NNI filing — read by section

Item 2. Management’s Discussion and Analysis

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 (Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and six months ended June 30, 2025 and 2024. All dollars are in thousands, except per share amounts, unless otherwise noted.) 
 The following discussion and analysis provides information that the Company’s management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. The discussion should be read in conjunction with the Company’s consolidated financial statements included in the 2024 Annual Report. 
 Forward-looking and cautionary statements 
 This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document. Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “scheduled,” “should,” “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. 
 The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” sections of the 2024 Annual Report and this report and include such risks and uncertainties as: 
 • risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans; 
 • loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans; 
 • financing and liquidity risks, including risks of changes in the interest rate environment; 
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 • risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets; 
 • risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches; 
 • risks related to use of artificial intelligence; 
 • uncertainties inherent in forecasting future cash flows from student loan assets, including investment interests therein, and related asset-backed securitizations; 
 • risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration; 
 • risks related to the Company's solar tax equity investments and solar construction business, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits; 
 • risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses; 
 • risks and uncertainties associated with climate change; and 
 • risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, including changes to the regulatory environment from the change in presidential administration, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company’s consolidated financial statements. 
 All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this document. Although the Company may from time to time voluntarily update or revise its prior forward-looking statements to reflect actual results or changes in the Company's expectations, the Company disclaims any commitment to do so except as required by law. 
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 OVERVIEW 
 The Company is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space. The largest operating businesses engage in loan servicing, and education technology services and payments. A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans. The Company also makes and manages investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). In the Nelnet Financial Services division, which includes Nelnet Bank, the Company is also actively expanding its private education, consumer, and other loan portfolios. 
 GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments 
 The Company prepares its financial statements and presents its financial results in accordance with GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. A reconciliation of the Company's GAAP net income to Non-GAAP net income excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, are provided below. 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 
 GAAP net income attributable to Nelnet, Inc. $ 181,459 45,091 264,018 118,498 
 Realized and unrealized derivative market value adjustments (a) 3,866 (1,533) 10,190 (9,497) 
 Tax effect (b) (928) 368 (2,446) 2,279 
 Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 184,397 43,926 271,762 111,280 
 
 Earnings per share: 
 GAAP net income attributable to Nelnet, Inc. $ 4.97 1.23 7.24 3.22 
 Realized and unrealized derivative market value adjustments (a) 0.11 (0.04) 0.28 (0.26) 
 Tax effect (b) (0.03) 0.01 (0.07) 0.06 
 Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 5.05 1.20 7.45 3.02 

 (a) "Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. 
 The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective; however, the majority of the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period. 
 The Company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the Company’s management utilizes operating results excluding these items for comparability purposes when making decisions regarding the Company’s performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management and represents what earnings would have been had these derivatives qualified for hedge accounting. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. 
 (b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate. 
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 Recent Development - Partial Redemption of ALLO Investment 
 Nelnet had both voting and preferred membership interest investments in ALLO. On June 4, 2025, Nelnet redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025. The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction. 
 Operating Segments 
 The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2024 Annual Report. They include: 
 • Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS) 
 • Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS) 
 • Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division 
 • Nelnet Bank, part of the NFS division 
 The Company earns fee-based revenue through its NDS and NBS reportable operating segments. The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, through its AGM reportable operating segment. This segment is expected to generate significant amounts of cash as the FFELP portfolio amortizes. The Company actively works to maximize the amount and timing of cash flows generated from its FFELP portfolio and seeks to acquire additional loan assets to leverage its servicing scale and expertise to generate incremental earnings and cash flow. Nelnet Bank operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah. Other operating segments included in the NFS division include the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary, property and casualty reinsurance activities, investment activities in real estate, and investment debt securities (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments. 
 Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions, certain investment activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services. In addition, Corporate includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs. 
 The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three and six months ended June 30, 2025 and 2024. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2. 
 
 
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 Three months ended June 30, Six months ended June 30, Certain Items Impacting Comparability
(All dollar amounts below are pre-tax) 
 2025 2024 2025 2024 
 NDS $ 19,959 2,243 38,471 18,234 • An increase in before tax operating margin due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures. This was partially offset for the six months ended June 30, 2025 compared with the same period in 2024 due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract. 
 
 NBS 23,542 25,599 71,005 73,235 • ETSP revenue increased to $118.2 million and $265.5 million for the three and six months ended June 30, 2025 compared with $116.9 million and $260.4 million for the same periods in 2024. However, NBS experienced a decrease in before tax operating margin due to a decrease in FACTS education services revenue and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. Net income and before tax operating margin will continue to be impacted by these items throughout 2025 compared with 2024. 
 
 Nelnet Financial Services division: 
 AGM 27,393 24,310 57,226 58,055 • The recognition of $11.1 million in provision for loan losses and $4.2 million in negative provision for loan losses for the three months ended June 30, 2025 and 2024, respectively, and $24.1 million and $2.2 million in provision for loan losses for the six months ended June 30, 2025 and 2024, respectively. Increase was due to an increase of loan acquisitions in the first half of 2025. 
 • A decrease of $1.1 million and $10.1 million in investment interest income for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to a decrease of interest earned on restricted cash driven by lower balances and a decrease in interest rates, which, for the three month period, was partially offset by an increase of interest income from beneficial interest investments. 
 • A net loss of $2.2 million compared to net income of $0.9 million, and a net loss of $6.0 million compared to net income of $6.6 million, for the three and six months ended June 30, 2025 and 2024, respectively, related to changes in the fair values of derivative instruments that do not qualify for hedge accounting. 
 • An increase in net loan interest income of $10.1 million and $26.6 million for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in loan spread driven by an increase in loans funded with operating cash (versus funded with debt), partially offset by a decrease in the average balance of loans. 
 
 Nelnet Bank (465) (3,718) 1,487 (2,571) • An increase of $5.6 million and $10.4 million in net interest income for the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in the average balance of loans and investments and an increase in net interest margin. 
 • A net loss of $1.7 million compared to net income of $0.6 million, and a net loss of $4.2 million compared to net income of $2.9 million, for the three and six months ended June 30, 2025 and 2024, respectively, related to changes in the fair values of derivative instruments that do not qualify for hedge accounting. 
 
 NFS other operating segments 10,091 16,525 20,152 30,286 • Net interest income earned on investment debt securities (primarily student loan and other asset-backed securities) was $6.4 million and $13.2 million for the three and six months ended June 30, 2025, respectively, compared with $12.2 million and $24.4 million for the same periods in 2024. This decrease was due to a decrease in the average balance of investments outstanding and a decrease in interest rates. 
 
 Corporate: 
 Unallocated corporate costs (11,923) (9,056) (21,911) (19,101) • During the second quarter 2025, the Company recognized a non-cash impairment charge of $3.3 million related to operating lease assets as a result of the Company consolidating office space. 
 
 Solar tax equity investments (1,892) (2,580) (686) (266) • Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. These results include results attributable to third-party noncontrolling interest investors. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. 
 

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 Nelnet Renewable Energy - solar construction (17,601) (4,752) (24,175) (8,788) • Includes the operating results of Nelnet Renewable Energy (NRE), the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to commercial entities. Since the acquisition of GRNE Solar in 2022, NRE has incurred low and, in many cases, negative margins on legacy projects. The Company has a handful of remaining legacy construction contracts that it is obligated to complete, down from over 30 at the beginning of 2024. During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts. In addition, uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue. See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill. 
 
 ALLO investment 185,236 3,940 193,651 (4,653) • The recognition of a $175.0 million gain in the three months ended June 30, 2025 on a partial redemption of the Company's investment in ALLO. 
 • The recognition of no loss in the six months ended June 30, 2025 compared with a loss of $10.7 million for the same period in 2024 related to the Company's ALLO voting membership interest investment. The loss recognized in the first quarter of 2024 reduced the Company's carrying value of its voting membership interest to $0. Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO. 
 • The recognition of income of $6.0 million and $14.4 million for the three and six months ended June 30, 2025 compared with $4.2 million and $6.6 million for the same periods in 2024 on the Company's preferred membership interests in ALLO. All preferred membership interests were redeemed as part of the second quarter 2025 redemption transaction; thus, no preferred return will be recognized in future periods. 
 
 Venture capital investments 1,340 3,417 5,560 2,711 • Includes operating results of the Company's venture capital investments. These investments may create volatility in earnings from recognizing results of certain equity method investees, periodic adjustment of certain fund investments to their respective fair value, and, when applicable, observable price changes on certain measurement alternative investments. 
 
 Other corporate activities 1,586 2,500 2,531 5,225 
 
 
 Eliminations/reclassifications 96 — 193 — 
 Net income before taxes 237,364 58,428 343,504 152,365 
 Income tax expense (59,510) (14,753) (84,521) (37,936) 
 Net loss attributable to noncontrolling interests 3,605 1,416 5,035 4,069 • The majority of noncontrolling interests represents losses attributed to noncontrolling membership interests related to the Company’s solar tax equity investments. 
 
 Net income $ 181,459 45,091 264,018 118,498 

 
 CONSOLIDATED RESULTS OF OPERATIONS 
 An analysis of the Company's consolidated operating results for the three and six months ended June 30, 2025 compared with the same periods in 2024 is provided below. 
 The Company operates as distinct reportable operating segments as described above. For a reconciliation of the reportable segment operating results to the consolidated results of operations, see note 12 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Since the Company monitors and assesses its operations and results based on these segments, the discussion following the consolidated results of operations is presented on a reportable segment basis. 
 
 Three months ended Six months ended 
 June 30, June 30, 
 2025 2024 2025 2024 Additional information 
 Loan interest $ 172,104 202,129 338,543 418,853 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. 
 Investment interest 40,185 40,737 81,574 92,814 Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations. Decrease was due to a decrease in interest earned on restricted cash in asset-backed securitizations due to lower balances and a decrease in interest rates. The decrease was partially offset for the three month period due to an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments. 
 Total interest income 212,289 242,866 420,117 511,667 

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 Interest expense 132,854 176,459 257,968 371,039 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds, partially offset by an increase in interest expense on a larger deposit balance at Nelnet Bank. 
 Net interest income 79,435 66,407 162,149 140,628 
 Less provision for loan losses 17,930 3,611 33,267 14,440 Represents the current period provision to reflect the lifetime expected credit losses related to the Company's loan portfolio. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for the factors impacting provision for loan losses for the periods presented. 
 
 Net interest income after provision for loan losses 61,505 62,796 128,882 126,188 
 Other income (expense): 
 LSS revenue 120,724 109,052 241,465 236,252 See LSS operating segment - results of operations. 
 ETSP revenue 118,184 116,909 265,515 260,449 See ETSP operating segment - results of operations. 
 
 Reinsurance premiums earned 26,112 14,851 50,799 27,631 Represents premiums earned, net of ceded portion, from reinsurance treaties on property and casualty policies. Increase was primarily due to an increase in overall property volume and new business. 
 Solar construction revenue 1,259 9,694 5,254 23,420 Represents revenue earned from NRE providing solar EPC services. Uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue. See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill. 
 
 Other, net 22,976 14,020 46,670 18,103 See table below for the components of "other, net." 
 
 Gain (loss) on sale of loans, net — (1,438) 909 (1,579) The Company recognizes gains/losses from selling loans. See NFS division - results of operations - AGM operating segment. 
 
 Gain on partial redemption of ALLO investment 175,044 — 175,044 — Represents a gain recognized from the partial redemption of the ALLO investment. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. 
 
 Derivative settlements, net 744 1,649 1,489 3,406 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income. See NFS division - results of operations - AGM and Nelnet Bank operating segments - for additional information. 
 
 Derivative market value adjustments, net (3,866) 1,533 (10,190) 9,497 Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of the Company's floor income interest rate swaps and derivatives at Nelnet Bank. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. 
 
 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 Represents primarily the amortization of previously capitalized contract fulfillment costs. The costs were pre-contract costs incurred to enhance the resources of the Company to satisfy future performance obligations. 
 
 Cost to provide education technology services and payments 39,844 40,222 87,891 88,832 Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations. 
 
 Cost to provide solar construction services 14,050 8,072 21,878 22,300 Represents direct costs related to NRE providing solar construction services. Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects. The Company has a handful of remaining legacy construction contracts it is obligated to complete, down from over 30 at the beginning of 2024. During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts. 
 
 Total cost of services 55,739 48,490 113,247 111,328 
 Salaries and benefits 134,699 139,634 272,922 283,509 Decrease was primarily due to staff reductions announced in June 2024 in LSS after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan servicing volume to one platform. These staff reductions took place during the second half of 2024. 
 
 Depreciation and amortization 7,624 15,142 16,879 31,911 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Decrease was primarily due to (i) reduction in depreciation as a result of prior year non-cash impairment charges recognized for lease, buildings, and associated improvements as the Company consolidated office space; and (ii) certain information technology activities moved to cloud computing and such expenses classified as other expenses. 
 Reinsurance losses and underwriting expenses 25,662 10,988 47,874 22,305 Represents case reserve, estimated loss reserve, and amortization of acquisition costs, which consist primarily of commissions and brokerage expenses, net of ceded portion, from reinsurance treaties on property and casualty policies. Increase was primarily due to an increase in overall property volume and new business. 
 Other expenses 51,306 48,608 99,532 94,136 Includes expenses such as postage and distribution, consulting and professional fees, servicing fees, marketing, travel, communications, and certain information technology-related costs. 
 

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 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 Represents the provision expense of recognized non-cash allowances for the Company's beneficial interest in certain loan securitizations due primarily to an increase in cumulative loss expectations and impairment expenses primarily related to operating lease assets. See note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. 
 
 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 The effective tax rate was 24.70% for the three months ended June 30, 2025 compared with 24.65% for the same period in 2024 and 24.25% for each of the six months ended June 30, 2025 and 2024, respectively. The Company expects its tax rate will range between 23% and 25% for the remainder of 2025. 
 
 Net income 177,854 43,675 258,983 114,429 
 Net loss attributable to noncontrolling interests 3,605 1,416 5,035 4,069 Represents the net income/loss attributable to the holders of noncontrolling membership interests. The majority is attributed to noncontrolling membership interests related to the Company's solar tax equity investments. 
 Net income attributable to Nelnet, Inc. $ 181,459 45,091 264,018 118,498 
 
 Additional information: See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. 
 Net income attributable to Nelnet, Inc. $ 181,459 45,091 264,018 118,498 
 Derivative market value adjustments, net 3,866 (1,533) 10,190 (9,497) 
 Tax effect (928) 368 (2,446) 2,279 
 Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 184,397 43,926 271,762 111,280 

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 The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income: 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Investment activity, net (a) $ 8,852 217 14,012 (1,082) See note (b) below for additional information. 
 ALLO preferred return 5,985 4,160 14,400 6,569 See Corporate - results of operations. 
 Borrower late fee income 1,642 2,584 3,231 5,718 See NFS division - results of operations - AGM operating segment. 
 Investment advisory services (WRCM) 1,504 1,524 2,977 3,033 See NFS division - results of operations - NFS other operating segments. 
 Administration/sponsor fee income 1,293 1,482 2,598 3,028 See NFS division - results of operations - AGM operating segment. 
 Loss from ALLO voting membership interest investment — — — (10,693) See Corporate - results of operations. 
 
 
 (Loss) gain from solar investments, net (1,502) (2,610) (1,046) 170 See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 
 Other 5,202 6,663 10,498 11,360 
 Other, net $ 22,976 14,020 46,670 18,103 

 (a) The Company anticipates fluctuations in future periodic earnings resulting from investment purchases, sales, and valuation adjustments. 
 (b) Investment activity by operating segment and investment type follows: 
 
 Real Estate Venture Capital and Funds Equity / Bonds Total Real Estate Venture Capital and Funds Equity / Bonds Total 
 Three months ended June 30, 
 2025 2024 
 NFS - AGM $ — 4,213 — 4,213 — (2,700) — (2,700) 
 NFS - Nelnet Bank — (65) 149 84 — (10) 756 746 
 NFS - Other Operating Segments 453 — 2,340 2,793 (1,832) — 312 (1,520) 
 Corporate — 1,762 — 1,762 — 3,691 — 3,691 
 $ 453 5,910 2,489 8,852 (1,832) 981 1,068 217 
 Six months ended June 30, 
 2025 2024 
 NFS - AGM $ — 5,260 — 5,260 — (2,378) — (2,378) 
 NFS - Nelnet Bank — (127) 435 308 — (189) 1,285 1,096 
 NFS - Other Operating Segments (1,190) — 3,380 2,190 (3,626) — 524 (3,102) 
 Corporate — 6,254 — 6,254 — 3,302 — 3,302 
 $ (1,190) 11,387 3,815 14,012 (3,626) 735 1,809 (1,082) 

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 LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS 
 Loan Servicing Volumes 
 
 As of 
 June 30,
2025 March 31,
2025 December 31,
2024 September 30,
2024 June 30,
2024 March 31,
2024 December 31,
2023 
 Servicing volume (dollars in millions): 
 Government $ 465,689 482,786 489,877 492,142 489,298 495,409 494,691 
 FFELP 12,386 12,826 13,260 13,745 14,576 15,783 17,462 
 Private and consumer 38,018 46,728 29,226 20,666 19,876 21,015 20,493 
 Total $ 516,093 542,340 532,363 526,553 523,750 532,207 532,646 
 
 Number of servicing borrowers: 
 Government 12,694,386 13,453,127 14,049,550 14,114,468 14,096,152 14,328,013 14,503,057 
 FFELP 502,205 524,421 549,861 574,979 610,745 656,814 725,866 
 Private and consumer 1,326,451 1,350,999 1,168,293 851,747 829,072 882,256 894,703 
 Total 14,523,042 15,328,547 15,767,704 15,541,194 15,535,969 15,867,083 16,123,626 
 
 Number of remote hosted borrowers: 2,056,358 1,427,800 842,200 662,075 133,681 65,295 70,580 

 Summary and Comparison of Operating Results 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Interest income $ 624 1,258 1,345 3,152 Represents interest income on cash balances primarily collected from borrower remittances that are subsequently disbursed to servicing customers (lenders). Decrease was due to a decrease in average balance of loan repayment funds held in custody for lenders and a decrease in interest rates. 
 
 Loan servicing and systems revenue 120,724 109,052 241,465 236,252 See table below for additional information. 
 Intersegment servicing revenue 5,603 6,106 11,287 12,991 Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. Intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off. 
 Other income 113 685 225 1,395 Represents revenue earned from providing administrative support services. 
 
 Total other income 126,440 115,843 252,977 250,638 
 Contract fulfillment and acquisition costs 1,845 196 3,478 196 Represents primarily the amortization of previously capitalized contract fulfillment costs. The costs were pre-contract costs incurred to enhance the resources of the Company to satisfy future performance obligations. 
 
 Salaries and benefits 65,549 70,631 135,123 147,353 Decrease was due to staff reductions announced in June 2024 after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan servicing volume to one platform. These staff reductions took place during the second half of 2024. 
 
 Depreciation 1,821 5,342 4,474 10,450 Decrease was due to certain information technology activities moved to cloud computing and incurred at the corporate level and such costs are classified as other expenses and intercompany expenses, respectively. 
 Postage expense 9,551 9,277 17,127 19,883 Increase during the three months ended June 30, 2025 compared with the same period in 2024 was primarily due to an increase in consumer loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp. during the fourth quarter of 2024 and first quarter of 2025 and higher postage rates. The decrease in the six months ended June 30, 2025 compared with the same period in 2024 was due to a non-recurring volume-based credit earned from the Company's mail provider and recognized in the first quarter of 2025. 
 Other expenses 11,099 11,188 21,931 20,119 The total of other expenses and intercompany expenses decreased due to moving to one platform in 2024 and continued focus on expense reductions. Intersegment expenses represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. 
 
 Intersegment expenses 17,240 18,224 33,718 37,555 
 Total operating expenses 105,260 114,662 212,373 235,360 
 
 Total expenses 107,105 114,858 215,851 235,556 
 Income before income taxes 19,959 2,243 38,471 18,234 
 Income tax expense (4,790) (538) (9,233) (4,376) Represents income tax expense at an effective tax rate of 24%. 
 Net income $ 15,169 1,705 29,238 13,858 
 
 
 
 
 
 
 

 47 

 
 
 
 

 
 
 Before tax operating margin 16.0 % 1.9 % 15.4 % 7.3 % Before tax operating margin is a measure of before tax operating profitability as a percentage of revenue, and for LSS is calculated as income before income taxes divided by the total of loan servicing and systems revenue (less contract fulfillment and acquisition costs), intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods. 
 Before tax operating margin increased due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures executed primarily in 2024. This was partially offset for the six months ended June 30, 2025 compared with the same period in 2024 due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract. 
 
 
 
 

 Loan servicing and systems revenue 
 The following table presents disaggregated revenue by service offering for each reporting period: 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Government loan servicing $ 85,737 87,014 173,100 192,490 Represents revenue from the Company's servicing contract with the Department. Decrease was due to a decrease in the number of borrowers serviced, and for the six months ended June 30, 2025 compared to the same period in 2024 was also due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract. The Company expects the number of borrowers serviced under this contract will continue to decrease through the fourth quarter of 2025 as volume is transferred from the Company to its remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer. In addition, volume is expected to decrease beginning in the fourth quarter of 2025 due to borrowers exiting the CARES forbearance period that have not made payments. These borrowers are expected to be transferred to the Debt Management and Collections System who is responsible for managing and facilitating the collection of defaulted federal student loans. 
 Private education and consumer loan servicing 22,733 12,959 45,426 25,577 Increase was due to an increase in loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp. loan portfolios during the fourth quarter of 2024 and first quarter of 2025. Over time, revenue earned on the Discover Financial Services portfolio will decrease as borrowers pay off their loans. 
 
 FFELP loan servicing 2,241 3,245 4,873 6,624 Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off. 
 
 Software services 9,452 4,879 16,444 9,420 Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Increase was primarily due to the Company's recognition of revenue beginning in the second quarter of 2024 from a new remote hosted servicing customer awarded a USDS contract. The Company expects software services revenue to increase through the fourth quarter of 2025 as additional volume is transferred from the Company to this new remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer. 
 
 Outsourced services 561 955 1,622 2,141 Represents revenue from providing contact center and back office operational outsourcing services. 
 Loan servicing and systems revenue $ 120,724 109,052 241,465 236,252 
 
 

 48 

 
 
 
 
 

 EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS 
 As discussed further in the Company's 2024 Annual Report, this segment of the Company’s business is subject to seasonal fluctuations which correspond, or are related to, the traditional school year. Based on the timing of revenue recognition and when expenses are incurred, revenue and before tax operating margin are higher in the first quarter compared with the remainder of the year. 
 Summary and Comparison of Operating Results 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Interest income $ 5,417 5,715 12,356 13,580 Represents interest income on tuition funds held in custody for schools. Decrease was due to a decrease in interest rates partially offset by higher balances. 
 
 Education technology services and payments revenue 
 118,184 116,909 265,515 260,449 See table below for additional information. 
 Intersegment revenue 65 56 129 106 
 
 Total other income 118,249 116,965 265,644 260,555 
 Cost of services 39,844 40,222 87,891 88,832 See table below for additional information. 
 Salaries and benefits 41,598 40,736 83,339 80,903 Increase was due to an increase in headcount to support the growth of the customer base and the investment in the development of new technologies. 
 Depreciation and amortization 2,505 2,712 4,936 5,395 
 Other expenses 9,904 8,600 18,952 16,158 Increase was due to an increase in professional fees and technology services. 
 Intersegment expenses, net 6,273 4,811 11,877 9,612 Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. 
 Total operating expenses 60,280 56,859 119,104 112,068 
 
 Total expenses 100,124 97,081 206,995 200,900 
 Income before income taxes 23,542 25,599 71,005 73,235 
 Income tax expense (5,650) (6,150) (17,052) (17,585) Represents income tax expense at an effective tax rate of 24%. 
 Net income 17,892 19,449 53,953 55,650 
 Net loss attributable to noncontrolling interests — 29 45 46 Amounts for noncontrolling interests reflect the net loss attributable to the holders of minority membership interests in NextGen. In April 2025, the Company acquired the remaining 20.0% of NextGen for $3.9 million. 
 Net income $ 17,892 19,478 53,998 55,696 The Company expects net income to be impacted in 2025 compared with 2024 due to a decrease in contribution from FACTS education services as a result of the end of funding of the EANS program in 2024 as described in the revenue table below and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. 

 49 

 
 
 
 

 Education technology services and payments revenue 
 The following table presents disaggregated revenue by service offering and before tax operating margin for each reporting period: 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Tuition payment plan services $ 36,013 34,164 76,085 73,043 Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers. 
 
 Payment processing 37,515 34,326 89,051 82,113 Increase was due to an increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers. 
 Education technology services 44,481 47,205 100,177 103,227 Decrease was due to a decrease in FACTS education services revenue which resulted from the winding down of economic aid provided to private schools in response to the COVID-19 pandemic. Instructional services revenue provided to private schools has been funded by the Emergency Assistance to Non-Public Schools (EANS) program. The EANS II program funding ended on September 30, 2024. Although schools still have allocated funds to spend, future instructional services revenue will be adversely impacted compared to recent historical results due to the EANS funding ending in 2024. Revenue earned under the EANS program was $0.1 million and $1.7 million for the three and six months ended June 30, 2025 compared with $8.8 million and $18.9 million for the same periods in 2024. This decrease was partially offset by an increase in revenue from the Company’s professional development services, financial aid management, enrollment services, and instructional services from non-EANS funding sources. 
 
 Other 175 1,214 202 2,066 
 Education technology services and payments revenue 118,184 116,909 265,515 260,449 
 Cost of services 39,844 40,222 87,891 88,832 Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues. 
 Net revenue $ 78,340 76,687 177,624 171,617 
 GAAP before tax operating margin 30.0 % 33.4 % 40.0 % 42.7 % Before tax operating margin, excluding net interest income, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the ETSP segment is calculated as income before income taxes less net interest income divided by net revenue. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it facilitates an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods. 
 Before tax operating margin, excluding net interest income, decreased due to a decrease in FACTS education services revenue and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. Before tax operating margin will continue to be impacted by these items throughout 2025 compared with 2024. 
 
 Net interest income (6.9) (7.5) (7.0) (7.9) 
 Non-GAAP before tax operating margin, excluding net interest income 23.1 % 25.9 % 33.0 % 34.8 % 

 50 

 
 
 
 
 

 NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS 
 
 Asset Generation and Management Operating Segment 
 Loan Portfolio 
 As of June 30, 2025, the AGM operating segment had an $8.9 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of June 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 Loan Activity 
 The following table sets forth the activity of loans in the AGM operating segment: 
 
 FFELP Private Consumer and other Total 
 Three months ended June 30, 2025 
 Balance as of March 31, 2025 $ 8,670,284 208,507 381,215 9,260,006 
 Loan acquisitions 626 — 142,503 143,129 
 Repayments, claims, capitalized interest, participations, and other, net (236,813) (8,920) (112,248) (357,981) 
 Loans lost to external parties (66,771) (800) — (67,571) 
 Loans sold (241) — — (241) 
 Loans contributed to Nelnet Bank — (42,173) — (42,173) 
 Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169 
 Three months ended June 30, 2024 
 Balance as of March 31, 2024 $ 10,383,052 261,582 155,308 10,799,942 
 Loan acquisitions — — 195,279 195,279 
 Repayments, claims, capitalized interest, participations, and other, net (325,263) (13,367) (37,352) (375,982) 
 Loans lost to external parties (574,056) (778) — (574,834) 
 Loans sold — — (133,788) (133,788) 
 Balance as of June 30, 2024 $ 9,483,733 247,437 179,447 9,910,617 
 
 Six months ended June 30, 2025 
 Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868 
 Loan acquisitions 703,425 — 272,290 975,715 
 Repayments, claims, capitalized interest, participations, and other, net (467,370) (21,455) (206,232) (695,057) 
 Loans lost to external parties (125,535) (1,502) — (127,037) 
 Loans sold (131,999) — (148) (132,147) 
 Loans contributed to Nelnet Bank — (42,173) — (42,173) 
 Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169 
 
 Six months ended June 30, 2024 
 Balance as of December 31, 2023 $ 11,686,207 277,320 85,935 12,049,462 
 Loan acquisitions — — 276,009 276,009 
 Repayments, claims, capitalized interest, participations, and other, net (650,216) (27,958) (48,304) (726,478) 
 Loans lost to external parties (1,352,564) (1,925) — (1,354,489) 
 Loans sold (199,694) — (134,193) (333,887) 
 Balance as of June 30, 2024 $ 9,483,733 247,437 179,447 9,910,617 

 The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2025, the Company’s ownership correlates to approximately $1.70 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income. 
 51 

 
 
 
 

 Beginning in late 2021, the Company experienced accelerated run-off of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans as a result of the CARES Act payment pause on Department-held loans and the initiatives offered by the Department for FFELP borrowers to consolidate their loans to qualify for loan forgiveness under various programs. However, the Company has experienced a significant decrease in FFELP borrowers consolidating their loans into the Federal Direct Loan Program since August 2024 that has resulted in prepayment rates on the Company’s FFELP portfolio being more consistent with longer-term historical rates. 
 Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs 
 For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of AGM’s loan portfolios as of June 30, 2025 and December 31, 2024; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 Loan Spread Analysis 
 The following table analyzes the loan spread on AGM’s portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net loan interest income, including settlements on derivatives" below, divided by the average balance of loans or debt outstanding. 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 
 Variable loan yield, gross 7.77 % 8.16 % 7.59 % 8.07 % 
 Consolidation rebate fees (0.82) (0.81) (0.80) (0.80) 
 
 Premium and deferred origination costs amortization, net of discount accretion (0.15) 0.07 (0.14) 0.07 
 Variable loan yield, net 6.80 7.42 6.65 7.34 
 Loan cost of funds - interest expense (5.60) (6.50) (5.50) (6.50) 
 Loan cost of funds - derivative settlements (a) (b) 0.01 0.01 0.01 0.01 
 Variable loan spread 1.21 0.93 1.16 0.85 
 Fixed rate floor income, gross 0.04 0.01 0.05 0.01 
 Fixed rate floor income - derivative settlements (a) (c) 0.02 0.04 0.02 0.04 
 Fixed rate floor income, net of settlements on derivatives 0.06 0.05 0.07 0.05 
 Core loan spread 1.27 % 0.98 % 1.23 % 0.90 % 
 
 Average balance of AGM's loans $ 9,215,579 10,484,458 9,379,948 11,022,981 
 Average balance of AGM's debt outstanding 8,439,800 10,168,761 8,445,716 10,778,080 

 (a) Derivative settlements represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements with respect to derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income (loan spread) as presented in this table. The Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's Non-Nelnet Bank derivative instruments, including the net settlement activity recognized by the Company for each type of derivative for the 2025 and 2024 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 5 and in this table. 
 52 

 
 
 
 

 A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows. 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 
 Core loan spread 1.27 % 0.98 % 1.23 % 0.90 % 
 Derivative settlements (basis swaps) (0.01) (0.01) (0.01) (0.01) 
 Derivative settlements (fixed rate floor income) (0.02) (0.04) (0.02) (0.04) 
 Loan spread 1.24 % 0.93 % 1.20 % 0.85 % 

 (b) Derivative settlements consist of net settlements received related to the Company’s basis swaps. 
 (c) Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps. 
 The relationship between the indices in which AGM earns interest on its loans and funds such loans has a significant impact on loan spread. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM’s FFELP student loan assets and related funding for those assets. In a decreasing interest rate environment, student loan spread on FFELP loans decreases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly. This also results in student loan spread increasing in the short term in an increasing interest rate environment. 
 Variable loan spread was higher during the three and six months ended June 30, 2025 compared with the same periods in 2024 due to an increase in loans funded by the Company with operating cash (versus funded with debt). As of June 30, 2025, AGM had $576.1 million (par value) of unencumbered federally insured, private education, consumer, and other loans (as compared to $253.5 million, $194.1 million, and $77.0 million as of December 31, 2024, June 30, 2024, and December 31, 2023, respectively). The difference between variable loan spread and core loan spread is fixed rate floor income earned on a portion of AGM's federally insured student loan portfolio. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM's federally insured student loans earning fixed rate floor income. 
 Summary and Comparison of Operating Results 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Interest income: 
 Loan interest $ 157,300 193,707 311,768 403,335 See table below for additional analysis. 
 Investment interest 12,641 13,709 25,411 35,544 Represents primarily investment interest earned on beneficial interest investments and restricted cash included in student loan securitizations and other secured borrowings. Decrease was due to a decrease of interest earned on restricted cash due to lower balances and a decrease in interest rates, which was partially offset for the three months period by an increase of interest earned on beneficial interest investments. AGM earned $7.7 million and $3.8 million of interest income on beneficial interest investments for the three months ended June 30, 2025 and 2024, respectively, and $16.4 million and $17.0 million for the six months ended June 30, 2025 and 2024, respectively. 
 Total interest income 169,941 207,416 337,179 438,879 
 Loan interest expense 117,843 164,315 230,254 348,460 See table below for additional analysis. 
 Intercompany interest expense 2,223 7,317 4,115 14,077 Represents interest paid by AGM to Nelnet, Inc. (parent company) related to (i) internal borrowings to fund equity advances on certain AGM debt facilities; and (ii) AGM issued bonds held by Nelnet, Inc. Decrease was due to a decrease in interest rates and a decrease in the weighted average balance of outstanding AGM issued bonds held by Nelnet, Inc. Intercompany interest is eliminated for consolidated financial reporting purposes. 
 Net interest income 49,875 35,784 102,810 76,342 
 Less provision (negative provision) for loan losses 11,133 (4,225) 24,144 2,230 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision (negative provision) for loan losses for the periods presented. 
 
 Net interest income after provision for loan losses 38,742 40,009 78,666 74,112 
 

 53 

 
 
 
 

 
 Other income, net 7,507 1,337 11,502 6,321 Represents primarily borrower late fees, income from providing administration activities for third parties, sponsor fee income, and income/losses from AGM's investment in joint ventures. See "Overview - Consolidated Results of Operations" for further detail included in other income. Increase was due to an increase in income from investments, partially offset by a decrease in borrower late fees due to the continued amortization of the Company's FFELP portfolio. 
 (Loss) gain on sale of loans, net — (1,438) 909 (1,579) The Company recognizes gains/losses from selling portfolios of loans. See above under "Loan Activity" for loans sold during the three and six months ended June 30, 2025 and 2024. 
 
 Derivative settlements, net 581 1,442 1,162 2,997 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income as reflected in the table below. 
 
 Derivative market value adjustments, net (2,165) 936 (5,961) 6,642 Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of the Company's floor income interest rate swaps. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. 
 
 Total other income, net 5,923 2,277 7,612 14,381 
 Salaries and benefits 1,469 1,113 2,690 2,308 Increase was due to an increase in headcount as the Company actively expands into new asset loan classes. 
 Servicing fees 7,102 8,541 14,013 17,492 Represents servicing fees paid to (i) third parties and (ii) LSS for the servicing of AGM’s loans. The amounts paid to LSS exceed the actual cost of servicing the loans. Decrease was due to the amortization of the FFELP student loan portfolio, the majority of which is serviced by LSS. Intercompany servicing expense of $4.8 million and $5.9 million during the three months ended June 30, 2025 and 2024, respectively, and $9.7 million and $12.5 million during the six months ended June 30 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes. 
 
 Other expenses 2,464 1,139 3,352 2,246 Increase was due to an increase in costs associated with the Company actively expanding into new asset loan classes. 
 Intersegment expenses 1,260 1,272 2,510 2,481 Includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. 
 Total operating expenses 12,295 12,065 22,565 24,527 Total operating expenses were 53 and 46 basis points of the average balance of loans for the three months ended June 30, 2025 and 2024, respectively, and 48 and 45 for the six months ended June 30, 2025 and 2024, respectively. Increase in expenses compared to the average balance of loans is due to upfront costs associated with the Company actively expanding into new asset classes. 
 
 Provision for beneficial interests 4,977 5,911 6,487 5,911 During the periods presented, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. 
 
 Total expenses 17,272 17,976 29,052 30,438 
 Income before income taxes 27,393 24,310 57,226 58,055 
 Income tax expense (6,569) (5,835) (13,725) (13,933) Represents income tax expense at an effective tax rate of 24%. 
 Net income 20,824 18,475 43,501 44,122 
 Net income attributable to noncontrolling interests (23) — (40) — 
 Net income $ 20,801 18,475 43,461 44,122 
 Additional information: 
 GAAP net income $ 20,801 18,475 43,461 44,122 See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. Increase in net income, excluding derivative market value adjustments, was due to an increase in net loan interest income and a decrease in intercompany interest expense, partially offset by a decrease in investment interest income and an increase in provision for loan losses. 
 Derivative market value adjustments, net 2,165 (936) 5,961 (6,642) 
 Tax effect (520) 225 (1,431) 1,594 
 Non-GAAP net income, excluding derivative market value adjustments $ 22,446 17,764 47,991 39,074 
 

 54 

 
 
 
 

 
 

 Net loan interest income, including settlements on derivatives 
 The following table summarizes the components of "loan interest," "loan interest expense," and "derivative settlements, net:" 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Variable interest income, gross $ 178,606 212,969 353,912 443,185 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. 
 Consolidation rebate fees (18,897) (21,126) (37,645) (44,182) Decrease was due to a decrease in the average consolidation loan balance. 
 
 Premium and deferred origination costs amortization, net of discount accretion (3,406) 1,705 (6,471) 3,994 Net premium amortization in the three and six months ended June 30, 2025 was due to consumer and other loans purchased at a premium during 2024 and the first half of 2025 that have a short estimated life, offset by purchases of loans at a net discount over the last several years that have substantially longer estimated lives. Net discount accretion for the three and six months ended June 30, 2024 was due to the Company's purchases of loans at a net discount over the last several years. 
 Variable interest income, net 156,303 193,548 309,796 402,997 
 Interest on bonds and notes payable (117,843) (164,315) (230,254) (348,460) Decrease was due to a decrease in the average balance of debt outstanding and cost of funds. 
 Derivative settlements, net (a) 154 249 307 614 Represents net derivative settlements received related to the Company’s basis swaps. 
 Variable loan interest margin, net of settlements on derivatives 38,614 29,482 79,849 55,151 
 Fixed rate floor income, gross 997 159 1,972 338 Increase was due to lower interest rates. 
 Derivative settlements, net (a) 427 1,193 855 2,383 Represents net derivative settlements received related to the Company's floor income interest rate swaps. 
 
 Fixed rate floor income, net of settlements on derivatives 1,424 1,352 2,827 2,721 
 Net loan interest income, including derivative settlements (core loan interest income) (a) $ 40,038 30,834 82,676 57,872 
 
 
 
 
 
 
 

 (a) Net loan interest income, including derivative settlements (core loan interest income) is a non-GAAP financial measure. For an explanation of GAAP accounting for derivative settlements and the reasons why the Company reports these non-GAAP measures (and the limitations thereof), see footnote (a) to the table immediately under the caption “Loan Spread Analysis” above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's derivative instruments, including the net settlement activity recognized by the Company for each type of derivative referred to in the "Additional information" column of this table, for the 2025 and 2024 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 5 and in this table. 
 55 

 
 
 
 
 

 Nelnet Bank Operating Segment 
 Loan Portfolio 
 As of June 30, 2025, Nelnet Bank had an $827.6 million loan portfolio. For a summary of the Company’s loan portfolio as of June 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 Loan Activity 
 The following table sets forth the activity of loans in the Nelnet Bank operating segment: 
 
 FFELP Private Consumer and other Total 
 Three months ended June 30, 2025 
 Balance as of March 31, 2025 $ 110,187 489,451 161,995 761,633 
 Loan acquisitions and originations 38 8,354 50,175 58,567 
 Repayments (3,670) (23,315) (7,747) (34,732) 
 
 Loans contributed from AGM — 42,173 — 42,173 
 Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641 
 
 Three months ended June 30, 2024 
 Balance as of March 31, 2024 $ — 364,766 118,957 483,723 
 Loan acquisitions and originations — 1,390 82,998 84,388 
 Repayments — (11,744) (14,016) (25,760) 
 
 Balance as of June 30, 2024 $ — 354,412 187,939 542,351 
 
 Six months ended June 30, 2025 
 Balance as of December 31, 2024 $ — 482,445 162,152 644,597 
 Loan acquisitions and originations 111,040 37,396 54,730 203,166 
 Repayments (4,485) (45,351) (12,459) (62,295) 
 
 Loans contributed from AGM — 42,173 — 42,173 
 Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641 
 
 Six months ended June 30, 2024 
 Balance as of December 31, 2023 $ — 360,520 72,352 432,872 
 Loan acquisitions and originations — 18,106 139,843 157,949 
 Repayments — (24,214) (24,256) (48,470) 
 
 Balance as of June 30, 2024 $ — 354,412 187,939 542,351 

 Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs 
 For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of June 30, 2025 and December 31, 2024; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 Deposits 
 As of June 30, 2025, Nelnet Bank had $1.53 billion of deposits, which included $149.9 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of June 30, 2025 and December 31, 2024, see note 10 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 
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 Average Balance Sheet 
 The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities: 
 
 Three months ended June 30, (a) 
 Six months ended June 30, (a) 
 
 2025 2024 2025 2024 
 Balance Rate Balance Rate Balance Rate Balance Rate 
 Average assets 
 Federally insured student loans $ 108,235 6.14 % $ — — % $ 67,156 6.21 % $ — — % 
 Private education loans 519,858 6.37 359,486 4.35 504,619 6.24 363,172 4.31 
 Consumer and other loans 181,821 10.79 152,232 11.97 172,265 10.64 124,684 12.46 
 Cash and investments 923,233 6.05 625,123 6.96 858,743 6.21 601,535 6.95 
 Total interest-earning assets 1,733,147 6.65 % 1,136,841 6.80 % 1,602,783 6.69 % 1,089,391 6.70 % 
 Non-interest-earning assets 13,504 17,857 14,071 15,312 
 Total assets $ 1,746,651 $ 1,154,698 $ 1,616,854 $ 1,104,703 
 Average liabilities and equity 
 Brokered deposits $ 269,112 2.11 % $ 236,517 1.82 % $ 259,240 2.03 % $ 220,584 1.62 % 
 Intercompany deposits 158,465 3.99 146,788 4.82 115,887 3.81 153,568 4.86 
 Retail and other deposits 1,073,322 4.24 621,241 5.01 1,018,443 4.22 582,688 4.96 
 Federal funds purchased and other borrowed money 13,258 5.45 — — 11,839 5.12 — — 
 Total interest-bearing liabilities 1,514,157 3.84 % 1,004,546 4.23 % 1,405,409 3.79 % 956,840 4.17 % 
 Non-interest-bearing liabilities 10,037 6,369 9,323 7,424 
 Equity 222,457 143,783 202,122 140,439 
 Total liabilities and equity $ 1,746,651 $ 1,154,698 $ 1,616,854 $ 1,104,703 
 Net interest margin 3.29 % 3.07 % 3.37 % 3.03 % 

 
 (a) Calculated using average daily balances. 
 
 
 57 

 
 
 
 

 Summary and Comparison of Operating Results 
 
 Three months ended June 30, Six months ended June 30, 
 2025 2024 2025 2024 Additional information 
 Interest income: 
 Loan interest $ 14,804 8,422 26,775 15,518 Represents interest earned on loans. Increase was due to an increase in the balance and mix of loans. 
 Investment interest 13,934 10,811 26,430 20,779 Represents interest earned on cash and investments. Increase was due to an increase of these balances, partially offset by a decrease in interest rates. 
 Total interest income 28,738 19,233 53,205 36,297 
 Interest expense 14,672 10,769 26,749 20,266 Represents interest expense on deposits. Increase was due to an increase in the balance of deposits, partially offset by a decrease in interest rates. 
 Net interest income 14,066 8,464 26,456 16,031 
 Provision for loan losses 6,797 7,836 9,123 12,210 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision for loan losses for the periods presented. 
 
 Net interest income after provision for loan losses 7,269 628 17,333 3,821 
 Other income, net 392 775 534 1,150 Represents primarily net gains and income from investments. 
 
 
 Derivative settlements, net 163 207 327 409 Nelnet Bank uses derivatives to hedge its exposure related to variable rate deposits to minimize volatility from future changes in interest rates. Nelnet Bank has designated all of its derivative instruments as cash flow hedges; however, because certain hedged items are intercompany deposits, the corresponding derivative instruments are not eligible for hedge accounting in the consolidated financial statements. Accordingly, changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations. "Derivative settlements, net" represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments that do not qualify for hedge accounting based on their contractual terms. For additional information on Nelnet Bank's derivative portfolio, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 
 Derivative market value adjustments, net (1,701) 597 (4,229) 2,855 
 Total other income, net (1,146) 1,579 (3,368) 4,414 
 Salaries and benefits 2,791 2,798 5,607 5,518 Represents salaries and benefits of Nelnet Bank associates and third-party contract labor. 
 Depreciation 352 341 691 601 
 Servicing fees 824 193 1,491 426 Represents primarily fees paid to LSS for servicing certain of Nelnet Bank's loans. Intercompany servicing expense of $0.7 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, and $1.2 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes. 
 
 Other expenses 1,969 2,002 3,327 3,113 Represents various expenses such as marketing, consulting and professional fees, collection costs, software, FDIC insurance, and management fees. 
 Intersegment expenses 652 591 1,362 1,148 Intersegment expenses include costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. 
 
 Total operating expenses 6,588 5,925 12,478 10,806 
 
 
 (Loss) income before income taxes (465) (3,718) 1,487 (2,571) 
 Income tax benefit (expense) 101 916 (333) 657 Represents income tax expense at an effective tax rate of 21.6% and 24.6% for the three months ended June 30, 2025 and 2024, respectively, and 22.4% and 25.6% for the six months ended June 30, 2025 and 2024, respectively. 
 
 Net (loss) income $ (364) (2,802) 1,154 (1,914) 
 Additional information: 
 Net (loss) income $ (364) (2,802) 1,154 (1,914) 
 
 See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP financial information. 
 
 Derivative market value adjustments, net 1,701 (597) 4,229 (2,855) 
 Tax effect (408) 143 (1,015) 685 
 Net income (loss), excluding derivative market value adjustments $ 929 (3,256) 4,368 (4,084) 

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 NFS Other Operating Segments 
 The following table summarizes the operating results of other operating segments included in NFS that are not reportable. Income taxes are allocated based on 24% of income (loss) before taxes for each activity. 
 Summary and Comparison of Operating Results 
 
 WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total 
 Three months ended June 30, 2025 
 Investment interest $ 4 2,464 — 6,402 8,870 
 Interest expense — (1,427) — (1) (1,428) 
 Net interest income 4 1,037 — 6,401 7,442 
 Reinsurance premiums earned — 26,112 — — 26,112 
 Other income, net 1,506 1,073 453 2,233 5,265 
 Salaries and benefits (30) (296) (213) — (539) 
 
 Reinsurance losses and underwriting expenses — (25,662) — — (25,662) 
 Other expenses (63) (2,113) (29) (1) (2,206) 
 Intersegment expenses, net (4) (182) (103) (32) (321) 
 
 Income (loss) before income taxes 1,413 (31) 108 8,601 10,091 
 Income tax (expense) benefit (305) 8 (33) (2,065) (2,395) 
 Net (income) loss attributable to noncontrolling interests (141) — 27 — (114) 
 Net income (loss) $ 967 (23) 102 6,536 7,582 
 Three months ended June 30, 2024 
 Investment interest $ 4 1,521 145 14,210 15,880 
 Interest expense — (589) — (2,017) (2,606) 
 Net interest income 4 932 145 12,193 13,274 
 Reinsurance premiums earned — 14,851 — — 14,851 
 Other income, net 1,531 1,060 (1,832) 92 851 
 Salaries and benefits (52) (123) (199) — (374) 
 
 Reinsurance losses and underwriting expenses — (10,988) — — (10,988) 
 Other expenses (71) (719) (50) (1) (841) 
 Intersegment expenses, net (4) (99) (110) (35) (248) 
 
 Income (loss) before income taxes 1,408 4,914 (2,046) 12,249 16,525 
 Income tax (expense) benefit (304) (1,179) 488 (2,940) (3,935) 
 Net (income) loss attributable to noncontrolling interests (141) — 12 — (129) 
 Net income (loss) $ 963 3,735 (1,546) 9,309 12,461 

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 WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total 
 Six months ended June 30, 2025 
 Investment interest $ 7 4,457 — 13,226 17,690 
 Interest expense — (2,196) — (2) (2,198) 
 Net interest income 7 2,261 — 13,224 15,492 
 Reinsurance premiums earned — 50,799 — — 50,799 
 Other income, net 2,980 1,647 (1,190) 2,939 6,376 
 Salaries and benefits (62) (546) (409) — (1,017) 
 
 Reinsurance losses and underwriting expenses — (47,874) — — (47,874) 
 Other expenses (125) (2,790) (60) (3) (2,978) 
 Intersegment expenses, net (7) (291) (202) (65) (565) 
 Impairment expense — — (81) — (81) 
 Income (loss) before income taxes 2,793 3,206 (1,942) 16,095 20,152 
 Income tax (expense) benefit (603) (770) 456 (3,862) (4,779) 
 Net (income) loss attributable to noncontrolling interests (279) — 41 — (238) 
 Net income (loss) $ 1,911 2,436 (1,445) 12,233 15,135 
 
 Six months ended June 30, 2024 
 Investment interest $ 7 2,339 286 28,863 31,495 
 Interest expense — (589) — (4,435) (5,024) 
 Net interest income 7 1,750 286 24,428 26,471 
 Reinsurance premiums earned — 27,631 — — 27,631 
 Other income, net 3,009 1,346 (3,626) 284 1,013 
 Salaries and benefits (107) (237) (388) — (732) 
 
 Reinsurance losses and underwriting expenses — (22,305) — — (22,305) 
 Other expenses (145) (1,059) (120) (3) (1,327) 
 Intersegment expenses, net (7) (146) (240) (72) (465) 
 
 Income (loss) before income taxes 2,757 6,980 (4,088) 24,637 30,286 
 Income tax (expense) benefit (595) (1,675) 975 (5,914) (7,209) 
 Net (income) loss attributable to noncontrolling interests (276) — 27 — (249) 
 Net income (loss) $ 1,886 5,305 (3,086) 18,723 22,828 

 (a) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. WRCM earned management and performance fees of $1.5 million for each of the three months ended June 30, 2025 and 2024, respectively, and $3.0 million for each of the six months ended June 30, 2025 and 2024, respectively. Fees earned by WRCM are included in "other income, net" in the table above. 
 (b) Represents primarily the operating results of the Company’s reinsurance treaties on property and casualty policies. The increase in reinsurance premiums and associated reinsurance losses and underwriting expenses in the three and six months ended June 30, 2025 compared with the same periods in 2024 was primarily due to an increase in overall property volume and new business. Reinsurance losses and underwriting expenses also increased related to several commercial auto programs, which the Company has exited; however, adverse development of related expenses may continue to be recognized in future periods. All other operating expenses also increased to support the growth of this business. 
 (c) Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio. Included in "other income, net" in the table above are primarily the net losses recognized related to the Company's proportionate share of certain real estate investments accounted for under the equity method. Operating results for the three and six months ended June 30, 2025 also includes a realized gain of $1.6 million as a result of the sale of a certain real estate investment during the second quarter. 
 (d) Represents interest income earned on investment debt securities (primarily student loan and other asset-backed securities, including Nelnet-owned asset-backed securities which it has repurchased and are eliminated in consolidation), interest income on certain notes receivable, unrealized gains/losses on marketable equity securities, realized gains/losses on marketable equity securities and investment debt securities, and other costs to manage these investments. Also includes interest expense incurred on debt used to finance such investments. The decrease in investment interest income and interest expense in 2025 compared with 2024 was primarily due to a decrease in the average balance of investment debt securities and debt outstanding, respectively, and a decrease in interest rates. As of December 31, 2024, the majority of debt used to finance such investments had been repaid. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk - Interest Rate and Market Risk - Investments," which provides additional detail on NFS's investment debt securities. 
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 CORPORATE AND OTHER ACTIVITIES – RESULTS OF OPERATIONS 
 Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities (“Corporate”). The following table summarizes the operating results of these activities. 
 Income taxes are allocated based on 24% of income (loss) before taxes for each activity. The difference between the Corporate income tax expense and the sum of taxes calculated for each activity is included in income taxes in “other” in the table below. 
 Summary and Comparison of Operating Results 
 
 Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total 
 Three months ended June 30, 2025 
 Investment interest $ — 1 — — — 2,660 2,661 
 Interest expense — — (2) — — (649) (651) 
 Net interest income (expense) — 1 (2) — — 2,011 2,010 
 Solar construction revenue — — 1,259 — — — 1,259 
 Other income, net 598 (1,228) — 5,300 1,762 3,171 9,603 
 Gain on partial redemption of ALLO investment — — — 175,044 — — 175,044 
 Cost to provide solar construction services — — (14,050) — — — (14,050) 
 Salaries and benefits (18,600) (374) (1,850) — (229) (1,731) (22,784) 
 Depreciation and amortization (2,666) — (241) — — (39) (2,946) 
 Other expenses (14,402) (225) (407) 4,892 (8) (1,545) (11,695) 
 Intersegment expenses, net 26,416 (66) (408) — (45) (281) 25,616 
 Impairment expense (3,269) — (1,902) — (140) — (5,311) 
 (Loss) income before income taxes (11,923) (1,892) (17,601) 185,236 1,340 1,586 156,746 
 Income tax benefit (expense) 2,862 (467) 4,224 (44,457) (321) (2,048) (40,207) 
 Net loss attributable to noncontrolling interests — 3,838 — — — — 3,838 
 Net (loss) income $ (9,061) 1,479 (13,377) 140,779 1,019 (462) 120,377 
 
 Three months ended June 30, 2024 
 Investment interest $ — 1 12 — — 2,633 2,646 
 Interest expense — — (377) — — (356) (733) 
 Net interest income (expense) — 1 (365) — — 2,277 1,913 
 Solar construction revenue — — 9,694 — — — 9,694 
 Other income, net 750 (1,635) 51 4,193 3,691 3,322 10,372 
 
 Cost to provide solar construction services — — (8,072) — — — (8,072) 
 Salaries and benefits (19,223) (601) (3,260) — (238) (1,464) (24,786) 
 Depreciation and amortization (6,359) — (289) — (8) (92) (6,748) 
 Other expenses (10,441) (197) (343) (250) (10) (1,601) (12,842) 
 Intersegment expenses, net 26,217 (148) (303) (3) (18) 58 25,803 
 Impairment expense — — (1,865) — — — (1,865) 
 (Loss) income before income taxes (9,056) (2,580) (4,752) 3,940 3,417 2,500 (6,531) 
 Income tax benefit (expense) 2,174 478 917 (946) (820) (1,015) 788 
 Net loss attributable to noncontrolling interests — 590 926 — — — 1,516 
 Net (loss) income $ (6,882) (1,512) (2,909) 2,994 2,597 1,485 (4,227) 

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 Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total 
 Six months ended June 30, 2025 
 Investment interest $ — 6 — — — 4,967 4,973 
 Interest expense — — (3) — — (1,281) (1,284) 
 Net interest income (expense) — 6 (3) — — 3,686 3,689 
 Solar construction revenue — — 5,254 — — — 5,254 
 Other income, net 1,217 502 — 13,715 6,254 6,152 27,840 
 Gain on partial redemption of ALLO investment — — — 175,044 — — 175,044 
 Cost to provide solar construction services — — (21,878) — — — (21,878) 
 Salaries and benefits (37,320) (761) (3,494) — (436) (3,268) (45,279) 
 Depreciation and amortization (6,185) — (517) — (1) (75) (6,778) 
 Other expenses (27,586) (302) (828) 4,892 (31) (3,426) (27,281) 
 Intersegment expenses, net 51,232 (131) (807) — (86) (538) 49,670 
 Impairment expense (3,269) — (1,902) — (140) — (5,311) 
 (Loss) income before income taxes (21,911) (686) (24,175) 193,651 5,560 2,531 154,970 
 Income tax benefit (expense) 5,259 (1,146) 5,802 (46,476) (1,334) (1,503) (39,398) 
 Net loss attributable to noncontrolling interests — 5,461 — — — — 5,461 
 Net (loss) income $ (16,652) 3,629 (18,373) 147,175 4,226 1,028 121,033 
 
 Six months ended June 30, 2024 
 Investment interest $ — 1 31 — — 6,429 6,461 
 Interest expense — — (708) — — (701) (1,409) 
 Net interest income (expense) — 1 (677) — — 5,728 5,052 
 Solar construction revenue — — 23,420 — — — 23,420 
 Other income, net 1,456 1,242 93 (4,043) 3,302 6,174 8,224 
 
 Cost to provide solar construction services — — (22,300) — — — (22,300) 
 Salaries and benefits (39,243) (1,284) (4,631) — (476) (2,673) (48,307) 
 Depreciation and amortization (14,727) — (539) — (14) (184) (15,464) 
 Other expenses (20,332) (368) (1,228) (606) (26) (3,683) (26,243) 
 Intersegment expenses, net 53,745 143 (1,061) (4) (38) (137) 52,648 
 Impairment expense — — (1,865) — (37) — (1,902) 
 (Loss) income before income taxes (19,101) (266) (8,788) (4,653) 2,711 5,225 (24,872) 
 Income tax benefit (expense) 4,584 (564) 1,711 1,117 (651) (1,686) 4,511 
 Net loss attributable to noncontrolling interests — 2,617 1,655 — — — 4,272 
 Net (loss) income $ (14,517) 1,787 (5,422) (3,536) 2,060 3,539 (16,089) 

 (a) Includes corporate activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services. The amount allocated to operating segments is reflected as “intersegment expenses, net” in the table above. Also includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs. During the second quarter 2025, the Company recognized a non-cash impairment charge of $3.3 million related to operating lease assets as a result of the Company consolidating office space. 
 (b) Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. The Company accounts for these investments using the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment. In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years). These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments syndicated to third parties. Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings. For additional information on the results of this operating segment, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 (c) Nelnet Renewable Energy (NRE) is the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to commercial entities. The Company entered this business from its acquisition of 80% of GRNE Solar in June 2022. On June 30, 2024, the Company acquired the remaining 20% of GRNE Solar for $0.3 million. 
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 Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects. The Company has a handful of remaining legacy construction contracts it is obligated to complete, down from over 30 at the beginning of 2024. During the second quarter 2025, NRE recognized $12.9 million in contract loss reserves that represents NRE's estimate of costs it will incur to complete the remaining legacy contracts. The loss reserve expense is included in "costs to provide solar construction services" in the table above. In addition, uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue. See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill. 
 (d) Represents primarily the Company's share of loss on its voting membership interest and income on its preferred membership interests in ALLO. For additional information on the results of these investments, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 On June 4, 2025, the Company redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025, and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. 
 (e) Represents the operating results of the Company’s venture capital investments, including Hudl which the Company accounts for using the measurement alternative method, and the administrative costs to manage this portfolio. These investments may create volatility in earnings from recognizing results of certain equity method investees, periodic adjustment of certain fund investments to their respective fair value, and, when applicable, observable price changes on certain measurement alternative investments. 
 
 
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 LIQUIDITY AND CAPITAL RESOURCES 
 The Company’s Loan Servicing and Systems, and Education Technology Services and Payments operating segments are non-capital intensive and both produce positive operating cash flows. As such, a minimal amount of debt and equity capital is allocated to these segments and any liquidity or capital needs are satisfied using cash flow from operations. 
 Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Nelnet Financial Services division, which includes the Asset Generation and Management and Nelnet Bank reportable operating segments, and the Company's other initiatives to pursue additional strategic investments. On July 4, 2025, the One Big Beautiful Bill (the "Bill") was enacted into law. Among other substantial changes to the tax code, the Bill makes numerous changes to the federal student loan program. Graduate students and parents of undergraduates will be subject to new caps on federal lending. Overall, we expect these changes will boost privatization of student lending and may create opportunities for the Company to expand its private education loan originations and acquisitions. 
 Sources of Liquidity 
 As of June 30, 2025, the Company's sources of liquidity included: 
 
 Cash and cash equivalents $ 225,753 
 Less: Cash and cash equivalents held at Nelnet Bank (a) (16,741) 
 Net cash and cash equivalents 209,012 
 
 Available-for-sale (AFS) debt securities (investments) - at fair value 1,202,980 
 Less: AFS debt securities held at Nelnet Bank - at fair value (a) (705,139) 
 AFS private education and consumer loan debt securities - held as risk retention - at fair value (b) (206,543) 
 Restricted investments (c) (121,914) 
 Unencumbered AFS debt securities (investments) - at fair value 169,384 
 
 Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par 576,072 
 
 Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) 238,840 
 
 
 
 Unused capacity on unsecured line of credit (e) 495,000 
 
 Sources of liquidity as of June 30, 2025 
 $ 1,688,308 

 (a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank. 
 (b) The Company is sponsor for certain private education and consumer loan securitizations and as sponsor, is required to provide a certain level of risk retention. To satisfy this requirement, the Company has purchased bonds issued in the securitizations. The majority of the purchased bonds reflected in the table above relate to private education loan securitizations. For these securitizations, the Company is required to retain these bonds 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 these bonds to a third party. The Company estimates these bonds will be restricted from trading until approximately the first half of 2027. 
 (c) The Company is required to hold collateral in third-party trusts related to its reinsurance business. 
 (d) 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, redeem the notes at par as cash is generated by the trust estate, or pledge the securities as collateral on repurchase agreements. 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. 
 (e) The Company has a $495.0 million unsecured line of credit that matures on September 22, 2026. As of June 30, 2025, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use. 
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 The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or investment interests therein); strategic acquisitions and investments; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. The timing and size of these opportunities will vary and will have a direct impact on the Company's cash and investment balances. 
 Recent Development - Partial Redemption of ALLO Investment 
 Nelnet had both voting and preferred membership interest investments in ALLO. On June 4, 2025, Nelnet redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025. The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction. The majority of the proceeds from this transaction were used by the Company to pay down third-party debt that was used to fund loan assets and repurchase certain of the Company's own asset-backed securities (bonds and notes payable) in the secondary market. 
 Cash Flows 
 The Company has historically generated positive cash flow from operations. During the six months ended June 30, 2025 and 2024, the Company generated $172.9 million and $345.3 million, respectively, in cash from operating activities. The decrease in 2025 compared with 2024 was due to: 
 • Adjustments to net income for certain non-cash items, including the gain recognized on the partial redemption of the Company's ALLO investment, deferred income tax benefit, loan discount and deferred lender fees accretion, and gain/loss on investments; and 
 • The impact of changes to accrued interest receivable during the six months ended June 30, 2025 compared with the same period in 2024. 
 These factors were partially offset by: 
 • An increase in net income; 
 • Adjustments to net income for the non-cash change in derivative market value adjustments and provision for loan losses; and 
 • The impact of changes to other liabilities during the six months ended June 30, 2025 compared with the same period in 2024. 
 The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, and the purchase and sale of other investments. During June 2025, the Company received cash proceeds of $410.9 million from the redemption of its membership interests in ALLO. The proceeds from the ALLO redemption are included in investing activities on the statement of cash flows. The primary items included in financing activities are the payments on bonds and notes payable, the change in deposits at Nelnet Bank used to fund loans and investment activity at Nelnet Bank, and the change in due to customers. Cash provided by investing activities and used in financing activities for the six months ended June 30, 2025 was $709.8 million and $1.01 billion, respectively. Cash provided by investing activities and used in financing activities for the six months ended June 30, 2024 was $1.82 billion and $2.25 billion, respectively. Investing and financing activities are further addressed in the discussion that follows. 
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 Liquidity Needs and Sources of Liquidity Available to Satisfy Debt Obligations Secured by Loan Assets and Related Collateral - AGM Operating Segment 
 The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral: 
 
 As of June 30, 2025 
 Carrying amount 
 Final maturity 
 Bonds and notes issued in asset-backed securitizations $ 7,338,061 8/26/30 - 9/25/69 
 FFELP and consumer loan warehouse facilities 621,339 7/31/26 - 2/29/28 
 $ 7,959,400 

 Bonds and Notes Issued in Asset-backed Securitizations 
 The majority of AGM’s portfolio of student loans is funded in asset-backed securitizations that are structured to substantially match the maturity of the funded assets, thereby minimizing liquidity risk. Cash generated from student loans funded in asset-backed securitizations provides the source of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations. In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees that AGM earns from these transactions, AGM has created a portfolio that will generate earnings and significant cash flow over the life of these transactions. 
 As of June 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio to be approximately $1.07 billion as detailed below. The actual timing of cash flows released from the securitizations could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold. 
 The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of June 30, 2025, the majority of which are federally insured student loans. As of June 30, 2025, AGM had $7.9 billion of loans included in asset-backed securitizations, which represented 88.7% of its total loan portfolio. The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered federally insured, private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to June 30, 2025, and loans owned by Nelnet Bank. 
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 Asset-backed Securitization Cash Flow Forecast 
 $1.07 billion 
 (dollars in millions) 
 
 The forecasted future undiscounted cash flows of approximately $1.07 billion include approximately $0.74 billion (as of June 30, 2025) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.33 billion, or approximately $0.25 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2025 balance. 
 The Company uses various assumptions, including prepayments and future interest rates, when preparing its cash flow forecast. These assumptions are further discussed below. 
 Prepayments : The primary variables in establishing a life of loan estimate are the level and timing of prepayments. Prepayment rates equal the amount of loans that prepay annually as a percentage of the beginning-of-period balance, net of scheduled principal payments. A number of factors can affect estimated prepayment rates, including the level of consolidation activity, borrower default rates, and utilization of debt management options such as income-based repayment, deferments, and forbearance. Should any of these factors change, management may revise its assumptions, which in turn would impact the projected future cash flow. The Company’s cash flow forecast above assumes prepayment rates of 6% for both federally insured consolidation and Stafford loans. Prepayment rates for private education loans range from 11% to 20%. 
 Beginning in late 2021, the Company experienced accelerated run-off (prepayments) of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans to qualify for loan forgiveness under various initiatives and programs offered by the federal government and the Department. However, the Company has experienced a significant decrease in FFELP borrowers consolidating their loans into the Federal Direct Loan Program since August 2024 that has resulted in prepayment rates on the Company’s FFELP portfolio being more consistent with longer-term historical rates. 
 The following table summarizes the estimated impact to the above forecasted cash flows if prepayments were greater than the prepayment rate assumptions used to calculate the forecasted cash flows: 
 
 Increase in prepayment rate 
 Reduction in forecasted cash flow from table above 
 Forecasted cash flow using increased prepayment rate 
 2x $0.08 billion 
 $0.99 billion 
 
 4x $0.20 billion $0.87 billion 
 
 

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 If the entire AGM student loan portfolio was prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.74 billion (as of June 30, 2025); however, the Company would not receive the $0.33 billion ($0.25 billion after tax) of estimated future earnings from the portfolio. 
 Interest rates : The Company funds a portion of its student loans with floating rate securities that are indexed to 90-day SOFR. Meanwhile, the interest earned on the Company’s student loan assets is indexed primarily to the 30-day average SOFR in effect for each day in a calendar quarter. The different interest rate characteristics of the Company’s loan assets and liabilities funding these assets result in basis risk. The Company’s cash flow forecast assumes, for the life of the portfolio, a relationship between the various SOFR indices that is implied by the current forward SOFR curves. If the forecast is computed assuming a spread of an additional 12 basis points between 3-month Term SOFR and 30-day average SOFR for the life of the portfolio, the cash flow forecast would be reduced by approximately $5 million to $15 million. 
 The Company uses the current forward interest rate yield curve to forecast cash flows. A change in the forward interest rate curve would impact the future cash flows generated from the portfolio. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk — AGM Operating Segment" for additional information about various interest rate risks which may impact future cash flows from AGM's loan assets. 
 Warehouse Facilities 
 Warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. For a summary of the Company's warehouse facilities outstanding as of June 30, 2025, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 Upon termination or expiration of the warehouse facilities, the Company would expect to access the securitization market, obtain replacement warehouse facilities, use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations. 
 Asset-backed Securities Transactions 
 The Company, through its subsidiaries, has historically funded loans by completing asset-backed securitizations. Depending on market conditions, the Company anticipates continuing to access the asset-backed securitization market. Such asset-backed securitization transactions would be used to refinance loans included in its warehouse facilities and existing asset-backed securitizations and/or finance loans purchased from third parties and loans that are currently unencumbered. 
 There were no asset-backed securitization transactions completed during the six months ended June 30, 2025. 
 Other Uses of Liquidity 
 Subsequent to the Reconciliation Act of 2010, the Company no longer originates FFELP loans but continues to acquire FFELP loan portfolios from third parties and believes additional loan purchase opportunities exist, including opportunities to purchase private education, consumer, and other loans (or investment interests therein). 
 The Company plans to fund additional loan acquisitions and related investments using current cash; cash provided by operating activities; proceeds from the sale of certain investments; its unsecured line of credit, its Union Bank student loan participation agreement, and its Union Bank student loan asset-backed securities participation agreement (each as described below), and/or establishing similar secured and unsecured borrowing facilities; using its existing warehouse facilities (as described above); increasing the capacity under existing and/or establishing new warehouse facilities; and continuing to access the asset-backed securities market. 
 Union Bank Participation Agreements 
 The Company maintains an agreement with Union Bank, a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans. As of June 30, 2025, $583.2 million of loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. The agreement automatically renews annually and is terminable by either party upon five business days' notice. This agreement provides beneficiaries of Union Bank’s grantor trusts with access to investments in interests in student loans, while providing liquidity to the Company. The Company can sell participation interests in loans to Union Bank to the extent of availability under the grantor trusts, up to $900.0 million or an amount in excess of $900.0 million if mutually agreed to by both parties. Loans participated under this agreement have been accounted for by the Company as loan sales. Accordingly, the participation interests sold are not included on the Company’s consolidated balance sheets. 
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 The Company also has an agreement with Union Bank under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (bond investments). The agreement automatically renews annually and is terminable by either party upon five business days' notice. The Company can participate FFELP loan asset-backed securities to Union Bank to the extent of availability under the grantor trusts, up to $400.0 million or an amount in excess of $400.0 million if mutually agreed to by both parties. The Company maintains legal ownership of the FFELP loan asset-backed securities and, in its discretion, approves and accomplishes any sale, assignment, transfer, encumbrance, or other disposition of the securities. As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheets as "investments at fair value" and the participation interests outstanding have been accounted for by the Company as a secured borrowing. As of June 30, 2025, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. 
 Liquidity Impact Related to Beneficial Interest in Loan Securitizations 
 The Company has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "other investments and notes receivable, net" on the Company's consolidated balance sheets. These residual interests were acquired by the Company or have been received by the Company as consideration from selling portfolios of loans to unrelated third parties who securitized such loans. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2025, the Company's ownership correlates to approximately $1.70 billion of loans included in these securitizations. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income. 
 As of June 30, 2025, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $190.9 million. For a summary of this investment balance, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 
 The Company's partial ownership percentage in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. As of June 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $279.7 million. The vast majority of these cash flows are expected to be received over the next 5 years. 
 The difference between the total estimated future undiscounted cash flows from these residual interests ($279.7 million) and the investment carrying value ($190.9 million) of $88.8 million, or $67.5 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2025 balance. 
 The undiscounted future cash flows from the consumer and private education loan securitizations are highly subject to credit risk (defaults). If defaults are higher than management's current estimate, the forecasted cash flows and estimated future investment interest income (earnings) from these securitizations would be adversely impacted. 
 Sources and Needs of Liquidity - Nelnet Bank 
 Sources of Liquidity 
 Nelnet Bank launched operations in November 2020. Nelnet Bank was funded by the Company with an initial capital contribution of $100 million and the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC as discussed below. The Company has contributed an additional $118 million, including $42 million of private education loans, to Nelnet Bank since its inception. Based on Nelnet Bank's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to the bank in future periods. Nelnet Bank also has unsecured Federal Funds lines of credit with correspondent banks and has established accounts at the Federal Reserve Bank and the Federal Home Loan Bank. 
 The growth of Nelnet Bank is primarily driven by its ability to achieve loan growth goals while sustaining credit quality and maintaining cost-efficient funding sources to support its loan growth. 
 Deposits 
 Nelnet Bank utilizes brokered, retail, and other deposits to meet its funding needs and enhance its liquidity position. The deposits can be term or liquid deposits. The term deposits have terms from three months to ten years. Retail, commercial, and institutional deposits are sourced through a direct banking platform and a deposit marketplace and provide diversified funding sources. Brokered deposits are sourced through a network of brokers and provide a stable source of funding. In addition, Nelnet 
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 Bank accepts certain deposits considered non-brokered that are held in large accounts structured to allow FDIC insurance to flow through to underlying individual depositors. The deposits are diversified with deposits from Educational 529 College Savings and Health Savings plans, STFIT, and FDIC sweep deposits. 
 Regulatory Capital 
 Prior to Nelnet Bank’s launch of operations, Nelnet Bank, Nelnet, Inc. (the parent), and Michael S. Dunlap (Nelnet, Inc.’s controlling shareholder) entered into a Capital and Liquidity Maintenance Agreement and a Parent Company Agreement with the FDIC in connection with Nelnet, Inc.’s role as a source of financial strength for Nelnet Bank. As part of the Capital and Liquidity Maintenance Agreement, Nelnet, Inc. is obligated to (i) contribute capital to Nelnet Bank for it to maintain capital levels that meet FDIC requirements for a “well capitalized” bank, including a leverage ratio of capital to total assets of at least 12%; (ii) provide and maintain an irrevocable asset liquidity takeout commitment for the benefit of Nelnet Bank in an amount equal to the greater of either 10% of Nelnet Bank’s total assets or such additional amount as agreed to by Nelnet Bank and Nelnet, Inc.; (iii) provide additional liquidity to Nelnet Bank in such amount and duration as may be necessary for Nelnet Bank to meet its ongoing liquidity obligations; and (iv) establish and maintain a pledged deposit of $40.0 million with Nelnet Bank. As of June 30, 2025, Nelnet Bank's leverage ratio of capital to total assets was 12.8%. 
 Liquidity Impact Related to Solar Tax Equity Investments 
 The Company makes solar tax equity investments in renewable energy solar partnerships that support the development and operations of solar projects. As of June 30, 2025, the Company has funded a total of $300.6 million in tax equity investments which remain outstanding for itself and $285.8 million on behalf of its syndication partners, for a funded total of $586.4 million. These investments provide a federal income tax credit under the Internal Revenue Code, currently equaling 30% to 70% of the eligible project cost, with the tax credit available when the project is placed in service. The Company is then allowed to reduce its tax estimates paid to the U.S. Treasury based on the credits earned. In addition to the credits, the Company structures the investments to receive quarterly distributions of cash from the operating earnings of the solar project for a period of at least five years after the project is placed in service. After that period, the contractual agreements typically provide for the Company’s entire interest in the projects to be sold at the fair market value of the discounted forecasted future cash flows allocable to the Company. Based on the timing of when the Company funds a project and decreases its tax estimate to the U.S. Treasury due to earning of the tax credit, the net amount of capital funded to solar tax equity investments at any point in time is not significant and has a minimal impact on the Company’s liquidity. As of June 30, 2025, the Company is committed to fund an additional $63.5 million directly in solar tax equity investments and $115.7 million will be funded by its syndication partners, for a total commitment of $179.2 million. 
 Liquidity Impact Related to Hedging Activities 
 The Company utilizes derivative instruments to manage interest rate sensitivity. By using derivative instruments, the Company is exposed to market risk which could impact its liquidity. 
 All Non-Nelnet Bank over-the-counter derivative contracts executed by the Company are cleared post-execution at a regulated clearinghouse. Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default. Nelnet Bank derivative contracts have protection against counterparty risk provided by International Swaps and Derivatives Association, Inc. agreements. The agreements require collateral to be exchanged based on the net fair value of derivatives with each counterparty. The Company’s exposure related to the Nelnet Bank derivatives is limited to the value of the derivative contracts in a gain position, less any collateral held by us. 
 Based on the derivative portfolio outstanding as of June 30, 2025, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives. 
 Unsecured Line of Credit 
 As discussed above, the Company has a $495.0 million unsecured line of credit with a maturity date of September 22, 2026. As of June 30, 2025, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use. Upon the maturity date of this facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary. 
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 Stock Repurchases 
 In 2022, the Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ended May 8, 2025. That program expired on May 8, 2025. On May 8, 2025, the Company announced that its Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028. The five million shares authorized under the new program include the remaining unpurchased shares from the prior program, which the new program replaces. As of June 30, 2025, 4,822,191 shares remained authorized for repurchase under the Company's stock repurchase program. Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity. 
 Shares repurchased by the Company during the first half of 2025 are shown below. Certain of these repurchases were made pursuant to trading plans adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. For additional information on stock repurchases during the second quarter of 2025, see "Stock Repurchases" under Part II, Item 2 of this report. 
 
 Total shares repurchased Purchase price (in thousands) Average price of shares repurchased (per share) (a) 
 
 Quarter ended March 31, 2025 38,491 $ 4,458 115.81 
 Quarter ended June 30, 2025 183,554 21,360 116.37 
 
 Total 222,045 $ 25,818 116.28 

 (a) The average price of shares repurchased for the three months ended June 30, 2025 includes excise taxes. 
 Dividends 
 On June 16, 2025, the Company paid a second quarter 2025 cash dividend on the Company's Class A and Class B common stock of $0.28 per share. In addition, the Company's Board of Directors has declared a third quarter 2025 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.30 per share. The third quarter cash dividend will be paid on September 16, 2025 to shareholders of record at the close of business on September 2, 2025. 
 The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors. 
 CRITICAL ACCOUNTING ESTIMATES 
 This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other factors that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Note 2 of the notes to consolidated financial statements included in the Company’s 2024 Annual Report includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. 
 On an on-going basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are most “critical” — that is, they are most important to the portrayal of the Company’s financial condition and results of operations and they require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the allowance for loan losses as a critical accounting policy and estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Allowance for Loan Losses” in the Company’s 2024 Annual Report. For additional information regarding changes in the Company’s allowance for loan losses for the three and six months ended June 30, 2025 and 2024, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. There have been no material changes to the Company’s critical accounting policy and estimate since December 31, 2024. 
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 RECENT ACCOUNTING PRONOUNCEMENTS 
 In December 2023, the FASB issued accounting guidance to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance will be effective for the Company for the year ending December 31, 2025 annual financial statements, with early adoption permitted. The guidance will be applied on a prospective basis. The Company intends to adopt the standard when it becomes effective for the year ending December 31, 2025. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements. 
 In November 2024, the FASB issued accounting guidance to increase disclosure requirements primarily through enhanced disclosures about types of expenses (including employee compensation, depreciation, and amortization) in commonly presented expense captions. This guidance will be effective for the Company for fiscal years beginning after December 15, 2026. The guidance is required to be applied prospectively with the option for retrospective application. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements. 
 There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company's consolidated financial statements and related disclosures.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
NELNET INC 10-Q

Item 2. Management’s Discussion and Analysis
