 81,574 Total interest income 1,345 12,356 337,179 53,205 404,085 17,690 4,973 ( 6,632 ) 420,117 Interest expense — — 234,369 26,749 261,118 2,198 1,284 ( 6,632 ) 257,968 Net interest income 1,345 12,356 102,810 26,456 142,967 15,492 3,689 — 162,149 Less provision (negative provision) for loan losses — — 24,144 9,123 33,267 — — — 33,267 Net interest income after provision for loan losses 1,345 12,356 78,666 17,333 109,700 15,492 3,689 — 128,882 Other income (expense): LSS revenue 241,465 — — — 241,465 — — — 241,465 Intersegment revenue 11,287 129 — — 11,416 — — ( 11,416 ) — ETSP revenue — 265,515 — — 265,515 — — — 265,515 Reinsurance premiums earned — — — — — 50,799 — — 50,799 Solar construction revenue — — — — — — 5,254 — 5,254 Other, net 225 — 11,502 534 12,261 6,376 27,840 193 46,670 Gain (loss) on sale of loans, net — — 909 — 909 — — — 909 Gain on partial redemption of ALLO investment — — — — — — 175,044 — 175,044 Derivative settlements, net — — 1,162 327 1,489 — — — 1,489 Derivative market value adjustments, net — — ( 5,961 ) ( 4,229 ) ( 10,190 ) — — — ( 10,190 ) Total other income (expense), net 252,977 265,644 7,612 ( 3,368 ) 522,865 57,175 208,138 ( 11,223 ) 776,955 Cost of services and expenses: Total cost of services 3,478 87,891 — — 91,369 — 21,878 — 113,247 Salaries and benefits 135,123 83,339 2,690 5,607 226,759 1,017 45,279 ( 134 ) 272,922 Depreciation and amortization 4,474 4,936 — 691 10,101 — 6,778 — 16,879 Reinsurance losses and underwriting expenses — — — — — 47,874 — — 47,874 Postage expense 17,127 17,127 ( 17,127 ) — Servicing fees 14,013 1,491 15,504 ( 15,504 ) — Other expenses (a) 21,931 18,952 3,352 3,327 47,562 2,978 27,281 21,711 99,532 Intersegment expenses, net 33,718 11,877 2,510 1,362 49,467 565 ( 49,670 ) ( 362 ) — Total operating expenses 212,373 119,104 22,565 12,478 366,520 52,434 29,668 ( 11,416 ) 437,207 Impairment expense and provision for beneficial interests — — 6,487 — 6,487 81 5,311 — 11,879 Total expenses 215,851 206,995 29,052 12,478 464,376 52,515 56,857 ( 11,416 ) 562,333 Income (loss) before income taxes 38,471 71,005 57,226 1,487 168,189 20,152 154,970 193 343,504 Income tax (expense) benefit ( 9,233 ) ( 17,052 ) ( 13,725 ) ( 333 ) ( 40,343 ) ( 4,779 ) ( 39,398 ) — ( 84,521 ) Net income (loss) 29,238 53,953 43,501 1,154 127,846 15,373 115,572 193 258,983 Net (income) loss attributable to noncontrolling interests — 45 ( 40 ) — 5 ( 238 ) 5,461 ( 193 ) 5,035 Net income (loss) attributable to Nelnet, Inc. $ 29,238 53,998 43,461 1,154 127,851 15,135 121,033 — 264,018 Total assets as of June 30, 2025 $ 168,435 533,317 10,036,454 1,767,193 12,505,399 1,077,523 541,471 ( 413,305 ) 13,711,088 (a) Other expenses for each reportable segment includes: LSS - communications, professional fees, collection costs, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and travel. AGM - trustee fees and professional fees. Nelnet Bank - marketing, consulting and professional fees, collection costs, software, FDIC insurance, and management fee expense. 33 Six months ended June 30, 2024 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 403,335 15,518 418,853 — — — 418,853 Investment interest 3,152 13,580 35,544 20,779 73,055 31,495 6,461 ( 18,197 ) 92,814 Total interest income 3,152 13,580 438,879 36,297 491,908 31,495 6,461 ( 18,197 ) 511,667 Interest expense — — 362,537 20,266 382,803 5,024 1,409 ( 18,197 ) 371,039 Net interest income 3,152 13,580 76,342 16,031 109,105 26,471 5,052 — 140,628 Less provision (negative provision) for loan losses — — 2,230 12,210 14,440 — — — 14,440 Net interest income after provision for loan losses 3,152 13,580 74,112 3,821 94,665 26,471 5,052 — 126,188 Other income (expense): LSS revenue 236,252 — — — 236,252 — — — 236,252 Intersegment revenue 12,991 106 — — 13,097 — — ( 13,097 ) — ETSP revenue — 260,449 — — 260,449 — — — 260,449 Reinsurance premiums earned — — — — — 27,631 — — 27,631 Solar construction revenue — — — — — — 23,420 — 23,420 Other, net 1,395 — 6,321 1,150 8,866 1,013 8,224 — 18,103 Gain (loss) on sale of loans, net — — ( 1,579 ) — ( 1,579 ) — — — ( 1,579 ) Gain on partial redemption of ALLO investment — — — — — — — — — Derivative settlements, net — — 2,997 409 3,406 — — — 3,406 Derivative market value adjustments, net — — 6,642 2,855 9,497 — — — 9,497 Total other income (expense), net 250,638 260,555 14,381 4,414 529,988 28,644 31,644 ( 13,097 ) 577,179 Cost of services and expenses: Total cost of services 196 88,832 — — 89,028 — 22,300 — 111,328 Salaries and benefits 147,353 80,903 2,308 5,518 236,082 732 48,307 ( 1,611 ) 283,509 Depreciation and amortization 10,450 5,395 — 601 16,446 — 15,464 — 31,911 Reinsurance losses and underwriting expenses — — — — — 22,305 — — 22,305 Postage expense 19,883 19,883 ( 19,883 ) — Servicing fees 17,492 426 17,918 ( 17,918 ) — Other expenses (a) 20,119 16,158 2,246 3,113 41,636 1,327 26,243 24,928 94,136 Intersegment expenses, net 37,555 9,612 2,481 1,148 50,796 465 ( 52,648 ) 1,387 — Total operating expenses 235,360 112,068 24,527 10,806 382,761 24,829 37,366 ( 13,097 ) 431,861 Impairment expense and provision for beneficial interests — — 5,911 — 5,911 — 1,902 — 7,813 Total expenses 235,556 200,900 30,438 10,806 477,700 24,829 61,568 ( 13,097 ) 551,002 Income (loss) before income taxes 18,234 73,235 58,055 ( 2,571 ) 146,953 30,286 ( 24,872 ) — 152,365 Income tax (expense) benefit ( 4,376 ) ( 17,585 ) ( 13,933 ) 657 ( 35,237 ) ( 7,209 ) 4,511 — ( 37,936 ) Net income (loss) 13,858 55,650 44,122 ( 1,914 ) 111,716 23,077 ( 20,361 ) — 114,429 Net (income) loss attributable to noncontrolling interests — 46 — — 46 ( 249 ) 4,272 — 4,069 Net income (loss) attributable to Nelnet, Inc. $ 13,858 55,696 44,122 ( 1,914 ) 111,762 22,828 ( 16,089 ) — 118,498 Total assets as of June 30, 2024 $ 264,381 478,077 11,315,210 1,185,302 13,242,970 1,038,068 778,549 ( 558,394 ) 14,501,193 (a) Other expenses for each reportable segment includes: LSS - communications, professional fees, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, travel, and provision for losses. AGM - trustee fees and professional fees. Nelnet Bank - marketing, consulting and professional fees, software, computer services and subscriptions, FDIC insurance, and management fee expense. 34 13. Disaggregated Revenue The following tables present disaggregated revenue for the Company's fee-based operating segments: Loan Servicing and Systems Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Government loan servicing $ 85,737 87,014 173,100 192,490 Private education and consumer loan servicing 22,733 12,959 45,426 25,577 FFELP loan servicing 2,241 3,245 4,873 6,624 Software services 9,452 4,879 16,444 9,420 Outsourced services 561 955 1,622 2,141 Loan servicing and systems revenue $ 120,724 109,052 241,465 236,252 Education Technology Services and Payments Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Tuition payment plan services $ 36,013 34,164 76,085 73,043 Payment processing 37,515 34,326 89,051 82,113 Education technology services 44,481 47,205 100,177 103,227 Other 175 1,214 202 2,066 Education technology services and payments revenue $ 118,184 116,909 265,515 260,449 Other Income (Expense) The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Investment activity, net $ 8,852 217 14,012 ( 1,082 ) ALLO preferred return 5,985 4,160 14,400 6,569 Borrower late fee income 1,642 2,584 3,231 5,718 Investment advisory services (WRCM) 1,504 1,524 2,977 3,033 Administration/sponsor fee income 1,293 1,482 2,598 3,028 Loss from ALLO voting membership interest investment — — — ( 10,693 ) (Loss) gain from solar investments, net ( 1,502 ) ( 2,610 ) ( 1,046 ) 170 Other 5,202 6,663 10,498 11,360 Other, net $ 22,976 14,020 46,670 18,103 35 14. Reinsurance The following table presents reinsurance premiums written and earned and loss reserves, commissions, and broker fees: Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Premiums written: Assumed $ 55,798 41,264 110,404 72,151 Ceded ( 16,916 ) ( 20,550 ) ( 36,965 ) ( 35,993 ) Net premiums written $ 38,882 20,714 73,439 36,158 Premiums earned: Assumed $ 44,079 29,889 91,803 55,393 Ceded ( 17,967 ) ( 15,038 ) ( 41,004 ) ( 27,762 ) Net premiums earned $ 26,112 14,851 50,799 27,631 Loss reserve, commissions, and broker fees: Assumed $ 45,100 21,675 87,741 44,517 Ceded ( 19,438 ) ( 10,687 ) ( 39,867 ) ( 22,212 ) Reinsurance losses and underwriting expenses $ 25,662 10,988 47,874 22,305 The Company’s loss reserve balance, net of amounts ceded to reinsurers, was $ 57.1 million and $ 33.1 million as of June 30, 2025 and December 31, 2024, respectively, which is included in "other liabilities" on the consolidated balance sheets. 15. Major Customer Government Loan Servicing The Company earns loan servicing revenue from a servicing contract with the Department of Education (the "Department"). Revenue earned by the Company related to this contract was $ 85.7 million and $ 87.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 173.1 million and $ 192.5 million for the six months ended June 30, 2025 and 2024, respectively. The Company's legacy student loan servicing contract with the Department was scheduled to expire on December 14, 2023. In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract which replaced the legacy Department student loan servicing contract. The USDS contract became effective in April 2023 and has a five-year base period, with 2 two-year and 1 one-year possible extensions. The Department's total loan servicing volume of existing borrowers was allocated by the Department to the Company and four other third-party servicers that were awarded a USDS contract. Servicing under the USDS contract went live on April 1, 2024 and the Company recognized revenue in accordance with this new contract beginning in the second quarter of 2024. The Company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024. The Company earns less revenue from the Department on a per-borrower blended basis under the new USDS servicing contract as compared with the legacy servicing contract. 36 16. Fair Value The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis: As of June 30, 2025 As of December 31, 2024 Level 1 Level 2 Total Level 1 Level 2 Total Assets: Investments: Asset-backed debt securities - available-for-sale $ 100 1,202,880 1,202,980 100 1,085,726 1,085,826 Equity securities 1,100 — 1,100 455 — 455 Equity securities measured at net asset value (a) 82,649 74,039 Total investments 1,200 1,202,880 1,286,729 555 1,085,726 1,160,320 Derivative instruments — 402 402 — 3,232 3,232 Total assets $ 1,200 1,203,282 1,287,131 555 1,088,958 1,163,552 Liabilities: Derivative instruments $ — 2,077 2,077 — 53 53 Total liabilities $ — 2,077 2,077 — 53 53 (a) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets. The methodologies for estimating the fair value of financial assets and liabilities are described in note 24 of the notes to consolidated financial statements included in the 2024 Annual Report. As of June 30, 2025 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 9,990,823 9,594,556 — — 9,990,823 Accrued loan interest receivable 560,927 560,927 — 560,927 — Cash and cash equivalents 225,753 225,753 225,753 — — Investments at fair value 1,286,729 1,286,729 1,200 1,202,880 — Investments - held-to-maturity asset-backed securities 208,464 203,591 — 208,464 — Notes receivable 54,603 54,603 — 54,603 — Beneficial interest in loan securitizations 201,025 190,853 — — 201,025 Restricted cash 317,958 317,958 317,958 — — Restricted cash – due to customers 258,065 258,065 258,065 — — Derivative instruments 402 402 — 402 — Financial liabilities: Bonds and notes payable 7,847,907 7,903,561 — 7,847,907 — Accrued interest payable 19,296 19,296 — 19,296 — Bank deposits 1,368,830 1,382,042 919,731 449,099 — Due to customers 429,109 429,109 429,109 — — Derivative instruments 2,077 2,077 — 2,077 — 37 As of December 31, 2024 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 10,008,165 9,443,461 — — 10,008,165 Accrued loan interest receivable 549,283 549,283 — 549,283 — Cash and cash equivalents 194,518 194,518 194,518 — — Investments at fair value 1,160,320 1,160,320 555 1,085,726 — Investments - held-to-maturity asset-backed securities 216,164 210,774 — 216,164 — Notes receivable 32,258 32,258 — 32,258 — Beneficial interest in loan securitizations 229,510 213,809 — — 229,510 Restricted cash 332,100 332,100 332,100 — — Restricted cash – due to customers 404,402 404,402 404,402 — — Derivative instruments 3,232 3,232 — 3,232 — Financial liabilities: Bonds and notes payable 8,343,565 8,309,797 — 8,343,565 — Accrued interest payable 21,046 21,046 — 21,046 — Bank deposits 1,172,707 1,186,131 744,721 427,986 — Due to customers 478,469 478,469 478,469 — — Derivative instruments 53 53 — 53 —