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Nelnet
NNI
#3223
Rank
$4.59 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$128.15
Share price
-0.63%
Change (1 day)
16.08%
Change (1 year)
๐Ÿ’ณ Financial services
Categories
  1. Nelnet
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q1

Nelnet - 10-Q quarterly report FY2025 Q1


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025 
or    
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to . 
Commission File Number: 001-31924
Nelnet_Logo_color.jpg
NELNET, INC.
(Exact name of registrant as specified in its charter)
Nebraska
84-0748903
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
121 South 13th Street, Suite 100
Lincoln,Nebraska68508
(Address of principal executive offices)
(Zip Code)
(402) 458-2370
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, Par Value $0.01 per ShareNNINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                    Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                             Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒                    Accelerated filer ☐
Non-accelerated filer ☐                    Smaller reporting company ☐
        Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2025, there were 25,695,792 and 10,658,604 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).




NELNET, INC.
FORM 10-Q
INDEX
March 31, 2025







PART I. FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(unaudited)
 
As of
As of
 March 31, 2025December 31, 2024
Assets:  
Loans and accrued interest receivable (net of allowance for loan losses of $120,076 and $114,890, respectively)
$10,422,704 9,992,744 
Cash and cash equivalents:  
Cash and cash equivalents - not held at a related party67,107 48,838 
Cash and cash equivalents - held at a related party153,410 145,680 
Total cash and cash equivalents220,517 194,518 
Investments and notes receivable:
Investments at fair value1,238,903 1,160,320 
Other investments and notes receivable, net1,063,647 1,040,376 
Total investments and notes receivable2,302,550 2,200,696 
Restricted cash317,139 332,100 
Restricted cash - due to customers294,471 404,402 
Accounts receivable (net of allowance for doubtful accounts of $2,617 and $2,877, respectively)
129,864 159,934 
Goodwill158,029 158,029 
Intangible assets, net34,803 36,328 
Property and equipment, net89,584 95,185 
Other assets222,297 203,817 
Total assets$14,191,958 13,777,753 
Liabilities:  
Bonds and notes payable$8,656,157 8,309,797 
Accrued interest payable22,394 21,046 
Bank deposits1,313,407 1,186,131 
Other liabilities457,714 483,193 
Due to customers379,277 478,469 
Total liabilities10,828,949 10,478,636 
Commitments and contingencies
Equity:
Nelnet, Inc. shareholders' equity:  
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding
— — 
Common stock:
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 25,697,581
     shares and 25,634,748 shares, respectively
257 256 
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding
     10,658,604 shares
107 107 
Additional paid-in capital6,649 7,389 
Retained earnings3,412,939 3,340,540 
Accumulated other comprehensive (loss) earnings, net(429)1,470 
Total Nelnet, Inc. shareholders' equity3,419,523 3,349,762 
Noncontrolling interests(56,514)(50,645)
Total equity3,363,009 3,299,117 
Total liabilities and equity$14,191,958 13,777,753 
Supplemental information - assets and liabilities of consolidated education and other lending variable interest entities:
Loans and accrued interest receivable$9,369,071 9,122,609 
Restricted cash290,100 287,389 
Bonds and notes payable(8,741,203)(8,452,614)
Accrued interest payable and other liabilities(89,043)(88,200)
Net assets of consolidated education and other lending variable interest entities$828,925 869,184 
See accompanying notes to consolidated financial statements.
2


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
(unaudited)
 Three months ended
 March 31,
 20252024
Interest income:  
Loan interest$166,439 216,724 
Investment interest41,389 52,078 
Total interest income207,828 268,802 
Interest expense on bonds and notes payable and bank deposits125,114 194,580 
Net interest income82,714 74,222 
Less provision for loan losses15,337 10,828 
Net interest income after provision for loan losses67,377 63,394 
Other income (expense): 
Loan servicing and systems revenue120,741 127,201 
Education technology services and payments revenue147,330 143,539 
Reinsurance premiums earned24,687 12,780 
Solar construction revenue3,995 13,726 
Other, net23,694 4,082 
Gain (loss) on sale of loans, net909 (141)
Derivative market value adjustments and derivative settlements, net(5,578)9,721 
Total other income (expense), net315,778 310,908 
Cost of services and expenses:
Loan servicing contract fulfillment and acquisition costs1,633 — 
Cost to provide education technology services and payments48,047 48,610 
Cost to provide solar construction services7,828 14,229 
Total cost of services57,508 62,839 
Salaries and benefits138,223 143,875 
Depreciation and amortization9,255 16,769 
Reinsurance losses and underwriting expenses22,212 11,317 
Other expenses48,226 45,528 
Total operating expenses217,916 217,489 
Impairment expense and provision for beneficial interests1,591 37 
Total expenses277,015 280,365 
Income before income taxes106,140 93,937 
Income tax expense25,010 23,181 
Net income81,130 70,756 
Net loss attributable to noncontrolling interests1,430 2,652 
Net income attributable to Nelnet, Inc.$82,560 73,408 
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
$2.26 1.98 
Weighted average common shares outstanding - basic and diluted
36,478,426 37,156,971 
    
See accompanying notes to consolidated financial statements.
3


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(unaudited)
Three months ended March 31,
20252024
Net income$81,130 70,756 
Other comprehensive (loss) income:
Net changes related to foreign currency translation adjustments$(16)5 
Net changes related to available-for-sale debt securities:
Unrealized holding (losses) gains arising during period, net (2,767)16,761 
Reclassification of gains recognized in net income, net(483)(552)
Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity47 71 
Income tax effect769 (2,434)(3,907)12,373 
Net changes related to equity method investee's other comprehensive income:
Gain (loss) on cash flow hedge725 (967)
Income tax effect(174)551 232 (735)
Other comprehensive (loss) income(1,899)11,643 
Comprehensive income79,231 82,399 
Comprehensive loss attributable to noncontrolling interests1,430 2,652 
Comprehensive income attributable to Nelnet, Inc.$80,661 85,051 

See accompanying notes to consolidated financial statements.
4


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
(unaudited)
 
Nelnet, Inc. Shareholders
 Preferred stock sharesCommon stock sharesPreferred stockClass A common stockClass B common stockAdditional paid-in capital Retained earningsAccumulated other comprehensive (loss) earningsNoncontrolling interestsTotal equity
 Class AClass B
Balance as of December 31, 2023—26,400,63010,663,088$— 264 107 3,096 3,270,403 (20,119)(53,644)3,200,107 
Net income (loss)———— — — — 73,408 — (2,652)70,756 
Other comprehensive income———— — — — — 11,643 — 11,643 
Issuance of noncontrolling interests———— — — — — — 1,532 1,532 
Distribution to noncontrolling interests———— — — — — — (6,706)(6,706)
Cash dividends on Class A and Class B common stock - $0.28 per share
———— — — — (10,370)— — (10,370)
Issuance of common stock, net of forfeitures—51,408—— 1 — 1,126 — — — 1,127 
Compensation expense for stock based awards———— — — 3,100 — — — 3,100 
Repurchase of common stock—(396,724)—— (4)— (6,221)(29,244)— — (35,469)
Balance as of March 31, 2024—26,055,31410,663,088$— 261 107 1,101 3,304,197 (8,476)(61,470)3,235,720 
Balance as of December 31, 2024—25,634,74810,658,604$— 256 107 7,389 3,340,540 1,470 (50,645)3,299,117 
Net income (loss)———— — — — 82,560 — (1,430)81,130 
Other comprehensive loss———— — — — — (1,899)— (1,899)
Issuance of noncontrolling interests———— — — — — — 2,297 2,297 
Distribution to noncontrolling interests———— — — — — — (6,736)(6,736)
Cash dividends on Class A and Class B common stock - $0.28 per share
———— — — — (10,161)— — (10,161)
Issuance of common stock, net of forfeitures—101,324—— 1 — 663 — — — 664 
Compensation expense for stock based awards———— — — 3,055 — — — 3,055 
Repurchase of common stock—(38,491)—— — — (4,458)— — — (4,458)
Balance as of March 31, 2025—25,697,58110,658,604$— 257 107 6,649 3,412,939 (429)(56,514)3,363,009 

See accompanying notes to consolidated financial statements.




5


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 Three months ended
March 31,
 20252024
Net income attributable to Nelnet, Inc.$82,560 73,408 
Net loss attributable to noncontrolling interests(1,430)(2,652)
Net income81,130 70,756 
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:  
Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs23,123 33,957 
Loan discount and deferred lender fees accretion(19,407)(7,433)
Provision for loan losses15,337 10,828 
Derivative market value adjustments6,324 (7,964)
(Payments to) proceeds from clearinghouse - initial and variation margin, net(810)4,054 
(Gain) loss on sale of loans, net(909)141 
(Gain) loss on investments, net(8,307)8,183 
Deferred income tax expense (benefit)4,316 (2,173)
Non-cash compensation expense3,115 3,166 
Impairment expense and provision for beneficial interests1,591 37 
Changes in operating assets and liabilities:
Decrease in loan and investment accrued interest receivable13,488 79,841 
Decrease in accounts receivable30,087 61,494 
(Increase) decrease in other assets, net(18,886)10,443 
Decrease in the carrying amount of ROU asset, net954 953 
Decrease in accrued interest payable(2,974)(3,408)
Decrease in other liabilities(37,102)(50,218)
Decrease in the carrying amount of lease liability(897)(1,025)
Other996 (73)
Total adjustments10,039 140,803 
Net cash provided by operating activities91,169 211,559 
Cash flows from investing activities, net of acquisitions:
 
 
Purchases and originations of loans, including cash paid for student loan trusts,
net of cash and restricted cash acquired		(173,931)(157,047)
Purchases of loans from a related party(136,667)— 
Net proceeds from loan repayments, claims, and capitalized interest423,817 1,147,413 
Proceeds from sale of loans72,502 269 
Proceeds from sale of loans to a related party59,939 199,694 
Purchases of available-for-sale securities(139,007)(181,897)
Proceeds from sales of available-for-sale securities74,781 153,373 
Proceeds from beneficial interest in loan securitizations18,948 5,875 
Purchases of other investments and issuance of notes receivable(80,091)(70,975)
Proceeds from other investments and repayments of notes receivable15,668 11,176 
Redemption of held-to-maturity debt securities3,776 1,779 
Purchases of property and equipment(3,378)(23,225)
Net cash provided by investing activities$136,357 1,086,435 
6


NELNET, INC. AND SUBSIDIARIES (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 Three months ended
March 31,
 20252024
Cash flows from financing activities, net of acquisitions:  
Payments on bonds and notes payable$(347,217)(1,276,160)
Proceeds from issuance of bonds and notes payable— 18,108 
Payments of debt issuance costs(69)(31)
Increase in bank deposits, net127,276 58,462 
Decrease in due to customers(99,176)(150,712)
Dividends paid(10,161)(10,370)
Repurchases of common stock(4,458)(35,469)
Proceeds from issuance of common stock341 374 
Issuance of noncontrolling interests8,869 14,098 
Distribution to noncontrolling interests(1,850)(799)
Net cash used in financing activities(326,445)(1,382,499)
Effect of exchange rate changes on cash and restricted cash26 (163)
Net decrease in cash, cash equivalents, and restricted cash(98,893)(84,668)
Cash, cash equivalents, and restricted cash, beginning of period931,020 1,025,491 
Cash, cash equivalents, and restricted cash, end of period$832,127 940,823 
Supplemental disclosures of cash flow information:
Cash disbursements made for interest$119,241 185,784 
Cash disbursements made for income taxes, net of refunds and credits received (a)$1,311 791 
Cash disbursements made for operating leases$1,179 1,258 
Non-cash operating, investing, and financing activity:
ROU assets obtained in exchange for lease obligations$84 48 
Distribution to noncontrolling interests$4,886 5,907 
Issuance of noncontrolling interests$6,572 12,566 
(a) The Company utilized $14.1 million and $8.6 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2025 and 2024, respectively.
Supplemental disclosures of non-cash activities regarding the Company's acquisition of certain student loan trusts are contained in note 3.
The following table presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.
As ofAs ofAs ofAs of
March 31, 2025December 31, 2024March 31, 2024December 31, 2023
Total cash and cash equivalents$220,517 194,518 179,682 168,112 
Restricted cash317,139 332,100 618,363 488,723 
Restricted cash - due to customers294,471 404,402 142,778 368,656 
Cash, cash equivalents, and restricted cash
$832,127 931,020 940,823 1,025,491 
See accompanying notes to consolidated financial statements.
7


NELNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise noted)
(unaudited)
1.  Basis of Financial Reporting
The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company” or "Nelnet") as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2024 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report").
2.  Reclassification and Immaterial Error Corrections
During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation.
Loan Sales
The Company determined the reversal of provision for loan losses resulting from the sale of loans should be presented as a reduction to the provision for loan losses rather than the historical presentation as a gain/(loss) on sale of loans included in "other income (expense)" on the consolidated statements of income. Prior period amounts have been corrected to conform to the current period presentation resulting in a reclassification of $0.1 million for the three months ended March 31, 2024. This correction had no impact on previously reported consolidated assets, liabilities, equity, net income, and cash flows from operating activities.
Solar Tax Equity Investments
The Company relies on audited financial statements provided by third parties to record its share of earnings or losses on its solar tax equity investments. The Company determined that the Hypothetical Liquidation at Book Value (HLBV) method of accounting was not consistently adopted by all third parties in such audited financial statements for those solar tax equity investments made under a lease pass-through structure. The adoption of the HLBV method of accounting accelerates accounting losses in the initial years of the investment but has no impact on the overall economics of the transaction. During the second quarter of 2024, the Company fully adopted HLBV accounting for these investments and prior period amounts have been corrected, resulting in an increase in solar investment losses included in "other, net" in "other income (expense)" on the consolidated statements of income of $0.2 million for the three months ended March 31, 2024, offset by an increase in "net loss attributable to noncontrolling interests" of $0.4 million. The after-tax net income impact to Nelnet, Inc. was an increase of $0.2 million for the three months ended March 31, 2024. Consolidated "total equity" on the consolidated balance sheet was reduced $21.8 million as of December 31, 2023, which reflects the cumulative impact of this correction through such date.
8


3.  Loans and Accrued Interest Receivable and Allowance for Loan Losses
Loans and accrued interest receivable consisted of the following:
As ofAs of
 March 31, 2025December 31, 2024
Non-Nelnet Bank:
Federally insured loans:
Stafford and other$2,102,961 2,108,960 
Consolidation6,567,323 6,279,604 
Total8,670,284 8,388,564 
Private education loans208,507 221,744 
Consumer and other loans381,215 345,560 
Non-Nelnet Bank loans9,260,006 8,955,868 
Nelnet Bank:
Federally insured loans:
Stafford and other10,336 — 
Consolidation99,851 — 
Total110,187 — 
Private education loans489,451 482,445 
Consumer and other loans161,995 162,152 
Nelnet Bank loans761,633 644,597 
Accrued interest receivable566,275 549,283 
Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs(45,134)(42,114)
Allowance for loan losses:
Non-Nelnet Bank:
Federally insured loans(48,906)(49,091)
Private education loans(10,394)(11,130)
Consumer and other loans(43,904)(38,468)
Non-Nelnet Bank allowance for loan losses(103,204)(98,689)
Nelnet Bank:
Federally insured loans(362)— 
Private education loans(9,893)(10,086)
Consumer and other loans(6,617)(6,115)
Nelnet Bank allowance for loan losses(16,872)(16,201)
 $10,422,704 9,992,744 
The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.
As ofAs of
March 31, 2025December 31, 2024
Non-Nelnet Bank:
Federally insured loans (a)0.56 %0.59 %
Private education loans4.98 %5.02 %
Consumer and other loans11.52 %11.13 %
Nelnet Bank:
Federally insured loans (a)0.33 %— 
Private education loans2.02 %2.09 %
Consumer and other loans4.08 %3.77 %
(a)    The allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 20.2% and 20.6% as of March 31, 2025 and December 31, 2024, respectively, and for Nelnet Bank was 16.3% as of March 31, 2025.

9


Student Loan Trust Acquisitions
In March 2025, the Company acquired the ownership interests in certain trusts giving the Company rights to the residual interest. The trusts included $646.9 million (par value) of federally insured Stafford and consolidation loans funded to term with $721.3 million (par value) of bonds and notes payable, $32.2 million of cash and restricted cash, and $27.4 million of other net assets. The Company has consolidated these trusts on its consolidated balance sheet as the Company is the primary beneficiary of the trusts. Upon acquisition, the Company recorded the student loans and bonds and notes payable at fair value, resulting in the recognition of a student loan net discount of $6.6 million and a bonds and notes payable discount of $31.1 million. These net discounts will be accreted using the effective interest method over the lives of the underlying assets and liabilities.
Activity in the Allowance for Loan Losses
The following table presents the activity in the allowance for loan losses by portfolio segment.
Balance at beginning of periodProvision (negative provision) for loan lossesCharge-offsRecoveriesBalance at end of period
Three months ended March 31, 2025
Non-Nelnet Bank:
Federally insured loans$49,091 2,634 (2,819)— 48,906 
Private education loans11,130 — (933)197 10,394 
Consumer and other loans38,468 10,378 (5,178)236 43,904 
Nelnet Bank:
Federally insured loans— 365 (3)— 362 
Private education loans10,086 1,085 (1,394)116 9,893 
Consumer and other loans6,115 1,003 (569)68 6,617 
$114,890 15,465 (10,896)617 120,076 
Three months ended March 31, 2024
Non-Nelnet Bank:
Federally insured loans$68,453 (1,870)(4,860)— 61,723 
Private education loans15,750 (265)(1,013)264 14,736 
Consumer and other loans11,742 8,590 (1,952)381 18,761 
Nelnet Bank:
Private education loans3,347 757 (446)2 3,660 
Consumer and other loans5,351 3,717 (1,967)27 7,128 
$104,643 10,929 (10,238)674 106,008 
The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios.
Three months ended March 31,
20252024
Non-Nelnet Bank:
Federally insured loans0.13 %0.17 %
Private education loans1.39 %1.12 %
Consumer and other loans5.44 %5.71 %
Nelnet Bank:
Federally insured loans0.05 %— 
Private education loans1.06 %0.49 %
Consumer and other loans (a)1.25 %8.01 %
(a)    Decrease in annualized net charge-offs as a percentage of average loans was due to a change in mix of consumer loan portfolios that resulted in a portfolio of loans with an overall higher credit quality in 2025 as compared with 2024 and Nelnet Bank exiting a consumer loan program in December 2024 that had previously incurred significant charge-offs.
10


The Company recorded a provision for loan losses for the three months ended March 31, 2025 due primarily to the establishment of an initial allowance for loans originated and acquired during the period.
The Company recorded a negative provision for loan losses for the three months ended March 31, 2024 for its Non-Nelnet Bank federally insured and private education loan portfolios primarily due to the amortization of these portfolios. The primary item impacting provision for loan losses for Non-Nelnet Bank consumer loans and Nelnet Bank's loan portfolios for the three months ended March 31, 2024 was the establishment of an initial allowance for loans originated and acquired during the period.
Unfunded Loan Commitments
As of March 31, 2025 and December 31, 2024, Nelnet Bank had a liability of approximately $198,000 and $326,000, respectively, related to $28.8 million and $40.7 million, respectively, of unfunded private education, consumer, and other loan commitments. When a new loan commitment is made, the Company records an allowance that is included in "other liabilities" on the consolidated balance sheet by recording a provision for loan losses. When the loan is funded, the Company transfers the liability to the allowance for loan losses. Below is a reconciliation of the provision for loan losses reported in the consolidated statements of income.
Three months ended
March 31,
20252024
Provision for loan losses from allowance activity table above$15,465 10,929 
Negative provision for unfunded loan commitments(128)(101)
Provision for loan losses reported in consolidated statements of income$15,337 10,828 
11


Key Credit Quality Indicators
Loan Status and Delinquencies
Key credit quality indicators for the Company’s federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but for purposes of the following tables, do not include those loans while they are in forbearance). The following table presents the Company’s loan status and delinquency amounts.
As of March 31, 2025As of December 31, 2024As of March 31, 2024
Federally insured loans - Non-Nelnet Bank:    
Loans in-school/grace/deferment $401,868 4.6 % $376,765 4.5 % $490,402 4.7 %
Loans in forbearance 546,170 6.3  586,412 7.0  777,141 7.5 
Loans in repayment status:  
Loans current6,536,815 84.7 %6,374,897 85.9 %7,691,650 84.4 %
Loans delinquent 31-60 days306,032 4.0 243,348 3.3 360,237 3.9 
Loans delinquent 61-90 days239,477 3.1 166,474 2.2 189,035 2.1 
Loans delinquent 91-120 days155,641 2.0 113,838 1.5 143,656 1.6 
Loans delinquent 121-270 days326,523 4.2 380,823 5.1 422,979 4.6 
Loans delinquent 271 days or greater157,758 2.0 146,007 2.0 307,952 3.4 
Total loans in repayment7,722,246 89.1 100.0 %7,425,387 88.5 100.0 %9,115,509 87.8 100.0 %
Total federally insured loans8,670,284 100.0 % 8,388,564 100.0 % 10,383,052 100.0 %
Accrued interest receivable551,512 540,272 677,001 
Loan discount, net of unamortized premiums and deferred origination costs(28,020)(21,513)(26,658)
Allowance for loan losses(48,906)(49,091)(61,723)
Total federally insured loans and accrued interest receivable, net of allowance for loan losses$9,144,870 $8,858,232 $10,971,672 
Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment $5,850 2.8 %$5,997 2.7 %$8,979 3.4 %
Loans in forbearance 1,512 0.7 2,089 0.9 2,601 1.0 
Loans in repayment status:
Loans current195,573 97.2 %206,825 96.8 %243,637 97.4 %
Loans delinquent 31-60 days2,136 1.1 3,424 1.6 2,162 0.9 
Loans delinquent 61-90 days1,794 0.9 1,275 0.6 1,542 0.6 
Loans delinquent 91 days or greater1,642 0.8 2,134 1.0 2,661 1.1 
Total loans in repayment201,145 96.5 100.0 %213,658 96.4 100.0 %250,002 95.6 100.0 %
Total private education loans208,507 100.0 % 221,744 100.0 % 261,582 100.0 %
Accrued interest receivable1,948 2,019 2,560 
Loan discount, net of unamortized premiums(5,928)(6,350)(7,616)
Allowance for loan losses(10,394)(11,130)(14,736)
Total private education loans and accrued interest receivable, net of allowance for loan losses$194,133 $206,283 $241,790 
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment$205 0.1 %$150 0.0 %$54 0.0 %
Loans in repayment status:
Loans current369,364 97.0 %335,355 97.1 %150,947 97.2 %
Loans delinquent 31-60 days3,413 0.9 3,667 1.1 1,758 1.1 
Loans delinquent 61-90 days3,170 0.8 2,143 0.6 1,471 1.0 
Loans delinquent 91 days or greater5,063 1.3 4,245 1.2 1,078 0.7 
Total loans in repayment381,010 99.9 100.0 %345,410 100.0 100.0 %155,254 100.0 100.0 %
Total consumer and other loans381,215 100.0 %345,560 100.0 %155,308 100.0 %
Accrued interest receivable2,071 1,868 1,209 
Loan discount and deferred lender fees, net of unamortized premiums(9,437)(10,713)(5,451)
Allowance for loan losses(43,904)(38,468)(18,761)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses$329,945 $298,247 $132,305 
12


As of March 31, 2025As of December 31, 2024As of March 31, 2024
Federally insured loans - Nelnet Bank (a):
Loans in-school/grace/deferment$3,000 2.7 %
Loans in forbearance5,433 4.9 
Loans in repayment status:
Loans current92,027 90.4 %
Loans delinquent 30-59 days3,725 3.7 
Loans delinquent 60-89 days1,447 1.4 
Loans delinquent 90-119 days1,063 1.0 
Loans delinquent 120-270 days2,423 2.4 
Loans delinquent 271 days or greater1,069 1.1 
Total loans in repayment101,754 92.4 100.0 %
Total federally insured loans110,187 100.0 %
Accrued interest receivable5,065 
Loan premium1,307 
Allowance for loan losses(362)
Total federally insured loans and accrued interest receivable, net of allowance for loan losses$116,197 
Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment$45,026 9.2 %$31,674 6.6 %$42,699 11.7 %
Loans in forbearance1,370 0.3 3,061 0.6 1,277 0.4 
Loans in repayment status:
Loans current436,547 98.5 %439,569 98.2 %318,906 99.4 %
Loans delinquent 30-59 days2,732 0.6 4,327 1.0 327 0.1 
Loans delinquent 60-89 days1,937 0.5 1,497 0.3 665 0.2 
Loans delinquent 90 days or greater1,839 0.4 2,317 0.5 892 0.3 
Total loans in repayment443,055 90.5 100.0 %447,710 92.8 100.0 %320,790 87.9 100.0 %
Total private education loans489,451 100.0 %482,445 100.0 %364,766 100.0 %
Accrued interest receivable4,636 4,103 2,445 
Loan discount, net of unamortized premiums and deferred origination costs(3,973)(4,581)5,692 
Allowance for loan losses(9,893)(10,086)(3,660)
Total private education loans and accrued interest receivable, net of allowance for loan losses$480,221 $471,881 $369,243 
Consumer and other loans - Nelnet Bank (a):
Loans in deferment$7,295 4.5 %$5,186 3.2 %$141 0.1 %
Loans in repayment status:
Loans current153,416 99.2 %155,772 99.2 %115,152 96.9 %
Loans delinquent 30-59 days523 0.3 803 0.5 1,511 1.3 
Loans delinquent 60-89 days462 0.3 243 0.2 1,084 0.9 
Loans delinquent 90 days or greater299 0.2 148 0.1 1,069 0.9 
Total loans in repayment154,700 95.5 100.0 %156,966 96.8 100.0 %118,816 99.9 100.0 %
Total consumer and other loans161,995 100.0 %162,152 100.0 %118,957 100.0 %
Accrued interest receivable1,043 1,021 880 
Loan premium, net of unaccreted discount917 1,043 1,359 
Allowance for loan losses(6,617)(6,115)(7,128)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses$157,338 $158,101 $114,068 
(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.

13


FICO Scores
An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination or purchase. The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination or purchase.
Nelnet Bank Private Education Loans
Loan balance as of March 31, 2025
Three months ended March 31, 20252024202320222021Prior yearsTotal
FICO at origination or purchase:
Less than 705$857 3,037 3,291 4,633 3,989 15,620 31,427 
705 - 7341,613 5,152 8,689 19,100 7,345 12,841 54,740 
735 - 7642,887 5,844 8,105 28,984 12,156 18,911 76,887 
765 - 7942,498 6,538 5,854 45,042 23,344 24,578 107,854 
Greater than 7943,747 14,873 14,433 64,876 47,078 65,742 210,749 
No FICO score available or required (a)— 2,402 5,392 — — — 7,794 
$11,602 37,846 45,764 162,635 93,912 137,692 489,451 
Loan balance as of December 31, 2024
20242023202220212020Prior yearsTotal
FICO at origination or purchase:
Less than 705$2,566 3,578 4,759 4,182 331 15,485 30,901 
705 - 7343,736 8,874 19,666 7,531 426 12,349 52,582 
735 - 7644,398 8,629 29,918 12,775 1,286 17,920 74,926 
765 - 7944,600 6,115 46,340 24,073 1,105 23,867 106,100 
Greater than 7949,971 15,471 67,454 49,408 4,406 63,258 209,968 
No FICO score available or required (a)2,476 5,492 — — — — 7,968 
$27,747 48,159 168,137 97,969 7,554 132,879 482,445 
Nelnet Bank Consumer and Other Loans
Loan balance as of March 31, 2025
Three months ended March 31, 20252024202320222021Prior yearsTotal
FICO at origination:
Less than 720$57 18,944 1,630 — 371 1,655 22,657 
720 - 769266 40,681 4,196 17 5,916 8,115 59,191 
Greater than 7692,337 56,077 6,389 100 5,791 3,764 74,458 
No FICO score available or required (a)14 4,910 435 276 54 — 5,689 
$2,674 120,612 12,650 393 12,132 13,534 161,995 
Loan balance as of December 31, 2024
20242023202220212020Prior yearsTotal
FICO at origination:
Less than 720$19,264 1,762 — 376 675 1,170 23,247 
720 - 76941,217 4,502 19 6,152 5,448 3,105 60,443 
Greater than 76957,323 6,577 103 5,834 2,755 1,165 73,757 
No FICO score available or required (a)3,936 437 277 55 — — 4,705 
$121,740 13,278 399 12,417 8,878 5,440 162,152 
(a)    Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.
14


Nonaccrual Status
The Company does not place federally insured loans on nonaccrual status due to the government guaranty. The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of March 31, 2025 and December 31, 2024, was not material.
Amortized Cost Basis by Origination Year
The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of March 31, 2025 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the Federal Family Education Loan Program (the "FFEL Program" or FFELP) and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all of the Company’s federally insured loans were originated prior to July 1, 2010.
Three months ended March 31, 20252024202320222021Prior yearsTotal
Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment$— — — 487 2,295 3,068 5,850 
Loans in forbearance— — — 29 525 958 1,512 
Loans in repayment status:
Loans current— — 188 3,966 4,958 186,461 195,573 
Loans delinquent 31-60 days— — — — 64 2,072 2,136 
Loans delinquent 61-90 days— — — 3 25 1,766 1,794 
Loans delinquent 91 days or greater— — — — 87 1,555 1,642 
Total loans in repayment— — 188 3,969 5,134 191,854 201,145 
Total private education loans$— — 188 4,485 7,954 195,880 208,507 
Accrued interest receivable1,948 
Loan discount, net of unamortized premiums(5,928)
Allowance for loan losses(10,394)
Total private education loans and accrued interest receivable, net of allowance for loan losses$194,133 
Gross charge-offs - three months ended March 31, 2025$— — — — — 933 933 
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment$— 48 157 — — — 205 
Loans in repayment status:
Loans current87,997 238,966 39,437 2,345 323 296 369,364 
Loans delinquent 31-60 days— 1,949 1,199 246 19 — 3,413 
Loans delinquent 61-90 days— 1,971 979 220 — — 3,170 
Loans delinquent 91 days or greater— 3,889 1,124 50 — — 5,063 
Total loans in repayment87,997 246,775 42,739 2,861 342 296 381,010 
Total consumer and other loans$87,997 246,823 42,896 2,861 342 296 381,215 
Accrued interest receivable2,071 
Loan discount and deferred lender fees, net of unamortized premiums(9,437)
Allowance for loan losses(43,904)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses$329,945 
Gross charge-offs - three months ended March 31, 2025$— 2,076 2,847 127 9 119 5,178 
15


Three months ended March 31, 20252024202320222021Prior yearsTotal
Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment$5,427 21,515 10,133 6,070 522 1,359 45,026 
Loans in forbearance— — 210 347 145 668 1,370 
Loans in repayment status:
Loans current6,107 15,978 34,191 155,473 92,067 132,731 436,547 
Loans delinquent 30-59 days68 162 380 333 401 1,388 2,732 
Loans delinquent 60-89 days— 119 160 112 697 849 1,937 
Loans delinquent 90 days or greater— 72 690 300 80 697 1,839 
Total loans in repayment6,175 16,331 35,421 156,218 93,245 135,665 443,055 
Total private education loans$11,602 37,846 45,764 162,635 93,912 137,692 489,451 
Accrued interest receivable4,636 
Loan discount, net of unamortized premiums and deferred origination costs(3,973)
Allowance for loan losses(9,893)
Total private education loans and accrued interest receivable, net of allowance for loan losses$480,221 
Gross charge-offs - three months ended March 31, 2025$— 139 119 105 84 947 1,394 
Consumer and other loans - Nelnet Bank (a):
Loans in deferment$2,087 5,208 — — — — 7,295 
Loans in repayment status:
Loans current587 114,453 12,568 393 12,061 13,354 153,416 
Loans delinquent 30-59 days— 432 — — — 91 523 
Loans delinquent 60-89 days— 288 40 — 71 63 462 
Loans delinquent 90 days or greater— 231 42 — — 26 299 
Total loans in repayment587 115,404 12,650 393 12,132 13,534 154,700 
Total consumer and other loans$2,674 120,612 12,650 393 12,132 13,534 161,995 
Accrued interest receivable1,043 
Loan premium, net of unaccreted discount917 
Allowance for loan losses(6,617)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses$157,338 
Gross charge-offs - three months ended March 31, 2025$— 192 242 — 77 58 569 
(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.
16


4.  Bonds and Notes Payable
The following tables summarize the Company’s outstanding debt obligations by type of instrument:
 As of March 31, 2025
Carrying
amount
Interest rate
range
Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:   
Bonds and notes based on indices$6,956,048 
4.71% - 6.43%
8/26/30 - 9/25/69
Bonds and notes based on auction457,395 
4.22% - 6.19%
3/22/32 - 11/1/47
Total FFELP variable-rate bonds and notes7,413,443 
Fixed-rate bonds and notes issued in FFELP loan asset-backed
      securitizations		335,506 
1.42% - 3.45%
10/25/67 - 8/27/68
FFELP loan warehouse facilities821,803 
5.21% - 5.35%
5/1/26 / 7/31/26
Consumer loan warehouse facilities68,877 
6.14% / 6.42%
8/1/26 / 11/13/27
Variable-rate bonds and notes issued in private education loan asset-backed securitizations49,771 
5.90% / 6.59%
6/25/49 / 11/25/53
Fixed-rate bonds and notes issued in private education loan asset-backed securitizations39,508 
7.15%
11/25/53
Unsecured line of credit— —9/22/26
Participation agreements2,498 
5.07% - 5.82%
5/4/25 / 1/30/33
8,731,406   
Discount on bonds and notes payable and debt issuance costs(75,249)
Total$8,656,157 
 As of December 31, 2024
Carrying
amount
Interest rate
range
Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:   
Bonds and notes based on indices$6,923,824 
4.89% - 6.45%
8/26/30 - 9/25/69
Bonds and notes based on auction36,395 
5.71% - 5.72%
3/22/32 - 8/25/37
Total FFELP variable-rate bonds and notes6,960,219 
Fixed-rate bonds and notes issued in FFELP loan asset-backed
      securitizations
346,359 
1.42% - 3.45%
10/25/67 - 8/27/68
FFELP loan warehouse facilities853,165 
4.41% - 4.69%
1/31/26 / 4/1/26
Consumer loan warehouse facilities90,000 
4.46% / 4.57%
8/1/26 / 11/13/27
Variable-rate bonds and notes issued in private education loan asset-backed securitizations54,973 
5.90% / 6.82%
6/25/49 / 11/25/53
Fixed-rate bonds and notes issued in private education loan asset-backed securitizations50,415 
5.35% / 7.15%
12/28/43 / 11/25/53
Unsecured line of credit— —9/22/26
Participation agreements3,320 
5.27% - 5.82%
5/4/25 / 1/30/33
8,358,451   
Discount on bonds and notes payable and debt issuance costs(48,654)
Total$8,309,797 
17


Warehouse Facilities
The Company funds a portion of its loan acquisitions using warehouse facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. The following table summarizes the Company's warehouse facilities as of March 31, 2025.
Type of loansMaximum financing amountAmount outstandingAmount availableExpiration of liquidity provisionsFinal maturity dateAdvance rateAdvanced as equity support
FFELP (a)$600,000 544,067 55,933 7/31/20257/31/2026note (b)$39,554 
FFELP (c)375,000 277,736 97,264 5/1/20255/1/202692 %23,265 
$975,000 821,803 153,197 $62,819 
Consumer$100,000 3,877 96,123 11/13/202611/13/202770 %$1,775 
Consumer125,000 65,000 60,000 1/1/20268/1/2026
60% - 80%
21,299 
$225,000 68,877 156,123 $23,074 
(a)    On January 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to July 31, 2025 and July 31, 2026, respectively.
(b)    This facility has a static advance rate until the expiration date of the liquidity provisions. The maximum advance rates for this facility are 90% to 96%, and the minimum advance rates are 84% to 90%. In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor. The loans would then be funded at this new advance rate until the final maturity date of the facility.
(c)    On March 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to May 1, 2025 and May 1, 2026, respectively, and on April 10, 2025, extended the liquidity provisions and final maturity to May 1, 2026 and May 1, 2027, respectively.
Unsecured Line of Credit
The Company has a $495.0 million unsecured line of credit that has a maturity date of September 22, 2026. As of March 31, 2025, no amount was outstanding on the line of credit and $495.0 million was available for future use.
Debt Repurchases
The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. As of March 31, 2025, the Company holds $97.4 million (par value) of its own FFELP asset-backed securities.
5.  Derivative Financial Instruments
Non-Nelnet Bank Derivatives
The Company uses settled-to-market derivative financial instruments to manage interest rate risk. Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 5 of the notes to consolidated financial statements included in the 2024 Annual Report.
Basis Swaps
The following table summarizes the Company’s outstanding basis swaps as of March 31, 2025 and December 31, 2024 used to hedge its basis risk and repricing risk on a portion of its FFELP student loan assets. For these derivative instruments, the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements (the "Basis Swaps").
MaturityNotional amount
2026$1,150,000 
2027250,000 
$1,400,000 

18


Interest Rate Swaps – Floor Income Hedges
The following table summarizes the outstanding derivative instruments used by the Company as of March 31, 2025 and December 31, 2024 to economically hedge loans earning fixed rate floor income.
MaturityNotional amountWeighted average fixed rate paid by the Company (a)
2026$200,000 3.92 %
202850,000 3.56 
2029 (b)50,000 3.17 
2030 (c)100,000 3.63 
 $400,000 3.71 %
(a)    For all interest rate derivatives, the Company receives payments based on SOFR, the majority of which reset quarterly.
(b)    This $50 million notional amount derivative has a forward effective start date in January 2026.
(c)    A $50 million notional amount derivative maturing in 2030 has a forward effective start date in November 2025.
Nelnet Bank Derivatives
Interest Rate Swaps
The following table summarizes the outstanding non-centrally cleared derivative instruments used by Nelnet Bank as of March 31, 2025 and December 31, 2024, to hedge exposure to variability in cash flows related to variable rate intercompany deposits.
MaturityNotional amountWeighted average fixed rate paid by the Company (a)
2028$40,000 3.33 %
202925,000 3.37 
2030 (b)50,000 3.06 
2032 (c)25,000 4.03 
2033 (d)25,000 3.90 
 $165,000 3.44 %
(a)    For all interest rate derivatives, the Company receives monthly or quarterly payments based on SOFR that resets daily.
(b)    These $25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.
(c)    This $25 million notional amount derivative has a forward effective start date in February 2027.
(d)    This $25 million notional amount derivative has a forward effective start date in November 2025.

19


Consolidated Financial Statement Impact Related to Derivatives
Balance Sheets
Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse. As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset (included in "other assets") or liability (included in "other liabilities") measured at fair value. The following table summarizes the fair value of the Company's Nelnet Bank derivatives as reflected in the consolidated balance sheets.
Fair value of asset derivativesFair value of liability derivatives
As of March 31, 2025As of December 31, 2024As of March 31, 2025As of December 31, 2024
Interest rate swaps - Nelnet Bank$1,473 3,232 822 53 
Statements of Income
The following table summarizes the components of "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income.
Three months ended March 31,
 20252024
Settlements:  
Basis swaps$153 365 
Interest rate swaps - floor income hedges429 1,190 
Interest rate swaps - Nelnet Bank164 202 
Total settlements - income746 1,757 
Change in fair value:  
Basis swaps(138)(354)
Interest rate swaps - floor income hedges(3,657)6,060 
Interest rate swaps - Nelnet Bank(2,529)2,258 
Total change in fair value - (expense) income(6,324)7,964 
Derivative market value adjustments and derivative settlements, net - (expense) income$(5,578)9,721 
20


6.  Investments and Notes Receivable
“Total investments and notes receivable” consisted of the following:
As of March 31, 2025As of December 31, 2024
Amortized costGross unrealized gainsGross unrealized losses Fair valueAmortized costGross unrealized gainsGross unrealized lossesFair value
Investments at fair value:
Available-for-sale asset-backed securities
Non-Nelnet Bank:
FFELP loan$129,556 4,157 (3,175)130,538 188,386 5,804 (896)193,294 
FFELP loan and other debt securities - restricted (a)120,355 3,535 (372)123,518 98,914 3,151 (78)101,987 
Private education loan (b)226,575 — (17,160)209,415 237,288 — (18,118)219,170 
Other debt securities38,942 2,692 (10)41,624 32,552 2,500 — 35,052 
Total Non-Nelnet Bank515,428 10,384 (20,717)505,095 557,140 11,455 (19,092)549,503 
Nelnet Bank:
FFELP loan239,694 6,330 (632)245,392 231,543 6,060 (270)237,333 
Private education loan5,888 — (1)5,887 1,596 — — 1,596 
Other debt securities401,700 1,855 (1,867)401,688 296,944 1,775 (1,325)297,394 
Total Nelnet Bank647,282 8,185 (2,500)652,967 530,083 7,835 (1,595)536,323 
Total available-for-sale asset-backed securities$1,162,710 18,569 (23,217)1,158,062 1,087,223 19,290 (20,687)1,085,826 
Equity securities80,841 74,494 
Total investments at fair value1,238,903 1,160,320 
Other investments and notes receivable (not measured at fair value):
Nelnet Bank: Held-to-maturity asset-backed securities
FFELP loan202,739 203,439 
Private education loan4,618 7,335 
Total Nelnet Bank held-to-maturity asset-backed securities207,357 210,774 
Venture capital, funds, and other:
Measurement alternative (c)205,749 200,782 
Equity method163,258 170,258 
Total venture capital and funds369,007 371,040 
Real estate equity method138,123 131,745 
Investment in ALLO (d):
Voting interest/equity method— — 
Preferred membership interests and accrued and unpaid preferred return234,030 225,614 
Total investment in ALLO234,030 225,614 
Beneficial interest in loan securitizations (e):
Consumer loans, net of allowance for credit losses of $39,826 and $38,590 as of March 31, 2025 and December 31, 2024, respectively
137,961 142,764 
Private education loans, net of allowance for credit losses of $1,175 and $901 as of March 31, 2025 and December 31, 2024, respectively
50,389 52,824 
Federally insured student loans18,017 18,221 
Total beneficial interest in loan securitizations, net of allowance206,367 213,809 
Solar (f)(167,048)(155,048)
Notes receivable64,281 32,258 
Tax liens, affordable housing, and other11,530 10,184 
Total other investments and notes receivable (not measured at fair value)1,063,647 1,040,376 
Total investments and notes receivable$2,302,550 $2,200,696 
21


(a)    Represent investments held in third-party trusts as collateral for the Company’s reinsurance business.
(b)    As sponsor of certain private education loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement. The bonds purchased to satisfy the risk retention requirement are included in the above table. The Company must retain these investment securities until the latest of (i) the date the aggregate outstanding principal balance of the loans in the securitization is 33% or less of the initial loan balance, and (ii) the date the aggregate outstanding principal balance of the bonds is 33% or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party.
(c)    The Company has an investment in Agile Sports Technologies, Inc. (doing business as “Hudl”). During the first quarter of 2025, the Company acquired additional ownership interests in Hudl for $3.8 million from existing Hudl investors. This transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities. Accordingly, the Company did not adjust its carrying value of its Hudl investment to the transaction value. As of March 31, 2025, the carrying amount of the Company's investment in Hudl is $172.5 million. David S. Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl.
(d)    The Company has both a voting and preferred membership interest investment in ALLO Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO").
The Company's voting membership interest in ALLO is accounted for under the HLBV method of accounting. Under the HLBV method of accounting, the Company recognized $10.7 million of losses during the three months ended March 31, 2024, reducing the carrying value of the voting membership interest investment to $0. Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO.
As of March 31, 2025, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $225.6 million and $8.4 million, respectively. The Company earns a preferred return of 13.50% and 20.00% on $169.1 million and $56.5 million, respectively, of the Company's preferred membership interests of ALLO. The Company recognized income on its ALLO preferred membership interests of $8.4 million and $2.4 million during the three months ended March 31, 2025 and 2024, respectively.
The income statement activity from the Company's investment in ALLO is included in "other, net" in "other income (expense)" on the consolidated statements of income.
In April 2025, the Company executed a transaction that is expected to close in late May 2025. Upon closing, the Company expects all of its outstanding preferred membership interests, including the preferred return accrued on such membership interests, to be redeemed by ALLO. In addition, a portion of its voting membership interest will also be redeemed. The Company expects to receive aggregate cash proceeds of approximately $410 million from ALLO and recognize a pre-tax gain of approximately $175 million as a result of this transaction. See note 16 for additional information.
(e)    The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations, which are accounted for as held-to-maturity beneficial interest investments. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company's ownership correlates to approximately $1.10 billion, $440 million, and $280 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.
The Company recorded an additional $1.5 million allowance for credit losses (and related provision expense) during the three months ended March 31, 2025 on these investments. This expense is included in "impairment expense and provision for beneficial interests" on the consolidated statement of income.
(f)    The Company invests in solar tax equity investments through investment partnerships. Due to the management and control of each of these investment partnerships, such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the third-party co-investor’s portion being presented as noncontrolling interests. As of March 31, 2025, the Company has invested a total of $309.9 million and its third-party investors have invested $280.4 million in tax equity investments that remain outstanding in renewable energy solar partnerships that support the development and operations of solar projects. The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed in service. As of March 31, 2025, the Company and its third-party co-investors have earned $331.0 million and $265.1 million, respectively, of tax credits on those projects that remain outstanding. The solar investment negative carrying value on the consolidated balance sheet of $167.0 million as of March 31, 2025 represents the sum of total tax credits earned on solar projects placed in service through March 31, 2025 and the calculated HLBV cumulative net losses being larger than the total investment contributions made by the Company and its syndication partners on such projects. The solar investment negative carrying value as of March 31, 2025, excluding the portion owned by syndication partners that is reflected as "noncontrolling interests" on the consolidated balance sheet, was $94.0 million.
The Company accounts for its solar investments using the HLBV method of accounting. For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment. The following table presents (i) the Company's recognized HLBV losses and gains recognized from sales of certain investments at the end of the contractual agreement (typically five years), which include losses and gains attributable to third-party noncontrolling interest investors (syndication partners), included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses and gains attributed to noncontrolling interest investors included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the Company's recognized net gain excluding amounts attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company).
22


Three months ended March 31,
20252024
Losses from HLBV accounting (gross)$(2,616)(1,427)
Gains from sales (gross)3,072 4,207 
Gains from solar investments, net456 2,780 
Less: losses attributable to noncontrolling members, net(1,046)(1,641)
Net gain, excluding amounts attributed to noncontrolling interest investors$1,502 4,421 
The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2025:
As of March 31, 2025
1 year or lessAfter 1 year through 5 yearsAfter 5 years through 10 yearsAfter 10 yearsTotal
Available-for-sale asset-backed securities
Non-Nelnet Bank:
FFELP loan$— 204 2,514 126,838 129,556 
FFELP loan and other debt securities - restricted— 5,500 15,951 98,904 120,355 
Private education loan— — — 226,575 226,575 
Other debt securities— 100 8,487 30,355 38,942 
Total Non-Nelnet Bank— 5,804 26,952 482,672 515,428 
Fair value— 5,943 27,021 472,131 505,095 
Nelnet Bank:
FFELP loan44,926 21,799 29,022 143,947 239,694 
Private education loan— — 4,612 1,276 5,888 
Other debt securities— 27,019 64,075 310,606 401,700 
Total Nelnet Bank44,926 48,818 97,709 455,829 647,282 
Fair value44,682 48,887 98,082 461,316 652,967 
Total available-for-sale asset-backed securities at amortized cost$44,926 54,622 124,661 938,501 1,162,710 
Total available-for-sale asset-backed securities at fair value$44,682 54,830 125,103 933,447 1,158,062 
Held-to-maturity asset-backed securities
Nelnet Bank:
FFELP loan$— 2,684 11,759 188,296 202,739 
Private education loan— — — 4,618 4,618 
Total held-to-maturity asset-backed securities at amortized cost$— 2,684 11,759 192,914 207,357 
Total held-to-maturity asset-backed securities at fair value$— 2,743 11,627 198,534 212,904 
Beneficial interest in loan securitizations (a):
Amortized cost$— — — — 206,367 
Fair value$— — — — 221,991 
(a) The Company's beneficial interest in loan securitizations are not due at a single maturity date.
The following table summarizes the unrealized positions for held-to-maturity asset-backed securities investments and the beneficial interest in loan securitizations as of March 31, 2025:
Carrying valueGross unrealized gainsGross unrealized lossesFair value
Asset-backed securities$207,357 6,074 (527)212,904 
Beneficial interest in loan securitizations206,367 16,824 (1,200)221,991 

23


The following table presents securities classified as available-for-sale that have gross unrealized losses as of March 31, 2025 and the fair value of such securities as of March 31, 2025. These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis. All securities in the table below have been evaluated to determine if a credit loss exists. As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.
As of March 31, 2025
Unrealized loss position less than 12 monthsUnrealized loss position 12 months or moreTotal
Unrealized lossFair valueUnrealized lossFair valueUnrealized lossFair value
Available-for-sale asset-backed securities
Non-Nelnet Bank:
FFELP loan$(240)10,614 (2,935)46,474 (3,175)57,088 
FFELP loan and other debt securities - restricted(141)12,037 (231)2,288 (372)14,325 
Private education loan— — (17,160)209,415 (17,160)209,415 
Other debt securities(10)1,990 — — (10)1,990 
Total Non-Nelnet Bank(391)24,641 (20,326)258,177 (20,717)282,818 
Nelnet Bank:
FFELP loan(418)52,348 (214)16,408 (632)68,756 
Private education loan(1)4,611 — — (1)4,611 
Other debt securities(752)29,220 (1,115)13,948 (1,867)43,168 
Total Nelnet Bank(1,171)86,179 (1,329)30,356 (2,500)116,535 
Total available-for-sale asset-backed securities$(1,562)110,820 (21,655)288,533 (23,217)399,353 
The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.
Three months ended
March 31,
20252024
Gross proceeds from sales$74,781 153,373 
Gross realized gains$933 1,054 
Gross realized losses(450)(502)
Net gains$483 552 
24


7. Intangible Assets
Intangible assets consisted of the following:
Weighted average remaining useful life as of
March 31, 2025 (months)
As ofAs of
March 31, 2025December 31, 2024
Amortizable intangible assets, net:  
Customer relationships (net of accumulated amortization of $54,303 and $54,644, respectively)
94$33,541 34,960 
Trade names (net of accumulated amortization of $225 and $205, respectively)
85545 565 
Computer software (net of accumulated amortization of $1,003 and $917, respectively)
25717 803 
Total amortizable intangible assets, net93$34,803 36,328 
The Company recorded amortization expense on its intangible assets of $1.5 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of March 31, 2025, the Company estimates it will record amortization expense as follows:
2025 (April 1 - December 31)$4,574 
20266,012 
20275,714 
20285,354 
20294,008 
2030 and thereafter9,141 
 $34,803 
8. Goodwill
The following table presents the carrying amount of goodwill as of March 31, 2025 and December 31, 2024 by reportable operating segment:
Nelnet Financial Services
Loan Servicing and SystemsEducation Technology Services and PaymentsAsset
Generation and
Management		Nelnet BankNFS Other Operating SegmentsCorporate and Other ActivitiesTotal
Total goodwill$23,639 92,507 41,883 — — — 158,029 
25


9.  Bank Deposits
The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:
As ofAs of
March 31, 2025December 31, 2024
Retail and other savings$1,030,449 916,475 
Brokered CDs, net of brokered deposit fees261,495 247,872 
Retail and other CDs, net of issuance fees21,463 21,784 
Total interest-bearing deposits$1,313,407 1,186,131 
As of March 31, 2025 and December 31, 2024, Nelnet Bank had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $68.6 million and $68.5 million, respectively, including a $40.0 million pledged deposit from Nelnet, Inc. as required under a Capital and Liquidity Maintenance Agreement with the FDIC. All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.
The following table presents certificates of deposit remaining maturities as of March 31, 2025:
One year or less$63,507 
After one year to two years159,825 
After two years to three years1,598 
After three years to four years801 
After four years to five years43,671 
After five years13,556 
Total$282,958 
Retail and other savings deposits include deposits from Educational 529 College Savings and Health Savings plans, retirement savings plans, Short Term Federal Investment Trust (STFIT), and FDIC sweep deposits. These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. The deposits exceeding the FDIC insurance limits as of March 31, 2025 were $44.7 million, the majority of which are intercompany deposits from Nelnet, Inc. and its subsidiaries. Union Bank, a related party, is the program manager for certain of the Educational 529 College Savings plans and trustee for the STFIT.
10.  Earnings per Common Share
The following table presents the components used to calculate basic and diluted earnings per share. The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock.
 Three months ended March 31,
20252024
Common shareholdersUnvested restricted stock shareholdersTotalCommon shareholdersUnvested restricted stock shareholdersTotal
Numerator:
Net income attributable to Nelnet, Inc.$81,017 1,543 82,560 71,921 1,487 73,408 
Denominator:
Weighted-average common shares outstanding - basic and diluted35,796,531 681,895 36,478,426 36,404,364 752,607 37,156,971 
Earnings per share - basic and diluted$2.26 2.26 2.26 1.98 1.98 1.98 

26


11.  Segment Reporting
See note 16 of the notes to consolidated financial statements included in the 2024 Annual Report for a description of the Company's operating segments. The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.
 Three months ended March 31, 2025
Reportable SegmentsReconciling Items
Loan Servicing and Systems (LSS)Education Technology Services and Payments (ETSP)Asset
Generation and
Management		Nelnet BankTotal Reportable SegmentsNFS Other Operating SegmentsCorporate and Other ActivitiesEliminations/ ReclassificationsTotal
Interest income:
Loan interest$— — 154,469 11,971 166,440 — — — 166,439 
Investment interest721 6,939 12,769 12,496 32,925 8,820 2,312 (2,669)41,389 
Total interest income721 6,939 167,238 24,467 199,365 8,820 2,312 (2,669)207,828 
Interest expense— — 114,303 12,077 126,380 770 633 (2,669)125,114 
Net interest income721 6,939 52,935 12,390 72,985 8,050 1,679 — 82,714 
Less provision for loan losses— — 13,012 2,325 15,337 — — — 15,337 
Net interest income after provision for loan losses721 6,939 39,923 10,065 57,648 8,050 1,679 — 67,377 
Other income (expense):
LSS revenue120,741 — — — 120,741 — — — 120,741 
Intersegment revenue5,684 64 — — 5,748 — — (5,748)— 
ETSP revenue— 147,330 — — 147,330 — — — 147,330 
Reinsurance premiums earned— — — — — 24,687 — — 24,687 
Solar construction revenue— — — — — — 3,995 — 3,995 
Other, net112 — 3,995 142 4,249 1,110 18,238 97 23,694 
Gain (loss) on sale of loans, net— — 909 — 909 — — — 909 
Derivative settlements, net— — 582 164 746 — — — 746 
Derivative market value adjustments, net— — (3,795)(2,529)(6,324)— — — (6,324)
Total other income (expense), net126,537 147,394 1,691 (2,223)273,399 25,797 22,233 (5,651)315,778 
Cost of services and expenses:
Total cost of services1,633 48,047 — — 49,680 — 7,828 — 57,508 
Salaries and benefits69,574 41,741 1,221 2,816 115,352 478 22,496 (104)138,223 
Depreciation and amortization2,654 2,430 — 339 5,423 — 3,833 — 9,255 
Reinsurance losses and underwriting expenses— — — — — 22,212 — — 22,212 
Postage expense7,575 7,575 (7,575)— 
Servicing fees6,911 667 7,578 (7,578)— 
Other expenses (a)10,832 9,048 888 1,358 22,126 772 15,586 9,741 48,226 
Intersegment expenses, net16,478 5,605 1,250 710 24,043 244 (24,055)(232)— 
Total operating expenses107,113 58,824 10,270 5,890 182,097 23,706 17,860 (5,748)217,916 
Impairment expense and provision for beneficial interests— — 1,510 — 1,510 81 — — 1,591 
Total expenses108,746 106,871 11,780 5,890 233,287 23,787 25,688 (5,748)277,015 
Income (loss) before income taxes18,512 47,462 29,834 1,952 97,760 10,060 (1,776)97 106,140 
Income tax (expense) benefit(4,443)(11,402)(7,156)(434)(23,435)(2,385)810 — (25,010)
Net income (loss)14,069 36,060 22,678 1,518 74,325 7,675 (966)97 81,130 
Net loss (income) attributable to noncontrolling interests— 45 (17)— 28 (124)1,623 (97)1,430 
Net income (loss) attributable to Nelnet, Inc.$14,069 36,105 22,661 1,518 74,353 7,551 657 — 82,560 
Total assets as of March 31, 2025$184,142 469,706 10,362,549 1,689,633 12,706,030 874,667 873,211 (261,950)14,191,958 
(a)    Other expenses for each reportable segment includes:
LSS - communications, professional fees, collection costs, software, and computer services and subscriptions.
ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and travel.
AGM - trustee fees and professional fees.
Nelnet Bank - marketing, consulting and professional fees, software, insurance, and management fee expense.

27


 Three months ended March 31, 2024
Reportable SegmentsReconciling Items
Loan Servicing and Systems (LSS)Education Technology Services and Payments (ETSP)Asset
Generation and
Management		Nelnet BankTotal Reportable SegmentsNFS Other Operating SegmentsCorporate and Other ActivitiesEliminations/ ReclassificationsTotal
Interest income:
Loan interest$— — 209,628 7,096 216,724 — — — 216,724 
Investment interest1,894 7,866 21,835 9,968 41,563 15,616 3,815 (8,915)52,078 
Total interest income1,894 7,866 231,463 17,064 258,287 15,616 3,815 (8,915)268,802 
Interest expense— — 190,905 9,497 200,402 2,418 676 (8,915)194,580 
Net interest income1,894 7,866 40,558 7,567 57,885 13,198 3,139 — 74,222 
Less provision for loan losses— — 6,455 4,373 10,828 — — — 10,828 
Net interest income after provision for loan losses1,894 7,866 34,103 3,194 47,057 13,198 3,139 — 63,394 
Other income (expense):
LSS revenue127,201 — — — 127,201 — — — 127,201 
Intersegment revenue6,886 49 — — 6,935 — — (6,935)— 
ETSP revenue— 143,539 — — 143,539 — — — 143,539 
Reinsurance premiums earned— — — — — 12,780 — — 12,780 
Solar construction revenue— — — — — — 13,726 — 13,726 
Other, net710 — 4,983 375 6,068 161 (2,147)— 4,082 
Gain (loss) on sale of loans, net— — (141)— (141)— — — (141)
Derivative settlements, net— — 1,555 202 1,757 — — — 1,757 
Derivative market value adjustments, net— — 5,706 2,258 7,964 — — — 7,964 
Total other income (expense), net134,797 143,588 12,103 2,835 293,323 12,941 11,579 (6,935)310,908 
Cost of services and expenses:
Total cost of services— 48,610 — — 48,610 — 14,229 — 62,839 
Salaries and benefits76,722 40,167 1,195 2,721 120,805 358 23,521 (807)143,875 
Depreciation and amortization5,109 2,683 — 260 8,052 — 8,716 — 16,769 
Reinsurance losses and underwriting expenses— — — — — 11,317 — — 11,317 
Postage expense10,605 10,605 (10,605)— 
Servicing fees8,951 233 9,184 (9,184)— 
Other expenses (a)8,933 7,558 1,109 1,111 18,711 485 13,402 12,931 45,528 
Intersegment expenses, net19,332 4,801 1,208 557 25,898 217 (26,845)730 — 
Total operating expenses120,701 55,209 12,463 4,882 193,255 12,377 18,794 (6,935)217,489 
Impairment expense and provision for beneficial interests— — — — — — 37 — 37 
Total expenses120,701 103,819 12,463 4,882 241,865 12,377 33,060 (6,935)280,365 
Income (loss) before income taxes15,990 47,635 33,743 1,147 98,515 13,762 (18,342)— 93,937 
Income tax (expense) benefit(3,838)(11,435)(8,099)(259)(23,631)(3,274)3,723 — (23,181)
Net income (loss)12,152 36,200 25,644 888 74,884 10,488 (14,619)— 70,756 
Net loss (income) attributable to noncontrolling interests— 17 — — 17 (120)2,755 — 2,652 
Net income (loss) attributable to Nelnet, Inc.$12,152 36,217 25,644 888 74,901 10,368 (11,864)— 73,408 
Total assets as of March 31, 2024$212,381 389,990 12,315,238 1,125,122 14,042,731 1,111,587 803,709 (583,815)15,374,212 
(a)    Other expenses for each reportable segment includes:
LSS - occupancy, communications, professional fees, software, and computer services and subscriptions.
ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, travel, and provision for losses.
AGM - trustee fees and professional fees.
Nelnet Bank - consulting and professional fees, software, and insurance.

28


12. Disaggregated Revenue
The following tables present disaggregated revenue for the Company's fee-based operating segments.
Loan Servicing and Systems
 Three months ended March 31,
 20252024
Government loan servicing$87,358 105,474 
Private education and consumer loan servicing22,696 12,620 
FFELP loan servicing2,633 3,380 
Software services6,992 4,541 
Outsourced services1,062 1,186 
Loan servicing and systems revenue$120,741 127,201 
Education Technology Services and Payments
 Three months ended March 31,
 20252024
Tuition payment plan services$40,072 38,880 
Payment processing51,536 47,786 
Education technology services55,695 56,021 
Other27 852 
Education technology services and payments revenue$147,330 143,539 
Solar Construction
Three months ended March 31,
20252024
Commercial revenue$3,989 11,920 
Residential revenue (a)6 1,806 
Solar construction revenue$3,995 13,726 
(a)    In April 2024, the Company announced a change in its solar engineering, procurement, and construction operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will decline from historical amounts as existing customer contracts are completed.
Other Income (Expense)
The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:
Three months ended March 31,
20252024
ALLO preferred return$8,416 2,409 
Investment activity, net5,161 (1,298)
Borrower late fee income1,587 3,133 
Investment advisory services (WRCM)1,473 1,508 
Administration/sponsor fee income1,305 1,546 
Gain from solar investments, net456 2,780 
Loss from ALLO voting membership interest investment— (10,693)
Other5,296 4,697 
Other, net$23,694 4,082 
29


13.  Reinsurance
The following table presents reinsurance premiums written and earned and loss reserves, commissions, and broker fees.
Three months ended March 31,
20252024
Premiums written:
Assumed$60,853 30,887 
Ceded(23,229)(15,443)
Net premiums written$37,624 15,444 
Premiums earned:
Assumed$47,723 25,504 
Ceded(23,036)(12,724)
Net premiums earned$24,687 12,780 
Loss reserve, commissions, and broker fees:
Assumed$42,641 22,842 
Ceded(20,429)(11,525)
Reinsurance losses and underwriting expenses$22,212 11,317 
The Company’s loss reserve balance, net of amounts ceded to reinsurers, was $46.0 million and $33.1 million as of March 31, 2025 and December 31, 2024, respectively, which is included in "other liabilities" on the consolidated balance sheets.
14.  Major Customer
Government Loan Servicing
The Company earns loan servicing revenue from a servicing contract with the Department of Education (the "Department"). Revenue earned by the Company related to this contract was $87.4 million and $105.5 million for the three months ended March 31, 2025 and 2024, respectively.
The Company's legacy student loan servicing contract with the Department was scheduled to expire on December 14, 2023. In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract which replaced the legacy Department student loan servicing contract.
The USDS contract became effective in April 2023 and has a five-year base period, with 2 two-year and 1 one-year possible extensions. The Department's total loan servicing volume of existing borrowers was allocated by the Department to the Company and four other third-party servicers that were awarded a USDS contract. Servicing under the USDS contract went live on April 1, 2024 and the Company recognized revenue in accordance with this new contract beginning in the second quarter of 2024. The Company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024. The Company earns less revenue from the Department on a per borrower blended basis under the new USDS servicing contract as compared with the legacy servicing contract.
15.  Fair Value
The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.
 As of March 31, 2025As of December 31, 2024
 Level 1Level 2TotalLevel 1Level 2Total
Assets:   
Investments:
Asset-backed debt securities - available-for-sale$100 1,157,962 1,158,062 100 1,085,726 1,085,826 
Equity securities445 — 445 455 — 455 
Equity securities measured at net asset value (a)80,396 74,039 
Total investments545 1,157,962 1,238,903 555 1,085,726 1,160,320 
Derivative instruments— 1,473 1,473 — 3,232 3,232 
Total assets$545 1,159,435 1,240,376 555 1,088,958 1,163,552 
Liabilities:
Derivative instruments$— 822 822 — 53 53 
Total liabilities$— 822 822 — 53 53 
(a)    In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
30


The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets. The methodologies for estimating the fair value of financial assets and liabilities are described in note 24 of the notes to consolidated financial statements included in the 2024 Annual Report.
 As of March 31, 2025
 Fair valueCarrying valueLevel 1Level 2Level 3
Financial assets:    
Loans receivable$10,268,097 9,856,429 — — 10,268,097 
Accrued loan interest receivable566,275 566,275 — 566,275 — 
Cash and cash equivalents220,517 220,517 220,517 — — 
Investments at fair value1,238,903 1,238,903 545 1,157,962 — 
Investments - held-to-maturity asset-backed securities212,904 207,357 — 212,904 — 
Notes receivable64,281 64,281 — 64,281 — 
Beneficial interest in loan securitizations221,991 206,367 — — 221,991 
Restricted cash317,139 317,139 317,139 — — 
Restricted cash – due to customers294,471 294,471 294,471 — — 
Derivative instruments1,473 1,473 — 1,473 — 
Financial liabilities:  
Bonds and notes payable8,584,733 8,656,157 — 8,584,733 — 
Accrued interest payable22,394 22,394 — 22,394 — 
Bank deposits1,300,242 1,313,407 858,424 441,818 — 
Due to customers379,277 379,277 379,277 — — 
Derivative instruments822 822 — 822 — 
 As of December 31, 2024
 Fair valueCarrying valueLevel 1Level 2Level 3
Financial assets:    
Loans receivable$10,008,165 9,443,461 — — 10,008,165 
Accrued loan interest receivable549,283 549,283 — 549,283 — 
Cash and cash equivalents194,518 194,518 194,518 — — 
Investments at fair value1,160,320 1,160,320 555 1,085,726 — 
Investments - held-to-maturity asset-backed securities216,164 210,774 — 216,164 — 
Notes receivable32,258 32,258 — 32,258 — 
Beneficial interest in loan securitizations229,510 213,809 — — 229,510 
Restricted cash332,100 332,100 332,100 — — 
Restricted cash – due to customers404,402 404,402 404,402 — — 
Derivative instruments3,232 3,232 — 3,232 — 
Financial liabilities:  
Bonds and notes payable8,343,565 8,309,797 — 8,343,565 — 
Accrued interest payable21,046 21,046 — 21,046 — 
Bank deposits1,172,707 1,186,131 744,721 427,986 — 
Due to customers478,469 478,469 478,469 — — 
Derivative instruments53 53 — 53 — 
16. Subsequent Event - Partial Redemption of ALLO Investment
Nelnet has both a voting and preferred membership interest investment in ALLO. On April 18, 2025, ALLO executed a financing transaction that will result in gross proceeds to ALLO of $500 million (the “Financing”). In conjunction with the Financing, on April 18, 2025, Nelnet, ALLO, and certain other ALLO investors entered into a Membership Unit Redemption Agreement (the “Redemption Agreement”) pursuant to which ALLO will redeem certain of its membership interests from certain investors in ALLO, including Nelnet (the “Transaction”).
As part of the Transaction, ALLO will redeem all of Nelnet's outstanding preferred membership interests, including the preferred return accrued on such membership interests as of the closing date. In addition, ALLO will redeem a portion of Nelnet’s voting membership interest of ALLO. The Transaction is expected to close in late May 2025, subject to customary closing conditions.
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Upon closing, Nelnet expects to receive aggregate cash proceeds of approximately $410 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175 million.
Immediately following the closing of the Transaction, Nelnet will not own any preferred membership interests of ALLO, but will maintain a significant voting equity investment in ALLO. Nelnet’s ownership of ALLO will decrease from 45% to approximately 26%. Nelnet will continue to account for its remaining voting membership interest of ALLO under the HLBV method of accounting, with the carrying value of such interest remaining at $0 as of the closing date of the Transaction.
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 months ended March 31, 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” section of the 2024 Annual 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;
•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 expected benefits to the Company from its continuing investment in ALLO, and risks related to solar tax equity investments, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities;
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•risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, solar construction, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;
•risks 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.
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.
Reclassification and Immaterial Error Corrections
The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations gives effect to the immaterial error corrections made to the previously reported consolidated financial statements for the three months ended March 31, 2024. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments
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 March 31,
20252024
GAAP net income attributable to Nelnet, Inc.$82,560 73,408 
Realized and unrealized derivative market value adjustments (a)6,324 (7,964)
Tax effect (b)(1,519)1,911 
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments$87,365 67,355 
Earnings per share:
GAAP net income attributable to Nelnet, Inc.$2.26 1.98 
Realized and unrealized derivative market value adjustments (a)0.17 (0.22)
Tax effect (b)(0.04)0.05 
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments$2.39 1.81 
(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
33


derivative transactions with the intent that each is economically effective; however, the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value of derivative instruments is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. 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.
Recent Development - Partial Redemption of ALLO Investment
The Company has both a voting and preferred membership interest investment in ALLO.
The Company's 45% voting membership interest in ALLO is accounted for under the Hypothetical Liquidation at Book Value (HLBV) method of accounting and as of March 31, 2025 has a carrying value of $0.
As of March 31, 2025, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $225.6 million and $8.4 million, respectively. The Company earns a preferred return of 13.50% and 20.00% on $169.1 million and $56.5 million, respectively, of the Company's preferred membership interests of ALLO.
In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests. The Company expects ALLO to redeem all of the Company's outstanding preferred membership interests, including the accrued preferred return earned through the closing date, and a portion of the Company's voting membership interest. The transaction is expected to close in late May 2025. The Company expects to receive cash proceeds of approximately $410.0 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175.0 million. As a result of this transaction, Nelnet's ownership of ALLO will decrease from 45% to approximately 26%. Nelnet will continue to account for its remaining voting membership interest of ALLO under the HLBV method of accounting, with the carrying value of such interest remaining at $0 as of the closing date of the transaction.
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
34


activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), and solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services. In addition, Corporate includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs.
The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three months ended March 31, 2025 and 2024. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.
Three months ended March 31,Certain Items Impacting Comparability
(All dollar amounts below are pre-tax)
20252024
NDS$18,512 15,990 
•An increase in before tax operating margin due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures. This was partially offset by a decrease in government loan servicing revenue due to lower revenue earned on a per borrower blended basis under the new government servicing contract (which the Company began recognizing revenue under on April 1, 2024).
NBS47,462 47,635 
•ETSP revenue increased to $147.3 million for the three months ended March 31, 2025 compared with $143.5 million for the same period in 2024. 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:
AGM29,834 33,743 
•The recognition of $13.0 million and $6.5 million in provision for loan losses for the three months ended March 31, 2025 and 2024, respectively. Increase was due to an increase of loan acquisitions in the first quarter of 2025.
•A decrease of $9.1 million in investment interest income for the three months ended March 31, 2025 compared with the same period in 2024, due to a decrease of interest earned on restricted cash driven by lower balances and a decrease in interest rates and a decrease of interest income from beneficial interest investments.
•A net loss of $3.8 million and net income of $5.7 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.
•An increase in net loan interest income of $16.6 million for the three months ended March 31, 2025 compared with the same period in 2024, due to an increase in loan spread driven by an increase in consumer loans funded with operating cash (versus funded with debt), partially offset by a decrease in the average balance of loans.
Nelnet Bank1,952 1,147 
•An increase of $4.8 million in net interest income for the three months ended March 31, 2025 compared with the same period in 2024 due to an increase in the average balance of loans and investments and an increase in net interest margin.
•A net loss of $2.5 million and net income of $2.3 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.
•The recognition of $2.3 million and $4.4 million of provision for loan losses for the three months ended March 31, 2025 and 2024, respectively.
NFS other operating segments10,060 13,762 
•Net interest income earned on investment debt securities (primarily student loan and other asset-backed securities) was $6.8 million for the three months ended March 31, 2025 compared with $12.2 million for the same period in 2024.
Corporate:
Unallocated corporate costs(9,988)(10,045)

Solar tax equity investments1,205 2,314 
•Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. The Company accounts for these investments under the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment. In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years). These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments made by third parties. Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings.
•These results include results attributable to third-party noncontrolling interest investors. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Nelnet Renewable Energy - solar construction(6,575)(4,037)
•Since the acquisition of GRNE Solar in 2022, the Company has incurred low and, in some cases, negative margins on certain legacy solar construction projects. The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024. Uncertain economic conditions have impacted the costs to complete existing construction contracts and new construction projects being initiated which may continue to negatively impact margins and revenue, respectively, in future periods.
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ALLO investment8,416 (8,593)
•The recognition of no loss in the three months ended March 31, 2025 compared with a loss of $10.7 million for the same period in 2024 related to the Company's ALLO voting membership interest investment. The loss recognized in the first quarter of 2024 reduced the Company's carrying value of its voting membership interest to $0. Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO.
•The recognition of income of $8.4 million on the Company's preferred membership interests in ALLO for the three months ended March 31, 2025 compared with $2.4 million for the same period in 2024.
Venture capital investments4,220 (704)
•Includes operating results of the Company's venture capital investments. During the first quarter of 2025, the Company recognized income, net of losses, of $2.1 million from equity method investees, $1.7 million related to the periodic adjustment of certain fund investments to their respective fair value, and $0.6 million on certain measurement alternative investments as a result of observable price changes.    
Other corporate activities946 2,723 

Eliminations/reclassifications97 — 
Net income before taxes106,140 93,937 
Income tax expense(25,010)(23,181)
Net loss attributable to noncontrolling interests1,430 2,652 
•The majority of noncontrolling interests represents losses attributed to noncontrolling membership interests related to the Company’s solar tax equity investments.
Net income$82,560 73,408 
CONSOLIDATED RESULTS OF OPERATIONS
An analysis of the Company's consolidated operating results for the three months ended March 31, 2025 compared with the same period in 2024 is provided below.
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 11 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
 March 31,
 20252024Additional information
Loan interest$166,439 216,724 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans.
Investment interest41,389 52,078 Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations. Decrease was due to a decrease of interest earned on restricted cash in asset-backed securitizations due to lower balances and a decrease in interest rates and a decrease in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Total interest income207,828 268,802 
Interest expense125,114 194,580 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds.
Net interest income82,714 74,222 
Less provision for loan losses15,337 10,828 
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 losses67,377 63,394 
Other income (expense):  
LSS revenue120,741 127,201 See LSS operating segment - results of operations.
ETSP revenue147,330 143,539 
See ETSP operating segment - results of operations.
Reinsurance premiums earned24,687 12,780 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 revenue3,995 13,726 
Represents revenue earned from Nelnet Renewable Energy (NRE) providing solar construction services, including design and installations of commercial solar systems.
Other, net23,694 4,082 
See table below for the components of "other, net."
Gain (loss) on sale of loans, net909 (141)
The Company recognizes gains/losses from selling loans. See NFS division - results of operations - AGM operating segment.
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Derivative settlements, net746 1,757 
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(6,324)7,964 
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), net315,778 310,908 
Cost of services and expenses:
Loan servicing contract fulfillment and acquisition costs1,633 — 
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 payments48,047 48,610 
Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations.
Cost to provide solar construction services7,828 14,229 Represents direct costs related to NRE providing solar construction services. Since the acquisition of GRNE Solar in 2022, it has incurred low and, in some cases, negative margins on certain legacy projects. The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024. Uncertain economic conditions have impacted the costs to complete existing construction contracts and new construction projects being initiated which may continue to negatively impact margins and revenue, respectively, in future periods.
Total cost of services57,508 62,839 
Salaries and benefits138,223 143,875 
Decrease was primarily due to staff reductions announced in June 2024 in LSS after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan serving volume to one platform. These staff reductions took place during the second half of 2024.
Depreciation and amortization9,255 16,769 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Decrease was primarily due to reduction in depreciation due to prior year non-cash impairment charges recognized for lease, buildings, and associated improvements as the Company continues to evaluate the use of office space as it modifies its hybrid work model for associates.
Reinsurance losses and underwriting expenses22,212 11,317 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 expenses48,226 45,528 Includes expenses such as postage and distribution, consulting and professional fees, occupancy, servicing fees, marketing, travel, communications, and certain information technology-related costs.
Total operating expenses217,916 217,489 
Impairment expense and provision for beneficial interests1,591 37 
During 2025, the Company recorded an additional allowance of $1.5 million for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Total expenses277,015 280,365 
Income before income taxes106,140 93,937 
Income tax expense25,010 23,181 
The effective tax rate was 23.25% and 24.00% for the three months ended March 31, 2025 and 2024, respectively. The Company expects its tax rate will range between 22% and 24% for the remainder of 2025.
Net income81,130 70,756 
Net loss attributable to noncontrolling interests1,430 2,652 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.$82,560 73,408 
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.$82,560 73,408 
Derivative market value adjustments, net6,324 (7,964)
Tax effect(1,519)1,911 
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments$87,365 67,355 
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The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income.
 Three months ended March 31,
 20252024Additional information
ALLO preferred return $8,416 2,409 See Corporate - results of operations.
Investment activity, net (a)5,161 (1,298)See note (b) below for additional information.
Borrower late fee income 1,587 3,133 See NFS division - results of operations - AGM operating segment.
Investment advisory services (WRCM) 1,473 1,508 See NFS division - results of operations - NFS other operating segments.
Administration/sponsor fee income 1,305 1,546 See NFS division - results of operations - AGM operating segment.
Gain from solar investments, net (a)456 2,780 See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loss from ALLO voting membership interest investment (a)— (10,693)See Corporate - results of operations.
Other 5,296 4,697 
Other, net$23,694 4,082 
(a)    The Company anticipates fluctuations in future periodic earnings resulting from investment purchases, sales, and valuation adjustments.
(b)    Investment activity by operating segment and investment type follows:
Real EstateVenture Capital and FundsEquity / BondsTotalReal EstateVenture Capital and FundsEquity / BondsTotal
Three months ended March 31,
20252024
NFS - AGM$— 1,047 — 1,047 — 322 — 322 
NFS - Nelnet Bank— (62)287 225 — (179)529 350 
NFS - Other Operating Segments(1,643)— 1,040 (603)(1,794)— 212 (1,582)
Corporate— 4,492 — 4,492 — (388)— (388)
$(1,643)5,477 1,327 5,161 (1,794)(245)741 (1,298)
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LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS
Loan Servicing Volumes
As of
March 31,
2025		December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Servicing volume (dollars in millions):
Government$482,786 489,877 492,142 489,298 495,409 494,691 
FFELP12,826 13,260 13,745 14,576 15,783 17,462 
Private and consumer46,728 29,226 20,666 19,876 21,015 20,493 
Total$542,340 532,363 526,553 523,750 532,207 532,646 
Number of servicing borrowers:
Government13,453,127 14,049,550 14,114,468 14,096,152 14,328,013 14,503,057 
FFELP524,421 549,861 574,979 610,745 656,814 725,866 
Private and consumer1,645,423 1,168,293 851,747 829,072 882,256 894,703 
Total15,622,971 15,767,704 15,541,194 15,535,969 15,867,083 16,123,626 
Number of remote hosted borrowers:1,427,800 842,200 662,075 133,681 65,295 70,580 
Summary and Comparison of Operating Results
 Three months ended March 31,
 20252024Additional information
Interest income$7211,894
Represents interest income on cash balances primarily collected from borrower remittances that are subsequently disbursed to servicing customers (lenders). Decrease was due to decrease in average balance of loan repayment funds held in custody for lenders and a decrease in interest rates.
Loan servicing and systems revenue120,741127,201See table below for additional information.
Intersegment servicing revenue5,6846,886Represents 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 income112710
Represents revenue earned from providing administrative support services.
Total other income126,537134,797
Contract fulfillment and acquisition costs1,633—
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 benefits69,57476,722
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.
Depreciation2,6545,109Decrease 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 expense7,57510,605Decrease was due to a non-recurring volume based credit earned from the Company's mail provider and recognized in the first quarter of 2025. The volume increase was a result of additional mailings as borrowers returned to repayment under the government servicing contract and consumer borrower growth.
Other expenses10,8328,933
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 expenses16,47819,332
Total operating expenses107,113120,701
Total expenses108,746120,701
Income before income taxes18,51215,990
Income tax expense(4,443)(3,838)Represents income tax expense at an effective tax rate of 24%.
Net income$14,06912,152

39


Before tax operating margin14.8 %11.9 %
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 in 2024. This was partially offset by a decrease in government loan servicing revenue due to lower revenue earned on a per borrower blended basis under the new government servicing contract.
Loan servicing and systems revenue
The following table presents disaggregated revenue by service offering for each reporting period.
Three months ended March 31,
 20252024Additional information
Government loan servicing$87,358 105,474 Represents revenue from the Company's servicing contract with the Department. The Company recognized revenue under the new government servicing USDS contract beginning April 1, 2024. Decrease was due to lower revenue earned on a per borrower blended basis under the new contract as compared with the government legacy contract and a decrease in the number of borrowers serviced. The Company expects the number of borrowers serviced under this contract will continue to decrease as volume is transferred from the Company to its remote hosted servicing customer.
Private education and consumer loan servicing22,696 12,620 
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.
FFELP loan servicing2,633 3,380 
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 services6,992 4,541 
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 in future periods as additional volume is transferred from the Company to this new remote hosted servicing customer.
Outsourced services1,062 1,186 Represents revenue from providing contact center and back office operational outsourcing services.
Loan servicing and systems revenue$120,741 127,201 
40


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 March 31,
 20252024Additional information
Interest income$6,939 7,866 
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
147,330 143,539 See table below for additional information.
Intersegment revenue64 49 
Total other income147,394 143,588 
Cost of services48,047 48,610 See table below for additional information.
Salaries and benefits41,741 40,167 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 amortization2,430 2,683 
Other expenses9,048 7,558 Increase was due to an increase in technology services and professional fees.
Intersegment expenses, net5,605 4,801 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 expenses58,824 55,209 
Total expenses106,871 103,819 
Income before income taxes47,462 47,635 
Income tax expense(11,402)(11,435)Represents income tax expense at an effective tax rate of 24%.
Net income36,060 36,200 
Net loss attributable to noncontrolling interests45 17 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$36,105 36,217 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.
41


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 March 31,
 20252024Additional information
Tuition payment plan services$40,07238,880
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 processing51,53647,786Increase 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 services55,69556,021
Decrease was due to a decrease in FACTS education services revenue which resulted from the wind down of economic aid provided to private schools in response to the COVID 19 pandemic. Instructional services revenue provided to private schools has been funded by the Emergency Assistance to Non-Public Schools (EANS) program. The EANS II program funding ended on September 30, 2024. Although schools still have allocated funds to spend, future instructional services revenue will be adversely impacted compared to recent historical results as a result of the EANS funding ending in 2024. Revenue earned under the EANS program was $10.1 million for the three months ended March 31, 2024 compared with $1.6 million for the three months ended March 31, 2025. 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.
Other27852
Education technology services and payments revenue147,330143,539
Cost of services48,04748,610Represents 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$99,28394,929
GAAP before tax operating margin47.8 %50.2 %
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(7.0)(8.3)
Non-GAAP before tax operating margin, excluding net interest income40.8 %41.9 %
42


NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS
Asset Generation and Management Operating Segment
Loan Portfolio
As of March 31, 2025, the AGM operating segment had a $9.3 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loan Activity
The following table sets forth the activity of loans in the AGM operating segment:
FFELPPrivateConsumer and otherTotal
Three months ended March 31, 2025
Balance as of December 31, 2024$8,388,564 221,744 345,560 8,955,868 
Loan acquisitions702,800 — 129,787 832,587 
Repayments, claims, capitalized interest, participations, and other, net(230,558)(12,535)(93,984)(337,077)
Loans lost to external parties(58,764)(702)— (59,466)
Loans sold(131,758)— (148)(131,906)
Balance as of March 31, 2025$8,670,284 208,507 381,215 9,260,006 
Three months ended March 31, 2024
Balance as of December 31, 2023$11,686,207 277,320 85,935 12,049,462 
Loan acquisitions— — 80,730 80,730 
Repayments, claims, capitalized interest, participations, and other, net(324,953)(14,591)(10,952)(350,496)
Loans lost to external parties(778,508)(1,147)— (779,655)
Loans sold(199,694)— (405)(200,099)
Balance as of March 31, 2024$10,383,052 261,582 155,308 10,799,942 
The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company’s ownership correlates to approximately $1.82 billion of loans included in these securitizations. 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.
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 March 31, 2025 and December 31, 2024; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
43


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 March 31,
20252024
Variable loan yield, gross7.43 %7.99 %
Consolidation rebate fees(0.79)(0.80)
Premium and deferred origination costs amortization, net of discount accretion(0.13)0.09 
Variable loan yield, net6.51 7.28 
Loan cost of funds - interest expense(5.39)(6.50)
Loan cost of funds - derivative settlements (a) (b)0.01 0.01 
Variable loan spread1.13 0.79 
Fixed rate floor income, gross0.04 0.01 
Fixed rate floor income - derivative settlements (a) (c)0.02 0.04 
Fixed rate floor income, net of settlements on derivatives0.06 0.05 
Core loan spread1.19 %0.84 %
Average balance of AGM's loans$9,544,317 11,561,504 
Average balance of AGM's debt outstanding8,451,699 11,387,400 
(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.
A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows.
Three months ended March 31,
20252024
Core loan spread1.19 %0.84 %
Derivative settlements (basis swaps)(0.01)(0.01)
Derivative settlements (fixed rate floor income)(0.02)(0.04)
Loan spread1.16 %0.79 %
(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 an increasing interest rate environment, student loan spread on FFELP loans increases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly. This also results in student loan spread decreasing in the short term in a decreasing interest rate environment.
44


Variable loan spread was higher during the three months ended March 31, 2025 compared with the same period in 2024 due to an increase in consumer loans funded by the Company with operating cash (versus funded with debt). 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 March 31,
 20252024Additional information
Interest income:
Loan interest$154,469 209,628 See table below for additional analysis.
Investment interest12,769 21,835 Represents primarily investment interest earned on beneficial interest investments and restricted cash included in student loan securitizations and other secured borrowings. Decrease was due to a decrease of interest earned on restricted cash due to lower balances and a decrease in interest rates and a decrease of interest earned on beneficial interest investments. AGM earned $8.7 million and $13.1 million of interest income on beneficial interest investments for the three months ended March 31, 2025 and 2024, respectively.
Total interest income167,238 231,463 
Loan interest expense112,411 184,145 See table below for additional analysis.
Intercompany interest expense1,892 6,760 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 income52,935 40,558 
Less provision for loan losses13,012 6,455 
See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision for loan losses for the periods presented.
Net interest income after provision for loan losses39,923 34,103 
Other income, net3,995 4,983 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. Decrease was primarily due to a decrease in borrower late fees due to the continued amortization of the Company's FFELP portfolio.
Gain (loss) on sale of loans, net909 (141)
The Company recognizes gains/losses from selling portfolios of loans. See above under "Loan Activity" for loans sold during the three months ended March 31, 2025 and 2024.
Derivative settlements, net582 1,555 
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(3,795)5,706 
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, net1,691 12,103 
Salaries and benefits1,221 1,195  
Servicing fees6,911 8,951 
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 $4.9 million and $6.6 million during the three months ended March 31, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.
Other expenses888 1,109 
Intersegment expenses1,250 1,208 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 expenses10,270 12,463 
Total operating expenses were 43 basis points of the average balance of loans in each of 2025 and 2024, respectively.
Provision for beneficial interests1,510 — 
During 2025, the Company recorded an additional allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Total expenses11,780 12,463 
Income before income taxes29,834 33,743 
45


Income tax expense(7,156)(8,099)Represents income tax expense at an effective tax rate of 24%.
Net income22,678 25,644 
Net income attributable to noncontrolling interests(17)— 
Net income$22,661 25,644 
Additional information:
GAAP net income$22,661 25,644 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, net3,795 (5,706)
Tax effect(911)1,369 
Non-GAAP net income, excluding derivative market value adjustments$25,545 21,307 
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 March 31,
 20252024Additional information
Variable interest income, gross$175,306 230,217 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans.
Consolidation rebate fees(18,748)(23,057)Decrease was due to a decrease in the average consolidation loan balance.
Premium and deferred origination costs amortization, net of discount accretion(3,064)2,288 Net premium amortization in the three months ended March 31, 2025 was due to consumer and other loans purchased at a premium during 2024 and the first quarter of 2025 that have a short estimated life, offset by purchases of loans at a net discount over the last several years that have substantially longer estimated lives. Net discount accretion for the three months ended March 31, 2024 was due to the Company's purchases of loans at a net discount over the last several years.
Variable interest income, net153,494 209,448 
Interest on bonds and notes payable(112,411)(184,145)Decrease was due to a decrease in the average balance of debt outstanding and cost of funds.
Derivative settlements, net (a)153 365 Represents net derivative settlements received related to the Company’s basis swaps.
Variable loan interest margin, net of settlements on derivatives41,236 25,668 
Fixed rate floor income, gross975 180 Increase was due to lower interest rates.
Derivative settlements, net (a)429 1,190 
Represents net derivative settlements received related to the Company's floor income interest rate swaps.
Fixed rate floor income, net of settlements on derivatives1,404 1,370 
Net loan interest income, including derivative settlements (core loan interest income) (a)$42,640 27,038 
(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.
46


Nelnet Bank Operating Segment
Loan Portfolio
As of March 31, 2025, Nelnet Bank had a $761.6 million loan portfolio. For a summary of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loan Activity
The following table sets forth the activity of loans in the Nelnet Bank operating segment:
FFELPPrivateConsumer and otherTotal
Three months ended March 31, 2025
Balance as of December 31, 2024$— 482,445 162,152 644,597 
Loan acquisitions and originations111,002 29,041 4,555 144,598 
Repayments(815)(22,035)(4,712)(27,562)
Balance as of March 31, 2025$110,187 489,451 161,995 761,633 
Three months ended March 31, 2024
Balance as of December 31, 2023$— 360,520 72,352 432,872 
Loan acquisitions and originations— 16,715 56,847 73,562 
Repayments— (12,469)(10,242)(22,711)
Balance as of March 31, 2024$— 364,766 118,957 483,723 
Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs
For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of March 31, 2025 and December 31, 2024; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Deposits
As of March 31, 2025, Nelnet Bank had $1.38 billion of deposits, which included $68.6 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of March 31, 2025 and December 31, 2024, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
47


Average Balance Sheet
The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities.
Three months ended March 31, (a)
20252024
BalanceRateBalanceRate
Average assets
Federally insured student loans$25,621 6.55 %$— — %
Private education loans489,211 6.10 366,858 4.28 
Consumer and other loans162,602 10.47 97,136 13.23 
Cash and investments793,537 6.39 577,947 6.94 
Total interest-earning assets1,470,971 6.75 %1,041,941 6.59 %
Non-interest-earning assets14,646 12,767 
Total assets$1,485,617 $1,054,708 
Average liabilities and equity
Brokered deposits$249,259 1.95 %$204,651 1.39 %
Intercompany deposits 72,836 3.41 160,349 4.90 
Retail and other deposits962,954 4.21 544,136 4.90 
Federal funds purchased and other borrowed money10,404 4.69 — — 
Total interest-bearing liabilities1,295,453 3.73 %909,136 4.11 %
Non-interest-bearing liabilities8,602 8,477 
Equity181,562 137,095 
Total liabilities and equity$1,485,617 $1,054,708 
Net interest margin3.46 %3.00 %
(a) Calculated using average daily balances.

48


Summary and Comparison of Operating Results
 Three months ended March 31,
 20252024Additional information
Interest income:
Loan interest$11,971 7,096 Represents interest earned on loans. Increase was due to an increase in the balance and mix of loans.
Investment interest12,496 9,968 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 income24,467 17,064 
Interest expense12,077 9,497 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 12,390 7,567 
Provision for loan losses2,325 4,373 
Decrease was due to the mix of loans originated, acquired, and outstanding during each period. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Net interest income after provision for loan losses10,065 3,194 
Other income, net142 375 
Represents primarily net gains and income from investments.
Derivative settlements, net164 202 
Nelnet Bank uses derivatives to hedge its exposure related to variable rate intercompany deposits to minimize volatility from future changes in interest rates. Nelnet Bank has designated its derivative instruments as cash flow hedges; however, because the hedged items are intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements. Accordingly, all changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations. "Derivative settlements" represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. 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(2,529)2,258 
Total other income, net(2,223)2,835 
Salaries and benefits2,816 2,721 Represents salaries and benefits of Nelnet Bank associates and third-party contract labor.
Depreciation339 260 
Servicing fees667 233 
Represents primarily fees paid to LSS for servicing certain of Nelnet Bank's loans. Intercompany servicing of $0.5 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes.
Other expenses1,358 1,111 Represents various expenses such as marketing, consulting and professional fees, software, insurance, and management fees. Increase was due to the overall growth of Nelnet Bank activities.
Intersegment expenses710 557 
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 expenses5,890 4,882 
Income before income taxes1,952 1,147 
Income tax expense(434)(259)
Represents income tax expense at an effective tax rate of 22.2% and 22.6% for the three months ended March 31, 2025 and 2024, respectively.
Net income$1,518 888 
Additional information:
Net income$1,518 888 

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, net2,529 (2,258)
Tax effect(607)542 
Net income (loss), excluding derivative market value adjustments$3,440 (828)
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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 March 31, 2025
Investment interest$4 1,994 — 6,822 8,820 
Interest expense— (769)— (1)(770)
Net interest income4 1,225 — 6,821 8,050 
Reinsurance premiums earned— 24,687 — — 24,687 
Other income, net1,473 574 (1,643)706 1,110 
Salaries and benefits(32)(249)(197)— (478)
Reinsurance losses and underwriting expenses— (22,212)— — (22,212)
Other expenses(63)(677)(31)(1)(772)
Intersegment expenses, net(4)(109)(99)(32)(244)
Impairment expense— — (81)— (81)
Income (loss) before income taxes1,378 3,239 (2,051)7,494 10,060 
Income tax (expense) benefit(298)(777)489 (1,799)(2,385)
Net (income) loss attributable to noncontrolling interests(138)— 14 — (124)
Net income (loss)$942 2,462 (1,548)5,695 7,551 
Three months ended March 31, 2024
Investment interest$3 818 141 14,654 15,616 
Interest expense—— — (2,418)(2,418)
Net interest income3 818 141 12,236 13,198 
Reinsurance premiums earned— 12,780 — — 12,780 
Other income, net1,477 286 (1,794)192 161 
Salaries and benefits(55)(114)(189)— (358)
Reinsurance losses and underwriting expenses— (11,317)— — (11,317)
Other expenses(75)(340)(70)— (485)
Intersegment expenses, net(4)(47)(130)(36)(217)
Impairment expense— — — — — 
Income (loss) before income taxes1,346 2,066 (2,042)12,392 13,762 
Income tax (expense) benefit(291)(496)487 (2,974)(3,274)
Net (income) loss attributable to noncontrolling interests(135)— 15 — (120)
Net income (loss)$920 1,570 (1,540)9,418 10,368 
(a)    The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. WRCM earned management and performance fees of $1.5 million for each of the three months ended March 31, 2025 and 2024. Fees earned by WRCM are included in "other income, net" in the table above.
(b)    Represents the operating results of the Company’s reinsurance treaties on property and casualty policies and the Company’s Nebraska chartered life and health company, which is in run-off mode and reinsures a decreasing term life insurance product distributed to FACTS. Increase in insurance premiums in the first quarter of 2025 compared with the same period in 2024 was primarily due to an increase in overall property volume and new business.
(c)    Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio. The Company recognized net losses from its real estate investments of $1.6 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively, which are included in "other income, net" in the table above. The net losses recognized relates primarily to the Company's proportionate share of certain real estate investments accounted for under the equity method.
(d)    Represents interest income earned on investment debt securities (primarily student loan and other asset-backed securities, including Nelnet-owned asset-backed securities which it has repurchased and are eliminated in consolidation), interest income on certain notes receivable, unrealized gains/losses on marketable equity securities, realized gains/losses on marketable equity securities and investment debt securities, and other costs to manage these investments. Also includes interest expense incurred on debt used to finance such investments. The decrease in interest income and interest expense in 2025 compared with 2024 was primarily due to a decrease in the average balance of investments and debt outstanding, respectively, and a decrease in interest rates. 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)OtherTotal
Three months ended March 31, 2025
Investment interest$— 5 — — — 2,307 2,312 
Interest expense— — (2)— — (631)(633)
Net interest income (expense)— 5 (2)— — 1,676 1,679 
Solar construction revenue— — 3,995 — — — 3,995 
Other income, net619 1,730 — 8,416 4,492 2,981 18,238 
Cost to provide solar construction services— — (7,828)— — — (7,828)
Salaries and benefits(18,720)(388)(1,644)— (207)(1,537)(22,496)
Depreciation and amortization(3,519)— (276)— (1)(37)(3,833)
Other expenses(13,184)(77)(421)— (24)(1,880)(15,586)
Intersegment expenses, net24,816 (65)(399)— (40)(257)24,055 
Impairment expense— — — — — — — 
(Loss) income before income taxes(9,988)1,205 (6,575)8,416 4,220 946 (1,776)
Income tax benefit (expense)2,397 (678)1,578 (2,020)(1,013)546 810 
Net loss attributable to noncontrolling interests— 1,623 — — — — 1,623 
Net (loss) income$(7,591)2,150 (4,997)6,396 3,207 1,492 657 
Three months ended March 31, 2024
Investment interest$— — 19 — — 3,796 3,815 
Interest expense— — (331)— — (345)(676)
Net interest income (expense)— — (312)— — 3,451 3,139 
Solar construction revenue— — 13,726 — — — 13,726 
Other income, net706 2,877 42 (8,236)(389)2,853 (2,147)
Cost to provide solar construction services— — (14,229)— — — (14,229)
Salaries and benefits(20,020)(683)(1,371)— (237)(1,210)(23,521)
Depreciation and amortization(8,368)— (250)— (6)(92)(8,716)
Other expenses(9,891)(171)(885)(356)(16)(2,083)(13,402)
Intersegment expenses, net27,528 291 (758)(1)(19)(196)26,845 
Impairment expense— — — — (37)— (37)
(Loss) income before income taxes(10,045)2,314 (4,037)(8,593)(704)2,723 (18,342)
Income tax benefit (expense)2,411 (1,041)794 2,062 169 (672)3,723 
Net loss attributable to noncontrolling interests— 2,027 728 — — — 2,755 
Net (loss) income$(7,634)3,300 (2,515)(6,531)(535)2,051 (11,864)
(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.
(b)    Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. The Company accounts for these investments under the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment. In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years). These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments made by third parties. Due to the recognition pattern
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(accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings. For additional information on the results of this operating segment, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
(c)    Nelnet Renewable Energy (NRE) is the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities. The Company entered this business from its acquisition of 80% of GRNE Solar in June 2022. Since the acquisition of GRNE Solar, it has incurred low and, in some cases, negative margins on certain legacy projects. The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024. Uncertain economic conditions have impacted the costs to complete existing construction contracts and new construction projects being initiated which may continue to negatively impact margins and revenue, respectively, in future periods.
In April 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and discontinued its residential solar operations. As a result, residential revenue will decline from recent historical amounts as existing customer contracts are completed. Residential solar construction revenue was $1.8 million for the three months ended March 31, 2024. The amount of residential construction revenue earned in 2025 was insignificant.
On June 30, 2024, the Company acquired the remaining 20% of GRNE Solar for $0.3 million.
(d)    Represents primarily the Company's share of loss on its voting membership interest and income on its preferred membership interests in ALLO. For additional information on the results of these investments, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests. The Company expects ALLO to redeem all of the Company's outstanding preferred membership interests, including the accrued preferred return on such membership interests through the closing date, and a portion of the Company's voting membership interest. The transaction is expected to close in late May 2025. As a result of this transaction, the Company expects to receive cash proceeds of approximately $410 million and recognize a pre-tax gain of approximately $175 million. For additional information on this transaction, see note 16 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
(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. During the first quarter of 2025, the Company recognized income, net of losses, of $2.1 million from equity method investees, $1.7 million related to the periodic adjustment of certain fund investments to their respective fair value, and $0.6 million on certain measurement alternative investments as a result of observable price changes.

52


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.
Sources of Liquidity
As of March 31, 2025, the Company's sources of liquidity included:
Cash and cash equivalents$220,517 
Less: Cash and cash equivalents held at Nelnet Bank (a)(44,887)
Net cash and cash equivalents175,630 
Available-for-sale (AFS) debt securities (investments) - at fair value1,158,062 
Less: AFS debt securities held at Nelnet Bank - at fair value (a)(652,967)
AFS private education and consumer loan debt securities - held as risk retention - at fair value (b)(216,980)
Restricted investments (c)(123,518)
Unencumbered AFS debt securities (investments) - at fair value164,597 
Unencumbered private, consumer, and other loans (Non-Nelnet Bank) - at par327,744 
Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d)97,419 
Unused capacity on unsecured line of credit (e)495,000 
Sources of liquidity as of March 31, 2025
$1,260,390 
(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 March 31, 2025, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use.
The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or investment interests therein); 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.
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Recent Development - Partial Redemption of ALLO Investment
The Company has both a voting and preferred membership interest investment in ALLO. In April 2025, the Company entered into an agreement pursuant to which ALLO will redeem certain of its membership interests. The Company expects ALLO to redeem all of the Company's outstanding preferred membership interests, including the accrued preferred return earned through the closing date, and a portion of the Company's voting membership interest. The transaction is expected to close in late May 2025. The Company expects to receive cash proceeds of approximately $410 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175 million. See note 16 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction.
Cash Flows
The Company has historically generated positive cash flow from operations. During the three months ended March 31, 2025 and 2024, the Company generated $91.2 million and $211.6 million, respectively, in cash from operating activities. The decrease in 2025 compared with 2024 was due to:
•Adjustments to net income for the non-cash change in gain on investments, loan discount and deferred lender fees accretion, and depreciation and amortization; and
•The impact of changes to accrued interest receivable, accounts receivable, and other assets during the three months ended March 31, 2025 compared with the same period in 2024.
These factors were partially offset by:
•An increase in net income;
•Adjustments to net income for the non-cash change in derivative market value adjustments, deferred income tax expense, and provision for loan losses; and
•The impact of changes to other liabilities during the three months ended March 31, 2025 compared with the same period in 2024.
The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, and the purchase of other investments (primarily solar investments). The primary items included in financing activities are the payments on bonds and notes payable, the change in deposits at Nelnet Bank used to fund loans and investment activity at Nelnet Bank, and the change in due to customers. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2025 was $136.4 million and $326.4 million, respectively. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2024 was $1.09 billion and $1.38 billion, respectively. Investing and financing activities are further addressed in the discussion that follows.
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 March 31, 2025
Carrying amount
Final maturity
Bonds and notes issued in asset-backed securitizations$7,753,104 8/26/30 - 9/25/69
FFELP and consumer loan warehouse facilities890,680 5/1/26 - 11/13/27
 $8,643,784  
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 sources of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations. In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees AGM earns from these transactions, AGM has created a portfolio that will generate earnings and significant cash flow over the life of these transactions.
As of March 31, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio to be approximately $1.02 billion as detailed below. The actual timing of cash flows released from the securitizations
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could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold.
The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of March 31, 2025, the majority of which are federally insured student loans. As of March 31, 2025, AGM had $8.0 billion of loans included in asset-backed securitizations, which represented 86.1% of its total loan portfolio. The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to March 31, 2025, and loans owned by Nelnet Bank.
Asset-backed Securitization Cash Flow Forecast
$1.02 billion
(dollars in millions)
abscfforecast2025q1.jpg
The forecasted future undiscounted cash flows of approximately $1.02 billion include approximately $0.74 billion (as of March 31, 2025) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.28 billion, or approximately $0.21 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2025 balance.
The 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 variable in establishing a life of loan estimate is 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
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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
$0.07 billion
$0.95 billion
4x
$0.19 billion
$0.83 billion
If the entire AGM student loan portfolio prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.74 billion (as of March 31, 2025); however, the Company would not receive the $0.28 billion ($0.21 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 March 31, 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 three months ended March 31, 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
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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 March 31, 2025, $597.2 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.
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 March 31, 2025, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.
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 March 31, 2025, the Company's ownership correlates to approximately $1.82 billion of loans included in these securitizations. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.
As of March 31, 2025, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $206.4 million. For a summary of this investment balance, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
The Company's partial ownership percentage in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. As of March 31, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $310.2 million. The vast majority of these cash flows are expected to be received over the next 5 years.
The difference between the total estimated future undiscounted cash flows from these residual interests ($310.2 million) and the investment carrying value ($206.4 million) of $103.8 million, or $78.9 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2025 balance.
The 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.
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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 $82 million 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 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 March 31, 2025, Nelnet Bank's leverage ratio of capital to total assets was 12.6%.
Liquidity Impact Related to Solar Tax Equity Investments
The Company makes solar tax equity investments in renewable energy solar partnerships that support the development and operations of solar projects. As of March 31, 2025, the Company has funded a total of $309.9 million in tax equity investments which remain outstanding for itself and $280.4 million on behalf of its syndication partners, for a funded total of $590.3 million. 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 March 31, 2025, the Company is committed to fund an additional $56.0 million directly in solar tax equity investments and $44.0 million will be funded by its syndication partners, for a total commitment of $100.0 million.
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-
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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 March 31, 2025, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives.
Unsecured Line of Credit
As discussed above, the Company has a $495.0 million unsecured line of credit with a maturity date of September 22, 2026. As of March 31, 2025, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use. Upon the maturity date of this facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary.
Stock Repurchases
In 2022, the Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2025. On March 20, 2025, the Board of Directors authorized a new stock repurchase program that will be effective when the now current program expires to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028. The five million shares authorized under the new program will include any remaining unpurchased shares from the prior program, which the new program will replace. As of March 31, 2025, 3,341,735 shares remained authorized for repurchase under the Company's stock repurchase program. Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity.
Shares repurchased by the Company during the three months ended March 31, 2025 are shown below. For additional information on stock repurchases during the first quarter of 2025, see "Stock Repurchases" under Part II, Item 2 of this report.
Total shares repurchasedPurchase price (in thousands)Average price of shares repurchased (per share)
Quarter ended March 31, 202538,491 $4,458 115.81 
Dividends
On March 14, 2025, the Company paid a first quarter 2025 cash dividend on the Company's Class A and Class B common stock of $0.28 per share. In addition, the Company's Board of Directors has declared a second quarter 2025 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.28 per share. The second quarter cash dividend will be paid on June 16, 2025 to shareholders of record at the close of business on June 2, 2025.
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
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the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the allowance for loan losses as a critical accounting estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Allowance for Loan Losses” in the Company’s 2024 Annual Report. For additional information regarding changes in the Company’s allowance for loan losses for the three months ended March 31, 2025 and 2024, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. There have been no material changes to the Company’s critical accounting policy and estimate since December 31, 2024.
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.
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(All dollars are in thousands, except share amounts, unless otherwise noted)
The Company’s consolidated balance sheets include assets and liabilities whose fair values are subject to market risks, primarily interest rate risk. The following sections address the interest rate risk associated with our relevant business activities.
Interest Rate Risk - AGM Operating Segment
AGM’s primary market risk exposure arises from fluctuations in its borrowing and lending rates, the spread between which could impact AGM due to shifts in market interest rates.
The following table sets forth AGM’s loan assets and debt instruments by rate characteristics:
 As of March 31, 2025As of December 31, 2024
 DollarsPercentDollarsPercent
Fixed-rate loan assets$903,844 9.8 %$814,843 9.1 %
Variable-rate loan assets8,356,162 90.2 8,141,025 90.9 
Total$9,260,006 100.0 %$8,955,868 100.0 %
Fixed-rate debt instruments$377,412 4.4 %$399,994 4.8 %
Variable-rate debt instruments8,268,770 95.6 7,958,357 95.2 
Total$8,646,182 100.0 %$8,358,351 100.0 %
FFELP loans originated prior to April 1, 2006 generally earn interest at the higher of the borrower rate, which is fixed over a period of time, or a floating rate based on the special allowance payment (SAP) formula set by the Department. The SAP rate is based on an applicable index plus a fixed spread that depends on loan type, origination date, and repayment status. The Company generally finances its FFELP student loan portfolio with variable rate debt. In low and/or declining interest rate environments, when the fixed borrower rate is higher than the SAP rate, the Company’s FFELP student loans earn at a fixed rate while the interest on the variable rate debt typically continues to reflect the low and/or declining interest rates. In these interest rate environments, the Company may earn additional spread income that it refers to as floor income.
Depending on the type of loan and when it was originated, the borrower rate is either fixed to term or is reset to an annual rate each July 1. As a result, for loans where the borrower rate is fixed to term, the Company may earn floor income for an extended period of time, which the Company refers to as fixed rate floor income, and for those loans where the borrower rate is reset annually on July 1, the Company may earn floor income to the next reset date, which the Company refers to as variable rate
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floor income. All FFELP loans first originated on or after April 1, 2006 effectively earn at the SAP rate, since lenders are required to rebate fixed rate floor income and variable rate floor income for those loans to the Department.
No variable-rate floor income was earned by the Company in 2025 or 2024.
The following table shows AGM’s federally insured student loan assets that were earning fixed rate floor income as of March 31, 2025.
Fixed interest rate rangeBorrower/lender weighted average yieldEstimated variable conversion rate (a)Loan balance
7.0 - 7.49%7.31%4.67%$21,068 
7.5 - 7.99%7.72%5.08%91,151 
8.0 - 8.99%8.18%5.54%224,564 
> 9.0%
9.06%6.42%88,905 
$425,688 
(a) The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of March 31, 2025, the weighted average estimated variable conversion rate was 5.58% and the short-term interest rate was 455 basis points.
Absent the use of derivative instruments, a rise in interest rates will reduce the amount of floor income received and has an impact on earnings due to interest margin compression caused by increasing financing costs, until such time as the federally insured loans earn interest at a variable rate in accordance with their SAP formulas. In higher interest rate environments, where the interest rate rises above the borrower rate and fixed rate loans effectively become variable rate loans, the impact of the rate fluctuations is reduced.
A summary of fixed rate floor income earned by the AGM operating segment follows.
Three months ended March 31,
20252024
Fixed rate floor income, gross$975 180 
Derivative settlements (a)429 1,190 
Fixed rate floor income, net$1,404 1,370 
(a)    Derivative settlements consist of settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.
For further details of the Company’s derivatives used to hedge fixed rate loans, see note 5 of the notes to consolidated financial statements included in Part I, Item 1 of this report.

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AGM is also exposed to interest rate risk in the form of repricing risk and basis risk because the interest rate characteristics of AGM’s assets do not match the interest rate characteristics of the funding for those assets. The following table presents AGM’s FFELP student loan assets and related funding for those assets arranged by underlying indices as of March 31, 2025.
IndexFrequency of variable resetsAssetsFunding of student loan assets
30-day average SOFR (a)Daily$8,150,392 — 
3-month Treasury billDaily261,089 — 
3-month H15 financial commercial paperDaily258,803 — 
30-day average SOFR / 1-month CME Term SOFRMonthly— 4,875,220 
90-day average SOFR / 3-month CME Term SOFR (a)Quarterly— 1,995,704 
Asset-backed commercial paper / SOFR (b)Varies— 821,803 
Auction-rate (c)Varies— 457,395 
Fixed rate—— 335,506 
Other (d)—812,704 997,360 
  $9,482,988 9,482,988 
(a)    The Company has certain basis swaps outstanding in which the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements (the "Basis Swaps"). The Company entered into these derivative instruments to better match the interest rate characteristics on its student loan assets and the debt funding such assets. The following table summarizes the Basis Swaps outstanding as of March 31, 2025.
MaturityNotional amount
2026$1,150,000 
2027250,000 
$1,400,000 
(b)    The interest rate on the Company's FFELP warehouse facilities is indexed to asset-backed commercial paper rates and daily SOFR.
(c)    As of March 31, 2025, the Company was sponsor for $457.4 million of outstanding asset-backed securities that were set and provide for interest rates to be periodically reset via a "dutch auction" (the “Auction Rate Securities”). Since the auction feature has essentially been inoperable for substantially all auction rate securities since 2008, the Auction Rate Securities generally pay interest to the holder at a maximum rate as defined by the indenture. While these rates will vary, they will generally be based on a spread to SOFR or Treasury Securities, or the Net Loan Rate as defined in the financing documents.
(d)    Assets include accrued interest receivable and restricted cash. Funding represents overcollateralization (equity) and other liabilities included in FFELP loan asset-backed securitizations and warehouse facilities.
The following table summarizes the effect on the Company’s consolidated earnings based upon a sensitivity analysis performed on AGM’s variable rate assets (including loans earning fixed rate floor income) and liabilities. The sensitivity analysis was performed assuming the funding index increases 10 basis points and 30 basis points while holding the asset index constant, if the funding index is different than the asset index.
 Asset and funding index mismatches
Increase of
10 basis points		Increase of
30 basis points		Increase of
10 basis points		Increase of
30 basis points
 DollarsPercentDollarsPercentDollarsPercentDollarsPercent
 Three months ended March 31, 2025Three months ended March 31, 2024
Effect on earnings: 
Increase (decrease) in pre-tax net income before impact of derivative settlements$(761)(0.7)%$(2,282)(2.1)%$(1,017)(1.0)%$(3,050)(3.2)%
Impact of derivative settlements345 0.3 1,036 1.0 783 0.8 2,349 2.5 
Increase (decrease) in net income before taxes$(416)(0.4)%$(1,246)(1.1)%$(234)(0.2)%$(701)(0.7)%
Increase (decrease) in basic and diluted earnings per share$(0.01)$(0.03)$ (0.00)$(0.01)

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Interest Rate Risk - Nelnet Bank
To manage Nelnet Bank's risk from fluctuations in market interest rates, the Company actively monitors interest rates and other interest sensitive components to minimize the impact that changes in interest rates have on the fair value of assets, net income, and cash flow. To achieve this objective, the Company manages and mitigates Nelnet Bank’s exposure to fluctuations in market interest rates through several techniques, including managing the maturity, repricing, and mix of fixed and variable rate assets and liabilities and the use of derivative instruments.
The following table presents Nelnet Bank's loan assets, asset-backed security investments, deposits (including intercompany deposits), and debt instruments by rate characteristics:
 As of March 31, 2025As of December 31, 2024
 DollarsPercentDollarsPercent
Fixed-rate loan assets$524,096 $505,539 
Fixed-rate investments71,094 90,303 
Total fixed-rate assets595,190 36.7 %595,842 42.8 %
Variable-rate loan assets237,537 139,058 
Variable-rate investments789,230 656,794 
Total variable-rate assets1,026,767 63.3 795,852 57.2 
Total assets$1,621,957 100.0 %$1,391,694 100.0 %
Fixed-rate deposits$462,864 31.5 %$449,706 35.8 %
Variable-rate deposits (a)919,108 804,916 
Variable-rate debt85,124 — 
Total variable-rate deposits and debt1,004,232 68.5 804,916 64.2 
Total deposits and debt instruments$1,467,096 100.0 %$1,254,622 100.0 %
(a)    Nelnet Bank uses derivative instruments to hedge exposure to variability in cash flows of variable rate deposits to minimize the exposure to volatility in cash flows from future changes in interest rates. The derivatives are not reflected in the above table. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for a summary of Nelnet Bank's derivatives outstanding as of March 31, 2025.
Interest Rate and Market Risk - Investments
The following table presents the rates earned on the Company’s available-for-sale debt securities (investments) and debt facilities used to fund a portion of such investments. The table below excludes securities (investments) held by Nelnet Bank.
Three months ended March 31,
20252024
Average balanceInterest income/ expenseAverage yields/ ratesAverage balanceInterest income/ expenseAverage yields/ rates
Investments:
Asset-backed securities available-for-sale (a) (b)$589,299 7,995 5.50 %$863,634 14,012 6.51 %
Debt funding asset-backed securities available-for-sale:
Participation agreement - variable rate (c)$100 1 4.06 %$91 1 4.41 %
Repurchase agreements - variable rate (d)— — — 137,914 2,417 7.03 
$100 1 4.06 $138,005 2,418 7.03 
(a)    The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. The table above includes these repurchased bonds.
(b)    The majority of the Company’s asset-backed securities earn floating rates with expected returns of approximately SOFR + 100 to 350 basis points to maturity. As of March 31, 2025, $209.2 million (par value) of the Company’s asset-backed securities earn a weighted average fixed rate of 3.48%.
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(c)    Interest incurred by the Company on amounts borrowed under the participation agreement is at a variable rate of SOFR + 62.5 basis points.
(d)    Interest incurred by the Company on amounts that were borrowed under repurchase agreements were at a variable rate of SOFR + 100 to 140 basis points.
The Company’s portfolio of asset-backed investment securities has limited liquidity, and the Company could incur a significant loss if the investments were sold prior to maturity at an amount less than the original purchase price. As of March 31, 2025, the gross unrealized loss on the Company’s available-for-sale debt securities (including available-for-sale securities held at Nelnet Bank) was $23.2 million, and the aggregate fair value of available-for-sale debt securities with unrealized losses was $399.4 million. The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Consolidated Sensitivity Analysis
The following table summarizes the effect on the Company’s consolidated earnings, based upon a sensitivity analysis performed on the Company’s significant interest-earning assets and interest-bearing liabilities assuming hypothetical increases and decreases in interest rates of 100 basis points and 300 basis points while funding spreads remain constant.
 Interest rates
Change from increase of
100 basis points		Change from increase of
300 basis points		Change from decrease of
100 basis points		Change from decrease of
300 basis points
 DollarsPercentDollarsPercentDollarsPercentDollarsPercent
 Three months ended March 31, 2025
Effect on earnings:
AGM Operating Segment (a)$402 $5,267 $355 $3,252 
Nelnet Bank Operating Segment (b)728 2,184 (728)(2,184)
NFS Other Operating Segments (c)916 2,747 (916)(2,747)
ETSP Operating Segment (d)1,567 4,702 (1,567)(4,702)
Corporate and Other Activities (d)1,392 4,177 (1,392)(4,177)
Increase (decrease) in net income before taxes$5,005 4.7 %19,077 18.0 %(4,248)(4.0)%(10,558)(9.9)%
Increase (decrease) in basic and diluted earnings per share$0.10 $0.40 $(0.09)$(0.22)
(a)Impact associated with variable rate loans and variable rate bonds and notes payable, including the impact of derivative settlements.
(b)Impact associated with variable rate loans and debt securities (investments) and variable rate deposits and bonds and notes payable, including the impact of derivative settlements.
(c)Impact associated with variable rate debt securities (investments).
(d)Impact associated with interest earning operating and restricted cash accounts.
ITEM 4.  CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company's principal executive and principal financial officers, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of March 31, 2025. Based on this evaluation, the Company’s principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material changes from the information referred to in the Legal Proceedings section of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 under Part I, Item 3 of such Form 10-K.
ITEM 1A.  RISK FACTORS
There have been no material changes from the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 in response to Part I, Item 1A of such Form 10-K.
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Stock Repurchases
The following table summarizes the repurchases of Class A common stock during the first quarter of 2025 by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934.
PeriodTotal number of shares purchased (a)Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programs (b)Maximum number of shares that may yet be purchased under the plans or programs (b)
January 1 - January 31, 2025258 $108.70 — 3,341,735 
February 1 - February 28, 2025— — — 3,341,735 
March 1 - March 31, 202538,233 115.86 — 3,341,735 
Total38,491 $115.81 — 
(a)    The total number of shares includes shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the Company’s shares on the date of vesting.
(b)    On May 9, 2022, 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, 2025. On March 20, 2025, the Board of Directors authorized a new stock repurchase program that will be effective when the current plan expires to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028. The five million shares authorized under the new program will include remaining unpurchased shares from the prior program, which the new program will replace.
Working capital and dividend restrictions/limitations
The Company's $495.0 million unsecured line of credit, which is available through September 22, 2026, imposes restrictions on the payment of dividends through covenants requiring a minimum consolidated net worth and a minimum level of unencumbered cash, cash equivalent investments, and available borrowing capacity under the line of credit. In addition, trust indentures and other financing agreements governing debt issued by the Company's lending subsidiaries generally have limitations on the amounts of funds that can be transferred to the Company by its subsidiaries through cash dividends at certain times. Further, Nelnet Bank and Nelnet Insurance Service's consolidated captive insurance companies are subject to laws and regulations that restrict the ability to pay dividends to the Company, and authorize regulatory authorities to prohibit or limit the payment of dividends by these subsidiaries to the Company. These provisions do not currently materially limit the Company's ability to pay dividends, and, based on the Company's current financial condition and recent results of operations, the Company does not currently anticipate that these provisions will materially limit the future payment of dividends.
ITEM 5.  OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the first quarter of 2025, none of the Company's officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans, or any non-Rule 10b5-1 trading arrangement.
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ITEM 6.  EXHIBITS
10.1
31.1*
31.2*
32**
101.INS*Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Filed herewith
**Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 NELNET, INC. 
    
Date:May 8, 2025By:/s/ JEFFREY R. NOORDHOEK 
 Name:Jeffrey R. Noordhoek 
 Title:
Chief Executive Officer
Principal Executive Officer
 
    
Date:May 8, 2025By:/s/ JAMES D. KRUGER 
Name:James D. Kruger 
 Title: 
Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer
 


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What is the market capitalization of a company?

The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company.
In most cases it can be easily calculated by multiplying the share price with the amount of outstanding shares.

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