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, ~~2023~~2024


☐			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, 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,	Nebraska	68508
(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 class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 per Share	NNI	New 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, ~~2023,~~2024, there were ~~26,620,622~~25,703,894 and ~~10,668,460~~10,663,088 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding ~~a total of~~ 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).

NELNET, INC.

FORM 10-Q

INDEX

March 31, ~~2023~~2024


PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	2
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3130
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
	Item 4.	Controls and Procedures	66

PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	66
	Item 1A.	Risk Factors	66
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
	Item 5.	Other Information	67
	Item 6.	Exhibits	67

Signatures			68

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NELNET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

(unaudited)

As of

March 31, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Assets:

Loans and accrued interest receivable (net of allowance for loan losses of $134,704 and

$131,827, respectively)

14,561,108

15,243,889

Loans and accrued interest receivable (net of allowance for loan losses of $106,008 and

$104,643, respectively)

Cash and cash equivalents:

Cash and cash equivalents - not held at a related party

26,539

24,584

Cash and cash equivalents - held at a related party

161,035

93,562

Total cash and cash equivalents

187,574

118,146

Investments and notes receivable

1,987,570

2,111,917

Investments and notes receivable (including investments at fair value of $1,037,637 and $988,841, respectively)

Restricted cash

576,267

945,159

Restricted cash - due to customers

134,202

294,311

Accounts receivable (net of allowance for doubtful accounts of $3,841 and $3,079, respectively)

151,172

194,851

Restricted investments

Accounts receivable (net of allowance for doubtful accounts of $4,248 and $4,304, respectively)

Goodwill

176,902

Intangible assets, net

60,788

63,501

Property and equipment, net

132,628

122,526

Other assets

114,398

102,842

Total assets

18,082,609

19,374,044

Liabilities:

Bonds and notes payable

13,438,416

14,637,195

Accrued interest payable

34,374

36,049

Bank deposits

675,767

691,322

Other liabilities

430,099

461,259

Due to customers

280,624

348,317

Total liabilities

14,859,280

16,174,142

Total liabilities

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 26,623,662

shares and 26,461,651 shares, respectively

266

265

Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding

10,668,460 shares

107

Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 26,055,314

shares and 26,400,630 shares, respectively

Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 26,055,314

shares and 26,400,630 shares, respectively

Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 26,055,314

shares and 26,400,630 shares, respectively

Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding

10,663,088 shares

Additional paid-in capital

4,639

1,109

Retained earnings

3,251,677

3,234,844

Accumulated other comprehensive loss, net

(27,006)

(37,366)

Total Nelnet, Inc. shareholders' equity

3,229,683

3,198,959

Noncontrolling interests

(6,354)

943

Total equity

3,223,329

3,199,902

Total liabilities and equity

18,082,609

19,374,044

Supplemental information - assets and liabilities of consolidated education and other lending
variable interest entities:

Loans and accrued interest receivable

13,911,681

14,585,491

Restricted cash

540,675

867,961

Bonds and notes payable

(13,222,429)

(14,233,586)

Bonds and notes payable

Accrued interest payable and other liabilities

(140,221)

(145,309)

Net assets of consolidated education and other lending variable interest entities

1,089,706

1,074,557

Net assets of consolidated education and other lending variable interest entities

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share data)

(unaudited)

Three months ended

March 31,

2023

2022

Interest income:

Loan interest

225,243

111,377

Loan interest

Investment interest

40,725

13,819

Total interest income

265,968

125,196

Total interest income

Interest expense on bonds and notes payable and bank deposits

199,449

48,079

Net interest income

66,519

77,117

Less provision (negative provision) for loan losses

34,275

(435)

Net interest income

Less provision for loan losses

Net interest income after provision for loan losses

32,244

77,552

Other income (expense):

Loan servicing and systems revenue

139,227

136,368

Education technology, services, and payment processing revenue

133,603

112,286

Loan servicing and systems revenue

Education technology services and payments revenue

Solar construction revenue

8,651

—

Other, net

(14,071)

9,877

Gain on sale of loans, net

11,812

2,989

Other, net

(Loss) gain on sale of loans, net

Derivative market value adjustments and derivative settlements, net

(14,074)

142,925

Total other income (expense)

265,148

404,445

Derivative market value adjustments and derivative settlements, net

Total other income (expense), net

Cost of services:

Cost to provide education technology, services, and payment processing services

47,704

35,545

Cost of services:

Cost to provide education technology services and payments

Cost to provide solar construction services

8,299

—

Total cost of services

56,003

35,545

Total cost of services

Operating expenses:

Salaries and benefits

152,710

149,414

Salaries and benefits

Depreciation and amortization

16,627

16,956

Other expenses

40,785

39,499

Other expenses

Total operating expenses

210,122

205,869

Income before income taxes

31,267

240,583

Income before income taxes

Income tax expense

8,250

55,697

Net income

23,017

184,886

Net income

Net loss attributable to noncontrolling interests

3,470

1,761

Net income attributable to Nelnet, Inc.

26,487

186,647

Net income attributable to Nelnet, Inc.

Earnings per common share:

Net income attributable to Nelnet, Inc. shareholders - basic and diluted

0.71

4.91

Net income attributable to Nelnet, Inc. shareholders - basic and diluted

Weighted average common shares outstanding - basic and diluted

37,344,604

38,041,834

Weighted average common shares outstanding - basic and diluted

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(unaudited)

Three months ended March 31,

2023

2022

Three months ended March 31,

2024

Net income

23,017

184,886

Other comprehensive income (loss):

Net income

Other comprehensive income:

Net changes related to foreign currency translation adjustments

(3)

Net changes related to available-for-sale debt securities:

Unrealized holding gains (losses) arising during period, net

8,651

(16,698)

Reclassification of losses (gains) recognized in net income, net

4,982

(2,793)

Net changes related to available-for-sale debt securities:

Unrealized holding gains arising during period, net of losses

Reclassification of (gains) losses recognized in net income, net

Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity

Income tax effect

(3,272)

10,361

4,678

(14,813)

Net changes related to equity method investee's other comprehensive income:

Gain on cash flow hedges

—

Net changes related to equity method investee's other comprehensive income:

(Loss) gain on cash flow hedge

Income tax effect

—

Other comprehensive income (loss)

10,360

(14,804)

Income tax effect

Other comprehensive income

Comprehensive income

33,377

170,082

Comprehensive loss attributable to noncontrolling interests

3,470

1,761

Comprehensive loss attributable to noncontrolling interests

Comprehensive income attributable to Nelnet, Inc.

36,847

171,843

Comprehensive income attributable to Nelnet, Inc.

See accompanying notes to consolidated financial statements.

																	NELNET, INC. AND SUBSIDIARIES										CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY				(Dollars in thousands, except share data)	(unaudited)
		Nelnet, Inc. Shareholders
		Preferred stock shares	Common stock shares		Preferred stock				Class A common stock	Class B common stock		Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Noncontrolling interests	Total equity
			Class A	Class B
Balance as of December 31, 2021		—	27,239,654	10,676,642			$	—			272		107	1,000	2,940,523	9,304			1,632		2,952,838
Issuance of noncontrolling interests		—	—	—	—				—	—		—	—	—	2,004	2,004
Net income (loss)		—	—	—	—				—	—		—	186,647	—	(1,761)	184,886
Other comprehensive loss		—	—	—	—				—	—		—	—	(14,804)	—	(14,804)
Distribution to noncontrolling interests		—	—	—	—				—	—		—	—	—	(5,125)	(5,125)
Cash dividends on Class A and Class B common stock - $0.24 per share		—	—	—	—				—	—		—	(9,063)	—	—	(9,063)
Issuance of common stock, net of forfeitures		—	289,919	—	—				3	—		4,382	—	—	—	4,385
Compensation expense for stock based awards		—	—	—	—				—	—		2,841	—	—	—	2,841
Repurchase of common stock		—	(380,053)	—	—				(3)	—		(7,015)	(25,881)	—	—	(32,899)

Conversion of common stock		—	1,750	(1,750)	—				—	—		—	—	—	—	—
																		Preferred stock shares		Common stock shares		Preferred stock	Class A common stock	Class B common stock	Additional paid-in capital	Retained earnings		Accumulated other comprehensive loss	Noncontrolling interests	Total equity

Balance as of March 31, 2022		—	27,151,270	10,674,892	$	—			272	107		1,208	3,092,226	(5,500)	(3,250)	3,085,063

Balance as of December 31, 2022
Balance as of December 31, 2022
Balance as of December 31, 2022	Balance as of December 31, 2022	—	26,461,651	10,668,460	$	—			265	107		1,109	3,234,844	(37,366)	943	3,199,902
Issuance of noncontrolling interests	Issuance of noncontrolling interests	—	—	—	—				—	—		—	—	—	1,201	1,201
Net income (loss)	Net income (loss)	—	—	—	—				—	—		—	26,487	—	(3,470)	23,017
Other comprehensive income	Other comprehensive income	—	—	—	—				—	—		—	—	10,360	—	10,360
Distribution to noncontrolling interests	Distribution to noncontrolling interests	—	—	—	—				—	—		—	—	—	(5,028)	(5,028)
Cash dividends on Class A and Class B common stock - $0.26 per share	Cash dividends on Class A and Class B common stock - $0.26 per share	—	—	—	—				—	—		—	(9,654)	—	—	(9,654)
Issuance of common stock, net of forfeitures	Issuance of common stock, net of forfeitures	—	198,524	—	—				1	—		3,063	—	—	—	3,064
Compensation expense for stock based awards	Compensation expense for stock based awards	—	—	—	—				—	—		3,769	—	—	—	3,769
Repurchase of common stock	Repurchase of common stock	—	(36,513)	—	—				—	—		(3,302)	—	—	—	(3,302)

Balance as of March 31, 2023	Balance as of March 31, 2023	—	26,623,662	10,668,460	$	—			266	107		4,639	3,251,677	(27,006)	(6,354)	3,223,329

Balance as of March 31, 2023

Balance as of March 31, 2023

Balance as of December 31, 2023
Balance as of December 31, 2023
Balance as of December 31, 2023
Issuance of noncontrolling interests
Net income (loss)
Other comprehensive income
Distribution to noncontrolling interests
Cash dividends on Class A and Class B common stock - $0.28 per share
Issuance of common stock, net of forfeitures
Compensation expense for stock based awards
Repurchase of common stock

Balance as of March 31, 2024

Balance as of March 31, 2024

Balance as of March 31, 2024

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

Three months ended

March 31,

2023

2022

2024

2023

Net income attributable to Nelnet, Inc.

26,487

186,647

Net loss attributable to noncontrolling interests

(3,470)

(1,761)

Net income

23,017

184,886

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs

34,211

36,335

Loan discount accretion

(7,676)

(9,927)

Provision (negative provision) for loan losses

34,275

(435)

Provision for loan losses

Derivative market value adjustments

37,411

(145,734)

Proceeds from termination of derivative instruments

164,079

—

Proceeds from termination of derivative instruments

(Payments to) proceeds from clearinghouse - initial and variation margin, net

(210,284)

149,649

Proceeds from (payments to) clearinghouse - initial and variation margin, net

Gain on sale of loans, net

(11,812)

(2,989)

Loss on investments, net

24,344

2,801

Loss (gain) on sale of loans, net

Loss on investments, net of gains

Proceeds from sale of equity securities, net

572

Deferred income tax (benefit) expense

(13,750)

39,443

Deferred income tax benefit

Non-cash compensation expense

3,838

2,920

Decrease in loan and investment accrued interest receivable

16,630

10,694

Decrease in loan and investment accrued interest receivable

Decrease in accounts receivable

43,675

18,442

Increase in other assets, net

(9,760)

(2,073)

Decrease (increase) in other assets, net

Decrease in the carrying amount of ROU asset, net

1,251

1,439

(Decrease) increase in accrued interest payable

(1,675)

2,650

Decrease in accrued interest payable

Decrease in other liabilities

(3,729)

(11,824)

Decrease in the carrying amount of lease liability

(1,275)

(1,500)

Other

Net cash provided by operating activities

122,845

275,349

Cash flows from investing activities:

Purchases and originations of loans

(289,177)

(161,334)

Purchases of loans from a related party

—

(1,049)

Net proceeds from loan repayments, claims, and capitalized interest

684,962

848,188

Proceeds from sale of loans

157,444

15,170

Purchases of available-for-sale securities

(242,370)

(139,195)

Purchases of restricted available-for-sale securities

Proceeds from sales of available-for-sale securities

492,173

113,980

Proceeds from sales of restricted available-for-sale securities

Proceeds from beneficial interest in loan securitizations

4,725

7,271

Purchases of other investments and issuance of notes receivable

(70,509)

(73,944)

Proceeds from other investments

11,114

9,776

Proceeds from other investments and repayments of notes receivable

Redemption of held-to-maturity debt securities

Purchases of property and equipment

(24,430)

(15,794)

Net cash provided by investing activities

723,932

603,069

Net cash provided by investing activities


NELNET, INC. AND SUBSIDIARIES	NELNET, INC. AND SUBSIDIARIES				NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)	CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)				CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
		Three months ended
		March 31,
		2023		2022
	Three months ended						Three months ended
	March 31,						March 31,
	2024					2024		2023
Cash flows from financing activities:	Cash flows from financing activities:				Cash flows from financing activities:
Payments on bonds and notes payable	Payments on bonds and notes payable	$	(1,415,424)	(918,270)
Proceeds from issuance of bonds and notes payable	Proceeds from issuance of bonds and notes payable	204,884		13,512
Payments of debt issuance costs	Payments of debt issuance costs	(169)		(312)

(Decrease) increase in bank deposits, net		(15,555)		139,732
Increase (decrease) in bank deposits, net

Increase (decrease) in bank deposits, net

Increase (decrease) in bank deposits, net
Decrease in due to customers	Decrease in due to customers	(67,642)		(89,884)
Dividends paid	Dividends paid	(9,654)		(9,063)
Repurchases of common stock	Repurchases of common stock	(3,302)		(32,899)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	395		435

Issuance of noncontrolling interests	Issuance of noncontrolling interests	1,201		2,004
Issuance of noncontrolling interests
Issuance of noncontrolling interests
Distribution to noncontrolling interests	Distribution to noncontrolling interests	(993)		(365)
Net cash used in financing activities	Net cash used in financing activities	(1,306,259)		(895,110)
Effect of exchange rate changes on cash		(91)		169
Effect of exchange rate changes on cash and restricted cash
Net decrease in cash, cash equivalents, and restricted cash	Net decrease in cash, cash equivalents, and restricted cash	(459,573)		(16,523)
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	1,357,616		1,194,189
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	898,043	1,177,666


Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:
Cash disbursements made for interest	Cash disbursements made for interest	$	189,795	33,895
Cash disbursements made for interest
Cash disbursements made for interest
Cash disbursements made for income taxes, net of refunds and credits received (a)	Cash disbursements made for income taxes, net of refunds and credits received (a)	$	961	466
Cash disbursements made for operating leases	Cash disbursements made for operating leases	$	1,705	1,887
Noncash operating, investing, and financing activity:
Non-cash operating, investing, and financing activity:

ROU assets obtained in exchange for lease obligations

ROU assets obtained in exchange for lease obligations

ROU assets obtained in exchange for lease obligations	ROU assets obtained in exchange for lease obligations	$	15,545	746
Receipt of beneficial interest in consumer loan securitizations as consideration from sale of loans	Receipt of beneficial interest in consumer loan securitizations as consideration from sale of loans	$	34,540	3,660
Receipt of asset-backed investment securities as consideration from sale of loans	Receipt of asset-backed investment securities as consideration from sale of loans	$	58,182	—

Distribution to noncontrolling interests	Distribution to noncontrolling interests	$	4,035	4,760

Distribution to noncontrolling interests
Distribution to noncontrolling interests
Issuance of noncontrolling interests

(a) The Company utilized ~~$5.7~~$8.6 million and ~~$1.1~~$5.7 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively.

The following table ~~provides~~presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.


		As of		As of	As of	As of
		March 31, 2023		December 31, 2022	March 31, 2022	December 31, 2021
	As of								As of
	March 31, 2024						March 31, 2024	December 31, 2023	March 31, 2023	December 31, 2022
Total cash and cash equivalents	Total cash and cash equivalents	$	187,574	118,146	162,785	125,563
Restricted cash	Restricted cash	576,267		945,159	757,954	741,981
Restricted cash - due to customers	Restricted cash - due to customers	134,202		294,311	256,927	326,645
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	898,043	1,357,616	1,177,666	1,194,189

See accompanying notes to consolidated financial statements.

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”) as of March 31, ~~2023~~2024 and for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, ~~2022~~2023 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, ~~2023~~2024 are not necessarily indicative of the results for the year ending December 31, ~~2023.~~2024. 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, ~~2022~~2023 (the ~~"2022~~"2023 Annual Report").

2. Loans and Accrued Interest Receivable and Allowance for Loan Losses

Loans and accrued interest receivable consisted of the following:

As of

March 31, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Non-Nelnet Bank:

Federally insured loans:

Stafford and other

3,229,778

3,389,178

Consolidation

9,701,781

10,177,295

Total

12,931,559

13,566,473

Private education loans

241,515

252,383

Consumer and other loans

309,546

350,915

Non-Nelnet Bank loans

13,482,620

14,169,771

Nelnet Bank:

Federally insured loans

63,399

65,913

Private education loans

355,705

353,882

Consumer and other loans

19,903

—

Nelnet Bank loans

439,007

419,795

Accrued interest receivable

800,400

816,864

Accrued interest receivable

Loan discount, net of unamortized loan premiums and deferred origination costs

(26,215)

(30,714)

Allowance for loan losses:

Non-Nelnet Bank:

Federally insured loans

(79,331)

(83,593)

Private education loans

(15,175)

(15,411)

Consumer and other loans

(35,317)

(30,263)

Non-Nelnet Bank allowance for loan losses

(129,823)

(129,267)

Nelnet Bank:

Federally insured loans

(160)

(170)

Private education loans

(2,894)

(2,390)

Consumer and other loans

(1,827)

—

Nelnet Bank allowance for loan losses

(4,881)

(2,560)

14,561,108

15,243,889

The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.


		As of		As of
		March 31, 2023		December 31, 2022
	As of											As of
	March 31, 2024								March 31, 2024				December 31, 2023
Non-Nelnet Bank:	Non-Nelnet Bank:
Federally insured loans (a)
Federally insured loans (a)
Federally insured loans (a)	Federally insured loans (a)	0.61	%	0.62	%	0.59	%			0.59	%
Private education loans	Private education loans	6.28	%	6.11	%	Private education loans	5.63	%			5.68	%
Consumer and other loans	Consumer and other loans	11.41	%	8.62	%	Consumer and other loans	12.08	%			13.66	%
Nelnet Bank:	Nelnet Bank:
Federally insured loans (a)		0.25	%	0.26	%

Private education loans

Private education loans

Private education loans	Private education loans	0.81	%	0.68	%	1.00	%			0.93	%
Consumer and other loans	Consumer and other loans	9.18	%	—		Consumer and other loans	5.99	%			7.40	%

(a) As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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 ~~22.3%~~21.7% and ~~22.4%, respectively, and for Nelnet Bank was 10.1% and 10.3%~~21.8%, respectively.

Loan Sales

The Company has sold portfolios of loans to unrelated third parties who securitized such loans. As partial consideration received for the loans sold, the Company received residual interest in the loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheets. The following table summarizes the loans sold and gains/losses recognized by the Company during the three months ended March 31, ~~2023~~2024 and ~~2022.~~2023.


		Loans sold (par value)		Gain (loss)	Loan type	Residual interest received in securitization
		Three months ended March 31, 2023
	Loans sold (par value)												Loans sold (par value)			Gain (loss)			Loan type				Residual interest received in securitization
	Three months ended March 31, 2024																			Three months ended March 31, 2024
March 27
March 28
March 28
March 28
		$
		$
		$
		Three months ended March 31, 2023
		Three months ended March 31, 2023
		Three months ended March 31, 2023
January 31	January 31	$	97,350	(1,441)	Home equity	64.8	%	(a)	January 31	$	97,350	(1,441)			(1,441)	Home equity		Home equity				64.8	%	(a)
January 31	January 31	42,275		4,350	Consumer	13.3
March 2	March 2	122,132		8,966	Consumer	24.6		(a)
March 2
March 2										122,132				8,966			Consumer				24.6	(a)
March 22	March 22	145		(63)	Home equity	—
		$	261,902	11,812
		Three months ended March 31, 2022
January 26		$	18,125	2,989	Consumer	6.6	%

		$

		$

		$

(a) In addition to receiving a residual interest in the securitizations, the Company also received $14.5 million and $43.7 million of asset-backed investment securities as part of the January 31 and March 2, 2023 transactions, respectively, that are included in "investments and notes receivable" on the Company's consolidated balance sheet.

Activity in the Allowance for Loan Losses

The following table presents the activity in the allowance for loan losses by portfolio segment.


		Balance at beginning of period
		Balance at beginning of period
		Balance at beginning of period								Provision (negative provision) for loan losses	Charge-offs	Recoveries		Loan sales	Balance at end of period
	Three months ended March 31, 2024												Three months ended March 31, 2024
Non-Nelnet Bank:
Federally insured loans
Federally insured loans
Federally insured loans
Private education loans
Consumer and other loans
Nelnet Bank:
		Balance at beginning of period		Provision (negative provision) for loan losses	Charge-offs	Recoveries	Initial allowance on loans purchased with credit deterioration	Loan sales	Balance at end of period
Private education loans
		Three months ended March 31, 2023
Private education loans

Private education loans
Consumer and other loans
	$

		Three months ended March 31, 2023
		Three months ended March 31, 2023
		Three months ended March 31, 2023
Non-Nelnet Bank:	Non-Nelnet Bank:
Federally insured loans
Federally insured loans
Federally insured loans	Federally insured loans	$	83,593	2,411	(6,679)	—	6	—	79,331
Private education loans	Private education loans	15,411		240	(640)	164	—	—	15,175
Consumer and other loans	Consumer and other loans	30,263		29,207	(2,267)	220	—	(22,106)	35,317
Nelnet Bank:	Nelnet Bank:
Federally insured loans	Federally insured loans	170		(9)	(1)	—	—	—	160
Private education loans		2,390		614	(110)	—	—	—	2,894
Consumer and other loans		—		1,827	—	—	—	—	1,827
		$	131,827	34,290	(9,697)	384	6	(22,106)	134,704
		Three months ended March 31, 2022
Non-Nelnet Bank:
Federally insured loans
Federally insured loans	Federally insured loans	$	103,381	(2,748)	(4,761)	—	123	—	95,995
Private education loans	Private education loans	16,143		(400)	(1,299)	176	—	2	14,622
Consumer and other loans	Consumer and other loans	6,481		2,284	(937)	166	—	(2,284)	5,710
Nelnet Bank:
Federally insured loans		268		(21)	—	—	—	—	247
Private education loans		840		426	(13)	—	—	(2)	1,251
	$

		$	127,113	(459)	(7,010)	342	123	(2,284)	117,825

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,
		2023		2022
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
		2024
		2024
		2024
Non-Nelnet Bank:
Non-Nelnet Bank:
Non-Nelnet Bank:	Non-Nelnet Bank:
Federally insured loans	Federally insured loans	0.20	%	0.11	%
Federally insured loans
Federally insured loans
Private education loans
Private education loans
Private education loans	Private education loans	0.78	%	1.58	%
Consumer and other loans	Consumer and other loans	2.59	%	7.40	%
Consumer and other loans
Consumer and other loans
Nelnet Bank:
Nelnet Bank:
Nelnet Bank:	Nelnet Bank:
Federally insured loans	Federally insured loans	0.01	%	0.00	%
Federally insured loans
Federally insured loans
Private education loans
Private education loans
Private education loans	Private education loans	0.13	%	0.02	%
Consumer and other loans	Consumer and other loans	—		—
Consumer and other loans
Consumer and other loans

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.

The Company recorded a provision for loan losses for the three months ended March 31, 2023 due to (i) management's estimate of declining economic conditions as of March 31, 2023 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of December 31, 2022; and (ii) the establishment of an initial allowance for loans originated and acquired during the period. These amounts were partially offset by the amortization of the federally insured loan portfolio.

The Company recorded a negative provision for loan losses for its federally insured loan portfolio for the three months ended March 31, 2022 due to the amortization of the portfolio and an increase in expected prepayments as a result of an initiative offered by the Department of Education (the “Department”) for Federal Family Education Loan Program (the "FFEL Program" or FFELP) borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department by October 31, 2022 to qualify for loan forgiveness under the Public Service Loan Forgiveness program. The Company recorded a provision for loan losses on its consumer loan portfolio during the three months ended March 31, 2022 as a result of loans acquired during the period.

Unfunded Loan Commitments

As of March 31, 2024 and December 31, 2023, Nelnet Bank ~~has~~had a liability of approximately ~~$71,000~~$57,000 and $158,000, respectively, related to ~~$2.5~~$9.1 million and $12.3 million, respectively, of unfunded private education, consumer, and other loan commitments. The liability for unfunded loan commitments is included in "other liabilities" on the consolidated balance sheets. During the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, Nelnet Bank recognized negative provision for loan losses of approximately ~~$15,000~~$101,000 and ~~provision for loan losses of approximately $24,000,~~$15,000, respectively, related to unfunded loan commitments.

~~Loan Modifications to Borrowers Experiencing Financial Difficulty~~

~~On January 1, 2023, the Company adopted ASU No. 2022-02,~~ ~~Financial Instruments – Credit Losses: Troubled Debt Restructurings and Vintage Disclosures,~~ ~~which~~eliminates the troubled debt restructurings recognition and measurement guidance and instead requires an entity to evaluate whether the modification represents a new loan or a continuation of an existing loan. The guidance also enhances the disclosure requirements for certain modifications of receivables made to borrowers experiencing financial difficulty and vintage disclosures reflecting gross charge-offs by year of origination.

Under the Higher Education Act, FFELP loan borrowers may be granted a deferment or forbearance for a period of time based on need. In addition, eligible borrowers may qualify for income-driven repayment plans offered by the Department. Because FFELP loan modifications are driven by the Higher Education Act, the Company does not consider these events as part of its loan modification programs. Administrative forbearances (e.g. bankruptcy, military service, death and disability, and disaster forbearance) are required by law and therefore are also not considered as part of the Company's loan modification programs. The Company does offer payment delays in the form of deferments or forbearances on certain private education and consumer loan programs for short-term periods. The Company generally considers payment delays to be insignificant when the delay is 3 months or less. The amortized cost of the Company’s private education and consumer loans in which the borrower is experiencing financial difficulty and the financial effect of such loan modifications is not material.

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. The following table presents the Company’s loan status and delinquency amounts.


		As of March 31, 2023						As of December 31, 2022						As of March 31, 2022
	As of March 31, 2024																										As of March 31, 2024													As of December 31, 2023										As of March 31, 2023
Federally insured loans - Non-Nelnet Bank:	Federally insured loans - Non-Nelnet Bank:
Loans in-school/grace/deferment	Loans in-school/grace/deferment	$	641,914	5.0	%			$	637,919	4.7	%			$	839,566	5.2	%
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in forbearance
Loans in forbearance
Loans in forbearance	Loans in forbearance	984,738		7.6				1,103,181		8.1				1,160,048		7.1
Loans in repayment status:	Loans in repayment status:
Loans in repayment status:
Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	9,859,751				87.2	%	10,173,859				86.0	%	12,352,543				86.4	%	7,691,650			84.4										84.4	%				8,416,624				82.6								82.6		%			9,859,751			87.2				87.2	%
Loans delinquent 31-60 days	Loans delinquent 31-60 days	346,665				3.1		415,305				3.5		462,750				3.2
Loans delinquent 61-90 days	Loans delinquent 61-90 days	254,353				2.2		253,565				2.2		282,810				2.0
Loans delinquent 91-120 days	Loans delinquent 91-120 days	178,078				1.6		180,029				1.5		202,371				1.4
Loans delinquent 121-270 days	Loans delinquent 121-270 days	440,695				3.9		534,410				4.5		712,753				5.0
Loans delinquent 271 days or greater	Loans delinquent 271 days or greater	225,365				2.0		268,205				2.3		282,536				2.0
Total loans in repayment	Total loans in repayment	11,304,907		87.4		100.0	%	11,825,373		87.2		100.0	%	14,295,763		87.7		100.0	%	Total loans in repayment	9,115,509	87.8			87.8	100.0			100.0		%					10,184,315		87.1			87.1	100.0			100.0	%			11,304,907				87.4		87.4	100.0		100.0	%
Total federally insured loans	Total federally insured loans	12,931,559		100.0	%			13,566,473		100.0	%			16,295,377		100.0	%
Accrued interest receivable	Accrued interest receivable	791,476						808,150						770,853
Accrued interest receivable
Accrued interest receivable
Loan discount, net of unamortized premiums and deferred origination costs
Loan discount, net of unamortized premiums and deferred origination costs
Loan discount, net of unamortized premiums and deferred origination costs	Loan discount, net of unamortized premiums and deferred origination costs	(32,626)						(35,468)						(27,317)
Allowance for loan losses	Allowance for loan losses	(79,331)						(83,593)						(95,995)
Allowance for loan losses
Allowance for loan losses
Total federally insured loans and accrued interest receivable, net of allowance for loan losses
Total federally insured loans and accrued interest receivable, net of allowance for loan losses
Total federally insured loans and accrued interest receivable, net of allowance for loan losses	Total federally insured loans and accrued interest receivable, net of allowance for loan losses	$	13,611,078					$	14,255,562					$	16,942,918

Private education loans - Non-Nelnet Bank:

Private education loans - Non-Nelnet Bank:

Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in forbearance
Loans in forbearance
Loans in forbearance
Loans in repayment status:
Loans in repayment status:
Loans in repayment status:
Loans current
Loans current
Loans current																					243,637									97.4		%					257,639									97.1	%				220,921									97.5	%
Loans delinquent 31-60 days
Loans delinquent 61-90 days
Loans delinquent 91 days or greater
Total loans in repayment																				Total loans in repayment	250,002			95.6				100.0	%						265,316				95.7				100.0	%				226,599						93.8		100.0	%
Total private education loans
Accrued interest receivable
Accrued interest receivable
Accrued interest receivable
Loan discount, net of unamortized premiums
Loan discount, net of unamortized premiums
Loan discount, net of unamortized premiums
Allowance for loan losses
Allowance for loan losses
Allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses

As of March 31, 2023 As of December 31, 2022 As of March 31, 2022
Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment $ 12,218 5.1 % $ 12,756 5.1 % $ 10,226 3.7 %
Loans in forbearance 2,698 1.1 2,017 0.8 2,838 1.0
Loans in repayment status:
Loans current 220,921 97.5 % 232,539 97.9 % 260,911 98.3 %
Loans delinquent 31-60 days 2,014 0.9 2,410 1.0 1,699 0.6
Loans delinquent 61-90 days 931 0.4 767 0.3 1,040 0.4
Loans delinquent 91 days or greater 2,733 1.2 1,894 0.8 1,823 0.7
Total loans in repayment 226,599 93.8 100.0 % 237,610 94.1 100.0 % 265,473 95.3 100.0 %
Total private education loans 241,515 100.0 % 252,383 100.0 % 278,537 100.0 %
Accrued interest receivable 2,277 2,146 1,898
Loan premium, net of unaccreted discount 79 (38) (598)
Allowance for loan losses (15,175) (15,411) (14,622)
Total private education loans and accrued interest receivable, net of allowance for loan losses $ 228,696 $ 239,080 $ 265,215
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment $ 40 0.0 % $ 109 0.0 % $ 72 0.2 %
Loans in repayment status:
Loans current 304,414 98.3 % 346,812 98.9 % 43,424 97.3 %
Loans delinquent 31-60 days 2,037 0.7 1,906 0.5 255 0.5
Loans delinquent 61-90 days 1,236 0.4 764 0.2 304 0.7
Loans delinquent 91 days or greater 1,819 0.6 1,324 0.4 658 1.5
Total loans in repayment 309,506 100.0 100.0 % 350,806 100.0 100.0 % 44,641 99.8 100.0 %
Total consumer and other loans 309,546 100.0 % 350,915 100.0 % 44,713 100.0 %
Accrued interest receivable 3,288 3,658 374
Loan premium, net of unaccreted discount 913 (588) 1,040
Allowance for loan losses (35,317) (30,263) (5,710)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 278,430 $ 323,722 $ 40,417
Federally insured loans - Nelnet Bank (a):
Loans in-school/grace/deferment $ 151 0.3 % $ 241 0.4 % $ 286 0.3 %
Loans in forbearance 1,046 1.6 981 1.5 948 1.2
Loans in repayment status:
Loans current 60,895 97.9 % 63,225 97.8 % 80,421 98.6 %
Loans delinquent 30-59 days 514 0.8 436 0.7 402 0.5
Loans delinquent 60-89 days 120 0.2 466 0.7 427 0.5
Loans delinquent 90-119 days 255 0.4 222 0.3 90 0.1
Loans delinquent 120-270 days 319 0.5 183 0.3 157 0.2
Loans delinquent 271 days or greater 99 0.2 159 0.2 58 0.1
Total loans in repayment 62,202 98.1 100.0 % 64,691 98.1 100.0 % 81,555 98.5 100.0 %
Total federally insured loans 63,399 100.0 % 65,913 100.0 % 82,789 100.0 %
Accrued interest receivable 1,857 1,758 1,231
Loan premium 18 20 25
Allowance for loan losses (160) (170) (247)
Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 65,114 $ 67,521 $ 83,798


	As of March 31, 2024																										As of March 31, 2024													As of December 31, 2023										As of March 31, 2023
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment
Loans in deferment
Loans in deferment
Loans in repayment status:
Loans in repayment status:
Loans in repayment status:
Loans current
Loans current
Loans current																					150,947									97.2		%					81,195									94.6	%				304,414									98.3	%
Loans delinquent 31-60 days
Loans delinquent 61-90 days
Loans delinquent 91 days or greater
Total loans in repayment																				Total loans in repayment	155,254			100.0				100.0	%						85,789				99.8				100.0	%				309,506						100.0		100.0	%
Total consumer and other loans
Accrued interest receivable
Accrued interest receivable
Accrued interest receivable
Loan discount, net of unamortized premiums
Loan discount, net of unamortized premiums
Loan discount, net of unamortized premiums
Allowance for loan losses
Allowance for loan losses
Allowance for loan losses
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses

Private education loans - Nelnet Bank (a):

Private education loans - Nelnet Bank (a):

		As of March 31, 2023						As of December 31, 2022						As of March 31, 2022
Private education loans - Nelnet Bank (a):	Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment	Loans in-school/grace/deferment	$	17,021	4.8	%			$	11,580	3.3	%			$	497	0.2	%
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in forbearance
Loans in forbearance
Loans in forbearance	Loans in forbearance	681		0.2				864		0.2				317		0.1
Loans in repayment status:	Loans in repayment status:
Loans in repayment status:
Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	336,967				99.7	%	340,830				99.8	%	284,081				99.8	%	318,906			99.4										99.4	%				331,580				99.4								99.4		%			336,967			99.7				99.7	%
Loans delinquent 30-59 days	Loans delinquent 30-59 days	388				0.1		167				0.1		422				0.2
Loans delinquent 60-89 days	Loans delinquent 60-89 days	536				0.2		32				0.0		78				0.0
Loans delinquent 90 days or greater	Loans delinquent 90 days or greater	112				—		409				0.1		73				0.0
Total loans in repayment	Total loans in repayment	338,003		95.0		100.0	%	341,438		96.5		100.0	%	284,654		99.7		100.0	%	Total loans in repayment	320,790	87.9			87.9	100.0			100.0		%					333,278		92.4			92.4	100.0			100.0	%			338,003				95.0		95.0	100.0		100.0	%
Total private education loans	Total private education loans	355,705		100.0	%			353,882		100.0	%			285,468		100.0	%
Accrued interest receivable	Accrued interest receivable	1,385						1,152						418
Accrued interest receivable
Accrued interest receivable
Deferred origination costs, net of unaccreted discount
Deferred origination costs, net of unaccreted discount
Deferred origination costs, net of unaccreted discount	Deferred origination costs, net of unaccreted discount	5,400						5,360						4,593
Allowance for loan losses	Allowance for loan losses	(2,894)						(2,390)						(1,251)
Allowance for loan losses
Allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses
Total private education loans and accrued interest receivable, net of allowance for loan losses	Total private education loans and accrued interest receivable, net of allowance for loan losses	$	359,596					$	358,004					$	289,228

Consumer and other loans - Nelnet Bank (a):	Consumer and other loans - Nelnet Bank (a):

Consumer and other loans - Nelnet Bank (a):

Consumer and other loans - Nelnet Bank (a):
Loans in deferment	Loans in deferment	$	—	—	%
Loans in deferment
Loans in deferment

Loans in repayment status:	Loans in repayment status:

Loans in repayment status:

Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	19,903				100.0	%													115,152			96.9										96.9	%				69,584				96.3								96.3		%			19,903			100.0				100.0	%
Loans delinquent 30-59 days	Loans delinquent 30-59 days	—				—
Loans delinquent 60-89 days	Loans delinquent 60-89 days	—				—
Loans delinquent 90 days or greater	Loans delinquent 90 days or greater	—				—
Total loans in repayment	Total loans in repayment	19,903		100.0		100.0	%													Total loans in repayment	118,816	99.9			99.9	100.0			100.0		%					72,249		99.9			99.9	100.0			100.0	%			19,903				100.0		100.0	100.0		100.0	%
Total consumer and other loans	Total consumer and other loans	19,903		100.0	%
Accrued interest receivable	Accrued interest receivable	117
Loan premium		1
Accrued interest receivable
Accrued interest receivable
Loan premium, net of unaccreted discount
Loan premium, net of unaccreted discount
Loan premium, net of unaccreted discount
Allowance for loan losses
Allowance for loan losses
Allowance for loan losses	Allowance for loan losses	(1,827)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	$	18,194
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses

(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.

FICO Scores ~~- Nelnet Bank Private Education Loans~~

An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination. The following tables highlight the gross principal balance of Nelnet Bank's ~~private education loan portfolio,~~portfolios, by year of origination, stratified by FICO score at the time of origination.

Loan balance as of March 31, 2023
Three months ended March 31, 2023 2022 2021 2020 Total
FICO at origination:
Less than 705 $ 836 5,956 5,258 344 12,394
705 - 734 2,657 23,313 9,979 536 36,485
735 - 764 2,874 35,250 16,284 1,419 55,827
765 - 794 1,413 56,325 29,900 1,579 89,217
Greater than 794 3,006 86,055 66,882 5,839 161,782
$ 10,786 206,899 128,303 9,717 355,705
Nelnet Bank Private Education Loans


	Loan balance as of March 31, 2024
	Three months ended March 31, 2024		2023	2022	2021	2020	Total
FICO at origination:
Less than 705	$	380	4,175	5,349	4,524	381	14,809
705 - 734	834		9,946	21,468	8,410	519	41,177
735 - 764	954		9,479	32,227	14,383	1,338	58,381
765 - 794	625		6,815	50,588	26,414	1,322	85,764
Greater than 794	1,523		18,207	75,304	56,079	4,979	156,092
No FICO score available or required	2,488		6,055	—	—	—	8,543
	$	6,804	54,677	184,936	109,810	8,539	364,766


	Loan balance as of December 31, 2023
	2023		2022	2021	2020	Total
FICO at origination:
Less than 705	$	3,840	5,495	4,647	386	14,368
705 - 734	9,534		21,961	8,805	525	40,825
735 - 764	8,648		32,969	14,910	1,358	57,885
765 - 794	5,776		52,045	27,221	1,374	86,416
Greater than 794	15,057		77,996	58,695	5,226	156,974
No FICO score available or required	4,052		—	—	—	4,052
	$	46,907	190,466	114,278	8,869	360,520

Nelnet Bank Consumer and Other Loans


	Loan balance as of March 31, 2024
	Three months ended March 31, 2024		2023	2022	2021	2020	Total
FICO at origination:
Less than 720	$	12,913	18,324	—	—	—	31,237
720 - 769	21,017		29,900	48	—	—	50,965
Greater than 769	21,359		14,280	108	—	—	35,747
No FICO score available or required	230		441	282	55	—	1,008
	$	55,519	62,945	438	55	—	118,957


	Loan balance as of December 31, 2023
	2023		2022	2021	2020	Total
FICO at origination:
Less than 720	$	21,412	—	—	—	21,412
720 - 769	33,571		51	—	—	33,622
Greater than 769	16,484		109	—	—	16,593
No FICO score available or required	386		284	55	—	725
	$	71,853	444	55	—	72,352

Loan balance as of December 31, 2022
2022 2021 2020 Total
FICO at origination:
Less than 705 $ 5,898 5,389 348 11,635
705 - 734 23,392 10,543 542 34,477
735 - 764 35,456 16,686 1,473 53,615
765 - 794 57,141 31,035 1,622 89,798
Greater than 794 87,959 70,135 6,263 164,357
$ 209,846 133,788 10,248 353,882

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 ~~December~~March 31, ~~2022~~2024 and ~~March~~December 31, 2023, 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, ~~2023~~2024 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the FFEL Program and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all the Company’s federally insured loans were originated prior to July 1, 2010.


		Three months ended March 31, 2023		2022	2021	2020	2019	Prior years	Total
	Three months ended March 31, 2024										Three months ended March 31, 2024	2023	2022	2021	2020	Prior years	Total
Private education loans - Non-Nelnet Bank:	Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in-school/grace/deferment	Loans in-school/grace/deferment	$	—	1,780	5,581	1,284	2,080	1,493	12,218
Loans in forbearance	Loans in forbearance	—		—	79	804	808	1,007	2,698
Loans in repayment status:	Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	116		4,009	4,057	51,441	40,385	120,913	220,921
Loans delinquent 31-60 days	Loans delinquent 31-60 days	—		14	19	103	252	1,626	2,014
Loans delinquent 61-90 days	Loans delinquent 61-90 days	—		—	—	—	71	860	931
Loans delinquent 91 days or greater	Loans delinquent 91 days or greater	—		—	5	35	441	2,252	2,733
Total loans in repayment	Total loans in repayment	116		4,023	4,081	51,579	41,149	125,651	226,599
Total private education loans	Total private education loans	$	116	5,803	9,741	53,667	44,037	128,151	241,515
Accrued interest receivable	Accrued interest receivable								2,277
Loan premium, net of unaccreted discount									79
Loan discount, net of unamortized premiums
Allowance for loan losses	Allowance for loan losses								(15,175)
Total private education loans and accrued interest receivable, net of allowance for loan losses	Total private education loans and accrued interest receivable, net of allowance for loan losses								$	228,696
Gross charge-offs - three months ended March 31, 2023		$	—	—	—	—	171	469	640
Gross charge-offs - three months ended March 31, 2024

Consumer and other loans - Non-Nelnet Bank:

Consumer and other loans - Non-Nelnet Bank:

Consumer and other loans - Non-Nelnet Bank:	Consumer and other loans - Non-Nelnet Bank:
Loans in deferment	Loans in deferment	$	—	—	24	—	16	—	40
Loans in deferment
Loans in deferment
Loans in repayment status:	Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	185,920		109,009	6,692	498	1,354	941	304,414
Loans delinquent 31-60 days	Loans delinquent 31-60 days	89		1,593	337	—	10	8	2,037
Loans delinquent 61-90 days	Loans delinquent 61-90 days	—		1,085	84	38	26	3	1,236
Loans delinquent 91 days or greater	Loans delinquent 91 days or greater	—		1,112	141	55	186	325	1,819
Total loans in repayment	Total loans in repayment	186,009		112,799	7,254	591	1,576	1,277	309,506
Total consumer and other loans	Total consumer and other loans	$	186,009	112,799	7,278	591	1,592	1,277	309,546
Accrued interest receivable	Accrued interest receivable								3,288
Loan premium, net of unaccreted discount									913
Loan discount, net of unamortized premiums
Allowance for loan losses	Allowance for loan losses								(35,317)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	Total consumer and other loans and accrued interest receivable, net of allowance for loan losses								$	278,430
Gross charge-offs - three months ended March 31, 2023		$	—	1,868	245	27	46	81	2,267
Gross charge-offs - three months ended March 31, 2024


		Three months ended March 31, 2023		2022	2021	2020	2019	Prior years	Total
	Three months ended March 31, 2024										Three months ended March 31, 2024	2023	2022	2021	2020	Prior years	Total
Private education loans - Nelnet Bank (a):	Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment
Loans in-school/grace/deferment
Loans in-school/grace/deferment	Loans in-school/grace/deferment	$	1,863	12,915	1,117	1,126	—	—	17,021
Loans in forbearance	Loans in forbearance	—		485	196	—	—	—	681
Loans in repayment status:	Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	8,913		192,723	126,740	8,591	—	—	336,967
Loans delinquent 30-59 days	Loans delinquent 30-59 days	10		247	131	—	—	—	388
Loans delinquent 60-89 days	Loans delinquent 60-89 days	—		481	55	—	—	—	536
Loans delinquent 90 days or greater	Loans delinquent 90 days or greater	—		48	64	—	—	—	112
Total loans in repayment	Total loans in repayment	8,923		193,499	126,990	8,591	—	—	338,003
Total private education loans	Total private education loans	$	10,786	206,899	128,303	9,717	—	—	355,705
Accrued interest receivable	Accrued interest receivable								1,385
Deferred origination costs, net of unaccreted discount	Deferred origination costs, net of unaccreted discount								5,400
Allowance for loan losses	Allowance for loan losses								(2,894)
Total private education loans and accrued interest receivable, net of allowance for loan losses	Total private education loans and accrued interest receivable, net of allowance for loan losses								$	359,596
Gross charge-offs - three months ended March 31, 2023		$	—	110	—	—	—	—	110
Gross charge-offs - three months ended March 31, 2024

Consumer and other loans - Nelnet Bank (a):	Consumer and other loans - Nelnet Bank (a):

Consumer and other loans - Nelnet Bank (a):

Consumer and other loans - Nelnet Bank (a):
Loans in deferment	Loans in deferment	$	—	—	—	—	—	—	—
Loans in deferment
Loans in deferment

Loans in repayment status:	Loans in repayment status:
Loans in repayment status:
Loans in repayment status:
Loans current
Loans current
Loans current	Loans current	19,259		589	55	—	—	—	19,903
Loans delinquent 30-59 days	Loans delinquent 30-59 days	—		—	—	—	—	—	—
Loans delinquent 60-89 days	Loans delinquent 60-89 days	—		—	—	—	—	—	—
Loans delinquent 90 days or greater	Loans delinquent 90 days or greater	—		—	—	—	—	—	—
Total loans in repayment	Total loans in repayment	19,259		589	55	—	—	—	19,903
Total consumer and other loans	Total consumer and other loans	$	19,259	589	55	—	—	—	19,903
Accrued interest receivable	Accrued interest receivable								117
Loan premium									1
Loan premium, net of unaccreted discount
Allowance for loan losses	Allowance for loan losses								(1,827)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	Total consumer and other loans and accrued interest receivable, net of allowance for loan losses								$	18,194
Gross charge-offs - three months ended March 31, 2023		$	—	—	—	—	—	—	—
Gross charge-offs - three months ended March 31, 2024

3. Bonds and Notes Payable

The following tables summarize the Company’s outstanding debt obligations by type of instrument:

As of March 31, 2023

As of March 31, 2024

Carrying

amount

Interest rate

range

Final maturity

Carrying

amount

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

11,043,945

4.93% - 6.85%

8/26/30 - 9/25/69

Bonds and notes based on indices

8,766,041

5.47% - 7.44%

8/26/30 - 9/25/69

Bonds and notes based on auction

142,385

0.00% - 5.43%

3/22/32 - 11/26/46

Bonds and notes based on auction

84,660

0.00% - 6.44%

3/22/32 - 11/26/46

Total FFELP variable-rate bonds and notes

11,186,330

Fixed-rate bonds and notes issued in FFELP loan asset-backed
securitizations

548,642

1.42% - 3.45%

10/25/67 - 8/27/68

FFELP loan warehouse facility

919,337

5.12% / 5.15%

5/22/24

Private education loan warehouse facility

47,937

5.18%

12/31/23

Fixed-rate bonds and notes issued in FFELP loan asset-backed
securitizations

430,061

1.42% - 3.45%

10/25/67 - 8/27/68

FFELP loan warehouse facilities

1,066,197

5.41% - 5.57%

4/2/25 / 5/22/25

Consumer loan warehouse facility

82,405

5.15%

11/14/25

41,762

5.55%

11/14/25

Variable-rate bonds and notes issued in private education loan asset-backed securitizations

17,808

6.40% / 6.60%

12/26/40 / 6/25/49

Variable-rate bonds and notes issued in private education loan asset-backed securitizations

71,963

6.90% / 7.57%

6/25/49 / 11/25/53

Fixed-rate bonds and notes issued in private education loan asset-backed securitization

22,145

3.60% / 5.35%

12/26/40 / 12/28/43

Fixed-rate bonds and notes issued in private education loan asset-backed securitizations

70,310

5.35% / 7.15%

12/28/43 / 11/25/53

Unsecured line of credit

—

9/22/26

Unsecured line of credit

—

9/22/26

Participation agreement

311,771

5.48%

5/4/23

Repurchase agreements

432,984

5.38% - 5.85%

4/6/23 - 11/27/24

Participation agreements

9,023

5.58% - 6.06%

5/4/24 / 1/30/33

Repurchase agreement

114,498

6.43% - 6.74%

11/27/24 / 12/20/24

Other - due to related party

6,181

3.55% - 6.05%

3/1/24 - 11/15/30

13,575,540

Other - due to related party

5,591

5.00% - 6.05%

4/30/24 - 11/15/30

10,660,106

Discount on bonds and notes payable and debt issuance costs

(137,124)

Total

13,438,416

Total

As of December 31, 2022

As of December 31, 2023

Carrying

amount

Interest rate

range

Final maturity

Carrying

amount

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

11,868,190

4.47% - 6.39%

8/26/30 - 9/25/69

Bonds and notes based on indices

9,552,667

5.45% - 7.47%

8/26/30 - 9/25/69

Bonds and notes based on auction

178,960

0.00% - 4.02%

3/22/32 - 11/26/46

Bonds and notes based on auction

87,360

0.00% - 6.45%

3/22/32 - 11/26/46

Total FFELP variable-rate bonds and notes

12,047,150

Fixed-rate bonds and notes issued in FFELP loan asset-backed

securitizations

Fixed-rate bonds and notes issued in FFELP loan asset-backed

securitizations

594,051

1.42% - 3.45%

10/25/67 - 8/27/68

FFELP loan warehouse facility

978,956

4.69% / 4.71%

5/22/24

Private education loan warehouse facility

64,356

4.72%

12/31/23

Fixed-rate bonds and notes issued in FFELP loan asset-backed

securitizations

Fixed-rate bonds and notes issued in FFELP loan asset-backed

securitizations

471,427

1.42% - 3.45%

10/25/67 - 8/27/68

FFELP loan warehouse facilities

1,398,485

5.41% - 5.70%

4/2/25 / 5/22/25

Consumer loan warehouse facility

89,000

4.73%

11/14/25

23,691

5.70%

11/14/25

Variable-rate bonds and notes issued in private education loan asset-backed securitizations

19,865

5.90% / 6.14%

12/26/40 / 6/25/49

Variable-rate bonds and notes issued in private education loan asset-backed securitizations

80,393

6.90% / 7.57%

6/25/49 / 11/25/53

Fixed-rate bonds and notes issued in private education loan asset-backed securitization

23,032

3.60% / 5.35%

12/26/40 / 12/28/43

Fixed-rate bonds and notes issued in private education loan asset-backed securitizations

80,130

5.35% / 7.15%

12/28/43 / 11/25/53

Unsecured line of credit

—

9/22/26

Unsecured line of credit

—

9/22/26

Participation agreement

395,432

5.02%

5/4/23

Repurchase agreements

567,254

0.97% - 5.60%

1/4/23 - 11/27/24

Participation agreements

10,063

5.58% - 6.08%

3/12/24 / 5/4/24

Repurchase agreement

208,164

6.35% - 6.81%

1/22/24 - 12/20/24

Other - due to related party

6,187

3.55% - 6.05%

3/1/24 - 11/15/30

14,785,283

Other - due to related party

5,778

5.00% - 6.05%

3/1/24 - 11/15/30

11,918,158

Discount on bonds and notes payable and debt issuance costs

(148,088)

Total

14,637,195

Total

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.

~~FFELP loan~~ The following table summarizes the Company's warehouse facilities

On as of March 31, ~~2023,~~2024.


Type of loans	Maximum financing amount		Amount outstanding	Amount available	Expiration of liquidity provisions	Final maturity date	Advance rate		Advanced as equity support
FFELP (a)	$	950,000	712,198	237,802	11/22/2024	5/22/2025	note (b)		$	50,093
FFELP (c)	432,000		353,999	78,001	4/2/2024	4/2/2025	92	%	29,196
	$	1,382,000	1,066,197	315,803					$	79,289

Consumer (d)	150,000		41,762	108,238	11/14/2024	11/14/2025	70	%	17,405

(a) Effective March 6, 2024, the ~~Company’s FFELP warehouse~~maximum financing amount on this facility was reduced from $1.25 billion to $950 million.

(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 April 2, 2024, this facility was amended to ~~increase~~reduce the ~~aggregate~~ maximum financing amount ~~available~~ from ~~$1.20 billion~~$432 million to ~~$1.25 billion. The~~$375 million, and to extend the expiration of liquidity provisions and final maturity ~~remain through May 22, 2023~~date to April 1, 2025 and ~~May 22,~~April 1, 2026, respectively.

(d) On March 11, 2024, ~~respectively. As of March 31, 2023, $919.3 million was outstanding under~~ this facility ~~$330.7 million~~ was ~~available for future funding, and~~amended to reduce the ~~Company had $62.8 million advanced as equity support.~~

Subsequent to the end of the first quarter, the Company closed on a $250.0 million FFELP warehouse facility on April 3, 2023, with liquidity provisions expiring on April 2, 2024 and a final maturity date of April 2, 2025.

~~Private education loan warehouse facility~~

As of March 31, 2023, the Company's private education warehouse facility had an outstanding balance of $47.9 million, liquidity provisions through June 30, 2023, a final maturity of December 31, 2023, and $19.4 million was advanced as equity support. No additional amounts can be borrowed under this facility.

~~Consumer loan warehouse facility~~

~~As of March 31, 2023, the Company's consumer loan warehouse facility had an aggregate~~ maximum financing amount ~~available of $250.0~~from $200 million an advance rate of 70%, liquidity provisions through November 14, 2024, and a final maturity date of November 14, 2025. As of March 31, 2023, $82.4 million was outstanding under this facility, $167.6 million was available for future funding, and the Company had $35.2 million advanced as equity support.to $150 million.

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, ~~2023,~~2024, no amount was outstanding on the line of credit and $495.0 million was available for future use subject to certain financial covenants, including limitations on recourse indebtedness to adjusted EBITDA (over the last four rolling quarters). Of the $495.0 million availability, approximately $260 million was available for purposes other than reducing existing recourse debt due to the limitations on recourse indebtedness to adjusted EBITDA financial covenant.use.

~~Participation~~Repurchase Agreement

The Company has ana repurchase agreement with ~~Union Bank and Trust Company ("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 FFELP loan asset-backed securities (bond investments). As of March 31, 2023, $311.8 million (par value) of FFELP loan asset-backed securities 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. On May 4, 2023, the agreement automatically renewed for another year through May 4, 2024. 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 and notes receivable" and the participation interests outstanding have been accounted for by the Company as a secured borrowing.

~~See note 5 for additional information about the FFELP loan asset-backed securities investments serving as collateral under this participation agreement.~~

~~Repurchase Agreements~~

~~On May 3, 2021 and June 23, 2021, the Company entered into repurchase agreements with~~ non-affiliated third ~~parties,~~party, the proceeds of which are collateralized by certain private education ~~and FFELP~~ loan asset-backed securities (bond investments). The ~~first~~outstanding balance under this agreement as of March 31, 2024 was $114.5 million. The agreement has various maturity dates through ~~November 27,~~December 20, 2024 or earlier if either party provides 180 days’ prior written notice, and the second agreement has various maturity dates (as of March 31, 2023) from April 6, 2023 through November 27, 2024. Subsequent to March 31, 2023, the maturities on this agreement were extended, and as of May 8, 2023, the maturity dates vary from May 26, 2023 through November 27, 2024. Under the first agreement, the Company is ~~subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase~~

~~price of such securities on any scheduled reset date, and under the second agreement, the Company could be~~ subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities and the counter-party provides notice requiring such payment. Included in “bonds and notes payable” in the consolidated balance sheets as of March 31, 2023 was $291.9 million subject to the first agreement and $141.1 million subject to the second agreement.

on any scheduled reset date. See note 5 ~~and below under "Debt Repurchases"~~ for additional information about the private education ~~and FFELP~~ loan asset-backed securities investments ~~respectively,~~ serving as collateral for ~~these~~this repurchase ~~agreements.~~

~~Nelnet Bank~~

Nelnet Bank has Federal Funds lines of credit with correspondent banks totaling $30.0 million at a stated interest rate at the time of borrowing. As of March 31, 2023, no amounts were drawn on these lines of credit.agreement.

Debt Repurchases

The following table summarizes the Company's repurchases of its own debt. Gains/losses recorded by the Company from the repurchase of debt are included in "other, net" in "other income (expense)" on the Company's consolidated statements of income.

Three months ended March 31,
2023 2022
Purchase price $ (828) (18,454)
Par value 908 18,530
Remaining unamortized cost of issuance (2) (45)
Gain $ 78 31

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, ~~2023,~~2024, the Company holds ~~$397.8~~$310.3 million (par value) of its own FFELP ~~loan~~ asset-backed securities. As of March 31, 2023, $197.5 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreements (as discussed above).

~~Subsequent Event~~

Subsequent to the end of the first quarter, in April 2023, the Company redeemed $188.6 million of FFELP loan asset-backed securities (bonds and notes payable) prior to their legal maturity, of which the Company owned $140.5 million of the bonds that were redeemed. The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $25.9 million non-cash expense recognized in April 2023.

4. Derivative Financial Instruments

Non-Nelnet Bank Derivatives

The Company uses settled-to-market derivative financial instruments ~~primarily~~ to manage interest rate risk. Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 65 of the notes to consolidated financial statements included in the ~~2022~~2023 Annual Report. A tabular presentation of such derivatives outstanding as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023 is presented below.

Basis Swaps

The following table summarizes the Company’s outstanding basis swaps as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, in which the Company receives and pays the term adjusted Secured Overnight Financing Rate (SOFR) plus the tenor spread adjustment to LIBOR. Prior to the discontinuation of LIBOR on June 30, 2023, the Company received three-month LIBOR set discretely in advance and ~~pays~~paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").


Maturity
Maturity
Maturity	Maturity	Notional amount			Notional amount
		As of		As of
		March 31, 2023		December 31, 2022
2023		$	—	750,000
2024

2024

2024	2024	1,750,000		1,750,000
2026	2026	1,150,000		1,150,000
2026
2026
2027
2027
2027	2027	250,000		250,000

		$	3,150,000	3,900,000
		$

		$

		$

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023 was ~~one-month LIBOR~~the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.1 basis ~~points and 9.7 basis points, respectively.~~points.

Interest Rate Swaps – Floor Income Hedges

The following table summarizes the outstanding derivative instruments used by the Company as of March 31, 2024 and December 31, 2023, to economically hedge loans earning fixed rate floor ~~income as of December 31, 2022.~~income.

Maturity Notional amount Weighted average fixed rate paid by the Company (a)
2024 $ 2,000,000 0.35 %
2026 500,000 1.02
2031 100,000 1.53
2032 (b) 200,000 2.92
$ 2,800,000 0.70 %



Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)
2026	$	200,000	3.92	%
2028	50,000		3.56
2029 (b)	50,000		3.17
2030 (c)	100,000		3.63





	$	400,000	3.71	%

(a) For ~~the interest rate derivatives maturing in 2032, the Company was to receive payments based on Secured Overnight Financing Rate (SOFR) that reset quarterly. For~~ all ~~other~~ interest rate derivatives, the Company ~~received~~receives payments based on ~~three-month LIBOR that~~SOFR, the majority of which reset quarterly.

(b) ~~These derivatives had~~This $50 million notional amount derivative has a forward effective start ~~dates~~date in January 2026.

(c) A $50 million notional amount derivative maturing in 2030 has a forward effective start date in November ~~2024.~~2025.

~~All over-the-counter derivative contracts executed by~~During 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 performancefirst quarter of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default. Through March 15, 2023, the Company ~~had~~ received ~~cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the fixed rate floor derivatives as of March 15, 2023 of~~ $183.2 million, which included $19.1 million related to ~~current period settlements. To minimize the Company's exposure~~2023 settlements, to ~~market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($2.8~~terminate $2.8 billion in notional amount of ~~derivatives).~~floor income interest rate swaps prior to their final maturity.

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, 2024 and December 31, 2023, to hedge exposure to variability in cash flows related to variable rate intercompany deposits.



Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)
2028	$	40,000	3.33	%
2030 (b)	50,000		3.06
2032 (c)	25,000		4.03
2033 (d)	25,000		3.90



	$	140,000	3.46	%

(a) For all interest rate derivatives, the Company receives payments based on SOFR that reset monthly or quarterly.

(b) These $25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.

(d) This $25 million notional amount derivative has a forward effective start date in November 2025.

Consolidated Financial Statement Impact Related to Derivatives -

Balance Sheets

Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse. As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset (included in "other assets") or liability (included in "other liabilities") measured at fair value. The following table summarizes the fair value of the Company's Nelnet Bank derivatives as reflected in the consolidated balance sheets.


	Fair value of asset derivatives			Fair value of liability derivatives
	As of March 31, 2024		As of December 31, 2023	As of March 31, 2024	As of December 31, 2023
Interest rate swaps - Nelnet Bank	$	1,820	452	1,085	1,976

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,
2023 2022
Settlements:
1:3 basis swaps $ 859 396
Interest rate swaps - floor income hedges (a) 22,478 (3,205)
Total settlements - income (expense) 23,337 (2,809)
Change in fair value:
1:3 basis swaps (23) 889
Interest rate swaps - floor income hedges (a) (37,388) 144,845
Total change in fair value - (expense) income (37,411) 145,734
Derivative market value adjustments and derivative settlements, net - (expense) income $ (14,074) 142,925


	Three months ended March 31,
	2024		2023
Settlements:
1:3 basis swaps	$	365	859
Interest rate swaps - floor income hedges	1,190		22,478
Interest rate swaps - Nelnet Bank	202		—

Total settlements - income	1,757		23,337
Change in fair value:
1:3 basis swaps	(354)		(23)
Interest rate swaps - floor income hedges	6,060		(37,388)

Interest rate swaps - Nelnet Bank	2,258		—


Total change in fair value - income (expense)	7,964		(37,411)
Derivative market value adjustments and derivative settlements, net - income (expense)	$	9,721	(14,074)

(a) As a result of the Company terminating all its interest rate swaps hedging loans earning fixed rate floor income on March 15, 2023 (as discussed above), there will be no derivative settlements and changes in fair value on these derivatives in future periods.

5. Investments and Notes Receivable

~~Investments~~"Restricted investments" and “investments and notes ~~receivable~~receivable” consisted of the following:


	As of March 31, 2024																							As of March 31, 2024			As of December 31, 2023
	Amortized cost																				Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value	Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Restricted available-for-sale investments (at fair value):
FFELP loan and other debt securities
FFELP loan and other debt securities
FFELP loan and other debt securities
Non-restricted available-for-sale investments (at fair value):
		As of March 31, 2023									As of December 31, 2022
Non-Nelnet Bank:
		Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value			Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Non-Nelnet Bank:
		Amortized cost			Gross unrealized gains					Gross unrealized losses		Fair value		Amortized cost		Gross unrealized gains			Gross unrealized losses			Fair value
Investments (at fair value):
Available-for-sale asset-backed securities
Non-Nelnet Bank:	Non-Nelnet Bank:
FFELP loan (a)		$	336,327	4,175			(7,926)				332,576		463,861		3,498		(11,105)			456,254
Private education loan (b)		321,120		—		(26,531)		294,589			335,903		—		(29,438)		306,465
FFELP loan
FFELP loan
FFELP loan
Private education loan (a)
Other debt securities	Other debt securities	53,743		2,365		(803)		55,305			158,589		151		(3,790)		154,950
Total Non-Nelnet Bank	Total Non-Nelnet Bank	711,190		6,540		(35,260)		682,470			958,353		3,649		(44,333)		917,669
Nelnet Bank:	Nelnet Bank:
FFELP loan (c)		240,348		754		(3,622)		237,480			349,855		955		(8,853)		341,957
FFELP loan
FFELP loan
FFELP loan
Private education loan	Private education loan	1,818		—		(101)		1,717			1,941		—		(122)		1,819
Other debt securities	Other debt securities	152,571		14		(3,549)		149,036			131,481		18		(3,907)		127,592
Total Nelnet Bank	Total Nelnet Bank	394,737		768		(7,272)		388,233			483,277		973		(12,882)		471,368
Total available-for-sale asset-backed securities	Total available-for-sale asset-backed securities	$	1,105,927	7,308		(42,532)		1,070,703			1,441,630		4,622		(57,215)		1,389,037
Equity securities	Equity securities							35,663									39,082
Total investments at fair value	Total investments at fair value							1,106,366									1,428,119
Other Investments and Notes Receivable (not measured at fair value):	Other Investments and Notes Receivable (not measured at fair value):
Held to maturity investments
Held-to-maturity investments
Held-to-maturity investments
Held-to-maturity investments
Non-Nelnet Bank:	Non-Nelnet Bank:
Debt securities (d)								4,700									18,554
Non-Nelnet Bank:
Non-Nelnet Bank:
Debt securities
Debt securities
Debt securities
Nelnet Bank:	Nelnet Bank:
FFELP loan asset-backed securities (c)								149,179									—
Other debt securities								240									220
FFELP loan asset-backed securities
FFELP loan asset-backed securities
FFELP loan asset-backed securities
Private education loan asset-backed securities
Total Nelnet Bank	Total Nelnet Bank							149,419									220
Total held to maturity investments								154,119									18,774

Total held-to-maturity investments
Venture capital and funds:	Venture capital and funds:
Measurement alternative (e)								191,731									160,052
Measurement alternative
Measurement alternative
Measurement alternative
Equity method	Equity method							98,217									89,332
Total venture capital and funds	Total venture capital and funds							289,948									249,384
Real estate:	Real estate:
Equity method	Equity method							84,526									80,364
Equity method
Equity method
Investment in ALLO:	Investment in ALLO:
Voting interest/equity method (f)								55,756									67,538
Preferred membership interest and accrued and unpaid preferred return (g)								148,175									145,926
Voting interest/equity method (b)
Voting interest/equity method (b)
Voting interest/equity method (b)
Preferred membership interest and accrued and unpaid preferred return (c)
Total investment in ALLO	Total investment in ALLO							203,931									213,464
Beneficial interest in loan securitizations (h):
Consumer loans and other								81,399									39,249
Beneficial interest in loan securitizations (d):
Consumer loans
Consumer loans
Consumer loans
Private education loans	Private education loans							72,898									75,261
Federally insured student loans	Federally insured student loans							23,591									24,228
Total beneficial interest in loan securitizations	Total beneficial interest in loan securitizations							177,888									138,738
Solar (i)								(66,353)									(55,448)
Solar (e)
Notes receivable	Notes receivable							30,246									31,106
Tax liens, affordable housing, and other	Tax liens, affordable housing, and other							6,899									7,416
Total investments (not measured at fair value)	Total investments (not measured at fair value)							881,204									683,798
Total investments and notes receivable	Total investments and notes receivable							$	1,987,570								$	2,111,917

(a) A portion of ~~FFELP~~the private education loan asset-backed securities were subject to ~~participation interests held by Union Bank,~~a repurchase agreement with a third party, as discussed in note 3 under ~~"Participation~~"Repurchase Agreement." As of March 31, ~~2023,~~2024, the par value and fair value of these securities was ~~$311.8~~$151.9 million and ~~$289.1~~$135.3 million, respectively.

(b) A portion of private education loan asset-backed securities were subject to repurchase agreements with third parties, as discussed in note 3 under "Repurchase Agreements." As of March 31, 2023, the par value and fair value of these securities was $321.6 million and $294.6 million, respectively.

(c) On March 31, 2023, securities at Nelnet Bank with a fair value of $149.2 million were transferred from available for sale to held to maturity. The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction. Accumulated other comprehensive income as of March 31, 2023 includes pre-tax unrealized losses of $3.7 million related to the transfer. These unrealized losses will be amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.

~~(d) On March 31, 2023, certain Non-Nelnet Bank debt securities were transferred from held to maturity to available for sale.~~

(e) The Company has an investment in Agile Sports Technologies, Inc. (doing business as “Hudl”) that is included in “venture capital and funds” in the above table. On February 6, 2023, the Company acquired additional ownership interests in Hudl for $31.5 million. Such ownership interests were purchased by the Company from certain existing Hudl investors. The Company accounts for its investment in Hudl using the measurement alternative method, which requires it to adjust its carrying value of the investment for changes resulting from observable market transactions. The February 6, 2023 transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities, and the price was privately negotiated between the Company and the selling parties. Accordingly, the Company did not adjust its carrying value of its Hudl investment to the February 2023 transaction value. As of March 31, 2023, the carrying amount of the Company's investment in Hudl is $165.5 million, and the Company's equity ownership interests did not materially change as a result of the February 6, 2023 transaction. 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.

(f) During the first quarter of 2023, the Company contributed $8.4 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO"). As a result of this equity contribution, the Company's voting membership interests percentage in ALLO did not materially change.

The Company accounts for its voting membership interests in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting. ~~During the three months ended March 31, 2023 and 2022, the~~The Company recognized losses ~~of $20.2 million and $13.1 million, respectively,~~ under the HLBV method of accounting on its ALLO voting membership interests ~~investment. Income~~investment of $10.7 million and ~~losses~~$20.2 million during the three months ended March 31, 2024 and 2023, respectively. Losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income. Absent additional equity contributions, the Company will not recognize additional losses for its voting membership interests in ALLO.

~~(g)~~(c) As of March 31, ~~2023,~~2024, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was ~~$145.9~~$155.0 million and ~~$2.2~~$2.4 million, respectively. The preferred membership interests of ALLO held by the Company ~~earn~~historically earned a preferred annual return of 6.25%. that increased to 10.00% on April 1, 2024. The Company recognized income on its ALLO preferred membership interests of ~~$2.2~~$2.4 million and ~~$2.1~~$2.2 million during the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.

~~(h)~~(d) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations. As of the latest remittance reports filed by the various trusts prior to or as of March 31, ~~2023,~~2024, the Company's ownership correlates to approximately ~~$585~~$965 million, ~~$590~~$490 million, and ~~$370~~$335 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

~~(i)~~(e) As of March 31, ~~2023,~~2024, the Company has funded a total of ~~$294.4~~$491.8 million in solar investments, which includes ~~$115.9~~$208.9 million funded by syndication partners. 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, 2024, the Company has earned a total of $511.6 million of tax credits, which includes $248.6 million earned by syndication partners. The solar investment carrying value on the consolidated balance sheet of $(133.8) million as of March 31, ~~2023~~2024 represents the sum of total tax credits earned on solar projects placed-in-service through March 31, ~~2023~~2024 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. AsThe solar investment balance as of March 31, ~~2023,~~2024, excluding the ~~Company is committed to fund an additional $220.3 million on tax equity investments, of which $141.4 million is expected to be provided~~portion owned by syndication ~~partners.~~partners and reflected as "noncontrolling interests" on the consolidated balance sheet, was $(70.1) 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 Company recognized net gains of $3.0 million and net losses of $1.9 million on its solar investments ~~of $1.9 million and $1.0 million~~ during the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. These ~~losses,~~amounts, which include net losses attributable to third-party noncontrolling interest investors (syndication partners), are included in “other, net” in "other income (expense)" on the consolidated statements of income. Solar net losses attributed to noncontrolling interest investors was ~~$2.7~~$1.2 million and ~~$1.8~~$2.7 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income. Excluding net losses attributed to noncontrolling interest investors, the Company recognized net gains on its solar investments of $4.2 million and $0.8 million during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the Company is committed to fund an additional $146.6 million on solar investments, of which $76.2 million is expected to be provided by syndication partners.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2024:


	As of March 31, 2024
	1 year or less		After 1 year through 5 years	After 5 years through 10 years	After 10 years	Total
Available-for-sale asset-backed securities
Restricted Investments:
FFELP loan and other debt securities	$	—	9,267	4,017	21,674	34,958
Fair value	—		9,270	4,037	22,769	36,076
Non-Nelnet Bank:
FFELP loan	8,796		9,206	22,190	223,143	263,335
Private education loan	—		—	—	269,983	269,983
Other debt securities	—		99	—	20,487	20,586
Total Non-Nelnet Bank	8,796		9,305	22,190	513,613	553,904
Fair value	8,697		9,244	21,651	497,751	537,343
Nelnet Bank:
FFELP loan	60,739		22,744	26,144	190,608	300,235
Private education loan	—		—	15,940	13,500	29,440
Other debt securities	—		47,839	11,868	51,208	110,915
Total Nelnet Bank	60,739		70,583	53,952	255,316	440,590
Fair value	61,249		70,585	53,924	259,510	445,268
Total available-for-sale asset-backed securities at amortized cost	$	69,535	89,155	80,159	790,603	1,029,452
Total available-for-sale asset-backed securities at fair value	$	69,946	89,099	79,612	780,030	1,018,687
Held-to-maturity investments
Non-Nelnet Bank:
Debt securities	$	4,700	—	—	—	4,700
Fair value	4,700		—	—	—	4,700
Nelnet Bank:
FFELP loan asset-backed securities	—		3,278	1,407	143,753	148,438
Private education loan asset-backed securities	—		—	—	8,100	8,100
Total Nelnet Bank	—		3,278	1,407	151,853	156,538
Fair value	—		3,351	1,435	155,007	159,793
Total held-to-maturity investments at amortized cost	$	4,700	3,278	1,407	151,853	161,238
Total held-to-maturity investments at fair value	$	4,700	3,351	1,435	155,007	164,493
Beneficial interest in loan securitizations (a):
Amortized cost	$	—	—	—	—	235,824
Fair value	$	—	—	—	—	260,537

(a) The Company's beneficial interest in loan securitizations are not due at a singe maturity date.

The following table summarizes the unrealized positions for held-to-maturity investments and the beneficial interest in loan securitizations as of March 31, 2024:


	Carrying value		Gross unrealized gains	Gross unrealized losses (a)	Fair value
Asset-backed and other securities	$	161,238	3,302	(47)	164,493
Beneficial interest in loan securitizations	235,824		28,806	(4,093)	260,537

(a) None of the unrealized losses at March 31, ~~2023:~~2024 were due to credit losses.

As of March 31, 2023
1 year or less After 1 year through 5 years After 5 years through 10 years After 10 years Total
Available-for-sale asset-backed securities
Non-Nelnet Bank:
FFELP loan $ 26,196 12,274 50,051 247,806 336,327
Private education loan — — — 321,120 321,120
Other debt securities — 99 — 53,644 53,743
Total Non-Nelnet Bank 26,196 12,373 50,051 622,570 711,190
Fair value 25,997 12,308 48,679 595,486 682,470
Nelnet Bank:
FFELP loan 39,728 6,933 34,659 159,028 240,348
Private education loan — — — 1,818 1,818
Other debt securities — 23,084 92,316 37,171 152,571
Total Nelnet Bank 39,728 30,017 126,975 198,017 394,737
Fair value 39,139 29,704 124,228 195,162 388,233
Total available-for-sale asset-backed securities at amortized cost $ 65,924 42,390 177,026 820,587 1,105,927
Total available-for-sale asset-backed securities at fair value $ 65,136 42,012 172,907 790,648 1,070,703
Held to maturity investments
Non-Nelnet Bank:
Debt securities $ 4,700 — — — 4,700
Fair value 4,700 — — — 4,700
Nelnet Bank:
FFELP loan asset-backed securities — — 3,797 145,382 149,179
Other debt securities 240 — — — 240
Total Nelnet Bank 240 — 3,797 145,382 149,419
Fair value 240 — 3,797 145,382 149,419
Total held-to-maturity investments at amortized cost $ 4,940 — 3,797 145,382 154,119
Total held-to-maturity investments at fair value $ 4,940 — 3,797 145,382 154,119

The following table presents ~~the~~securities classified as available-for-sale that have gross unrealized losses at March 31, 2024 and the fair value of such securities ~~classified~~ as ~~available for sale at~~of March 31, ~~2023.~~2024. 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, 2023
Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total
Available-for-sale asset-backed securities Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value
Non-Nelnet Bank:
FFELP loan $ (5,324) 182,059 (2,602) 44,238 (7,926) 226,297
Private education loan — — (26,531) 294,590 (26,531) 294,590
Other debt securities (803) 21,462 — — (803) 21,462
Total Non-Nelnet Bank (6,127) 203,521 (29,133) 338,828 (35,260) 542,349
Nelnet Bank:
FFELP loan (2,891) 155,672 (731) 37,285 (3,622) 192,957
Private education loan (101) 1,717 — — (101) 1,717
Other debt securities (3,492) 111,638 (57) 3,940 (3,549) 115,578
Total Nelnet Bank (6,484) 269,027 (788) 41,225 (7,272) 310,252
Total available-for-sale asset-backed securities $ (12,611) 472,548 (29,921) 380,053 (42,532) 852,601

~~As of December 31, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $1.2 billion.~~


	As of March 31, 2024
	Unrealized loss position less than 12 months			Unrealized loss position 12 months or more		Total
	Unrealized loss		Fair value	Unrealized loss	Fair value	Unrealized loss	Fair value
Available-for-sale asset-backed securities
Restricted Investments:
FFELP loan and other debt securities	$	(80)	8,175	—	—	(80)	8,175
Non-Nelnet Bank:
FFELP loan	(335)		16,011	(2,708)	119,466	(3,043)	135,477
Private education loan	—		—	(21,547)	248,436	(21,547)	248,436

Total Non-Nelnet Bank	(335)		16,011	(24,255)	367,902	(24,590)	383,913
Nelnet Bank:
FFELP loan	(779)		26,112	(832)	34,654	(1,611)	60,766

Other debt securities	(63)		15,088	(1,435)	14,713	(1,498)	29,801
Total Nelnet Bank	(842)		41,200	(2,267)	49,367	(3,109)	90,567
Total available-for-sale asset-backed securities	$	(1,257)	65,386	(26,522)	417,269	(27,779)	482,655

The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.

Gross realized gains Gross realized losses Gross proceeds from sales
Three months ended March 31, 2023 $ 1,274 (6,256) 492,173
Three months ended March 31, 2022 2,965 (172) 113,980


	Three months ended
	March 31,
	2024		2023
Gross proceeds from sales	$	153,373	492,173

Gross realized gains	$	1,054	1,274
Gross realized losses	(502)		(6,256)
Net gains (losses)	$	552	(4,982)

6. Intangible Assets

Intangible assets consisted of the following:

Weighted average remaining useful life as of
March 31, 2023 (months)
As of As of
March 31, 2023 December 31, 2022
Amortizable intangible assets, net:
Customer relationships (net of accumulated amortization of $57,285 and $55,116, respectively) 110 $ 49,569 51,738
Trade names (net of accumulated amortization of $882 and $617, respectively) 111 8,028 8,293
Computer software (net of accumulated amortization of $6,514 and $6,400, respectively) 49 1,406 1,520
Other (net of accumulated amortization of $655 and $490, respectively) 51 1,785 1,950
Total - amortizable intangible assets, net 107 $ 60,788 63,501


	Weighted average remaining useful life as of March 31, 2024 (months)
		As of		As of
		March 31, 2024		December 31, 2023
Amortizable intangible assets, net:
Customer relationships (net of accumulated amortization of $48,617 and $46,573, respectively)	102	$	40,987	43,031
Trade names (net of accumulated amortization of $148 and $8,268, respectively)	97	622		642
Computer software (net of accumulated amortization of $659 and $574, respectively)	37	1,061		1,146

Total amortizable intangible assets, net	100	$	42,670	44,819

The Company recorded amortization expense on its intangible assets of ~~$2.7~~$2.1 million and ~~$2.5~~$2.7 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of March 31, ~~2023,~~2024, the Company estimates it will record amortization expense as follows:


2023 (April 1 - December 31)		$	7,648
2024		9,773
2024 (April 1 - December 31)
2025	2025	8,145
2026	2026	7,262
2027	2027	6,736
2028 and thereafter		21,224
2028
2029 and thereafter
		$	60,788

7. Goodwill

The following table presents the carrying amount of goodwill as of March 31, ~~2023~~2024 and December 31, ~~2022~~2023 by reportable operating segment:

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Total
Goodwill balance $ 23,639 92,507 41,883 — 18,873 176,902


				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset Generation and Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Total
Total goodwill	$	23,639	92,507	41,883	—	—	—	158,029

8. Bank Deposits

~~Deposits are~~The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:


	As of		As of
	March 31, 2024		December 31, 2023
Retail and other savings	$	575,732	517,960
Brokered CDs, net of brokered deposit fees	204,174		203,522
Retail and other CDs (commercial and institutional)	19,320		20,060
Commercial	2,835		2,057
Total interest-bearing deposits	$	802,061	743,599

As of March 31, 2024 and consist of brokered certificates of deposit (CDs) and retail and other savings deposits and CDs. Retail and other deposits include savings deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trusts (STFIT), and commercial and institutional CDs. Union Bank and Trust Company (“Union Bank”), a related party, is the program manager for the College Savings plans and trustee for the STFIT Trust. CDs are accounts that have a stipulated maturity and interest rate. For savings accounts, the depositor may be required to give written notice of any intended withdrawal no less than seven days before the withdrawal is made. Generally, early withdrawal of brokered CDs is prohibited (except in the case of death or legal incapacity).

December 31, 2023, Nelnet Bank ~~has~~had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $158.6 million and $104.0 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 summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:~~

As of As of
March 31, 2023 December 31, 2022
Brokered CDs, net of brokered deposit fees $ 203,714 254,817
Retail and other savings (529, STFIT, and HSA) 447,792 410,556
Retail and other CDs (commercial and institutional) 24,261 25,949
Total interest-bearing deposits $ 675,767 691,322

The following table presents certificates of deposit remaining maturities as of March 31, ~~2023:~~2024:


One year or less	$	—
After one year to two years	63,026
After two years to three years	$159,320		~~65,513~~
After three years to four years	~~162,115~~348
After four years to five years	~~347~~800
After five years	—
Total	$	~~227,975~~223,494

~~The~~Retail and other deposits include savings deposits from Educational 529 College Savings, ~~STFIT,~~Short Term Federal Investment Trusts, and Health Savings plan deposits. These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. ~~Except for the pledged deposit from Nelnet, Inc. and an earmarked deposit required for intercompany transactions, there~~There were no deposits exceeding the FDIC insurance limits as of March 31, ~~2023~~2024, with the exception of $45.0 million, which includes the commercial deposit, the pledged deposit from Nelnet, Inc., and ~~December 31, 2022.~~an earmarked deposit required for intercompany transactions.

9. 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,							Three months ended March 31,
		2023				2022
		Common shareholders		Unvested restricted stock shareholders	Total	Common shareholders	Unvested restricted stock shareholders	Total
	2024											2024			2023
	Common shareholders									Common shareholders	Unvested restricted stock shareholders		Total	Common shareholders		Unvested restricted stock shareholders	Total
Numerator:	Numerator:
Net income attributable to Nelnet, Inc.	Net income attributable to Nelnet, Inc.	$	25,945	542	26,487	183,328	3,319	186,647
Net income attributable to Nelnet, Inc.
Net income attributable to Nelnet, Inc.
Denominator:	Denominator:
Weighted-average common shares outstanding - basic and diluted
Weighted-average common shares outstanding - basic and diluted
Weighted-average common shares outstanding - basic and diluted	Weighted-average common shares outstanding - basic and diluted	36,580,204		764,400	37,344,604	37,365,339	676,495	38,041,834
Earnings per share - basic and diluted	Earnings per share - basic and diluted	$	0.71	0.71	0.71	4.91	4.91	4.91

2425

10. Segment Reporting

See note 1716 of the notes to consolidated financial statements included in the ~~2022~~2023 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, 2023									Three months ended March 31, 2024
		Loan Servicing and Systems		Education Technology, Services, and Payment Processing		Asset Generation and Management	Nelnet Bank	Corporate and Other Activities	Eliminations	Total
					Nelnet Financial Services
		Loan Servicing and Systems
		Loan Servicing and Systems
		Loan Servicing and Systems										Education Technology Services and Payments	Asset Generation and Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Total interest income	Total interest income	$	1,037	6,036		234,719	12,259	21,199	(9,282)	265,968
Interest expense	Interest expense	—		—		189,198	7,214	12,318	(9,282)	199,449
Net interest income	Net interest income	1,037		6,036		45,521	5,045	8,881	—	66,519
Less provision (negative provision) for loan losses		—		—		31,858	2,417	—	—	34,275
Less provision for loan losses
Net interest income after provision for loan losses	Net interest income after provision for loan losses	1,037		6,036		13,663	2,628	8,881	—	32,244
Other income (expense):	Other income (expense):
Loan servicing and systems revenue	Loan servicing and systems revenue	139,227		—		—	—	—	—	139,227
Loan servicing and systems revenue
Loan servicing and systems revenue
Intersegment revenue	Intersegment revenue	7,790		56		—	—	—	(7,846)	—
Education technology, services, and payment processing revenue		—		133,603		—	—	—	—	133,603
Education technology services and payments revenue
Solar construction revenue	Solar construction revenue	—		—		—	—	8,651	—	8,651
Other, net	Other, net	608		—		2,845	210	(17,734)	—	(14,071)
Gain on sale of loans, net		—		—		11,812	—	—	—	11,812
(Loss) gain on sale of loans, net

Derivative settlements, net	Derivative settlements, net	—		—		23,337	—	—	—	23,337
Derivative settlements, net
Derivative settlements, net
Derivative market value adjustments, net	Derivative market value adjustments, net	—		—		(37,411)	—	—	—	(37,411)
Total other income (expense)		147,625		133,659		583	210	(9,083)	(7,846)	265,148
Total other income (expense), net
Cost of services:	Cost of services:
Cost to provide education technology, services, and payment processing services		—		47,704		—	—	—	—	47,704
Cost to provide education technology services and payments
Cost to provide education technology services and payments
Cost to provide education technology services and payments
Cost to provide solar construction services	Cost to provide solar construction services	—		—		—	—	8,299	—	8,299
Total cost of services	Total cost of services	—		47,704		—	—	8,299	—	56,003
Operating expenses:	Operating expenses:
Salaries and benefits
Salaries and benefits
Salaries and benefits	Salaries and benefits	84,560		37,913		755	2,064	27,419	—	152,710
Depreciation and amortization	Depreciation and amortization	4,513		2,578		—	5	9,531	—	16,627
Other expenses	Other expenses	13,313		8,063		5,016	782	13,611	—	40,785
Intersegment expenses, net	Intersegment expenses, net	21,057		5,800		8,696	80	(27,787)	(7,846)	—
Total operating expenses	Total operating expenses	123,443		54,354		14,467	2,931	22,774	(7,846)	210,122
Income (loss) before income taxes	Income (loss) before income taxes	25,219		37,637		(221)	(93)	(31,275)	—	31,267
Income tax (expense) benefit	Income tax (expense) benefit	(6,053)		(9,066)		53	35	6,781	—	(8,250)
Net income (loss)	Net income (loss)	19,166		28,571		(168)	(58)	(24,494)	—	23,017
Net loss attributable to noncontrolling interests		—		138		—	—	3,332	—	3,470
Net loss (income) attributable to noncontrolling interests
Net income (loss) attributable to Nelnet, Inc.	Net income (loss) attributable to Nelnet, Inc.	$	19,166	28,709		(168)	(58)	(21,162)	—	26,487

Total assets as of March 31, 2023		$	232,667	424,742		14,939,324	1,000,659	2,207,722	(722,505)	18,082,609
Total assets as of March 31, 2024
Total assets as of March 31, 2024
Total assets as of March 31, 2024

2526


		Three months ended March 31, 2022									Three months ended March 31, 2023
		Loan Servicing and Systems		Education Technology, Services, and Payment Processing		Asset Generation and Management	Nelnet Bank	Corporate and Other Activities	Eliminations	Total
					Nelnet Financial Services
		Loan Servicing and Systems
		Loan Servicing and Systems
		Loan Servicing and Systems										Education Technology Services and Payments	Asset Generation and Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Total interest income	Total interest income	$	67	339		118,598	3,030	3,992	(828)	125,196
Interest expense	Interest expense	24		—		46,003	856	2,026	(828)	48,079
Net interest income	Net interest income	43		339		72,595	2,174	1,966	—	77,117
Less provision (negative provision) for loan losses		—		—		(864)	429	—	—	(435)
Less provision for loan losses
Net interest income after provision for loan losses	Net interest income after provision for loan losses	43		339		73,459	1,745	1,966	—	77,552
Other income (expense):	Other income (expense):
Loan servicing and systems revenue	Loan servicing and systems revenue	136,368		—		—	—	—	—	136,368
Loan servicing and systems revenue
Loan servicing and systems revenue
Intersegment revenue	Intersegment revenue	8,480		3		—	—	—	(8,483)	—
Education technology, services, and payment processing revenue		—		112,286		—	—	—	—	112,286
Education technology services and payments revenue
Solar construction revenue	Solar construction revenue	—		—		—	—	—	—	—
Other, net	Other, net	740		—		6,511	1,500	1,125	—	9,877
Gain on sale of loans, net		—		—		2,989	—	—	—	2,989
(Loss) gain on sale of loans, net

Derivative settlements, net	Derivative settlements, net	—		—		(2,809)	—	—	—	(2,809)
Derivative settlements, net
Derivative settlements, net
Derivative market value adjustments, net	Derivative market value adjustments, net	—		—		145,734	—	—	—	145,734
Total other income (expense)		145,588		112,289		152,425	1,500	1,125	(8,483)	404,445
Total other income (expense), net
Cost of services:	Cost of services:
Cost to provide education technology, services, and payment processing services		—		35,545		—	—	—	—	35,545
Cost to provide education technology services and payments
Cost to provide education technology services and payments
Cost to provide education technology services and payments
Cost to provide solar construction services	Cost to provide solar construction services	—		—		—	—	—	—	—
Total cost of services	Total cost of services	—		35,545		—	—	—	—	35,545
Operating expenses:	Operating expenses:
Salaries and benefits
Salaries and benefits
Salaries and benefits	Salaries and benefits	91,972		31,286		591	1,554	24,012	—	149,414
Depreciation and amortization	Depreciation and amortization	4,954		2,315		—	3	9,684	—	16,956
Other expenses	Other expenses	16,213		5,764		3,033	682	13,804	—	39,499
Intersegment expenses, net	Intersegment expenses, net	20,398		4,605		8,831	45	(25,396)	(8,483)	—
Total operating expenses	Total operating expenses	133,537		43,970		12,455	2,284	22,104	(8,483)	205,869
Income (loss) before income taxes	Income (loss) before income taxes	12,094		33,113		213,429	961	(19,013)	—	240,583
Income tax (expense) benefit	Income tax (expense) benefit	(2,903)		(7,947)		(51,223)	(223)	6,598	—	(55,697)
Net income (loss)	Net income (loss)	9,191		25,166		162,206	738	(12,415)	—	184,886
Net loss attributable to noncontrolling interests		—		—		—	—	1,761	—	1,761
Net loss (income) attributable to noncontrolling interests
Net income (loss) attributable to Nelnet, Inc.	Net income (loss) attributable to Nelnet, Inc.	$	9,191	25,166		162,206	738	(10,654)	—	186,647

Total assets as of March 31, 2022		$	259,712	376,794		18,158,972	656,242	2,066,417	(528,396)	20,989,741
Total assets as of March 31, 2023
Total assets as of March 31, 2023
Total assets as of March 31, 2023

2627

11. Disaggregated Revenue

The following tables present disaggregated revenue by service offering or customer type for the Company's fee-based operating segments.

Loan Servicing and Systems

Three months ended March 31,

2023

2022

Government loan servicing

108,880

109,125

Government loan servicing

Private education and consumer loan servicing

12,164

12,873

FFELP loan servicing

3,368

4,248

FFELP loan servicing

Software services

9,697

7,400

Outsourced services

5,118

2,722

Outsourced services

Loan servicing and systems revenue

139,227

136,368

Loan servicing and systems revenue

Education Technology Services and ~~Payment Processing~~Payments






		Three months ended March 31,
		2023		2022
Tuition payment plan services	Tuition payment plan services	$	34,187	30,716
Tuition payment plan services
Tuition payment plan services
Payment processing	Payment processing	44,041		38,071
Education technology and services		54,787		43,251
Payment processing
Payment processing
Education technology services
Education technology services
Education technology services
Other	Other	588		248
Education technology, services, and payment processing revenue		$	133,603	112,286
Other
Other
Education technology services and payments revenue
Education technology services and payments revenue
Education technology services and payments revenue

Solar Construction

~~GRNE Solar was acquired~~


	Three months ended March 31,
	2024		2023




Commercial revenue	$	11,578	5,876
Residential revenue (a)	2,148		2,775

Solar construction revenue	$	13,726	8,651

(a) On April 12, 2024, the Company announced a change in its solar engineering, procurement, and construction operations to focus exclusively on ~~July 1, 2022; accordingly, there~~the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will decline in future periods as existing customer contracts are ~~no results for the three months ended March 31, 2022.~~


	~~Three months ended March 31, 2023~~
~~Commercial revenue~~	$	~~6,234~~
~~Residential revenue~~	~~2,775~~
~~Other~~	~~(358)~~
~~Solar construction revenue~~	$	~~8,651~~

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,

2023

2022

Three months ended March 31,

2024

Reinsurance premiums

Borrower late fee income

Gain (loss) from solar investments, net

ALLO preferred return

2,249

2,117

Borrower late fee income

2,247

2,431

ALLO preferred return

Administration/sponsor fee income

1,772

2,123

Investment advisory services

1,612

1,282

Administration/sponsor fee income

Investment advisory services (WRCM)

Loss from ALLO voting membership interest investment

(20,213)

(13,130)

Investment activity, net

(3,577)

11,856

Loss from solar investments

(1,947)

(1,030)

Investment activity, net

Other

3,786

4,228

Other, net

(14,071)

9,877

Other, net

2728

12. Major Customer

Government Loan Servicing

Nelnet Servicing, ~~LLC (Nelnet Servicing) and Great Lakes Educational Loan Services, Inc. (Great Lakes), both subsidiaries~~a subsidiary of the Company, ~~are two of the current six private sector entities that have student~~earns loan servicing ~~contracts~~revenue from a servicing contract with the ~~Department.~~Department of Education (the "Department"). Revenue earned by the Company related to ~~these contracts~~this contract was ~~$108.9~~$105.5 million and ~~$109.1~~$108.9 million for the three months ended March 31, 2024 and 2023, ~~and 2022,~~ respectively.

The ~~Company currently licenses its hosted servicing software two of the six servicers for the Department.~~

~~Contract Modifications and Award~~

On March 22, 2023, each of Nelnet Servicing and Great Lakes received modifications of contract with an effective date of April 1, 2023 (collectively the “modifications”) from the Department. Such modifications outline the Department's amendment to theCompany's legacy student loan servicing contracts between the Department and each of Nelnet Servicing and Great Lakes (the “servicing contracts”) to reduce the current prices earned by Nelnet Servicing and Great Lakes under the servicing contracts. Under the servicing contracts, Nelnet Servicing and Great Lakes earn a monthly fee from the Department for each unique borrower they service on behalf of the Department. The modifications reduce the monthly fee by $0.19 per borrower on certain borrower statuses.

~~The Company's current student loan servicing contracts~~contract with the Department ~~are~~was scheduled to expire on December 14, 2023. In 2017, the Department initiated a contract procurement process referred to as the Next Generation Financial Services Environment for a new framework for the servicing of all student loans owned by the Department. In the second quarter of 2022, the Department released a solicitation entitled Unified Servicing and Data Solution (USDS) for the new servicing framework. The Company responded to the USDS solicitation. On April ~~24,~~ 2023, Nelnet ~~Diversified Solutions, LLC (NDS), a subsidiary of the Company,~~Servicing received a contract award from the Department, pursuant to which ~~NDS~~it was selected to provide continued servicing capabilities for the Department's ~~Office of Federal Student Aid's~~ student aid recipients under a new ~~USDS~~Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which ~~will replace~~replaced the ~~existing~~ legacy Department student loan servicing ~~contracts that are currently scheduled to expire December 14, 2023.~~contract.

The New Government Servicing Contract isbecame effective April 24, 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 ~~more than 37 million~~ existing borrowers will be allocated by the Department to ~~NDS~~Nelnet Servicing and four other third-party servicers that were awarded a USDS ~~contract. New Department borrowers will be allocated to the USDS servicers~~contract based on service and performance levels. Under the New Government Servicing Contract, ~~NDS will begin~~Nelnet Servicing immediately began to make required servicing platform enhancements, for which ~~NDS~~it will be compensated from the Department on certain of these investments. ~~In a press release issued~~Servicing under the New Government Servicing Contract went live on April ~~24, 2023 by the Department's Office of Federal Student Aid (FSA), FSA indicated that servicing under the USDS contracts will go live in~~1, 2024 and to maintain stability as the new loan servicing environment gets underway, FSA will extend the current legacy servicing contracts with the Department from December 14, 2023 to December 2024. Until servicing under the USDS contracts goes live, the Company will ~~continue to earn~~recognize revenue in accordance with this new contract beginning in the second quarter of 2024. The Company earned revenue for servicing borrowers under ~~its current~~the legacy servicing ~~contracts~~contract with the ~~Department.~~Department through March 31, 2024.

The fee structure included in the new Department servicing contracts under USDS are structurally different than the current legacy servicing contracts with the Department. The USDS servicing contracts haveNew Government Servicing Contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing ~~contracts is~~contract was primarily based on borrower status. Assuming borrower volume remains consistent under the ~~USDS servicing contract,~~New Government Servicing Contract, the Company expects revenue earned on a per borrower blended basis will decrease under the ~~USDS contract~~New Government Servicing Contract versus the ~~current~~ legacy ~~contracts.~~contract. However, consistent with the ~~current~~ legacy ~~contracts,~~contract, the Company expects to earn additional revenue from the Department under the ~~USDS servicing contract~~New Government Servicing Contact for change requests ~~consolidations,~~ and other support services. As discussed below, during 2023, the Company will continue to transfer the Great Lakes direct loan servicing volume to the Nelnet servicing platform. The associated cost savings with moving government borrowers to one servicing platform will be partially offset under the USDS contract as the Company will incur additional costs for cybersecurity and other system specifications as required under the new contract.

~~Loan Volume Transfers~~

Edfinancial Services, LLC ("Edfinancial"), a current servicer for the Department, utilizes Nelnet Servicing's platform to service their loans for the Department. In the fourth quarter of 2022, Nelnet Servicing and Edfinancial reached an agreement on a decommission schedule transferring Edfinancial’s direct loan servicing volume to another servicing platform. As of March 31, 2023, Edfinancial was servicing 3.5 million borrowers for the Department on the Company’s platform.

In February 2023, the Department notified the Company of its intention to transfer up to one million borrowers of the Company’s existing Department servicing borrowers to another servicer, and one of the Company’s remote hosted servicing customers notified the Company the Department intends to move that customer’s servicing borrowers to a different servicing platform. As of March 31, 2023, the remote hosted servicing customer was servicing approximately 1.4 million borrowers for the Department on the Company's platform. Neither transfer decision was based on the Company’s performance.

The 2023 transfers discussed above began in the first quarter of 2023 and the Company expects the transfers to be completed by the end of the second quarter of 2023. As a result of the transfers, software services revenue for remote hosted customers and government servicing revenue will decrease in future periods as borrowers are transferred off of the Company’s platform. In addition, once all remote hosted servicing transfers are complete, there will be no active Department remote hosted servicing customers using the Company’s platform.

In addition, the Company continues to transfer the Great Lakes direct loan servicing volume to the Nelnet servicing platform (the GreatNet Federal servicing platform). The Company anticipates the transfer of active borrowers to be completed by the end of the second quarter of 2023 and decommissioning of the Great Lakes' platform to be completed by the end of 2023. Therefore, potential associated cost savings as a result of transferring direct loan servicing volume to one platform will not be recognized in operating results until 2024.

~~Department of Education Debt Relief~~

In August 2022, the Department announced a broad based student debt relief plan that would provide targeted student debt cancellation to borrowers with loans held by the Department, and that borrowers whose annual income for either 2020 or 2021 was under $125,000 (for single or married, filing separately) or under $250,000 (for married couples, filing jointly or heads of household) will be eligible for otherwise unconditional loan cancellation in amounts of up to $20,000 for eligible borrowers who received a Pell Grant, or of up to $10,000 for eligible borrowers who did not receive a Pell Grant. Decisions by the U.S. Courts of Appeals for the Eighth Circuit and Fifth Circuit in October 2022 and November 2022, respectively, in response to legal challenges that were initiated by other parties (not the Company) have blocked implementation of the Department's broad based student debt relief plan. These cases have been appealed to the U.S. Supreme Court. As of the filing of this report, the Supreme Court has not ruled on, and the Company cannot predict the timing, nature, or ultimate outcome of, this case.

The Company cannot estimate how many borrowers meet the eligibility requirements and other terms and conditions for one-time debt relief under the Department's announcement. If there was a broad $10,000 or $20,000 per borrower forgiveness on all government owned loans, the Company estimates it would decrease the number of borrowers serviced (based on the borrower loan information as of March 31, 2023) by approximately 4.5 million borrowers and 7.7 million borrowers, respectively. The actual impact to the number of borrowers serviced may be less than these amounts due to annual income ceilings for borrowers to qualify for forgiveness and the impact of whether a Pell Grant was received on the amount of forgiveness for a borrower.

~~Revenue earned under the current Department servicing contracts will decrease in future periods if the Department's student debt relief plan or other broad based loan forgiveness is implemented.~~

13. 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, 2023			As of December 31, 2022			As of March 31, 2024			As of December 31, 2023
		Level 1		Level 2	Total	Level 1	Level 2		Total	Level 1		Level 2	Total	Level 1	Level 2	Total
Assets:	Assets:
Investments:	Investments:
Investments:
Investments:
Asset-backed debt securities - available-for-sale
Asset-backed debt securities - available-for-sale
Asset-backed debt securities - available-for-sale	Asset-backed debt securities - available-for-sale	$	99	1,070,604	1,070,703	100	1,388,937		1,389,037
Equity securities	Equity securities	91		—	91	6,719	—		6,719
Equity securities measured at net asset value (a)	Equity securities measured at net asset value (a)				35,572				32,363
Total investments	Total investments	190		1,070,604	1,106,366	6,819	1,388,937		1,428,119
Derivative instruments
Total assets	Total assets	$	190	1,070,604	1,106,366	6,819	1,388,937		1,428,119
Liabilities:
Derivative instruments
Derivative instruments
Derivative instruments
Total liabilities

(a) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:


		As of March 31, 2023						As of March 31, 2024
		Fair value		Carrying value	Level 1	Level 2	Level 3	Fair value	Carrying value	Level 1	Level 2	Level 3
Financial assets:	Financial assets:
Loans receivable	Loans receivable	$	13,919,785	13,760,708	—	—	13,919,785
Loans receivable
Loans receivable
Accrued loan interest receivable	Accrued loan interest receivable	800,400		800,400	—	800,400	—
Cash and cash equivalents	Cash and cash equivalents	187,574		187,574	187,574	—	—
Investments (at fair value)	Investments (at fair value)	1,106,366		1,106,366	190	1,070,604	—
Investments - held to maturity		154,119		154,119	—	154,119	—
Investments - held-to-maturity
Notes receivable	Notes receivable	30,246		30,246	—	30,246	—
Beneficial interest in loan securitizations	Beneficial interest in loan securitizations	201,216		177,888	—	—	201,216
Restricted cash	Restricted cash	576,267		576,267	576,267	—	—
Restricted cash – due to customers	Restricted cash – due to customers	134,202		134,202	134,202	—	—

Derivative instruments
Derivative instruments
Derivative instruments
Financial liabilities:	Financial liabilities:
Bonds and notes payable
Bonds and notes payable
Bonds and notes payable	Bonds and notes payable	12,933,378		13,438,416	—	12,933,378	—
Accrued interest payable	Accrued interest payable	34,374		34,374	—	34,374	—
Bank deposits	Bank deposits	647,708		675,767	391,379	256,329	—
Due to customers	Due to customers	280,624		280,624	280,624	—	—

Derivative instruments


		As of December 31, 2022						As of December 31, 2023
		Fair value		Carrying value	Level 1	Level 2	Level 3	Fair value	Carrying value	Level 1	Level 2	Level 3
Financial assets:	Financial assets:
Loans receivable	Loans receivable	$	14,586,794	14,427,025	—	—	14,586,794
Loans receivable
Loans receivable
Accrued loan interest receivable	Accrued loan interest receivable	816,864		816,864	—	816,864	—
Cash and cash equivalents	Cash and cash equivalents	118,146		118,146	118,146	—	—
Investments (at fair value)	Investments (at fair value)	1,428,119		1,428,119	6,819	1,388,937	—
Investments - held to maturity		18,996		18,774	—	18,996	—
Investments - held-to-maturity
Notes receivable	Notes receivable	31,106		31,106	—	31,106	—
Beneficial interest in loan securitizations	Beneficial interest in loan securitizations	162,360		138,738	—	—	162,360
Restricted cash	Restricted cash	945,159		945,159	945,159	—	—
Restricted cash – due to customers	Restricted cash – due to customers	294,311		294,311	294,311	—	—

Derivative instruments
Derivative instruments
Derivative instruments
Financial liabilities:	Financial liabilities:
Bonds and notes payable
Bonds and notes payable
Bonds and notes payable	Bonds and notes payable	14,088,666		14,637,195	—	14,088,666	—
Accrued interest payable	Accrued interest payable	36,049		36,049	—	36,049	—
Bank deposits	Bank deposits	664,573		691,322	355,282	309,291	—
Due to customers	Due to customers	348,317		348,317	348,317	—	—

Derivative instruments

The methodologies for estimating the fair value of financial assets and liabilities are described in note 2423 of the notes to consolidated financial statements included in the ~~2022~~2023 Annual Report.

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, ~~2023~~2024 and ~~2022.~~2023. 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 ~~2022~~2023 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 ~~2022~~2023 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 ~~U.S.~~ Department, ~~of Education (the "Department")~~risks related to unfavorable contract modifications or interpretations, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, Federal Family Education Loan Program (the "FFEL Program" or FFELP), private education, and consumer loans;

•loan portfolio risks such as prepayment risk, credit risk, interest rate basis and repricing risk, ~~the risk of loss of floor income on certain student loans originated under the FFEL Program,~~ 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, and risks from changes in levels of loan prepayment or default rates;~~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;

•risks related to use of artificial intelligence;

•uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations;

•risks ~~and uncertainties of~~related to the ~~expected benefits from the November 2020 launch~~ability of Nelnet Bank ~~operations, including the ability~~ to ~~successfully conduct banking operations~~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 Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO"), and risks related to investments in solar projects, including risks of not being able to realize tax credits which remain subject to recapture by taxing ~~authorities;~~authorities and rising construction costs;

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

•risks and uncertainties associated with climate change; and

•risks and uncertainties associated with litigation matters and ~~with~~ maintaining compliance with the extensive regulatory requirements applicable to the Company's ~~businesses.~~businesses, 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 diverse, innovative company with a purpose to serve others and a vision to make dreams possible. The largest operating businesses engage in loan servicing and education technology services and ~~payment processing, and the Company also has a significant investment in communications.~~payments. A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans. The Company also makes investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). The Company is also actively expanding its private education, consumer, and other loan portfolios, and in November 2020 launched Nelnet Bank.

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, is provided below.

Three months ended March 31,

2023

2022

Three months ended March 31,

2024

GAAP net income attributable to Nelnet, Inc.

26,487

186,647

Realized and unrealized derivative market value adjustments

37,411

(145,734)

Realized and unrealized derivative market value adjustments

Tax effect (a)

(8,979)

34,976

Tax effect (a)

Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments (b)

54,919

75,889

Earnings per share:

GAAP net income attributable to Nelnet, Inc.

0.71

4.91

Realized and unrealized derivative market value adjustments

1.00

(3.83)

Realized and unrealized derivative market value adjustments

Tax effect (a)

(0.24)

0.91

Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments (b)

1.47

1.99

Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments (b)

(a) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate.

(b) "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 current 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 is met. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective; however, the Company’s derivative instruments do not qualify for hedge ~~accounting.~~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~~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. 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.

Operating Segments

The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the ~~2022~~2023 Annual Report. They include:

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

•Education Technology Services and ~~Payment Processing (ETS&PP)~~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, inthrough 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.

On November 2, 2020, the Company obtained final approval for federal deposit insurance from the Federal Deposit Insurance Corporation (FDIC) and for a bank charter from the Utah Department of Financial Institutions (UDFI) in connection with the establishment of Nelnet Bank, and Nelnet Bank launched operations. 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 ~~majority of the Company’s investments,~~corporate level and interest expense incurred on unsecured ~~and other~~ corporate related debt transactions, certain investment activities including its investment in ALLO and early-stage and emerging growth companies (venture capital investments), and certain shared service activities ~~related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing. These shared services~~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 ~~provides~~presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating ~~segment and Corporate and Other Activities~~segments reconciled to the consolidated financial statements for the three months ended March 31, ~~2023~~2024 and ~~2022.~~2023. See "Results of Operations" for each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2 for additional detail.

Three months ended March 31, Certain Items Impacting Comparability
(All dollar amounts below are pre-tax)
2023 2022
NDS $ 25,219 12,094
•An increase in before tax operating margin in 2023 compared with 2022 due to a decrease in operating expenses, primarily salaries and benefits. In 2022, the Company was fully staffed in preparation for the resumption of federal student loan payments once the CARES Act suspension was to expire. The expiration of the CARES Act was extended multiple times throughout 2022. The Company reduced staff in January 2023 to manage excess staff due to the delays in the government's student debt relief and return to repayment programs.
NBS 37,637 33,113
•The recognition of $6.0 million of interest income in 2023 compared with $0.3 million in 2022 due to higher interest rates.
•A decrease in before tax operating margin, excluding net interest income, in 2023 compared with 2022 due to additional investments in the development of new services and technologies and superior customer experiences to align with the Company's strategies to grow, retain, and diversify revenue.
AGM (221) 213,429
•A net loss of $37.4 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting in 2023 compared with a net gain of $145.7 million in 2022.
•The recognition of $31.9 million in provision for loan losses in 2023 compared with a negative provision of $0.9 million in 2022.
•A decrease of $12.6 million in net interest income due to the decrease in the average balance of loans in 2023 compared with 2022.
•An increase of $4.2 million in net interest income due to an increase in core loan spread in 2023 compared with 2022.
•The recognition of $11.8 million in gains from the sale of loans in 2023 compared with $3.0 million in 2022.
Nelnet Bank (93) 961
Corporate (31,275) (19,013)
•The recognition of a net loss of $20.2 million in 2023 related to the Company’s investment in ALLO, compared with a net loss of $13.1 million in 2022.
•The recognition of net investment losses of $3.3 million in 2023 compared with net investment income and gains of $8.5 million in 2022.
Income before income taxes 31,267 240,583
Income tax expense (8,250) (55,697)
Net loss attributable to noncontrolling interests 3,470 1,761
Net income $ 26,487 186,647


	Three months ended March 31,			Certain Items Impacting Comparability (All dollar amounts below are pre-tax)
	2024		2023
NDS	$	15,990	25,219		•A decrease in before tax operating margin due primarily to a decrease in loan servicing and systems revenue, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.
NBS	47,635		37,637		•An increase in before tax operating margin, excluding net interest income, due to increased revenue while maintaining a consistent cost structure. •The recognition of $7.9 million of interest income in 2024 compared with $6.0 million in 2023 due to higher interest rates.
Nelnet Financial Services division:
AGM	33,743		(221)		•A net gain of $5.7 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting in 2024 compared with a net loss of $37.4 million in 2023. •A decrease of $21.1 million in net interest income due to a decrease in core loan spread in 2024 compared with 2023. •A decrease of $5.1 million in net interest income due to the decrease in the average balance of loans in 2024 compared with 2023. •The recognition of $6.6 million in provision for loan losses in 2024 compared with $31.9 million in 2023. •The recognition of a net gain of $11.8 million in 2023 from the sale of loans. •The recognition of $21.8 million of investment interest in 2024 compared with $13.8 million in 2023 due to an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Nelnet Bank	1,147		(93)
NFS other operating segments	13,762		5,177		•The recognition of $12.2 million of net interest income in 2024 compared with $6.4 million in 2023 due to higher average yield on interest-earning debt securities (bonds) and a decrease in outstanding debt used to finance such investments. •The recognition of $4.0 million of realized losses on sales of investment securities in 2023.
Corporate:
Unallocated corporate costs	(10,045)		(12,989)
ALLO investment	(8,593)		(17,882)		•The recognition of a net loss from the ALLO voting membership interest investment of $10.7 million in 2024 compared with $20.2 million in 2023. Absent additional equity contributions, the Company will not recognize additional losses for its voting membership interests in ALLO. •The recognition of income of $2.4 million and $2.2 million in 2024 and 2023, respectively, on the $155.0 million (as of March 31, 2024) outstanding preferred membership interests of ALLO. The preferred membership interests of ALLO held by the Company historically earned a preferred annual return of 6.25% that increased to 10.00% on April 1, 2024.
Nelnet Renewable Energy	(1,533)		(6,701)		•The recognition of a loss in the solar construction business of $4.0 million in 2024 compared with $3.1 million in 2023. •The recognition of a net gain from tax solar investments of $3.0 million in 2024 compared with a net loss of $1.9 million in 2023.

Other corporate activities	2,019		1,120
Net income before taxes	94,127		31,267
Income tax expense	(23,119)		(8,250)
Net loss attributable to noncontrolling interests	2,202		3,470		•The majority of noncontrolling interests represents losses attributed to noncontrolling membership interests in the Company’s Nelnet Renewable Energy operating segment, which were $2.3 million and $3.5 million in 2024 and 2023, respectively.
Net income	$	73,210	26,487

CONSOLIDATED RESULTS OF OPERATIONS

An analysis of the Company's consolidated operating results for the three months ended March 31, ~~2023~~2024 compared with the same period in ~~2022~~2023 is provided below.

The Company’s operating results are primarily driven by the performance of its existing loan portfolio and the revenues generated by its fee-based businesses and the costs to provide such services. The performance of the Company’s portfolio is driven by net interest income (which includes financing costs) and losses related to credit quality of the assets, along with the cost to administer and service the assets and related debt.

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 10 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,
		2023		2022	Additional information	2024				2023				Additional information
Loan interest	Loan interest	$	225,243	111,377	Increase was due to an increase in the gross yield earned on loans, partially offset by a decrease in the average balance of loans and in gross fixed rate floor income.	Loan interest	$	216,724	225,243			225,243	Decrease was due to decreases in the average balance of loans and gross fixed rate floor income partially offset by an increase in the gross yield earned on loans.			Decrease was due to decreases in the average balance of loans and gross fixed rate floor income partially offset by an increase in the gross yield earned on loans.
Investment interest	Investment interest	40,725		13,819	Includes income from interest-earning deposits and investments and restricted cash in asset-backed securitizations. Increase was due to an increase in interest earning investments and an increase in interest rates.	Investment interest	52,078		40,725			40,725	Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations. Increase was due to an increase in interest rates and an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.			Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations. Increase was due to an increase in interest rates and an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Total interest income	Total interest income	265,968		125,196
Interest expense	Interest expense	199,449		48,079	Increase was due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
Interest expense
Interest expense							194,580				199,449				Decrease was due to a decrease in the average balance of debt outstanding partially offset by an increase in cost of funds.
Net interest income	Net interest income	66,519		77,117
Less provision (negative provision) for loan losses		34,275		(435)	Represents the current period provision (negative provision) to reflect the lifetime expected credit losses related to the Company's loan portfolio. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for the activity in the Company's allowance for loan losses.
Less provision for loan losses
Less provision for loan losses
Less provision for loan losses							10,928				34,275				Represents the current period provision to reflect the lifetime expected credit losses related to the Company's loan portfolio. See note 2 of the notes to consolidated financial statements in this report for the factors impacting provision for loan losses for the periods presented.
Net interest income after provision for loan losses	Net interest income after provision for loan losses	32,244		77,552
Other income (expense):	Other income (expense):
Other income (expense):
Other income (expense):
LSS revenue	LSS revenue	139,227		136,368	See LSS operating segment - results of operations.
ETS&PP revenue		133,603		112,286	See ETS&PP operating segment - results of operations.
LSS revenue
LSS revenue							127,201				139,227				See LSS operating segment - results of operations.
ETSP revenue						ETSP revenue	143,539				133,603				See ETSP operating segment - results of operations.
Solar construction revenue	Solar construction revenue	8,651		—	On July 1, 2022, the Company acquired 80% of the ownership interests of GRNE Solar. GRNE Solar designs and installs residential, commercial, and utility-scale solar systems. The acquisition diversifies the Company's position in the renewable energy space to include solar construction.	Solar construction revenue	13,726		8,651			8,651	Represents revenue earned from GRNE Solar providing solar construction services, including design and installations of residential and commercial solar systems. On April 12, 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will decline in future periods as existing customer contracts are completed. Residential solar construction revenue was $2.1 million and $2.8 million for the three months ended March 31, 2024 and 2023, respectively, and $11.8 million for the year ended December 31, 2023.			Represents revenue earned from GRNE Solar providing solar construction services, including design and installations of residential and commercial solar systems. On April 12, 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will decline in future periods as existing customer contracts are completed. Residential solar construction revenue was $2.1 million and $2.8 million for the three months ended March 31, 2024 and 2023, respectively, and $11.8 million for the year ended December 31, 2023.
Other, net	Other, net	(14,071)		9,877	See table below for the components of "other, net."	Other, net	17,015		(14,071)			(14,071)	See table below for the components of "other, net."			See table below for the components of "other, net."
Gain on sale of loans, net		11,812		2,989	The Company sold $261.9 million (par value) of consumer and other loans during 2023 and recognized a net gain of $11.8 million. The Company sold $18.1 million (par value) of consumer loans in 2022 and recognized a gain of $3.0 million.
(Loss) gain on sale of loans, net						(Loss) gain on sale of loans, net	(41)				11,812				The Company recognized a loss and net gains from selling loans in 2024 and 2023, respectively. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Derivative settlements, net	Derivative settlements, net	23,337		(2,809)	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. The majority of derivative settlements received in 2023 was from the Company's derivatives used to hedge loans earning fixed rate floor income. This entire derivative portfolio was terminated on March 15, 2023 to minimize the Company's exposure to market volatility. As such, there will be no derivative settlements received on this portfolio of derivatives in future periods. See AGM operating segment - results of operations.
Derivative settlements, net
Derivative settlements, net							1,757				23,337				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. The majority of derivative settlements received in the periods presented was from the Company's derivatives used to hedge loans earning fixed rate floor income. To minimize the Company's exposure to market volatility and increase liquidity, the Company terminated this derivative portfolio on March 15, 2023. Subsequent to terminating these derivatives, during the second and fourth quarters of 2023, the Company entered into a total of $400 million notional amount of derivatives to hedge loans earning fixed rate floor income and other loans and investments in which the Company receives a fixed rate. See AGM operating segment - results of operations for additional information.
Derivative market value adjustments, net	Derivative market value adjustments, net	(37,411)		145,734	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 were 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. The entire portfolio of floor income interest rate swaps was terminated on March 15, 2023 to minimize the Company's exposure to market volatility. As such, the Company expects the derivative market value adjustments in future periods will be less substantial.	Derivative market value adjustments, net	7,964		(37,411)			(37,411)	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. To minimize the Company's exposure to market volatility and increase liquidity, the Company terminated this derivative portfolio on March 15, 2023. As such, the Company expects the derivative market value adjustments in future periods will be less substantial.			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. To minimize the Company's exposure to market volatility and increase liquidity, the Company terminated this derivative portfolio on March 15, 2023. As such, the Company expects the derivative market value adjustments in future periods will be less substantial.
Total other income (expense)		265,148		404,445

Total other income (expense), net

Total other income (expense), net

Total other income (expense), net
Cost of services:	Cost of services:
Cost to provide education technology, services, and payment processing services		47,704		35,545	Represents direct costs to provide payment processing and instructional services in ETS&PP. Increase was primarily due to additional instructional services costs. See ETS&PP operating segment - results of operations.
Cost of services:
Cost of services:
Cost to provide education technology services and payments
Cost to provide education technology services and payments
Cost to provide education technology services and payments							48,610				47,704				Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations.
Cost to provide solar construction services	Cost to provide solar construction services	8,299		—	As noted above, the Company acquired GRNE Solar on July 1, 2022. These amounts represent direct costs related to GRNE providing solar construction services.	Cost to provide solar construction services	14,229		8,299			8,299	Represents direct costs to provide solar construction services. Since the acquisition of GRNE in July 2022, it has incurred low and, in some cases, negative margins on certain projects.			Represents direct costs to provide solar construction services. Since the acquisition of GRNE in July 2022, it has incurred low and, in some cases, negative margins on certain projects.
Total cost of services	Total cost of services	56,003		35,545

Operating expenses:

Salaries and benefits

152,710

149,414

Increase was due to an increase in headcount in ETS&PP to support the growth of its customer base and the investment in the development of new technologies. This increase was partially offset by staff reductions in LSS to manage excess staff due to delays in the government's student debt relief and return to repayment programs.

143,875

152,710

Decrease was primarily due to restructuring charges recognized in the first quarter of 2023 and staff reductions in LSS to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. This was partially offset by an increase in ETSP due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.

Depreciation and amortization

16,627

16,956

Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions.

Depreciation and amortization

16,769

16,627

Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions.

Other expenses

40,785

39,499

Includes expenses necessary for operations, such as postage and distribution, consulting and professional fees, occupancy, communications, and certain information technology-related costs. Increase was due to an increase in expenses in ETS&PP due to higher costs for consulting, professional fees, and technology services resulting from investments in new technologies, and an increase in costs for travel and in-person hosted conferences that had previously subsided due to the COVID-19 pandemic. The increase was partially offset by a decrease in expenses in LSS due to a decrease in professional fees and facility costs. Over the last year, the Company has reduced its office space as a large number of employees continue to work from home.

Other expenses

56,845

40,785

Represents expenses necessary for operations, such as postage and distribution, consulting and professional fees, occupancy, communications, reinsurance loss reserve and acquisitions costs, and certain information technology-related costs. Increase was driven by an increase in NFS due to reinsurance loss reserve and acquisition costs as a result of growth in reinsurance policies and in LSS due to additional postage and communication costs as a result of borrowers returning to repayment on September 1, 2023.

Total operating expenses

210,122

205,869

Income before income taxes

31,267

240,583

Income before income taxes

Income tax expense

8,250

55,697

The effective tax rate was 23.7% and 23.0% for the three months ended March 31, 2023 and 2022, respectively.

23,119

8,250

The effective tax rate was 24.0% and 23.7% for the three months ended March 31, 2024 and 2023, respectively. The Company expects its tax rate will range between 22% and 24% for the remainder of 2024.

Net income

23,017

184,886

Net loss attributable to noncontrolling interests

3,470

1,761

Amounts for noncontrolling interests reflect the net income/loss attributable to the holders of noncontrolling membership interests in WRCM, NextGen, multiple solar entities including, GRNE Solar, and multiple entities investing in federal opportunity zone programs.

Net loss attributable to noncontrolling interests

2,202

3,470

Represents the net income/loss attributable to the holders of noncontrolling membership interests. The majority is attributed to noncontrolling membership interests in the Company's Nelnet Renewable Energy operating segment.

Net income attributable to Nelnet, Inc.

26,487

186,647

Additional information:

See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments.

Net income attributable to Nelnet, Inc.

26,487

186,647

Derivative market value adjustments, net

37,411

(145,734)

Derivative market value adjustments, net

Tax effect

(8,979)

34,976

See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments.

Net income attributable to Nelnet, Inc., excluding derivative market value adjustments

54,919

75,889

Tax effect

Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments

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


		Three months ended March 31,
		2023		2022	Additional information



							2024			2023			Additional information
Reinsurance premiums						Reinsurance premiums	$	12,780		535			See NFS division - results of operations - NFS other operating segments.
Borrower late fee income						Borrower late fee income	3,133			2,247			See NFS division - results of operations - AGM operating segment.
Gain (loss) from solar investments, net						Gain (loss) from solar investments, net	2,971			(1,947)			See Corporate - results of operations.
ALLO preferred return	ALLO preferred return	$	2,249	2,117	See Corporate - results of operations.	ALLO preferred return	2,409		2,249		2,249	See Corporate - results of operations.		See Corporate - results of operations.
Borrower late fee income		2,247		2,431	See AGM operating segment - results of operations.
Administration/sponsor fee income	Administration/sponsor fee income	1,772		2,123	See AGM operating segment - results of operations.	Administration/sponsor fee income	1,546		1,772		1,772	See NFS division - results of operations - AGM operating segment.		See NFS division - results of operations - AGM operating segment.
Investment advisory services		1,612		1,282	See Corporate - results of operations.
Investment advisory services (WRCM)						Investment advisory services (WRCM)	1,508			1,612			See NFS division - results of operations - NFS other operating segments.
Loss from ALLO voting membership interest investment	Loss from ALLO voting membership interest investment	(20,213)		(13,130)	See Corporate - results of operations.	Loss from ALLO voting membership interest investment	(10,693)		(20,213)		(20,213)	See Corporate - results of operations.		See Corporate - results of operations.
Investment activity, net	Investment activity, net	(3,577)		11,856	See Corporate - results of operations and note (a) below for additional information.	Investment activity, net	(1,298)		(3,577)		(3,577)	See note (a) below for additional information.		See note (a) below for additional information.
Loss from solar investments		(1,947)		(1,030)	See Corporate - results of operations.

Other	Other	3,786		4,228
Other
Other
Other, net	Other, net	$	(14,071)	9,877
Other, net
Other, net

(a) During the three months ended March 31, 2023, the Company recognized net investment losses of $3.6 million, including net losses of $0.3 million from venture capital investments recognized at Nelnet Bank, a gain of $0.8 million related to real estate investments at Corporate, and losses of $4.1 million primarily related to sales of investments in asset-backed securities (bonds) and marketable equity securities (a loss of $4.1 million recognized at Corporate and a loss of $0.5 million recognized at AGM partially offset by a gain of $0.5 million recognized at Nelnet Bank).

During the three months ended March 31, 2022, the Company recognized net investment income and gains of $11.9 million, including $7.2 million from venture capital investments (including $4.9 million recognized at Corporate, $1.9 million recognized at AGM, and $0.4 million recognized at Nelnet Bank), $4.4 million related to real estate investments at Corporate, and $0.3 million related to investments in asset-backed securities (bonds) and marketable equity securities (a loss of $0.8 million recognized at Corporate and income of $1.1 million recognized at Nelnet Bank).

The Company anticipates fluctuations in future periodic earnings resulting from investment sales and valuation adjustments. Investment activity by operating segment and investment type follows:


	Real Estate		Venture Capital and Funds	Equity / Bonds	Total	Real Estate	Venture Capital and Funds	Equity / Bonds	Total
	Three months ended March 31,
	2024					2023
NFS - AGM	$	—	322	—	322	—	(104)	(476)	(580)
NFS - Nelnet Bank	—		(179)	529	350	—	(263)	465	202
NFS - Other Operating Segments	(1,794)		—	212	(1,582)	1,148	—	(4,058)	(2,910)
Corporate	—		(388)	—	(388)	—	(289)	—	(289)
	$	(1,794)	(245)	741	(1,298)	1,148	(656)	(4,069)	(3,577)

LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS

Loan Servicing Volumes


		As of
		December 31, 2021		March 31, 2022		June 30, 2022	September 30, 2022	December 31, 2022	March 31, 2023
						As of
						As of
						As of
					March 31, 2024					March 31, 2024	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023	December 31, 2022
Servicing volume (dollars in millions):	Servicing volume (dollars in millions):
Government
Government
Government	Government	$	478,402	507,653		542,398	545,546	545,373	537,291
FFELP	FFELP	26,916		25,646		24,224	22,412	20,226	19,815
Private and consumer	Private and consumer	23,702		23,433		22,838	22,461	21,866	21,484
Total	Total	$	529,020	556,732		589,460	590,419	587,465	578,590

Number of servicing borrowers:	Number of servicing borrowers:
Number of servicing borrowers:
Number of servicing borrowers:
Government
Government
Government	Government	14,196,520		14,727,860		15,426,607	15,657,942	15,777,328	15,518,751
FFELP	FFELP	1,092,066		1,034,913		977,785	910,188	829,939	819,791
Private and consumer	Private and consumer	1,065,439		1,030,863		998,454	979,816	951,866	925,861
Total	Total	16,354,025		16,793,636		17,402,846	17,547,946	17,559,133	17,264,403

Number of remote hosted borrowers:	Number of remote hosted borrowers:	4,799,368		5,487,943		5,738,381	6,025,377	6,135,760	5,048,324
Number of remote hosted borrowers:
Number of remote hosted borrowers:

Government Loan Servicing

Nelnet Servicing ~~LLC (Nelnet Servicing) and Great Lakes Educational Loan Services, Inc. (Great Lakes), both subsidiaries of~~earns loan servicing revenue from a servicing contract with the ~~Company, are two of the current six private sector entities that have~~Department. The Company's legacy student loan servicing ~~contracts~~contract with the Department to service loans that include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department. The Company currently licenses its hosted servicing software to two of the six servicers for the Department.

~~Contract Modifications and Award~~

On March 22, 2023, each of Nelnet Servicing and Great Lakes received modifications of contract with an effective date of April 1, 2023 (collectively the “modifications”) from the Department. Such modifications outline the Department's amendment to the student loan servicing contracts between the Department and each of Nelnet Servicing and Great Lakes (the “servicing contracts”) to reduce the current prices earned by Nelnet Servicing and Great Lakes under the servicing contracts. Under the servicing contracts, Nelnet Servicing and Great Lakes earn a monthly fee from the Department for each unique borrower they service on behalf of the Department. The modifications reduce the monthly fee by $0.19 per borrower on certain borrower statuses.

~~The Company's current student loan servicing contracts with the Department are~~was scheduled to expire on December 14, 2023. In 2017, the Department initiated a contract procurement process referred to as the Next Generation Financial Services Environment for a new framework for the servicing of all student loans owned by the Department. In the second quarter of 2022, the Department released a solicitation entitled Unified Servicing and Data Solution (USDS) for the new servicing framework. The Company responded to the USDS solicitation. On April ~~24,~~ 2023, Nelnet ~~Diversified Solutions, LLC (NDS), a subsidiary of the Company,~~Servicing received a contract award from the Department, pursuant to which ~~NDS~~it was selected to provide continued servicing capabilities for the Department's ~~Office of Federal Student Aid's~~ student aid recipients under a new ~~USDS~~Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which ~~will replace~~replaced the ~~existing~~ legacy Department student loan servicing ~~contracts that are currently scheduled to expire December 14, 2023.~~contract.

The New Government Servicing Contract isbecame effective April 24, 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 ~~more than 37 million~~ existing borrowers will be allocated by the Department to ~~NDS~~Nelnet Servicing and four other third-party servicers that were awarded a USDS ~~contract. New Department borrowers will be allocated to the USDS Servicers~~contract based on service and performance levels. Under the New Government Servicing Contract, ~~NDS will begin~~Nelnet Servicing immediately began to make required servicing platform enhancements, for which ~~NDS~~it will be compensated from the Department on certain of these investments. ~~In a press release issued~~Servicing under the New Government Servicing Contract went live on April ~~24, 2023 by the Department's Office of Federal Student Aid (FSA), FSA indicated that servicing under the USDS contracts will go live in~~1, 2024 and to maintain stability as the new loan servicing environment gets underway, FSA will extend the current legacy servicing contracts with the Department from December 14, 2023 to December 2024. Until servicing under the USDS contracts goes live, the Company will ~~continue to earn~~recognize revenue in accordance with this new contract beginning in the second quarter of 2024. The Company earned revenue for servicing borrowers under ~~its current~~the legacy servicing ~~contracts~~contract with the ~~Department.~~

Department through March 31, 2024.

The fee structure included in the new Department servicing contracts under USDS are structurally different than the current legacy servicing contracts with the Department. The USDS servicing contracts haveNew Government Servicing Contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing ~~contracts is~~contract was primarily based on borrower status. Assuming borrower volume remains consistent under the ~~USDS servicing contract,~~New Government Servicing Contract, the Company expects revenue earned on a per borrower blended basis will decrease under the ~~USDS contract~~New Government Servicing Contract versus the ~~current~~ legacy ~~contracts.~~contract. However, consistent with the ~~current~~ legacy ~~contracts,~~contract, the Company expects to earn additional revenue from the Department under the ~~USDS servicing contract~~New Government Servicing Contract for change requests ~~consolidations,~~ and other support services. ~~As discussed below, during 2023,~~In addition, the Company ~~will continue to transfer the Great Lakes direct loan servicing volume to the Nelnet servicing platform. The associated cost savings~~has executed an agreement with ~~moving government borrowers to one servicing platform will be partially offset under the~~a third-party servicer awarded a USDS contract ~~as the~~to license its servicing software to such entity. The Company will ~~incur additional costs for cybersecurity and other system specifications as required under the new contract.~~

~~Loan Volume Transfers~~

In July 2021, the Pennsylvania Higher Education Assistance Agency (PHEAA) announced its exit from the federal student loan servicing business. All applicable student loans serviced for the Department by PHEAA were transferredbegin to successor servicers. At the time of this announcement, PHEAA serviced approximately 8.5 million borrowers under its contract. As of December 31, 2021 and 2022, approximately 603,000 and 1,910,000 PHEAA borrowers, respectively, have been transitioned to the Company's platform. In addition, over this same time period, PHEAA borrowers were transferred to other servicers to which the Company provides its servicing system (remote hosted servicing customers).

In February 2023, the Department notified the Company of its intention to transfer up to one million borrowers of the Company’s existing Department servicing borrowers to another servicer, and one of the Company’searn remote hosted servicing ~~customers notified the Company the Department intends to move that customer’s servicing borrowers to a different servicing platform. As of March 31, 2023, the remote hosted servicing~~revenue from this new customer ~~was servicing approximately 1.4 million borrowers for the Department on the Company's platform. Neither transfer decision was based on the Company’s performance.~~

~~The 2023 transfers discussed above began in the first quarter of 2023 and the Company expects the transfers to be completed by the end of~~during the second quarter of ~~2023. As a result~~2024. The amount of ~~the transfers, software services~~ revenue for remote hosted customers and government servicing revenue will decrease in future periods as borrowers are transferred off of the Company’s platform. In addition, once all remote hosted servicing transfers are complete, there will be no active Department remote hosted servicing customers using the Company’s platform.

~~In addition,~~earned by the Company ~~continues to transfer~~from this new customer will depend on the ~~Great Lakes direct loan~~number of servicing ~~volume~~borrowers allocated by the Department to the Nelnet servicing platform (the GreatNet Federal servicing platform). The Company anticipates the transfer of active borrowers to be completed by the end of the second quarter of 2023 and decommissioning of the Great Lakes' platform to be completed by the end of 2023. Therefore, potential associated cost savings as a result of transferring direct loan servicing volume to one platform will not be recognized in operating results until 2024.new customer.

Department of Education Debt Relief

In August 2022, the Department announced a ~~broad based~~broad-based student debt relief plan that would provide targeted student debt cancellation to borrowers with loans held by the Department, and that borrowers whose annual income for either 2020 or 2021 was under $125,000 (for single or married, filing separately) or under $250,000 (for married couples, filing jointly or heads of household) will be eligible for otherwise unconditional loan cancellation in amounts ofhave provided up to $20,000 for eligible borrowers who received a Pell Grant, or of up to $10,000 for eligible borrowers who did not receive a Pell Grant. Decisions by the U.S. Courts of Appeals for the Eighth Circuit and Fifth Circuit in ~~October 2022 and November 2022, respectively, in response to legal challenges that were initiated by other parties (not the Company) have blocked implementation of the Department's broad based student~~one-time debt relief ~~plan. These cases have been appealed~~ to ~~the U.S. Supreme Court. As of the filing of this report,~~income-qualified recipients with Department held student loans. On June 30, 2023, the Supreme Court ~~has~~ruled that the Department was prohibited from implementing this plan. After the invalidation of this broad-based relief plan, the Department announced plans to enter into a negotiated rulemaking process to achieve debt relief for federal student loan borrowers using provisions of the Higher Education Act (HEA). Publicly available negotiated rulemaking sessions occurred in the fourth quarter of 2023 and the first quarter of 2024. The Department published draft regulations for public comment in April 2024, including regulations that would grant automatic discharge for all federal student loans older than 20 or 25 years. The April 2024 draft publication did not ~~ruled on,~~include regulations to provide forgiveness for borrowers “experiencing financial hardship;”

however, publication and comment period for such regulations are expected in Summer of 2024. Final publication and effective date for all pending forgiveness regulations pursuant to the HEA are expected in Fall of 2024. The Company cannot predict the timing, nature, or ultimate outcome of ~~this case.~~

~~The Company cannot estimate how many borrowers meet the eligibility requirements and other terms and conditions for one-time~~any student debt relief program as a result of the negotiated rulemaking process. Revenue earned under the ~~Department's announcement. If there was a broad $10,000~~ New Government Servicing Contract will decrease in future periods if the Department successfully implements its debt relief plan and/or ~~$20,000 per borrower~~if the Department initiates additional loan forgiveness ~~on all government owned~~or cancellation programs in the future.

Private Education Loan Servicing

In January 2024, Discover announced they were moving the servicing of its approximately $10 billion private education loan portfolio, representing approximately 500,000 borrowers, to the Company. The timing of the conversion of these loans to the ~~Company estimates it would decrease the number of borrowers serviced (based~~Company’s platform is dependent on the ~~borrower loan information as~~timing of ~~March 31, 2023) by approximately 4.5 million borrowers~~Discover’s potential sale of its portfolio.

Summary and ~~7.7 million borrowers, respectively. The~~Comparison of Operating Results


	Three months ended March 31,
	2024			2023		Additional information
Net interest income	$	1,894		1,037		Increase was due to higher interest rates.
Loan servicing and systems revenue	127,201			139,227		See table below for additional information.
Intersegment servicing revenue	6,886			7,790		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	710			608		Represents revenue earned from providing administrative support services.

Total other income	134,797			147,625
Salaries and benefits	76,722			84,560		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. As part of these reductions, the Company recognized a restructuring charge of $2.7 million in the first quarter of 2023.
Depreciation and amortization	5,109			4,513
Other expenses	19,538			13,313		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	19,332			21,057		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	120,701			123,443
Income before income taxes	15,990			25,219
Income tax expense	(3,838)			(6,053)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	12,152		19,166




Before tax operating margin	11.9		%	17.1	%	Before tax operating margin represents 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, 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 decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.

actual impact to the number of borrowers serviced may be less than these amounts due to annual income ceilings for borrowers to qualify for forgiveness and the impact of whether a Pell Grant was received on the amount of forgiveness for a borrower.

~~Revenue earned under the current Department servicing contracts will decrease in future periods if the Department's student debt relief plan or other broad based loan forgiveness is implemented.~~

~~The CARES Act~~

Under the CARES Act, beginning in March 2020, federal student loan payments and interest accruals were suspended for all borrowers that had loans owned by the Department. As a result of the CARES Act, the Company receives less servicing revenue per borrower from the Department based on the borrower forbearance status than what was earned on such accounts prior to these provisions. On April 6, 2022, the Department extended the student loans payment pause under the CARES Act from May 1, 2022 to August 31, 2022, and on August 24, 2022, the Department extended such payment pause from August 31, 2022 to December 31, 2022. On November 22, 2022, the Department again extended such payment pause until 60 days following the date the Department is permitted to implement the debt relief program or the litigation initiated by other parties is resolved. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023, borrower forbearances will end 60 days after June 30, 2023, and payments will resume within 60 days after that (on or before October 28, 2023). Prior to the April 2022 extension (during the fourth quarter of 2021 and first quarter of 2022), the Company earned additional revenue from the Department based on incremental work, including outbound engagement, being performed by the Company to support the anticipated Department borrowers coming out of forbearance. Effective May 1, 2022, the Department increased the monthly per borrower CARES Act forbearance rate paid to its servicers to compensate them for supplemental outreach to certain borrowers and to support the transition of borrowers back to repayment. Once borrowers transition back to repayment under the legacy government contracts, the Company anticipates revenue per borrower from the Department will increase from the current CARES Act levels.

~~Reduction in Staff~~

On January 18, 2023, the Company announced a reduction in staff to manage excess staff capacity due to delays in the government's student debt relief and return to repayment programs under the CARES Act (as discussed above). Approximately 350 associates who were hired within the prior six months were laid off with a 60 day notice period and approximately 210 associates were immediately terminated for performance.

On March 23, 2023, the Company announced a reduction in staff due to the March 2023 government servicing contract price modifications (as discussed above) and the notification by the Department in February 2023 of its intention to transfer up to one million borrowers of the Company's existing Department servicing borrowers to another servicer (as discussed above). Approximately 550 associates who work in LSS, including some in related shared services areas that support LSS, were notified their positions were being eliminated. The Company estimates incurring a charge of $4.3 million related to the staff reductions, of which $2.7 million was recognized in the first quarter of 2023. The remaining expense will be incurred primarily during the second quarter of 2023.

~~Summary and Comparison of Operating Results~~

Three months ended March 31,
2023 2022 Additional information
Net interest income $ 1,037 43 Increase in 2023 compared with 2022 was due to higher interest rates.
Loan servicing and systems revenue 139,227 136,368 See table below for additional information.
Intersegment servicing revenue 7,790 8,480 Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease in 2023 compared with 2022 was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income 608 740 Represents revenue earned from providing administrative support and marketing services.
Total other income 147,625 145,588
Salaries and benefits 84,560 91,972 Decrease in 2023 compared with 2022 was due to the Company being fully staffed with contact center operations and support associates in 2022 in preparation for the resumption of federal student loan payments and other activities after the CARES Act suspension. See “Government Loan Servicing - The CARES Act” above for additional details. In addition, the Company reduced staff in January and March 2023. See "Reduction in Staff" above for additional details.
Depreciation and amortization 4,513 4,954

Other expenses 13,313 16,213 Decrease in 2023 compared with 2022 was due to a decrease in professional fees and facility costs. Over the last year, the Company has reduced its office space as a large number of employees continue to work from home.
Intersegment expenses 21,057 20,398 Represent costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses 123,443 133,537
Income before income taxes 25,219 12,094
Income tax expense (6,053) (2,903) Represents income tax expense at an effective tax rate of 24%.
Net income $ 19,166 9,191

Before tax operating margin 17.1 % 8.3 %
Before tax operating margin represents 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, intersegment servicing revenue, and other income 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 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 in 2023 compared with 2022 due to a decrease in operating expenses as described above.

Loan servicing and systems revenue

Three months ended March 31,
2023 2022 Additional information
Government loan servicing $ 108,880 109,125 Represents revenue from the Company's Department servicing contracts. Decrease in 2023 compared with 2022 was due to (i) the recognition of $6.7 million of revenue in the first quarter of 2022 for incremental work related primarily to CARES Act forbearance exit outreach activities to borrowers; and (ii) the recognition of $10.5 million of revenue in the first quarter of 2022 related to the discharge of borrowers under the Total and Permanent Disability (TPD) discharge program (the Company earns revenue per each borrower that satisfies the requirements for their loan to be discharged under the TPD discharge program). These decreases were partially offset by (i) an increase in the number of PHEAA borrowers serviced on the Company's servicing platform; (ii) a per borrower CARES Act forbearance rate increase on May 1, 2022; and (iii) a per borrower rate increase on September 1, 2022 (5.0%) to reflect the increase in the cost of labor (Employment Cost Index) per the provisions of the contracts. Effective April 1, 2023, the monthly fee earned per borrower on certain borrower statuses will be reduced by $0.19. See “Government Loan Servicing - Contract Modifications and Award" above for additional details.
Private education and consumer loan servicing 12,164 12,873 Decrease in 2023 compared with 2022 was due to a decrease in servicing volume and client requested enhanced delinquency services.
FFELP loan servicing 3,368 4,248 Decrease in 2023 compared with 2022 was due to a decrease in the number of borrowers serviced. Over time, FFELP servicing revenue will continue to decrease as third-party customers' FFELP portfolios pay off. Since late 2021, the Company has experienced accelerated run-off of its FFELP servicing portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans as a result of the continued extension of borrower relief under the CARES Act and initiatives offered by the Department for FFELP borrowers to consolidate their loans to qualify for loan forgiveness under the Public Service Loan Forgiveness and other programs.
Software services 9,697 7,400 Increase in 2023 compared with 2022 was due to an increase in remote hosted borrowers and an increase in rates. Software services revenue from Department remote hosted servicing customers will be adversely impacted in future periods. See “Government Loan Servicing - Loan Volume Transfers” above for additional details.
Outsourced services 5,118 2,722 Represents primarily revenue to provide contact center and back office operational outsourcing services. Increase in 2023 compared with 2022 was due to additional outsourced opportunities, including assisting existing Department servicers as operations transition from exiting servicers.
Loan servicing and systems revenue $ 139,227 136,368
The following table presents disaggregated revenue by service offering for each reporting period.


	Three months ended March 31,
	2024		2023	Additional information
Government loan servicing	$	105,474	108,880	Represents revenue from the Company's Department legacy servicing contract. Decrease was due to the reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,620		12,164	Increase was due to rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,380		3,368	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,541		9,697	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts.
Outsourced services	1,186		5,118	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	127,201	139,227

4039

EDUCATION TECHNOLOGY SERVICES AND ~~PAYMENT PROCESSING~~PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

As discussed further in the Company's ~~2022~~2023 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,
		2023		2022	Additional information	2024					2023						Additional information
Net interest income	Net interest income	$	6,036	339	Represents interest income on tuition funds held in custody for schools. Increase in 2023 compared with 2022 was due to higher interest rates.	Net interest income	$	7,866		6,036				6,036		Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.				Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.
Education technology, services, and payment processing revenue		133,603		112,286	See table below for additional information.
Education technology services and payments revenue						Education technology services and payments revenue	143,539						133,603					See table below for additional information.
Intersegment revenue	Intersegment revenue	56		3

Total other income	Total other income	133,659		112,289

Total other income

Total other income
Cost of services
Cost of services
Cost of services	Cost of services	47,704		35,545	See table below for additional information.	48,610			47,704			47,704			See table below for additional information.				See table below for additional information.
Salaries and benefits	Salaries and benefits	37,913		31,286	Increase in 2023 compared with 2022 was due to an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.	Salaries and benefits	40,167			37,913				37,913		Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.				Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	Depreciation and amortization	2,578		2,315	Represents primarily amortization of intangible assets from prior business acquisitions.	Depreciation and amortization	2,683			2,578				2,578		Represents primarily amortization of intangible assets from prior business acquisitions.				Represents primarily amortization of intangible assets from prior business acquisitions.
Other expenses	Other expenses	8,063		5,764	Increase in 2023 compared with 2022 was due to higher costs for consulting, professional fees, and technology services resulting from investments in new technologies. Increase was also due to an increase in costs for travel and in-person hosted conferences that previously subsided due to the COVID pandemic.	Other expenses	7,558			8,063				8,063		Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.				Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	Intersegment expenses, net	5,800		4,605	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.	Intersegment expenses, net	4,801			5,800				5,800		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.				Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	Total operating expenses	54,354		43,970
Income before income taxes	Income before income taxes	37,637		33,113
Income before income taxes
Income before income taxes
Income tax expense
Income tax expense
Income tax expense	Income tax expense	(9,066)		(7,947)	Represents income tax expense at an effective tax rate of 24%.	(11,435)			(9,066)			(9,066)			Represents income tax expense at an effective tax rate of 24%.				Represents income tax expense at an effective tax rate of 24%.
Net income	Net income	28,571		25,166
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests	138		—	Amounts for noncontrolling interests reflect the net loss attributable to the holders of minority membership interests in NextGen, of which the Company became the majority owner on April 30, 2022.
Net loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests
Net income	Net income	$	28,709	25,166
Net income
Net income

4140

Education technology services and ~~payment processing~~payments revenue

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






		Three months ended March 31,
		2023			2022		Additional information		2024			2023		Additional information
Tuition payment plan services	Tuition payment plan services	$	34,187		30,716		Increase in 2023 compared with 2022 was due to a higher number of payment plans in the K-12 and higher education market.		Tuition payment plan services	$	38,880		34,187		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	Payment processing	44,041			38,071		Increase in 2023 compared with 2022 was due to 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.		Payment processing	47,786			44,041		Increase was due to 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 and services		54,787			43,251		Increase in 2023 compared with 2022 was due to an increase in revenue from the Company’s school information system software, enrollment and communication services, the NextGen acquisition completed in April 2022, and FACTS Education Solutions instructional and professional development services. FACTS Education Solutions instructional services revenue was the largest component of this increase, driven by the Emergency Assistance to Non-Public Schools (EANS) program which provides funds to non-public schools through September 2024 to address the impact COVID-19 has had or continues to have on students and teachers.
Education technology services									Education technology services	56,021			54,787		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs for the three months ended March 31, 2024 and 2023 was $10.6 million and $16.4 million, respectively.
Other	Other	588			248
Education technology, services, and payment processing revenue		133,603			112,286
Education technology services and payments revenue
Education technology services and payments revenue
Education technology services and payments revenue
Cost of services
Cost of services
Cost of services	Cost of services	47,704			35,545		Represents costs relating to 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 were the primary driver of the increase in 2023 compared with 2022 due to the increase in instructional services resulting from the EANS program as noted above.		48,610			47,704		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	Net revenue	$	85,899		76,741
GAAP before tax operating margin	GAAP before tax operating margin	43.8		%	43.1	%	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 ETS&PP segment is calculated as income before income taxes less 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 in 2023 compared with 2022 due to investments in (i) the development of new services and technologies; and (ii) superior customer experiences to align with the Company’s strategies to grow, retain, and diversify revenues. The Company anticipates before tax operating margin, excluding net interest income, will be impacted over the next several years as it continues to invest in these areas.
GAAP before tax operating margin
GAAP before tax operating margin									50.2	%		43.8	%	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, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	Net interest income	(7.0)			(0.4)			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 ETS&PP segment is calculated as income before income taxes less 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 in 2023 compared with 2022 due to investments in (i) the development of new services and technologies; and (ii) superior customer experiences to align with the Company’s strategies to grow, retain, and diversify revenues. The Company anticipates before tax operating margin, excluding net interest income, will be impacted over the next several years as it continues to invest in these areas.
Non-GAAP before tax operating margin, excluding net interest income	Non-GAAP before tax operating margin, excluding net interest income	36.8		%	42.7	%
Non-GAAP before tax operating margin, excluding net interest income
Non-GAAP before tax operating margin, excluding net interest income

4241

~~ASSET GENERATION AND MANAGEMENT OPERATING SEGMENT –~~NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

As of March 31, ~~2023,~~2024, the AGM operating segment had a ~~$13.5~~$10.8 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024			2023		Additional information
Net interest income	$	1,894		1,037		Increase was due to higher interest rates.
Loan servicing and systems revenue	127,201			139,227		See table below for additional information.
Intersegment servicing revenue	6,886			7,790		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	710			608		Represents revenue earned from providing administrative support services.

Total other income	134,797			147,625
Salaries and benefits	76,722			84,560		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. As part of these reductions, the Company recognized a restructuring charge of $2.7 million in the first quarter of 2023.
Depreciation and amortization	5,109			4,513
Other expenses	19,538			13,313		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	19,332			21,057		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	120,701			123,443
Income before income taxes	15,990			25,219
Income tax expense	(3,838)			(6,053)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	12,152		19,166




Before tax operating margin	11.9		%	17.1	%	Before tax operating margin represents 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, 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 decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.

Loan ~~Activity~~servicing and systems revenue

The following table ~~sets forth~~presents disaggregated revenue by service offering for each reporting period.


	Three months ended March 31,
	2024		2023	Additional information
Government loan servicing	$	105,474	108,880	Represents revenue from the Company's Department legacy servicing contract. Decrease was due to the reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,620		12,164	Increase was due to rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,380		3,368	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,541		9,697	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts.
Outsourced services	1,186		5,118	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	127,201	139,227

EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

As discussed further in the ~~activity~~Company's 2023 Annual Report, this segment of ~~loans~~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,
	2024		2023	Additional information
Net interest income	$	7,866	6,036	Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.
Education technology services and payments revenue	143,539		133,603	See table below for additional information.
Intersegment revenue	49		56


Total other income	143,588		133,659
Cost of services	48,610		47,704	See table below for additional information.
Salaries and benefits	40,167		37,913	Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	2,683		2,578	Represents primarily amortization of intangible assets from prior business acquisitions.
Other expenses	7,558		8,063	Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	4,801		5,800	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	55,209		54,354
Income before income taxes	47,635		37,637
Income tax expense	(11,435)		(9,066)	Represents income tax expense at an effective tax rate of 24%.
Net income	36,200		28,571
Net loss attributable to noncontrolling interests	17		138
Net income	$	36,217	28,709

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,
	2024			2023		Additional information
Tuition payment plan services	$	38,880		34,187		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	47,786			44,041		Increase was due to increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.
Education technology services	56,021			54,787		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs for the three months ended March 31, 2024 and 2023 was $10.6 million and $16.4 million, respectively.
Other	852			588
Education technology services and payments revenue	143,539			133,603
Cost of services	48,610			47,704		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	$	94,929		85,899
GAAP before tax operating margin	50.2		%	43.8	%	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, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	(8.3)			(7.0)
Non-GAAP before tax operating margin, excluding net interest income	41.9		%	36.8	%

NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

As of March 31, 2024, the AGM operating ~~segment:~~

Three months ended March 31,
2023 2022
Beginning balance $ 14,169,771 17,441,790
Loan acquisitions:
Federally insured student loans 2,980 10,202
Private education loans — 1,026
Consumer and other loans 250,706 18,522
Total loan acquisitions 253,686 29,750
Repayments, claims, capitalized interest, participations, and other, net (410,239) (447,140)
Loans lost to external parties (268,696) (387,648)
Loans sold (261,902) (18,125)
Ending balance $ 13,482,620 16,618,627

~~The Company has also purchased partial ownership in certain consumer, private education, and~~segment had a $10.8 billion loan portfolio, consisting primarily of federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "investments and notes receivable" 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, 2023, the Company’s ownership correlates to approximately $585 million, $590 million, and $370 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations. The loans held in these securitizations are not included in the above table.

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

loans. For a summary of the ~~allowance as a percentage of the ending balance and~~Company’s loan ~~status and delinquency amounts for each of AGM's loan portfolios~~portfolio as of March 31, ~~2023~~2024 and December 31, ~~2022; 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,~~ 2023, ~~and 2022,~~ see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

~~Loan Spread Analysis~~

The following table analyzes the loan spread on AGM’s portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net interest income after provision for loan losses, net of settlements on derivatives" below, divided by the average balance of loans or debt outstanding.

Three months ended March 31,
2023 2022
Variable loan yield, gross 7.12 % 2.75 %
Consolidation rebate fees (0.81) (0.85)
Discount accretion, net of premium and deferred origination costs amortization 0.05 0.03
Variable loan yield, net 6.36 1.93
Loan cost of funds - interest expense (5.53) (1.09)
Loan cost of funds - derivative settlements (a) (b) 0.03 0.01
Variable loan spread 0.86 0.85
Fixed rate floor income, gross 0.03 0.68
Fixed rate floor income - derivative settlements (a) (c) 0.68 (0.08)
Fixed rate floor income, net of settlements on derivatives 0.71 0.60
Core loan spread 1.57 % 1.45 %
Average balance of AGM's loans $ 13,991,241 17,208,909
Average balance of AGM's debt outstanding 13,364,876 16,773,698

(a) Derivative settlements represent the cash paid or received during the current 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 4 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 for the 2023 and 2022 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 4 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,
2023 2022
Core loan spread 1.57 % 1.45 %
Derivative settlements (1:3 basis swaps) (0.03) (0.01)
Derivative settlements (fixed rate floor income) (0.68) 0.08
Loan spread 0.86 % 1.52 %

~~(b) Derivative settlements consist of net settlements received related to the Company’s 1:3 basis swaps.~~

~~(c) Derivative settlements consist of net settlements received (paid) related to the Company’s floor income interest rate swaps.~~

~~A trend analysis of AGM's core and variable loan spreads is summarized below.~~

The interest earned on a large portion of AGM's FFELP student loan assets is indexed to the one-month LIBOR rate. AGM funds a portion of its assets with three-month LIBOR indexed floating rate securities. The relationship between the indices in which AGM earns interest on its loans and funds such loans has a significant impact on loan spread. The table above (the right axis) shows the difference between AGM's liability base rate and the one-month LIBOR rate by quarter.

Variable loan spread increased during the three months ended March 31, 2023 compared with the same period in 2022 due to a narrowing of the basis between the asset and debt indices in which the Company earns interest on its loans and funds such loans (as reflected in the table above). In an increasing interest rate environment, student loan spread on FFELP loans increases due to the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest resets on the Company's debt that occurs either monthly or quarterly.

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.

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. A summary of fixed rate floor income and its contribution to core loan spread follows:

Three months ended March 31,
2023 2022
Fixed rate floor income, gross $ 1,110 28,993
Derivative settlements (a) 22,478 (3,205)
Fixed rate floor income, net $ 23,588 25,788
Fixed rate floor income contribution to spread, net 0.71 % 0.60 %

~~(a) Derivative settlements consist of net settlements received (paid) related to the Company's derivatives used to hedge student loans earning fixed rate floor income.~~

~~The decrease in gross fixed rate floor income for the three months ended March 31, 2023 compared with the same period in 2022 was due to higher interest rates in 2023 compared with 2022.~~

The Company had a portfolio of derivative instruments in which the Company paid a fixed rate and received a floating rate to economically hedge loans earning fixed rate floor income. The increase in net derivative settlements received by the Company during the three months ended March 31, 2023, compared with net derivative settlements paid during the same period in 2022, was due to an increase in interest rates, partially offset by a decrease in the notional amount of derivatives outstanding.

The Company's derivatives that hedge fixed rate floor income are cleared post-execution at a regulated clearinghouse. Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default. Through March 15, 2023, the Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the fixed rate floor derivatives as of March 15, 2023 of $183.2 million, which included $19.1 million related to current period settlements. To minimize the Company's exposure to market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income. As a result of the Company terminating these derivatives, there will be no derivative settlements on these derivatives in future periods.

Summary and Comparison of Operating Results

Three months ended March 31,
2023 2022 Additional information
Net interest income after provision for loan losses $ 13,663 73,459 See table below for additional analysis.
Other income, net 2,845 6,511 Represents primarily borrower late fees, income from providing administration activities for third parties, and income from AGM's investment in a joint venture. Decrease in 2023 compared with 2022 was primarily due to the recognition of a $0.1 million loss in the first quarter of 2023 compared with $1.9 million of income for the same period in 2022 related to its investment in the joint venture.
Gain on sale of loans, net 11,812 2,989 The Company sold $261.9 million (par value) and $18.1 million (par value) of loans to unrelated third parties in 2023 and 2022, respectively, and recognized net gains from such sales.
Derivative settlements, net 23,337 (2,809) 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. The majority of derivative settlements received in 2023 was from the Company's derivatives used to hedge loans earning fixed rate floor income. This entire derivative portfolio was terminated on March 15, 2023 to minimize the Company's exposure to market volatility. As such, there will be no derivative settlements received on these derivatives in future periods.
Derivative market value adjustments, net (37,411) 145,734 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 2023 and 2022 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. The entire portfolio of floor income interest rate swaps was terminated on March 15, 2023 to minimize the Company's exposure to market volatility. As such, the Company expects the derivative market value adjustments in future periods will be less substantial.
Total other income (expense) 583 152,425
Salaries and benefits 755 591
Other expenses 5,016 3,033 Represents primarily servicing fees paid to third parties. Also includes certain professional and legal fees. Increase in 2023 compared with 2022 was due to incurring additional professional fees as the Company actively expands into new asset loan classes.
Intersegment expenses 8,696 8,831 Represents fees paid to LSS for the servicing of AGM’s loan portfolio. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses 14,467 12,455 Total operating expenses were 41 basis points and 29 basis points of the average balance of loans for the three months ended March 31, 2023 and 2022, respectively. The increase in operating expenses as a percent of the average balance of loans in 2023 compared with 2022 was due to an increase in certain professional costs as discussed above.
(Loss) income before income taxes (221) 213,429
Income tax benefit (expense) 53 (51,223) Represents income tax expense at an effective tax rate of 24%.
Net (loss) income $ (168) 162,206
Additional information:
Net (loss) income $ (168) 162,206 See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP net income, excluding derivative market value adjustments.
Derivative market value adjustments, net 37,411 (145,734)
Tax effect (8,979) 34,976
Net income, excluding derivative market value adjustments $ 28,264 51,448


	Three months ended March 31,
	2024			2023		Additional information
Net interest income	$	1,894		1,037		Increase was due to higher interest rates.
Loan servicing and systems revenue	127,201			139,227		See table below for additional information.
Intersegment servicing revenue	6,886			7,790		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	710			608		Represents revenue earned from providing administrative support services.

Total other income	134,797			147,625
Salaries and benefits	76,722			84,560		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. As part of these reductions, the Company recognized a restructuring charge of $2.7 million in the first quarter of 2023.
Depreciation and amortization	5,109			4,513
Other expenses	19,538			13,313		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	19,332			21,057		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	120,701			123,443
Income before income taxes	15,990			25,219
Income tax expense	(3,838)			(6,053)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	12,152		19,166




Before tax operating margin	11.9		%	17.1	%	Before tax operating margin represents 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, 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 decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.

Loan servicing and systems revenue

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


	Three months ended March 31,
	2024		2023	Additional information
Government loan servicing	$	105,474	108,880	Represents revenue from the Company's Department legacy servicing contract. Decrease was due to the reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,620		12,164	Increase was due to rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,380		3,368	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,541		9,697	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts.
Outsourced services	1,186		5,118	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	127,201	139,227

EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

As discussed further in the Company's 2023 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,
	2024		2023	Additional information
Net interest income	$	7,866	6,036	Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.
Education technology services and payments revenue	143,539		133,603	See table below for additional information.
Intersegment revenue	49		56


Total other income	143,588		133,659
Cost of services	48,610		47,704	See table below for additional information.
Salaries and benefits	40,167		37,913	Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	2,683		2,578	Represents primarily amortization of intangible assets from prior business acquisitions.
Other expenses	7,558		8,063	Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	4,801		5,800	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	55,209		54,354
Income before income taxes	47,635		37,637
Income tax expense	(11,435)		(9,066)	Represents income tax expense at an effective tax rate of 24%.
Net income	36,200		28,571
Net loss attributable to noncontrolling interests	17		138
Net income	$	36,217	28,709

4740

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,
	2024			2023		Additional information
Tuition payment plan services	$	38,880		34,187		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	47,786			44,041		Increase was due to increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.
Education technology services	56,021			54,787		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs for the three months ended March 31, 2024 and 2023 was $10.6 million and $16.4 million, respectively.
Other	852			588
Education technology services and payments revenue	143,539			133,603
Cost of services	48,610			47,704		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	$	94,929		85,899
GAAP before tax operating margin	50.2		%	43.8	%	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, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	(8.3)			(7.0)
Non-GAAP before tax operating margin, excluding net interest income	41.9		%	36.8	%

NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

As of March 31, 2024, the AGM operating segment had a $10.8 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of March 31, 2024 and December 31, 2023, see note 2 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:


	Three months ended March 31,
	2024		2023
Beginning balance	$	12,049,462	14,169,771
Loan acquisitions:
Federally insured student loans	—		2,980

Consumer and other loans	80,730		250,706
Total loan acquisitions	80,730		253,686
Repayments, claims, capitalized interest, participations, and other, net	(350,496)		(410,239)
Loans lost to external parties	(779,655)		(268,696)
Loans sold	(200,099)		(261,902)

Ending balance	$	10,799,942	13,482,620

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 "investments and notes receivable" 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, 2024, the Company’s ownership correlates to approximately $1.79 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table.

Since late 2021, the Company has 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 continued extension 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 the Public Service Loan Forgiveness and other programs. After multiple extensions of the student loans payment pause under the CARES Act, the payment and interest accrual suspension ended August 31, 2023, and Federal Direct Loan Program borrowers returned to repayment on September 1, 2023. In August 2022, the Department announced a broad-based student debt relief plan that would have provided up to $20,000 in one-time debt relief to income-qualified recipients with Department held student loans. On June 30, 2023, the Supreme Court ruled that the Department was prohibited from implementing this plan. After the invalidation of this broad-based relief plan, the Department announced plans to enter into a negotiated rulemaking process to achieve debt relief for federal student loan borrowers using provisions of the Higher Education Act (HEA). The Department released proposed regulatory text prior to holding its statutorily-required negotiated rulemaking sessions. Notably, the Department proposed forgiveness for certain groups of borrowers with privately-held FFELP loans without consolidation into the Federal Direct Loan Program as a prerequisite requirement for such forgiveness. Publicly available negotiated rulemaking sessions occurred in the fourth quarter of 2023 and the first quarter of 2024. The Department published draft regulations for public comment in April 2024, including regulations that would grant automatic discharge for all federal student loans, including privately-held FFELP loans, older than 20 or 25 years. The April 2024 draft publication did not include regulations to provide forgiveness for borrowers (including borrowers with privately-held FFELP loans) “experiencing financial hardship;” however, publication and comment period for such regulations are expected in Summer of 2024. Final publication and effective date for all pending forgiveness regulations pursuant to the HEA are expected in Fall of 2024. In addition, during 2023, the Department issued final regulations on the Saving on a Valuable Education (SAVE) income-driven repayment (IDR) plan. The SAVE plan makes significant changes to IDR to lower monthly payment amounts, subsidize interest, and accelerate time to forgiveness for some borrowers. FFELP borrowers can access the new income-driven repayment changes by consolidating their loans into the Federal Direct Loan Program. The benefits of the SAVE plan are conferred not exclusively on a go-forward basis, as has been the case with previous IDR rulemaking, meaning borrowers who consolidate into the Federal Direct Loan Program receive credit toward forgiveness for months in repayment prior to consolidation. The new income-driven repayment regulations are effective July 1,

2024; however, the Biden-Harris Administration announced implementation for some features starting July 30, 2023 and SAVE forgiveness starting February 2024. The proposed forgiveness regulations and implementation of the SAVE IDR plan regulations have increased, and may continue to increase, consolidation activity as FFELP borrowers (i) consolidate their loans into the Federal Direct Loan Program in order to be eligible for potential debt relief for Department borrowers and the SAVE plan and (ii) begin receiving automatic forgiveness for loans older than 20 or 25 years. Prepayments could significantly increase if the federal government and/or the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, or consolidation loan programs.

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

For a summary of the allowance as a percentage of the ending balance and loan status and delinquency amounts for each of AGM's loan portfolios as of March 31, 2024 and December 31, 2023; 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, 2024 and 2023, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Spread Analysis


	Three months ended March 31,
	2024			2023
Variable loan yield, gross	7.99		%	7.12	%
Consolidation rebate fees	(0.80)			(0.81)
Discount accretion, net of premium and deferred origination costs amortization	0.09			0.05
Variable loan yield, net	7.28			6.36
Loan cost of funds - interest expense	(6.50)			(5.53)
Loan cost of funds - derivative settlements (a) (b)	0.01			0.03
Variable loan spread	0.79			0.86
Fixed rate floor income, gross	0.01			0.03
Fixed rate floor income - derivative settlements (a) (c)	0.04			0.68
Fixed rate floor income, net of settlements on derivatives	0.05			0.71
Core loan spread	0.84		%	1.57	%

Average balance of AGM's loans	$	11,561,504		13,991,241
Average balance of AGM's debt outstanding	11,387,400			13,364,876

(a) Derivative settlements represent the cash paid or received during the current 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 4 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 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" 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,
	2024		2023
Core loan spread	0.84	%	1.57	%
Derivative settlements (1:3 basis swaps)	(0.01)		(0.03)
Derivative settlements (fixed rate floor income)	(0.04)		(0.68)
Loan spread	0.79	%	0.86	%

(b) Derivative settlements consist of net settlements received related to the Company’s 1:3 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.

Variable loan spread was lower during the three months ended March 31, 2024 compared with the same period in 2023 due to a significant increase in short-term rates during the first quarter of 2023 compared with an insignificant change in rates for the same period in 2024.


	Three months ended March 31,
	2024			2023
Fixed rate floor income, gross	$	180		1,110
Derivative settlements (a)	1,190			22,478
Fixed rate floor income, net	$	1,370		23,588
Fixed rate floor income contribution to spread, net	0.05		%	0.71	%

(a) Derivative settlements consist of net settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

The decrease in gross fixed rate floor income for the three months ended March 31, 2024 compared with the same period in 2023 was due to higher interest rates in 2024 compared with 2023.

The Company had a significant portfolio of derivative instruments in which the Company paid a fixed rate and received a floating rate to economically hedge loans earning fixed rate floor income. On March 15, 2023, to minimize the Company's exposure to market volatility and increase liquidity, the Company terminated its derivative portfolio hedging loans earning fixed rate floor income ($2.8 billion in notional amount of derivatives). Through March 15, 2023, the Company had received cash or had a receivable from its clearinghouse related to variation margin equal to the fair value of the $2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $183.2 million, which included $19.1 million related to current period settlements. Subsequent to terminating these derivatives, during the second and fourth quarters of 2023, the Company entered into a total of $400.0 million notional amount of derivatives to hedge loans earning fixed rate floor income and other loans and investments in which the Company receives a fixed rate.

The decrease in net derivative settlements received by the Company during the three months ended March 31, 2024, compared with the same period in 2023, was due to a decrease in the notional amount of derivatives outstanding and less favorable terms on the $400.0 million of notional derivatives entered into in 2023 compared with the $2.8 billion notional derivatives that were terminated due to an increase in interest rates from when the terminated derivatives were initially executed.

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024		2023	Additional information
Net interest income after provision for loan losses	$	34,003	13,663	See table below for additional analysis.
Other income, net	4,983		2,845	Represents primarily borrower late fees, income from providing administration activities for third parties, and income/losses from AGM's investment in joint ventures.
(Loss) gain on sale of loans, net	(41)		11,812	The Company recognized a loss and net gains from selling portfolios of loans in 2024 and 2023, respectively. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Derivative settlements, net	1,555		23,337	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. The majority of derivative settlements received in the periods presented was from the Company's derivative portfolio used to hedge loans earning fixed rate floor income. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Derivative market value adjustments, net	5,706		(37,411)	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. On March 15, 2023, AGM terminated its portfolio of floor income interest rate swaps to minimize the Company's exposure to market volatility and increase liquidity. As such, the Company expects the derivative market value adjustments in future periods will be less substantial. See above under "Loan Spread Analysis" for further information.
Total other income, net	12,203		583
Salaries and benefits	1,195		755	Increase was due to additional headcount as the Company actively expands into new asset loan classes.
Other expenses	3,418		5,016	Represents primarily servicing fees paid to third parties. Decrease in servicing fees was due to the amortization of the FFELP student loan portfolio.
Intersegment expenses	7,850		8,696	Represents fees paid to LSS for the servicing of the majority of AGM’s loans. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	12,463		14,467	Total operating expenses were 43 basis points and 41 basis points of the average balance of loans for the three months ended March 31, 2024 and 2023, respectively. The increase in operating expenses as a percent of the average balance of loans was due to an increase in costs as the Company actively expands into new asset loan classes.
Income (loss) before income taxes	33,743		(221)
Income tax (expense) benefit	(8,099)		53	Represents income tax expense at an effective tax rate of 24%.
Net income (loss)	$	25,644	(168)
Additional information:
GAAP net income (loss)	$	25,644	(168)	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments. The decrease in non-GAAP net income, excluding derivative market value adjustments was due to (i) a decrease in the average balance of loans; (ii) a decrease in core loan spread; and (iii) the net gain on sale of loans in 2023. These changes were partially offset by (i) a decrease in provision expense and (ii) an increase in investment interest income on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Derivative market value adjustments, net	(5,706)		37,411
Tax effect	1,369		(8,979)
Non-GAAP net income, excluding derivative market value adjustments	$	21,307	28,264

Net interest income after provision for loan losses, net of settlements on derivatives

The following table summarizes the components of "net interest income after provision for loan losses" and "derivative settlements, net."






		Three months ended March 31,
		2023		2022	Additional information	2024					2023						Additional information
Variable interest income, gross	Variable interest income, gross	$	246,594	115,753	Increase in 2023 compared with 2022 was due to an increase in the gross yield earned on loans, partially offset by a decrease in the average balance of loans.	Variable interest income, gross	$	229,817		246,594				246,594		Decrease was due to a decrease in the average balance of loans partially offset by an increase in the gross yield earned on loans.				Decrease was due to a decrease in the average balance of loans partially offset by an increase in the gross yield earned on loans.
Consolidation rebate fees	Consolidation rebate fees	(28,399)		(36,771)	Decrease in 2023 compared with 2022 was due to a decrease in the average consolidation loan balance.	Consolidation rebate fees	(23,057)			(28,399)				(28,399)		Decrease was due to a decrease in the average consolidation loan balance.				Decrease was due to a decrease in the average consolidation loan balance.
Discount accretion, net of premium and deferred origination costs amortization	Discount accretion, net of premium and deferred origination costs amortization	1,607		1,459	Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.	Discount accretion, net of premium and deferred origination costs amortization	2,688			1,607				1,607		Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.				Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.
Variable interest income, net	Variable interest income, net	219,802		80,441
Interest on bonds and notes payable	Interest on bonds and notes payable	(182,063)		(45,209)	Increase in 2023 compared with 2022 was due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
Interest on bonds and notes payable
Interest on bonds and notes payable							(184,145)						(182,063)					Increase was due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
Derivative settlements, net (a)	Derivative settlements, net (a)	859		396	Derivative settlements include the net settlements received related to the Company’s 1:3 basis swaps.	Derivative settlements, net (a)	365			859				859		Represents net derivative settlements received related to the Company’s 1:3 basis swaps.				Represents net derivative settlements received related to the Company’s 1:3 basis swaps.
Variable loan interest margin, net of settlements on derivatives	Variable loan interest margin, net of settlements on derivatives	38,598		35,628
Fixed rate floor income, gross
Fixed rate floor income, gross
Fixed rate floor income, gross	Fixed rate floor income, gross	1,110		28,993	Decrease in 2023 compared with 2022 was due to higher interest rates.	180			1,110			1,110			Decrease was due to higher interest rates.				Decrease was due to higher interest rates.
Derivative settlements, net (a)	Derivative settlements, net (a)	22,478		(3,205)	Derivative settlements include the settlements received (paid) related to the Company's floor income interest rate swaps. The increase in net derivative settlements received by the Company during 2023, compared with net derivative settlements paid during 2022, was due to an increase in interest rates, partially offset by a decrease in the notional amount of derivatives outstanding. The entire portfolio of floor income interest rate swaps was terminated on March 15, 2023 to minimize the Company's exposure to market volatility. As such, there will be no derivative settlements received on these derivatives in future periods.	Derivative settlements, net (a)	1,190			22,478				22,478		Represents net derivative settlements received related to the Company's floor income interest rate swaps. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.				Represents net derivative settlements received related to the Company's floor income interest rate swaps. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Fixed rate floor income, net of settlements on derivatives	Fixed rate floor income, net of settlements on derivatives	23,588		25,788
Core loan interest income (a)	Core loan interest income (a)	62,186		61,416
Core loan interest income (a)
Core loan interest income (a)
Investment interest
Investment interest
Investment interest	Investment interest	13,807		9,164	Increase in 2023 compared with 2022 was due to an increase of interest earned on restricted cash due to higher rates.	21,835			13,807			13,807			Increase was due to an increase in the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.				Increase was due to an increase in the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Intercompany interest	Intercompany interest	(7,135)		(794)	Increase in 2023 compared with 2022 was due to an increase in the balance of borrowings and higher rates.
(Provision) negative provision for loan losses - federally insured loans		(2,411)		2,748	The Company has recognized provision for loan losses during the three months ended March 31, 2023 due to management's estimate of declining economic conditions, as well as establishing an initial allowance for loans acquired during the period. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
(Provision) negative provision for loan losses - private education loans		(240)		400
(Provision) for loan losses - consumer and other loans		(29,207)		(2,284)
Negative provision (provision) for loan losses - federally insured loans
Negative provision (provision) for loan losses - federally insured loans
Negative provision (provision) for loan losses - federally insured loans							1,870						(2,411)					See note 2 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.
Negative provision (provision) for loan losses - private education loans
Provision for loan losses - consumer and other loans
Provision for loan losses - consumer and other loans
Provision for loan losses - consumer and other loans
Net interest income after provision for loan losses (net of settlements on derivatives) (a)	Net interest income after provision for loan losses (net of settlements on derivatives) (a)	$	37,000	70,650	Decrease in 2023 compared with 2022 was due to (i) a decrease in the average balance of loans; and (ii) an increase in provision for loan losses. These items were partially offset by (i) an increase in core loan spread; and (ii) an increase in investment interest income.
Net interest income after provision for loan losses (net of settlements on derivatives) (a)
Net interest income after provision for loan losses (net of settlements on derivatives) (a)

(a) Core loan interest income and net interest income after provision for loan losses (net of settlements on derivatives) are non-GAAP financial measures. 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 4 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 ~~2023~~2024 and ~~2022~~2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of ~~Income" in note 4 and in this table.~~Income."

~~Subsequent Event~~

Subsequent to the end of the first quarter, in April 2023, the Company redeemed $188.6 million of FFELP loan asset-backed securities (bonds and notes payable) prior to their legal maturity. The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $25.9 million non-cash expense recognized in April 2023.

4846

~~NELNET BANK OPERATING SEGMENT – RESULTS OF OPERATIONS~~Nelnet Bank Operating Segment

Loan Portfolio

As of March 31, ~~2023,~~2024, Nelnet Bank had a ~~$439.0~~$483.7 million loan portfolio, consisting of ~~$355.7~~$364.8 million of private education loans ~~$63.4 million of FFELP loans,~~ and ~~$19.9~~$119.0 million of consumer and other loans. For a summary of the Company’s loan portfolio as of March 31, 2024 and December 31, 2023, see note 2 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 Nelnet Bank operating segment:


	Three months ended March 31,
	2024		2023
Beginning balance	$	432,872	419,795
Loan acquisitions and originations:


Private education loans	16,715		14,226
Consumer and other loans	56,847		19,632
Total loan acquisitions and originations	73,562		33,858
Repayments	(22,711)		(14,529)

Loans sold to AGM	—		(117)

Ending balance	$	483,723	439,007

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

For a summary of the allowance as a percentage of the ending balance and loan status, delinquency amounts, and other key credit quality indicators offor each of Nelnet Bank's loan portfolios as of March 31, ~~2023~~2024 and December 31, ~~2022;~~2023; 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, ~~2023~~2024 and ~~2022,~~2023, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

~~The following table sets forth the activity in Nelnet Bank's loan portfolio:~~

Three months ended March 31,
2023 2022
Beginning balance $ 419,795 257,901
Loan originations:
Private education loans 14,226 130,342
Consumer and other loans 19,632 —
Total loan originations 33,858 130,342
Repayments (14,529) (18,394)
Sales to AGM (117) (1,592)
Ending balance $ 439,007 368,257

Deposits

As of March 31, ~~2023,~~2024, Nelnet Bank had ~~$869.8~~$960.6 million of deposits. All of Nelnet Bank’s deposits are interest-bearing ~~deposits~~ and primarily consist of brokered certificates of deposit (CDs) ~~and~~, retail and other savings deposits and ~~CDs.~~CDs, and intercompany deposits. Retail and other ~~saving~~savings deposits include deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trust (STFIT), and commercial and institutional CDs. Union Bank, a related party, is the program manager for the Educational 529 College Savings plans and trustee for the STFIT.

As of March 31, 2024, Nelnet Bank’s deposits ~~include $194.0~~included $158.6 million from Nelnet, Inc. ~~(the parent~~(parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. The intercompany deposits include a pledged deposit of $40.0 million from Nelnet, Inc. as required under the Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating ~~and savings~~ deposits, and NBS custodial deposits consisting of ~~collected~~ tuition payments collected which are subsequently remitted to the appropriate school.

4947

~~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)
2023 2022
Balance Rate Balance Rate
Average assets
Federally insured student loans $ 64,655 5.93 % $ 85,266 1.42 %
Private education loans 355,698 3.61 228,934 2.91
Consumer and other loans 7,308 12.30 — —
Cash and investments 540,513 5.95 265,101 1.66
Total interest-earning assets 968,174 5.14 % 579,301 2.12 %
Non-interest-earning assets 9,323 15,275
Total assets $ 977,497 $ 594,576
Average liabilities and equity
Brokered deposits $ 205,411 1.39 % $ 144,527 1.20 %
Intercompany deposits 187,872 4.96 70,576 0.20
Retail and other deposits 452,008 3.78 269,027 0.59
Total interest-bearing liabilities 845,291 3.46 % 484,130 0.72 %
Non-interest-bearing liabilities 5,608 6,427
Equity 126,598 104,019
Total liabilities and equity $ 977,497 $ 594,576

~~(a) Calculated using average daily balances.~~

Summary and Comparison of Operating Results

Three months ended March 31,
2023 2022 Additional information
Total interest income $ 12,259 3,030 Represents interest earned on loans, cash, and investments. Increase in 2023 compared with 2022 was due to an increase of these balances and interest rates.
Interest expense 7,214 856 Represents interest expense on deposits. Increase in 2023 compared with 2022 was due to an increase of deposits and interest rates.
Net interest income 5,045 2,174
Provision for loan losses 2,417 429 Increase in provision for loan losses was due to the mix of loans, including the mix of loans originated in 2023 compared with 2022, and management's estimate of declining economic conditions. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Net interest income after provision for loan losses 2,628 1,745
Other income 210 1,500 Represents primarily income and net gains from investments.
Salaries and benefits 2,064 1,554 Represents salaries and benefits of Nelnet Bank associates and third-party contract labor. Increase in 2023 compared with 2022 was due to the overall growth of Nelnet Bank activities.
Depreciation 5 3
Other expenses 782 682
Intersegment expenses 80 45 Represents primarily servicing costs paid to LSS. Certain shared service and support costs incurred by the Company to support Nelnet Bank are not and will not be reflected as part of Nelnet Bank through 2023 (when the bank’s de novo period will end). The shared service and support costs incurred by the Company related to Nelnet Bank and not reflected in the bank’s operating segment were $1.7 million and $1.3 million for the three months ended March 31, 2023 and 2022, respectively.
Total operating expenses 2,931 2,284
(Loss) income before income taxes (93) 961
Income tax benefit (expense) 35 (223) Represents income tax benefit (expense) at an effective tax rate of 37.4% and 23.2% for the three months ended March 31, 2023 and 2022, respectively.
Net (loss) income $ (58) 738


	Three months ended March 31,
	2024			2023		Additional information
Net interest income	$	1,894		1,037		Increase was due to higher interest rates.
Loan servicing and systems revenue	127,201			139,227		See table below for additional information.
Intersegment servicing revenue	6,886			7,790		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	710			608		Represents revenue earned from providing administrative support services.

Total other income	134,797			147,625
Salaries and benefits	76,722			84,560		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. As part of these reductions, the Company recognized a restructuring charge of $2.7 million in the first quarter of 2023.
Depreciation and amortization	5,109			4,513
Other expenses	19,538			13,313		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	19,332			21,057		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	120,701			123,443
Income before income taxes	15,990			25,219
Income tax expense	(3,838)			(6,053)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	12,152		19,166




Before tax operating margin	11.9		%	17.1	%	Before tax operating margin represents 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, 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 decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.

5038

Loan servicing and systems revenue

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


	Three months ended March 31,
	2024		2023	Additional information
Government loan servicing	$	105,474	108,880	Represents revenue from the Company's Department legacy servicing contract. Decrease was due to the reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,620		12,164	Increase was due to rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,380		3,368	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,541		9,697	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts.
Outsourced services	1,186		5,118	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	127,201	139,227

~~CORPORATE~~EDUCATION TECHNOLOGY SERVICES AND ~~OTHER ACTIVITIES~~PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

~~Other~~As discussed further in the Company's 2023 Annual Report, this segment of the Company’s business ~~activities~~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 ~~segments~~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,
	2024		2023	Additional information
Net interest income	$	7,866	6,036	Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.
Education technology services and payments revenue	143,539		133,603	See table below for additional information.
Intersegment revenue	49		56


Total other income	143,588		133,659
Cost of services	48,610		47,704	See table below for additional information.
Salaries and benefits	40,167		37,913	Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	2,683		2,578	Represents primarily amortization of intangible assets from prior business acquisitions.
Other expenses	7,558		8,063	Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	4,801		5,800	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	55,209		54,354
Income before income taxes	47,635		37,637
Income tax expense	(11,435)		(9,066)	Represents income tax expense at an effective tax rate of 24%.
Net income	36,200		28,571
Net loss attributable to noncontrolling interests	17		138
Net income	$	36,217	28,709

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,
	2024			2023		Additional information
Tuition payment plan services	$	38,880		34,187		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	47,786			44,041		Increase was due to increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.
Education technology services	56,021			54,787		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs for the three months ended March 31, 2024 and 2023 was $10.6 million and $16.4 million, respectively.
Other	852			588
Education technology services and payments revenue	143,539			133,603
Cost of services	48,610			47,704		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	$	94,929		85,899
GAAP before tax operating margin	50.2		%	43.8	%	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, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	(8.3)			(7.0)
Non-GAAP before tax operating margin, excluding net interest income	41.9		%	36.8	%

NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

Loan Activity

The following table sets forth the activity of loans in the AGM operating segment:


	Three months ended March 31,
	2024		2023
Beginning balance	$	12,049,462	14,169,771
Loan acquisitions:
Federally insured student loans	—		2,980

Consumer and other loans	80,730		250,706
Total loan acquisitions	80,730		253,686
Repayments, claims, capitalized interest, participations, and other, net	(350,496)		(410,239)
Loans lost to external parties	(779,655)		(268,696)
Loans sold	(200,099)		(261,902)

Ending balance	$	10,799,942	13,482,620

The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are ~~not reportable are combined~~accounted for as held-to-maturity beneficial interest investments and included in ~~Corporate~~"investments and ~~Other Activities (“Corporate”)~~notes receivable" 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, 2024, the Company’s ownership correlates to approximately $1.79 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table.

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

Loan Spread Analysis


	Three months ended March 31,
	2024			2023
Variable loan yield, gross	7.99		%	7.12	%
Consolidation rebate fees	(0.80)			(0.81)
Discount accretion, net of premium and deferred origination costs amortization	0.09			0.05
Variable loan yield, net	7.28			6.36
Loan cost of funds - interest expense	(6.50)			(5.53)
Loan cost of funds - derivative settlements (a) (b)	0.01			0.03
Variable loan spread	0.79			0.86
Fixed rate floor income, gross	0.01			0.03
Fixed rate floor income - derivative settlements (a) (c)	0.04			0.68
Fixed rate floor income, net of settlements on derivatives	0.05			0.71
Core loan spread	0.84		%	1.57	%

Average balance of AGM's loans	$	11,561,504		13,991,241
Average balance of AGM's debt outstanding	11,387,400			13,364,876

(a) Derivative settlements represent the cash paid or received during the current 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 4 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 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" 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,
	2024		2023
Core loan spread	0.84	%	1.57	%
Derivative settlements (1:3 basis swaps)	(0.01)		(0.03)
Derivative settlements (fixed rate floor income)	(0.04)		(0.68)
Loan spread	0.79	%	0.86	%

(b) Derivative settlements consist of net settlements received related to the Company’s 1:3 basis swaps.

(c) Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps.


	Three months ended March 31,
	2024			2023
Fixed rate floor income, gross	$	180		1,110
Derivative settlements (a)	1,190			22,478
Fixed rate floor income, net	$	1,370		23,588
Fixed rate floor income contribution to spread, net	0.05		%	0.71	%

(a) Derivative settlements consist of net settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

The decrease in gross fixed rate floor income for the three months ended March 31, 2024 compared with the same period in 2023 was due to higher interest rates in 2024 compared with 2023.

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024		2023	Additional information
Net interest income after provision for loan losses	$	34,003	13,663	See table below for additional analysis.
Other income, net	4,983		2,845	Represents primarily borrower late fees, income from providing administration activities for third parties, and income/losses from AGM's investment in joint ventures.
(Loss) gain on sale of loans, net	(41)		11,812	The Company recognized a loss and net gains from selling portfolios of loans in 2024 and 2023, respectively. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Derivative settlements, net	1,555		23,337	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. The majority of derivative settlements received in the periods presented was from the Company's derivative portfolio used to hedge loans earning fixed rate floor income. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Derivative market value adjustments, net	5,706		(37,411)	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. On March 15, 2023, AGM terminated its portfolio of floor income interest rate swaps to minimize the Company's exposure to market volatility and increase liquidity. As such, the Company expects the derivative market value adjustments in future periods will be less substantial. See above under "Loan Spread Analysis" for further information.
Total other income, net	12,203		583
Salaries and benefits	1,195		755	Increase was due to additional headcount as the Company actively expands into new asset loan classes.
Other expenses	3,418		5,016	Represents primarily servicing fees paid to third parties. Decrease in servicing fees was due to the amortization of the FFELP student loan portfolio.
Intersegment expenses	7,850		8,696	Represents fees paid to LSS for the servicing of the majority of AGM’s loans. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	12,463		14,467	Total operating expenses were 43 basis points and 41 basis points of the average balance of loans for the three months ended March 31, 2024 and 2023, respectively. The increase in operating expenses as a percent of the average balance of loans was due to an increase in costs as the Company actively expands into new asset loan classes.
Income (loss) before income taxes	33,743		(221)
Income tax (expense) benefit	(8,099)		53	Represents income tax expense at an effective tax rate of 24%.
Net income (loss)	$	25,644	(168)
Additional information:
GAAP net income (loss)	$	25,644	(168)	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments. The decrease in non-GAAP net income, excluding derivative market value adjustments was due to (i) a decrease in the average balance of loans; (ii) a decrease in core loan spread; and (iii) the net gain on sale of loans in 2023. These changes were partially offset by (i) a decrease in provision expense and (ii) an increase in investment interest income on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Derivative market value adjustments, net	(5,706)		37,411
Tax effect	1,369		(8,979)
Non-GAAP net income, excluding derivative market value adjustments	$	21,307	28,264

Net interest income after provision for loan losses, net of settlements on derivatives

The following table summarizes the ~~operating results~~components of "net interest income after provision for loan losses" and "derivative settlements, net."


	Three months ended March 31,
	2024		2023	Additional information
Variable interest income, gross	$	229,817	246,594	Decrease was due to a decrease in the average balance of loans partially offset by an increase in the gross yield earned on loans.
Consolidation rebate fees	(23,057)		(28,399)	Decrease was due to a decrease in the average consolidation loan balance.
Discount accretion, net of premium and deferred origination costs amortization	2,688		1,607	Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.
Variable interest income, net	209,448		219,802
Interest on bonds and notes payable	(184,145)		(182,063)	Increase was due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
Derivative settlements, net (a)	365		859	Represents net derivative settlements received related to the Company’s 1:3 basis swaps.
Variable loan interest margin, net of settlements on derivatives	25,668		38,598
Fixed rate floor income, gross	180		1,110	Decrease was due to higher interest rates.
Derivative settlements, net (a)	1,190		22,478	Represents net derivative settlements received related to the Company's floor income interest rate swaps. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Fixed rate floor income, net of settlements on derivatives	1,370		23,588
Core loan interest income (a)	27,038		62,186
Investment interest	21,835		13,807	Increase was due to an increase in the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Intercompany interest	(6,760)		(7,135)
Negative provision (provision) for loan losses - federally insured loans	1,870		(2,411)	See note 2 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.
Negative provision (provision) for loan losses - private education loans	265		(240)
Provision for loan losses - consumer and other loans	(8,690)		(29,207)
Net interest income after provision for loan losses (net of settlements on derivatives) (a)	$	35,558	37,000

~~Income taxes are allocated based~~non-GAAP measures (and the limitations thereof), see footnote (a) to the table immediately under the caption “Loan Spread Analysis” above. See note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on ~~24% of income (loss) before taxes~~the Company's derivative instruments, including the net settlement activity recognized by the Company for each ~~activity. The difference between~~type of derivative referred to in the ~~Corporate income tax expense~~"Additional information" column of this table, for the 2024 and ~~the sum of taxes calculated for each activity is included in income taxes in “other”~~2023 periods presented in the table ~~below.~~under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income."

Nelnet Bank Operating Segment

Loan Portfolio

As of March 31, 2024, Nelnet Bank had a $483.7 million loan portfolio, consisting of $364.8 million of private education loans and $119.0 million of consumer and other loans. For a summary of the Company’s loan portfolio as of March 31, 2024 and December 31, 2023, see note 2 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 Nelnet Bank operating segment:


	Three months ended March 31,
	2024		2023
Beginning balance	$	432,872	419,795
Loan acquisitions and originations:


Private education loans	16,715		14,226
Consumer and other loans	56,847		19,632
Total loan acquisitions and originations	73,562		33,858
Repayments	(22,711)		(14,529)

Loans sold to AGM	—		(117)

Ending balance	$	483,723	439,007

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

For a summary of the allowance as a percentage of the ending balance and loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of March 31, 2024 and December 31, 2023; 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, 2024 and 2023, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Deposits

As of March 31, 2024, Nelnet Bank had $960.6 million of deposits. All of Nelnet Bank’s deposits are interest-bearing and primarily consist of brokered certificates of deposit (CDs), retail and other savings deposits and CDs, and intercompany deposits. Retail and other savings deposits include deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trust (STFIT), and commercial and institutional CDs. Union Bank, a related party, is the program manager for the Educational 529 College Savings plans and trustee for the STFIT.

As of March 31, 2024, Nelnet Bank’s deposits included $158.6 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. The intercompany deposits include a pledged deposit of $40.0 million from Nelnet, Inc. as required under the Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school.

Summary and Comparison of Operating Results

Nelnet Renewable Energy (c)
Shared services (a) WRCM (b) Tax equity investments / syndication / administration GRNE Solar ALLO investment (d) Real estate investments (e) Venture capital investments (f) Interest income/expense, net (g) Other Total
Three months ended March 31, 2023
Interest income $ — 2 — 41 — 141 670 20,237 108 21,199
Interest expense — — — (273) — — — (11,977) (68) (12,318)
Net interest income — 2 — (232) — 141 670 8,260 40 8,881
Solar construction revenue — — — 8,651 — — — — — 8,651
Other, net 626 1,612 (1,948) 44 (17,864) 800 67 (3,941) 2,870 (17,734)
Cost to provide solar construction services — — — (8,299) — — — — — (8,299)
Salaries and benefits (23,384) (56) (1,007) (1,196) (30) (81) (177) — (1,488) (27,419)
Depreciation and amortization (8,830) — — (617) — (6) — — (78) (9,531)
Other expenses (10,566) (81) (821) (948) 12 (16) (165) (2,218) 1,192 (13,611)
Intersegment expenses, net 29,165 (3) 15 (513) — (95) (10) (97) (675) 27,787
Income (loss) before income taxes (12,989) 1,474 (3,761) (3,110) (17,882) 743 385 2,004 1,861 (31,275)
Income tax (expense) benefit 3,117 (319) 206 610 4,292 (180) (92) (481) (372) 6,781
Net (income) loss attributable to noncontrolling interests — (146) 2,903 569 — 6 — — — 3,332
Net income (loss) $ (9,872) 1,009 (652) (1,931) (13,590) 569 293 1,523 1,489 (21,162)
Three months ended March 31, 2022
Interest income $ — — — — — 289 — 3,603 100 3,992
Interest expense — — — — — — — (1,745) (281) (2,026)
Net interest income — — — — — 289 — 1,858 (181) 1,966
Solar construction revenue — — — — — — — — — —
Other, net 689 1,281 (869) — (11,014) 4,472 4,902 (864) 2,528 1,125
Cost to provide solar construction services — — — — — — — — — —
Salaries and benefits (21,868) (55) (258) — (84) (110) (239) — (1,398) (24,012)
Depreciation and amortization (9,615) — — — — — — — (69) (9,684)
Other expenses (12,261) (100) (102) — (24) (2) (23) (449) (843) (13,804)
Intersegment expenses, net 25,755 (3) (3) — — (95) — (56) (202) 25,396
Income (loss) before income taxes (17,300) 1,123 (1,232) — (11,122) 4,554 4,640 489 (165) (19,013)
Income tax (expense) benefit 4,152 (243) (153) — 2,669 (1,092) (1,114) (117) 2,496 6,598
Net (income) loss attributable to noncontrolling interests — (112) 1,869 — — (6) — — 10 1,761
Net income (loss) $ (13,148) 768 484 — (8,453) 3,456 3,526 372 2,341 (10,654)


	Three months ended March 31,
	2024			2023		Additional information
Net interest income	$	1,894		1,037		Increase was due to higher interest rates.
Loan servicing and systems revenue	127,201			139,227		See table below for additional information.
Intersegment servicing revenue	6,886			7,790		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	710			608		Represents revenue earned from providing administrative support services.

Total other income	134,797			147,625
Salaries and benefits	76,722			84,560		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. As part of these reductions, the Company recognized a restructuring charge of $2.7 million in the first quarter of 2023.
Depreciation and amortization	5,109			4,513
Other expenses	19,538			13,313		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	19,332			21,057		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	120,701			123,443
Income before income taxes	15,990			25,219
Income tax expense	(3,838)			(6,053)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	12,152		19,166




Before tax operating margin	11.9		%	17.1	%	Before tax operating margin represents 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, 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 decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, partially offset by a decrease in salaries and benefits resulting from restructure charges incurred during the first quarter of 2023 and staff reductions in 2023.

5138

Loan servicing and systems revenue

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


	Three months ended March 31,
	2024		2023	Additional information
Government loan servicing	$	105,474	108,880	Represents revenue from the Company's Department legacy servicing contract. Decrease was due to the reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,620		12,164	Increase was due to rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,380		3,368	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,541		9,697	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts.
Outsourced services	1,186		5,118	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	127,201	139,227

EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024		2023	Additional information
Net interest income	$	7,866	6,036	Represents interest income on tuition funds held in custody for schools. Increase was due to higher interest rates.
Education technology services and payments revenue	143,539		133,603	See table below for additional information.
Intersegment revenue	49		56


Total other income	143,588		133,659
Cost of services	48,610		47,704	See table below for additional information.
Salaries and benefits	40,167		37,913	Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	2,683		2,578	Represents primarily amortization of intangible assets from prior business acquisitions.
Other expenses	7,558		8,063	Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	4,801		5,800	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	55,209		54,354
Income before income taxes	47,635		37,637
Income tax expense	(11,435)		(9,066)	Represents income tax expense at an effective tax rate of 24%.
Net income	36,200		28,571
Net loss attributable to noncontrolling interests	17		138
Net income	$	36,217	28,709

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,
	2024			2023		Additional information
Tuition payment plan services	$	38,880		34,187		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	47,786			44,041		Increase was due to increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.
Education technology services	56,021			54,787		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs for the three months ended March 31, 2024 and 2023 was $10.6 million and $16.4 million, respectively.
Other	852			588
Education technology services and payments revenue	143,539			133,603
Cost of services	48,610			47,704		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	$	94,929		85,899
GAAP before tax operating margin	50.2		%	43.8	%	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, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	(8.3)			(7.0)
Non-GAAP before tax operating margin, excluding net interest income	41.9		%	36.8	%

NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

Loan Activity

The following table sets forth the activity of loans in the AGM operating segment:


	Three months ended March 31,
	2024		2023
Beginning balance	$	12,049,462	14,169,771
Loan acquisitions:
Federally insured student loans	—		2,980

Consumer and other loans	80,730		250,706
Total loan acquisitions	80,730		253,686
Repayments, claims, capitalized interest, participations, and other, net	(350,496)		(410,239)
Loans lost to external parties	(779,655)		(268,696)
Loans sold	(200,099)		(261,902)

Ending balance	$	10,799,942	13,482,620

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

Loan Spread Analysis


	Three months ended March 31,
	2024			2023
Variable loan yield, gross	7.99		%	7.12	%
Consolidation rebate fees	(0.80)			(0.81)
Discount accretion, net of premium and deferred origination costs amortization	0.09			0.05
Variable loan yield, net	7.28			6.36
Loan cost of funds - interest expense	(6.50)			(5.53)
Loan cost of funds - derivative settlements (a) (b)	0.01			0.03
Variable loan spread	0.79			0.86
Fixed rate floor income, gross	0.01			0.03
Fixed rate floor income - derivative settlements (a) (c)	0.04			0.68
Fixed rate floor income, net of settlements on derivatives	0.05			0.71
Core loan spread	0.84		%	1.57	%

Average balance of AGM's loans	$	11,561,504		13,991,241
Average balance of AGM's debt outstanding	11,387,400			13,364,876

(a) Derivative settlements represent the cash paid or received during the current 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 4 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 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" 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,
	2024		2023
Core loan spread	0.84	%	1.57	%
Derivative settlements (1:3 basis swaps)	(0.01)		(0.03)
Derivative settlements (fixed rate floor income)	(0.04)		(0.68)
Loan spread	0.79	%	0.86	%

(b) Derivative settlements consist of net settlements received related to the Company’s 1:3 basis swaps.

(c) Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps.


	Three months ended March 31,
	2024			2023
Fixed rate floor income, gross	$	180		1,110
Derivative settlements (a)	1,190			22,478
Fixed rate floor income, net	$	1,370		23,588
Fixed rate floor income contribution to spread, net	0.05		%	0.71	%

(a) Derivative settlements consist of net settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

The decrease in gross fixed rate floor income for the three months ended March 31, 2024 compared with the same period in 2023 was due to higher interest rates in 2024 compared with 2023.

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024		2023	Additional information
Net interest income after provision for loan losses	$	34,003	13,663	See table below for additional analysis.
Other income, net	4,983		2,845	Represents primarily borrower late fees, income from providing administration activities for third parties, and income/losses from AGM's investment in joint ventures.
(Loss) gain on sale of loans, net	(41)		11,812	The Company recognized a loss and net gains from selling portfolios of loans in 2024 and 2023, respectively. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Derivative settlements, net	1,555		23,337	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. The majority of derivative settlements received in the periods presented was from the Company's derivative portfolio used to hedge loans earning fixed rate floor income. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Derivative market value adjustments, net	5,706		(37,411)	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. On March 15, 2023, AGM terminated its portfolio of floor income interest rate swaps to minimize the Company's exposure to market volatility and increase liquidity. As such, the Company expects the derivative market value adjustments in future periods will be less substantial. See above under "Loan Spread Analysis" for further information.
Total other income, net	12,203		583
Salaries and benefits	1,195		755	Increase was due to additional headcount as the Company actively expands into new asset loan classes.
Other expenses	3,418		5,016	Represents primarily servicing fees paid to third parties. Decrease in servicing fees was due to the amortization of the FFELP student loan portfolio.
Intersegment expenses	7,850		8,696	Represents fees paid to LSS for the servicing of the majority of AGM’s loans. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	12,463		14,467	Total operating expenses were 43 basis points and 41 basis points of the average balance of loans for the three months ended March 31, 2024 and 2023, respectively. The increase in operating expenses as a percent of the average balance of loans was due to an increase in costs as the Company actively expands into new asset loan classes.
Income (loss) before income taxes	33,743		(221)
Income tax (expense) benefit	(8,099)		53	Represents income tax expense at an effective tax rate of 24%.
Net income (loss)	$	25,644	(168)
Additional information:
GAAP net income (loss)	$	25,644	(168)	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments. The decrease in non-GAAP net income, excluding derivative market value adjustments was due to (i) a decrease in the average balance of loans; (ii) a decrease in core loan spread; and (iii) the net gain on sale of loans in 2023. These changes were partially offset by (i) a decrease in provision expense and (ii) an increase in investment interest income on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Derivative market value adjustments, net	(5,706)		37,411
Tax effect	1,369		(8,979)
Non-GAAP net income, excluding derivative market value adjustments	$	21,307	28,264

Net interest income after provision for loan losses, net of settlements on derivatives

The following table summarizes the components of "net interest income after provision for loan losses" and "derivative settlements, net."


	Three months ended March 31,
	2024		2023	Additional information
Variable interest income, gross	$	229,817	246,594	Decrease was due to a decrease in the average balance of loans partially offset by an increase in the gross yield earned on loans.
Consolidation rebate fees	(23,057)		(28,399)	Decrease was due to a decrease in the average consolidation loan balance.
Discount accretion, net of premium and deferred origination costs amortization	2,688		1,607	Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.
Variable interest income, net	209,448		219,802
Interest on bonds and notes payable	(184,145)		(182,063)	Increase was due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
Derivative settlements, net (a)	365		859	Represents net derivative settlements received related to the Company’s 1:3 basis swaps.
Variable loan interest margin, net of settlements on derivatives	25,668		38,598
Fixed rate floor income, gross	180		1,110	Decrease was due to higher interest rates.
Derivative settlements, net (a)	1,190		22,478	Represents net derivative settlements received related to the Company's floor income interest rate swaps. The decrease in net derivative settlements received by the Company was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Fixed rate floor income, net of settlements on derivatives	1,370		23,588
Core loan interest income (a)	27,038		62,186
Investment interest	21,835		13,807	Increase was due to an increase in the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Intercompany interest	(6,760)		(7,135)
Negative provision (provision) for loan losses - federally insured loans	1,870		(2,411)	See note 2 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.
Negative provision (provision) for loan losses - private education loans	265		(240)
Provision for loan losses - consumer and other loans	(8,690)		(29,207)
Net interest income after provision for loan losses (net of settlements on derivatives) (a)	$	35,558	37,000

(a) Core loan interest income and net interest income after provision for loan losses (net of settlements on derivatives) are non-GAAP financial measures. 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 4 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 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income."

Nelnet Bank Operating Segment

Loan Portfolio

Loan Activity

The following table sets forth the activity of loans in Nelnet Bank operating segment:


	Three months ended March 31,
	2024		2023
Beginning balance	$	432,872	419,795
Loan acquisitions and originations:


Private education loans	16,715		14,226
Consumer and other loans	56,847		19,632
Total loan acquisitions and originations	73,562		33,858
Repayments	(22,711)		(14,529)

Loans sold to AGM	—		(117)

Ending balance	$	483,723	439,007

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

Deposits

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)
	2024				2023
	Balance		Rate		Balance		Rate
Average assets
Federally insured student loans	$	—	—	%	$	64,655	5.93	%
Private education loans	366,858		4.28		355,698		3.61
Consumer and other loans	97,136		13.23		7,308		12.30
Cash and investments	577,947		6.94		540,513		5.95
Total interest-earning assets	1,041,941		6.59	%	968,174		5.14	%
Non-interest-earning assets	12,767				9,323
Total assets	$	1,054,708			$	977,497
Average liabilities and equity
Brokered deposits	$	204,651	1.39	%	$	205,411	1.39	%
Intercompany deposits	160,349		4.90		187,872		4.96
Retail and other deposits	544,136		4.90		452,008		3.78

Total interest-bearing liabilities	909,136		4.11	%	845,291		3.46	%
Non-interest-bearing liabilities	8,477				5,608
Equity	137,095				126,598
Total liabilities and equity	$	1,054,708			$	977,497

(a) Calculated using average daily balances.

Summary and Comparison of Operating Results


	Three months ended March 31,
	2024		2023	Additional information
Total interest income	$	17,064	12,259	Represents interest earned on loans, cash, and investments. Increase was due to an increase of these balances and interest rates.
Interest expense	9,497		7,214	Represents interest expense on deposits. Increase was due to an increase of deposits and interest rates.
Net interest income	7,567		5,045
Provision for loan losses	4,373		2,417	Increase in provision for loan losses was due to the mix of loans, including the mix of loans acquired and originated in 2024 compared with 2023. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Net interest income after provision for loan losses	3,194		2,628
Other income	375		210	Represents primarily net gains and income from investments.

Derivative settlements, net	202		—	During the second and third quarter of 2023, Nelnet Bank entered into 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. For additional information on Nelnet Bank's derivative portfolio, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Derivative market value adjustments, net	2,258		—
Total other income, net	2,835		210
Salaries and benefits	2,721		2,064	Represents salaries and benefits of Nelnet Bank associates and third-party contract labor. Increase was due to the overall growth of Nelnet Bank activities.
Depreciation	260		5
Other expenses	1,128		782	Represents various expenses such as consulting and professional fees, Nelnet Bank director fees, occupancy, certain technology-related costs, insurance, and marketing. Increase was due to the overall growth of Nelnet Bank activities.
Intersegment expenses	773		80	Represents fees paid to LSS for servicing certain of Nelnet Bank's loans. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also include costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. The majority of shared service costs incurred by the Company to support Nelnet Bank were not allocated to Nelnet Bank through the bank’s de novo period which ended at the end of 2023. The shared service and support costs incurred by the Company related to Nelnet Bank and not allocated to Nelnet Bank were $1.7 million for the three months ended March 31, 2023.
Total operating expenses	4,882		2,931
Income (loss) before income taxes	1,147		(93)
Income tax (expense) benefit	(259)		35	Represents income tax expense at an effective tax rate of 22.6% and 37.4% for the three months ended March 31, 2024 and 2023, respectively.
Net income (loss)	$	888	(58)
Additional information:
Net income (loss)	$	888	(58)	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP net income, excluding derivative market value adjustments.
Derivative market value adjustments, net	(2,258)		—
Tax effect	542		—
Net loss, excluding derivative market value adjustments	$	(828)	(58)

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, 2024
Interest income	$	3	818	141	14,654	15,616
Interest expense	—		—	—	(2,418)	(2,418)
Net interest income	3		818	141	12,236	13,198
Other income, net	1,477		13,066	(1,794)	192	12,941

Salaries and benefits	(55)		(114)	(189)	—	(358)

Other expenses	(75)		(11,657)	(70)	—	(11,802)
Intersegment expenses, net	(4)		(47)	(130)	(36)	(217)
Income (loss) before income taxes	1,346		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
	Three months ended March 31, 2023
Interest income	$	2	326	141	18,191	18,660
Interest expense	—		—	—	(11,827)	(11,827)
Net interest income	2		326	141	6,364	6,833
Other income, net	1,596		691	1,147	(4,175)	(741)

Salaries and benefits	(56)		(95)	(68)	—	(219)

Other expenses	(81)		(469)	(16)	(1)	(567)
Intersegment expenses, net	(3)		(31)	(95)	—	(129)
Income (loss) before income taxes	1,458		422	1,109	2,188	5,177
Income tax (expense) benefit	(315)		(101)	(268)	(525)	(1,209)
Net (income) loss attributable to noncontrolling interests	(146)		—	6	—	(140)
Net income (loss)	$	997	321	847	1,663	3,828

(a) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. WRCM earned management fees of $1.4 million and $1.6 million during the three months ended March 31, 2024 and 2023, respectively. Fees earned by WRCM are included in "other income, net" in the table above.

(b) Represents the operating results of the Company’s reinsurance treaties on property and casualty policies and the Company’s Nebraska chartered life and health company, which is in run-off mode and reinsures a decreasing term life insurance product distributed to FACTS. During the three months ended March 31, 2024 and 2023, the Company earned reinsurance premiums of $25.5 million and $1.1 million, respectively, and ceded $12.7 million and $0.6 million, respectively, of its earned reinsurance premiums, which are included in “other income, net” in the table above. During the three months ended March 31, 2024 and 2023, the Company recognized $22.8 million and $0.9 million, respectively, of loss reserve, commissions, and broker fees of which it ceded $11.5 million and $0.5 million, respectively, which are included in “other expenses” in the table above.

(c) Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio. During the three months ended March 31, 2024 and 2023, the Company recognized $1.8 million of net losses and $1.1 million of net gains, respectively, from its real estate investments, which are included in "other income, net" in the table above. The loss recognized in the first quarter of 2024 relates primarily to the Company's proportionate share of the net losses 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), 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 in 2024 compared with 2023 was due to a decrease in the average balance of investments from $1.3 billion in 2023 to $0.9 billion in 2024, partially offset by an increase in interest rates. The decrease in interest expense in 2024 compared with 2023 was due to a decrease in the average debt outstanding from $0.9 billion in 2023 to $0.1 billion in 2024. Included in 2023 was $4.0 million of realized losses on sales of asset-backed and marketable securities, which are included in "other income, net" in the table above.

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


			Nelnet Renewable Energy (b)
	Shared services (a)		Tax equity investments / syndication / administration	GRNE Solar	ALLO investment (c)	Venture capital investments (d)	Other	Total
	Three months ended March 31, 2024


Net interest income (expense)	$	—	—	(312)	—	—	3,451	3,139
Solar construction revenue	—		—	13,726	—	—	—	13,726
Other income, net	706		3,067	42	(8,236)	(426)	2,853	(1,994)

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, net	27,528		291	(758)	(1)	(19)	(196)	26,845
Income (loss) before income taxes	(10,045)		2,504	(4,037)	(8,593)	(704)	2,723	(18,152)
Income tax (expense) benefit	2,411		(979)	794	2,062	169	(672)	3,785
Net loss attributable to noncontrolling interests	—		1,577	728	—	—	—	2,305
Net income (loss)	$	(7,634)	3,102	(2,515)	(6,531)	(535)	2,051	(12,062)

	Three months ended March 31, 2023


Net interest income (expense)	$	—	—	(232)	—	—	2,280	2,048
Solar construction revenue	—		—	8,651	—	—	—	8,651
Other income, net	626		(1,948)	6	(17,864)	(289)	2,476	(16,993)

Cost to provide solar construction services	—		—	(8,299)	—	—	—	(8,299)
Salaries and benefits	(23,384)		(870)	(1,196)	(30)	(190)	(1,530)	(27,200)
Depreciation and amortization	(8,830)		—	(617)	—	—	(84)	(9,531)
Other expenses	(10,240)		(765)	(886)	12	(165)	(1,000)	(13,044)
Intersegment expenses, net	28,839		(8)	(537)	—	(10)	(368)	27,916
Income (loss) before income taxes	(12,989)		(3,591)	(3,110)	(17,882)	(654)	1,774	(36,452)
Income tax (expense) benefit	3,117		165	610	4,292	157	(351)	7,990
Net loss attributable to noncontrolling interests	—		2,903	569	—	—	—	3,472
Net income (loss)	$	(9,872)	(523)	(1,931)	(13,590)	(497)	1,423	(24,990)

(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. ~~Certain shared service costs incurred to support Nelnet Bank will not be allocated to Nelnet Bank until the end of the Bank’s de novo period (November 2023).~~ 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) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. During the three months ended March 31, 2023 and 2022, WRCM earned $1.6 million and $1.3 million in management fees, respectively. Fees earned by WRCM are included in "other, net" in the table above.

~~(c)~~ Nelnet Renewable Energy ~~which~~ includes solar tax equity investments made by the Company, administrative and management services provided by the Company on tax equity investments made by third parties, and solar construction and development. As of March 31, ~~2023,~~2024, the Company has invested a total of ~~$294.4~~$491.8 million (which includes ~~$115.9~~$208.9 million syndicated to third-party investors) in solar tax equity investments. Due to the management and control of each of these investment partnerships, ~~the~~such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the co-investor’s portion being presented as ~~non-controlling~~noncontrolling interests.

Included in tax equity investments in the table above is the Company's share of income or loss from solar investments accounted for under the Hypothetical Liquidation at Book Value (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. ~~During~~Nelnet Renewable Energy recognized

net gains on its tax equity investments of $3.0 million and net losses of $1.9 million during the three months ended March 31, 2024 and 2023, ~~and 2022, Nelnet Renewable Energy recognized losses of $1.9 million and $1.0 million, respectively, on its tax equity investments.~~respectively. These ~~losses,~~income statement amounts, which include ~~losses~~amounts attributable to third-party noncontrolling interest investors, are included in “other income, net” in the table above. Solar net losses attributable to third-party noncontrolling interest investors was ~~$2.7~~$1.2 million and ~~$1.8~~$2.7 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, and are reflected in “net ~~(income)~~ loss attributable to noncontrolling interests” in the table above.

Nelnet Renewable Energy syndicates tax equity investments to third parties and earns management and performance fees. Management fee income recognized by Nelnet Renewable Energy was ~~$0.3~~$0.7 million and ~~$0.2~~$0.3 million for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, which is included in "other income, net" in the table above.

In addition to solar tax equity investments, the Company has a ~~strategy~~solar construction company (GRNE Solar) that provides full-service engineering, procurement, and construction (EPC) services to ~~own solar energy project assets. Accordingly,~~residential homes and commercial entities. Since the acquisition of GRNE in 2022, it has incurred low and, in some cases, negative margins on certain projects. Due to the complexity and long-term nature of existing construction contracts, the Company ~~has begun~~may continue to ~~execute a multi-faceted approach~~incur low and/or negative margins to ~~originate, acquire, finance, own,~~complete projects. In addition, higher interest rates reduced residential demand and ~~manage these assets. As part of this strategy, on July 1, 2022,~~made community solar projects more costly. On April 12, 2024, the Company ~~acquired 80% of~~announced a change in its solar EPC operations to focus exclusively on the ~~ownership interest~~commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will decline in ~~two subsidiaries of GRNE Solutions, LLC named GRNE-Nelnet, LLC (GRNE)~~future periods as existing customer contracts are completed. Residential solar construction revenue was $2.1 million and ~~ENRG-Nelnet, LLC (ENRG) (collectively referred to as “GRNE Solar”).~~$2.8 million for the three months ended March 31, 2024 and 2023, respectively, and $11.8 million for the year ended December 31, 2023.

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

The Company accounts for its approximately 45% voting membership interests in ALLO ~~Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO")~~ under the HLBV method of accounting. ~~During the three months ended March 31, 2023 and~~ ~~2022,~~ ~~the~~The Company recognized losses ~~of $20.2 million and $13.1 million, respectively,~~ under the HLBV method of accounting on its ALLO voting membership interests ~~investment.~~investment of $10.7 million and $20.2 million during the three months ended March 31, 2024 and 2023, respectively. These amounts are reflected in “other income, net” in the table above. Absent additional equity contributions, the Company will not recognize additional losses for its voting membership interests in ALLO.

As of March 31, ~~2023,~~2024, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was ~~$145.9~~$155.0 million and ~~$2.2~~$2.4 million, respectively. The preferred membership interests of ALLO held by the Company ~~earn~~historically earned a preferred annual return of 6.25%~~. During the three months ended March 31, 2023 and 2022, the~~ that increased to 10.00% on April 1, 2024. The Company recognized income on its ALLO preferred membership interests of $2.4 million and $2.2 million during the three months ended March 31, 2024 and ~~$2.1 million,~~2023, respectively. These amounts are reflected in “other income, net” in the table above.

~~(e) Represents the operating results~~As part of the ~~Company’s real estate investments~~ALLO recapitalization transaction completed in 2020, the Company and SDC (a third-party global digital infrastructure investor and member of ALLO) entered into an agreement, in which the ~~administrative costs~~Company has a contingent payment obligation to ~~manage~~pay SDC a contingent payment amount of up to $35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels. The Company recognized expense of $0.4 million associated with this ~~portfolio. During~~obligation for the three months ended March 31, ~~2023 and 2022, the Company recognized $0.8 million and $4.4 million, respectively, in net income and gains from its real estate investments,~~2024, which is included in “other ~~net”~~expenses” in the table above.

~~(f)~~(d) 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 three months ended March 31, 2022, the Company recognized $4.9 million in net income and gains on venture capital investments, which is included in “other, net” in the table above.~~

(g) Represents interest income earned on cash and investment debt securities (primarily student loan and other asset-backed securities), interest expense incurred on unsecured and certain other corporate related debt transactions, 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 and facilities. During the three months ended March 31, 2023 and 2022, the Company recognized losses of $4.1 million and $0.8 million, respectively, on its marketable equity and investment debt securities, which are included in “other, net” in the table above. During the three months ended March 31, 2023, the Company recognized $1.8 million in fees owed on collateral deposits with its derivative third-party clearinghouse as the result of an increase in collateral deposit balances and interest rates, which is included in “other expenses” in the table above. Fees owed on collateral deposits with its derivative third-party clearinghouse were insignificant for the three months ended March 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s Loan Servicing and Systems, and Education Technology Services and ~~Payment Processing~~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.

Nelnet Bank ~~launched operations in November 2020. Nelnet Bank~~ was funded by the Company with an initial capital contribution of $100.0 million in November 2020 and the Company contributed an additional $30.0 million and $5.0 million to Nelnet Bank during ~~2022.~~2022 and 2023, respectively. 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. Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank. See “Liquidity Impact Related to Nelnet Bank” included below for additional information.

Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Asset Generation and Management operating segment and the Company's other initiatives to pursue additional strategic investments.

Sources of Liquidity

As of March 31, ~~2023,~~2024, the Company's sources of liquidity included:


Cash and cash equivalents	$	~~187,574~~179,682
Less: Cash and cash equivalents held at Nelnet Bank ~~(1)~~(a)	~~(7,721)~~(22,869)
Net cash and cash equivalents	~~179,853~~156,813

Available-for-sale (AFS) debt securities (investments) - at fair value	~~1,070,703~~1,018,687
Less: AFS debt securities held at Nelnet Bank - at fair value ~~(1)~~(a)	~~(388,233)~~(445,268)
AFS private education loan debt securities ~~serving~~- held as ~~collateral on participation agreement~~risk retention - at fair value ~~(2)~~(b)	~~(289,086)~~(248,436)
~~AFS debt securities serving as collateral on repurchase agreements - at fair value (3)~~Restricted investments	~~(294,590)~~(36,076)
~~AFS restricted debt securities - at fair value~~	~~(15,910)~~
Unencumbered AFS debt securities (investments) - at fair value	~~82,884~~288,907

Unencumbered private, consumer, and other loans (Non-Nelnet Bank) - at par	~~285,401~~139,377

~~Repurchased~~Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) ~~(4)~~(c)	~~397,826~~310,321
~~Less: Repurchased Nelnet issued asset-backed debt securities serving as collateral on repurchase agreements - at par~~	~~(197,500)~~
~~Unencumbered repurchased Nelnet issued asset-backed debt securities - at par~~	~~200,326~~

Unused capacity on unsecured line of credit ~~(5)~~(d)	495,000

Sources of liquidity as of March 31, ~~2023~~2024	$	~~1,243,464~~1,390,418

~~(1)~~(a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank.

~~(2) See~~(b) The Company is sponsor for certain 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 Company is required to retain these bonds as described under the caption ~~"Other Debt Facilities"~~“Repurchase Agreement” below.

~~(3) See the caption "Repurchase Agreements" below.~~

~~(4)~~(c) 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.~~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. ~~Certain of these securities serve as collateral on amounts outstanding under the Company's repurchase agreements as reflected in the table above.~~

~~(5)~~(d) The Company has a $495.0 million unsecured line of credit that matures on September 22, 2026. As of March 31, ~~2023,~~2024, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use. ~~The line of credit~~

agreement contains certain financial covenants, including limitations on recourse indebtedness to adjusted EBITDA (over the last four rolling quarters). Of the $495.0 million availability, approximately $260 million was available for purposes other than reducing existing recourse debt due to the limitations on recourse indebtedness to adjusted EBITDA financial covenant.

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.

Cash Flows

The Company has historically generated positive cash flow from operations. During the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, the Company generated ~~$122.8~~$211.9 million and ~~$275.3~~$122.8 million, respectively, in cash from operating activities. The ~~decrease~~increase in ~~2023~~2024 compared with ~~2022~~2023 was due to:

•~~A decrease~~An increase in net income;

•~~Payments to~~Proceeds of $4.2 million from the Company's clearinghouse for margin payments on derivatives ~~for~~during the three months ended March 31, ~~2023~~2024 compared with ~~proceeds received~~payments of $210.3 million for the same period in ~~2022; and~~2023;

•Adjustments to net income for the impact of the non-cash change in deferred income ~~taxes.~~taxes; and

•The impact of changes to accrued interest receivable, accounts receivable, and other assets during the three months ended March 31, 2024 compared with the same period in 2023.

These factors were partially offset by:

•~~Proceeds from termination of derivative instruments in 2023;~~

•Adjustments to net income for derivative market value adjustments, the impact of provision for loan losses, and ~~loss~~gain/losses on investments;

•No proceeds from the termination of derivative instruments during the three months ended March 31, 2024 compared with $164.1 million for the same period in 2023; and

•The impact of changes to ~~accounts receivable~~other liabilities during the three months ended March 31, ~~2023~~2024 compared with the same period in ~~2022.~~2023.

The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and ~~repayment~~sale of loans, ~~and~~ the purchase and sale of available-for-sale ~~securities.~~securities, and the purchase of other investments (primarily solar investments). The primary items included in financing activities are ~~the~~ proceeds from the issuance of and payments on bonds and notes payable and the change in deposits at Nelnet Bank ~~deposits~~ used to fund ~~loans.~~loans and investment activity. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2024 was $1.1 billion and $1.4 billion, respectively. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2023 was ~~$723.9 million~~$0.7 billion and ~~$1,306.3 million, respectively. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2022 was $603.1 million and $895.1 million,~~$1.3 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

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


	As of March 31, ~~2023~~2024
	Carrying amount		Final maturity
Bonds and notes issued in asset-backed securitizations	$	~~11,774,925~~9,423,035	8/26/30 - 9/25/69
FFELP ~~private education,~~ and consumer loan warehouse facilities	~~1,049,679~~1,107,959		~~12/31/23~~4/2/25 - 11/14/25
	$	~~12,824,604~~10,530,994

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 provide 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, ~~2023,~~2024, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM currently expects future undiscounted cash flows from its portfolio to be approximately ~~$1.43~~$1.22 billion as detailed below.

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

The forecasted cash flow presented below includes ~~all loans, the majority of which are federally insured student~~ loans funded in asset-backed securitizations as of March 31, ~~2023.~~2024, the majority of which are federally insured student loans. As of March 31, ~~2023,~~2024, AGM had ~~$12.1~~$9.5 billion of loans included in asset-backed securitizations, which represented ~~89.5%~~88.4% of its total loan portfolio. The forecasted cash flow does not include cash

flows that the Company expects to receive related to loans funded in its warehouse facilities, unencumbered private education, consumer, and other loans funded with operating cash, loans acquired subsequent to March 31, ~~2023,~~2024, loans owned by Nelnet Bank, and cash flows relating to the Company's ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "investments and notes receivable" on the Company's consolidated balance sheets).

Asset-backed Securitization Cash Flow Forecast

$~~1.43~~1.22 billion

(dollars in millions)

The forecasted future undiscounted cash flows of approximately ~~$1.43~~$1.22 billion include approximately ~~$0.89~~$0.78 billion (as of March 31, ~~2023)~~2024) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets ~~and included~~ in the balances of "loans and accrued interest ~~receivable"~~receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately ~~$0.54~~$0.44 billion, or approximately ~~$0.41~~$0.33 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 ~~March 31, 2023~~ balance of consolidated shareholders' ~~equity.~~equity from the March 31, 2024 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 projected future cash flow. The Company’s cash flow forecast above assumes prepayment rates of 5% for federally insured consolidation loans and 6% for ~~all other loan types.~~federally insured Stafford loans. Prepayment rates for private education loans range from 11% to 20%.

Since late 2021, the Company has experienced accelerated run-off (prepayments) of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans ~~as a result of the continued extension 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 initiatives and programs offered by the ~~Public Service~~federal government and the Department. See "Nelnet Financial Services Division -

Results of Operations - Asset Generation and Management Operating Segment - Loan ~~Forgiveness~~Activity" included in this report's Management's Discussion and ~~other programs. If~~Analysis of Financial Condition and Results of Operations for additional information related to the federal government and the Department's initiatives for debt relief that has increased, and may continue to increase, prepayment activity. Prepayments could significantly increase if the federal government and the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, or consolidation loan ~~programs, or further extend the suspension of borrower payments under the CARES Act, such initiatives could significantly increase prepayments. See~~programs. In addition, see Part I, Item 1A, "Risk Factors - Loan Portfolio - Prepayments risk" in the Company's ~~2022~~2023 Annual Report for additional information related to risks associated with loan prepayments.

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

$~~0.11~~0.09 billion

$~~1.32~~1.13 billion

$~~0.25~~0.26 billion

$~~1.18~~0.96 billion

10x

$~~0.48~~0.45 billion

$~~0.95~~0.77 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 ~~$0.89~~$0.78 billion (as of March 31, ~~2023)~~2024); however, the Company would not receive the ~~$0.54~~$0.44 billion ($~~0.41~~0.33 billion after tax) of estimated future earnings from the portfolio.

Interest rates: The Company funds a ~~large~~ portion of its student loans with ~~three-month LIBOR indexed~~ floating rate ~~securities.~~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 ~~one-month LIBOR rate.~~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, ~~three-month LIBOR will exceed one-month LIBOR by 12 basis points~~ for the life of the portfolio, ~~which approximates the historical~~a relationship between ~~these indices.~~the various SOFR indices that is implied by the current forward SOFR curves. If the forecast is computed assuming a spread of 24an additional 12 basis points between ~~three-month~~Term SOFR and ~~one-month LIBOR~~30-day average SOFR for the life of the portfolio, the cash flow forecast would be reduced by approximately ~~$45~~$40 million to ~~$70~~$60 million. As the percentage of the Company's outstanding debt financed by three-month LIBOR declines, the Company's basis risk will be reduced. In addition, the Company attempts to mitigate the impact of this basis risk by entering into certain derivative instruments.

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. ~~An increase in future interest rates will reduce the amount of fixed rate floor income the Company is currently receiving.~~ 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.

In addition, LIBOR is in the process of being discontinued as a benchmark rate, and the market transition away from the current LIBOR framework could result in significant changes to the forecasted cash flows from the Company's asset-backed securitizations. See Item 1A, "Risk Factors - Loan Portfolio - Interest rate risk - replacement of LIBOR as a benchmark rate" in the Company's 2022 Annual Report.

Warehouse Facilities

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

~~The Company has~~ For a FFELP warehouse facility that, as of March 31, 2023, had an aggregate maximum financing amount available of $1.25 billion, of which $919.3 million was outstanding and $330.7 million was available for additional funding. The warehouse facility has a static advance rate until the expiration datesummary of the liquidity provisions (May 22, 2023). 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 dateCompany's warehouse facilities see note 3 of the ~~facility (May 22, 2024). As~~notes to consolidated financial statements included under Part I, Item 1 of ~~March 31, 2023, the Company had $62.8 million advanced as equity support on~~ this ~~facility.~~

On April 3, 2023, the Company obtained an additional FFELP warehouse facility that has an aggregate maximum financing amount available of $250.0 million. This warehouse facility's liquidity provisions expire on April 2, 2024 and has a final maturity date of April 2, 2025.

The Company also has a consumer loan warehouse facility that, as of March 31, 2023, had an aggregate maximum financing amount available of $250.0 million, an advance rate of 70%, liquidity provisions through November 14, 2024, and a final maturity date of November 14, 2025. As of March 31, 2023, $82.4 million was outstanding under this facility, $167.6 million was available for future funding, and the Company had $35.2 million advanced as equity support.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, loans purchased from third parties, and/or loans in its existing asset-backed securitizations.

There were no asset-backed securitization transactions completed during the three months ended March 31, 2024.

Other Uses of Liquidity

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, its Union Bank student loan asset-backed securities participation agreement, and its third-party repurchase ~~agreements~~agreement (each as described below), and/or establishing similar secured and unsecured borrowing facilities; using its existing warehouse facilities (as described above); increasing the capacity under existing and/or establishing new warehouse facilities; and continuing to access the asset-backed securities market.

Repurchase ~~Agreements~~Agreement

In December 2020, Wells Fargo announced the sale of its approximately $10.0 billion portfolio of private education loans representing approximately 445,000 borrowers. The Company entered into a joint venture with other investors to acquire the loans, and under the joint venture, the Company had an approximately 8% interest in the loans and has a corresponding 8% interest in residual interests in the 2021 securitizations of the loans discussed below. ~~The joint venture established a limited partnership that purchased the private education loans and funded such loans with a temporary warehouse facility.~~

During 2021, the Company sponsored four asset-backed securitization transactions to permanently finance a total of $8.7 billion of private education loans sold by Wells Fargo (which represented the total remaining loans originally purchased from Wells Fargo, factoring in borrower payments from the date of purchase). As sponsor, 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 reflected on the Company's consolidated balance ~~sheet~~sheets as "investments and notes receivable" and as of March 31, ~~2023,~~2024, the fair value of these bonds was ~~$294.6~~$248.4 million. The Company must retain these investment securities until the latest of (i) two years from the closing date of the securitization, (ii) the date the aggregate outstanding principal balance of the loans in the securitization is 33% or less of the initial loan balance, and (iii) 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.

The Company entered into a repurchase ~~agreements~~agreement with a third ~~parties,~~party, of which a portion of the proceeds from such ~~agreements~~agreement were used to purchase the asset-backed investments, and such investments serve as collateral on the repurchase obligations.

In addition, as discussed above, the Company has repurchased certain of its own asset-backed securities in the secondary market that serve as collateral on amounts outstanding under the Company's repurchase agreements.

As of March 31, ~~2023, $433.0~~2024, $114.5 million was outstanding on the Company's repurchase ~~agreements,~~agreement. As of ~~which $274.0 million was borrowed to fund private education loan securitization bonds subject to~~May 9, 2024, the ~~Company’s risk retention requirement and $159.0 million was borrowed to fund repurchased FFELP loan asset-backed securities. The repurchase agreements have various~~ maturity dates ~~(as of March 31, 2023)~~on this facility vary from ~~April 6, 2023 through~~ November 27, 2024 ~~but one of~~through December 20, 2024, and the ~~agreements~~facility is subject to early termination upon ~~required~~180 days' prior written notice provided by the Company or the ~~applicable~~ counterparty prior to the maturity dates. ~~Subsequent to March 31, 2023, the maturities on these agreements were extended, and as of May 8, 2023, the maturity dates vary from May 26, 2023 through November 27, 2024.~~ The Company is ~~required~~subject to ~~pay additional~~ cash margin deficit payment requirements in the event the fair value of the securities subject to athe repurchase agreement becomes less than the original purchase price of such securities.

Upon termination or ~~expiration~~maturity of the repurchase ~~agreements,~~agreement, there can be no assurance that the Company will be able to maintain this or a similar agreement, or find alternative funding if necessary. If necessary, the Company would expect to use operating cash, ~~and/~~consider the sale of unencumbered investments, or ~~cash proceeds from~~borrow on its unsecured line of credit ~~consider the sale of assets (subject to any restrictions described above), or transfer collateral~~ to satisfy any ~~outstanding obligations subject to the repurchase agreements.~~remaining obligations.

Union Bank Participation ~~Agreement~~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, ~~2023, $684.4~~2024, $469.7 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 participate 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.

~~Asset-backed Securities Transactions~~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. On May 4, 2024, the agreement automatically renewed for another year through May 4, 2025. 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 and notes receivable" and the participation interests outstanding have been accounted for by the Company as a secured borrowing. As of March 31, 2024, $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 ~~through its subsidiaries,~~ has ~~historically funded~~partial ownership in consumer, private education, and federally insured student ~~loans~~loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "investments and notes receivable" on the Company's consolidated balance sheets. These residual interests were acquired by ~~completing asset-backed securitizations. Depending on market conditions,~~ the Company ~~anticipates continuing~~or have been received by the Company as consideration from selling portfolios of loans to ~~access~~unrelated third parties who securitized such loans. As of the ~~asset-backed securitization market. Such asset-backed securitization transactions would be used~~latest remittance reports filed by the various trusts prior to ~~refinance student~~or as of March 31, 2024, the Company's ownership correlates to approximately $1.79 billion of loans included in ~~its warehouse facilities, loans purchased from third parties, and/or student loans in its existing asset-backed securitizations.~~these securitizations

~~There were no asset-backed securitization transactions completed during the three months ended~~As of March 31, ~~2023.~~2024, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $235.8 million. For a summary of this investment balance, see note5of 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, 2024, 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 $347.1 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 ($347.1 million) and the investment carrying value ($235.8 million) of $111.3 million, or $84.6 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, 2024 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.

Liquidity Impact Related to Nelnet Bank

Nelnet Bank launched operations in November 2020. Nelnet Bank was funded by the Company with an initial capital contribution of $100.0 million and the Company contributed an additional $30.0 million and $5.0 million to Nelnet Bank during ~~2022.~~2022 and 2023, respectively. In addition, the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC discussed below.

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.

Under the regulatory framework for prompt corrective action, Nelnet Bank is subject to various regulatory capital requirements administered by the FDIC and the UDFI and must meet specific capital standards. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on Nelnet Bank’s business, results of operations, or financial condition. On January 1, 2020, the Community Bank Leverage Ratio (CBLR) framework, as issued jointly by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the FDIC, became effective. Any banking organization with total consolidated assets of less than $10 billion, limited amounts of certain types of assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9% may opt into the CBLR framework quarterly. The CBLR framework allows banks to satisfy capital standards and be considered "well capitalized" under the prompt corrective action framework if their leverage ratio is greater than 9%, unless the banking organization's federal banking agency determines that the banking organization's risk profile warrants a more stringent leverage ratio. The FDIC has ordered Nelnet Bank to maintain at least a 12% leverage ratio. Nelnet Bank has opted into the CBLR framework for the quarter ended March 31, ~~2023~~2024 with a leverage ratio of ~~12.6%~~13.0%. Nelnet Bank intends to maintain at all times regulatory capital levels that meet both the minimum level necessary to be considered “well capitalized” under the FDIC’s prompt corrective action framework and the minimum level required by the FDIC.

Nelnet Bank has a portfolio of asset-backed securities investments that were accounted for and classified as available-for-sale. Accordingly, these securities were carried at fair value, with the changes in fair value, net of taxes, carried as a separate component of equity. To reduce Nelnet Bank's market exposure related to decreases in fair value on these investments, on March 31, 2023, securities at Nelnet Bank with a fair value of $149.2 million were transferred from available for sale to held to

maturity. The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction. Accumulated other comprehensive income as of March 31, 2023 includes pre-tax unrealized losses of $3.7 million related to the transfer. These unrealized losses will be amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.

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.

Liquidity Impact Related to Nelnet Renewable Energy

The Company’s Nelnet Renewable Energy business makes solar tax equity investments. Through March 31, ~~2023,~~2024, the Company has invested a total of ~~$294.4~~$491.8 million (which includes ~~$115.9~~$208.9 million syndicated to third-party investors) in tax equity investments in renewable energy solar partnerships. These investments provide a federal income tax credit under the Internal Revenue Code, equaling ~~either 26% or~~ 30% to 40% of the eligible project ~~costs,~~cost, with the tax credit available when the project is placed-in-service. The Company is allowed to reduce its tax estimates paid to the U.S. Treasury based on the credits earned. 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 amount of capital ~~committed~~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, ~~2023,~~2024, the Company is committed to fund an additional ~~$220.3~~$146.6 million on tax equity investments, of which ~~$141.4~~$76.2 million is expected to be provided by syndication partners.

In addition to solar tax equity investments, the Company has a strategy to own solar energy project assets. These assets provide long-term, predictable, and recurring cash flows. Accordingly, the Company has begun to execute a multi-faceted approach to originate, acquire, finance, own, and manage these assets. The Company plans to fund a ~~large~~ portion of its current growth plans in owning solar energy projects using third-party debt and third-party tax equity. The collateral on any third-party debt would be limited to the assets of the specific solar projects. Any capital requirements for the origination or purchase of solar projects not funded by third-party debt and third-party tax equity would be provided by the Company using operating cash, borrowings on its unsecured line of credit, and/or the sale of investments.

Liquidity Impact Related to ALLO

Upon the deconsolidation of ALLO on December 21, 2020, the Company recorded its 45% voting membership interests in ALLO at fair value, and accounts for such investment under the HLBV method of accounting. In addition, the Company recorded its remaining non-voting preferred membership units of ALLO at fair value, and accounts for such investment as a separate equity investment. As of March 31, ~~2023,~~2024, the outstanding preferred membership interests of ALLO held by the Company was ~~$145.9~~$155.0 million that ~~earns~~earned a preferred annual return of 6.25%.

~~Agreements among~~ Accrued and unpaid preferred returns are converted to additional preferred membership interests each December 31. As of March 31, 2024, the ~~Company, SDC (a third-party global digital infrastructure investor),~~accrued and ~~ALLO provide that they will use commercially reasonable efforts (which excludes requiring ALLO to raise any additional equity financing or sell any assets) to cause~~unpaid preferred return was $2.4 million. On April 1, 2024, the ~~redemption,~~preferred annual return on ~~or before April 2024,~~ the non-voting preferred membership interests in ALLO held by the Company, plus the amount of accrued and unpaid preferred return on such interests. However, if the non-voting preferred membership interests are not redeemed on or before April 2024, the preferred annual return is increased from 6.25% to 10.00%. On January 1, 2025, the preferred annual return will increase to 13.5%, commencing July 1, 2025, the return will increase to 15.0%, commencing January 1, 2026, the preferred return will increase to 17.5%, and beginning on January 1, 2027 and on each January 1 of each calendar year thereafter, the annual return will increase by an additional 2.5%.

As part of the ALLO recapitalization transaction in December 2020, the Company and SDC entered into an agreement, in which the Company has a contingent payment obligation to pay SDC a contingent payment amount of ~~$25.0 million~~up to $35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels. As of March 31, ~~2023~~2024, the estimated fair value of the contingent payment is ~~$7.6~~$10.1 million.

In June 2023, ALLO closed on an asset-backed securities transaction with an aggregate size over $600 million. The proceeds from this transaction were used to refinance the majority of ALLO's prior debt and fund a portion of its current growth plans. If ALLO needs additional capital to support its growth in existing or new markets, the Company has the option to contribute additional capital to maintain its voting equity interest. Although ALLO has obtained third-party debt financing to fund a large portion of its current growth plans, the Company contributed $8.4 million of additional equity to ALLO in the first quarter of 2023. As a result of this equity contribution, the Company’s voting membership interests percentage did not materially change. Based on ALLO's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to ALLO in future periods.

Liquidity Impact Related to Hedging Activities

The Company utilizes derivative instruments to manage interest rate sensitivity. By using derivative instruments, the Company is exposed to market risk which could impact its liquidity.

All Non-Nelnet Bank over-the-counter derivative contracts executed by the Company are cleared post-execution at a regulated clearinghouse. Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default. ~~Through March 15, 2023, the~~

Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value as of March 15, 2023 of the derivatives used to hedge loans earning fixed rate floor income of $183.2 million, which included $19.1 million related to current period settlements. To minimize the Company's exposure to market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($2.8 billion in notional amount of derivatives).

Based on the ~~remaining~~ derivative portfolio outstanding as of March 31, ~~2023,~~2024, 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.~~clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives.

Other Debt Facilities

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, ~~2023,~~2024, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use. The line of credit agreement contains certain financial covenants, including limitations on recourse indebtedness to adjusted EBITDA (over the last four rolling quarters). Of the $495.0 million availability, approximately $260 million was available for purposes other than reducing existing recourse debt due to the limitations on recourse indebtedness to adjusted EBITDA financial covenant. 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.

~~During 2020,~~On December 21, 2023, the Company entered into ana $10.0 million participation agreement with ~~Union Bank, as trustee for various grantor trusts, under~~a third-party, the proceeds of which ~~Union Bank has agreed~~are collateralized by consumer loans. The third-party participant does not have the right to ~~purchase from~~pledge, transfer, or otherwise dispose of their participation interest in all or any portion of the ~~Company~~loans subject to this agreement. As such, the consumer loans subject to this agreement are included on the Company's consolidated balance sheet and the participation interests ~~in federally insured student loan asset-backed securities. As of March 31, 2023, $311.8 million (par value) of student loan asset-backed securities were subject to~~ outstanding ~~participation interests held by Union Bank, as trustee, under this agreement. This participation agreement has~~have been accounted for by the Company as a secured borrowing. ~~Upon termination or expiration~~This participation agreement will amortize as the consumer loans subject to the participation pay down. As of March 31, 2024, the outstanding balance on this participation agreement ~~the Company would expect to use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations.~~was $8.9 million.

Stock Repurchases

The Board of Directors has 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. ~~No shares were repurchased under this program during the first quarter of 2023.~~ As of March 31, ~~2023, 4,467,021~~2024, 3,824,767 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.

~~During~~Shares repurchased by the Company during the three months ended March 31, 2024 are shown below. Certain of these repurchases were made pursuant to trading plans adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. For additional information on stock repurchases during the first quarter of 2023, the Company repurchased 36,513 shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. These repurchased shares are excluded from the Company's repurchase program. See2024, see "Stock Repurchases" under Part II, Item 2 of this report.


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

Quarter ended March 31, 2024	396,724	$	35,469	89.41

(a) The average price of shares repurchased for the three months ended March 31, 2024 includes excise taxes.

Subsequent to March 31, 2024 (through May 9, 2024), the Company repurchased an additional 421,102 Class A common shares for $39.8 million (average price of $94.47 per share) under its stock repurchase program.

Dividends

On March 15, ~~2023,~~2024, the Company paid a first quarter ~~2023~~2024 cash dividend on the Company's Class A and Class B common stock of ~~$0.26~~$0.28 per share. In addition, the Company's Board of Directors has declared a second quarter ~~2023~~2024 cash dividend on the Company's outstanding shares of Class A and Class B common stock of ~~$0.26~~$0.28 per share. The second quarter cash dividend will be paid on June ~~15, 2023~~14, 2024 to shareholders of record at the close of business on ~~June 1, 2023.~~May 31, 2024.

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

CRITICAL ACCOUNTING POLICIES AND 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 32 of the notes to consolidated financial statements included in the Company’s ~~2022~~2023 Annual Report includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements.

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

for loan losses as a critical accounting policy and estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates – Allowance for Loan Losses” in the Company’s ~~2022~~2023 Annual Report. For additional information regarding changes in the Company’s allowance for loan losses for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, see the caption “Activity in the Allowance for Loan Losses” in note 2 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, ~~2022.~~2023.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued accounting guidance which improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit (referred to as the “significant expense principle”). This guidance will be effective for the Company for the year ending December 31, 2024 annual financial statements, with early adoption permitted. The guidance will be applied retrospectively for all prior periods presented in the financial statements. The Company intends to adopt the standard when it becomes effective for the year ending December 31, 2024 annual financial statements. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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, 2023				As of December 31, 2022					As of March 31, 2024							As of December 31, 2023
		Dollars		Percent		Dollars		Percent			Dollars			Percent					Dollars				Percent
Fixed-rate loan assets	Fixed-rate loan assets	$	1,038,386	7.7	%	$	1,339,900	9.5	%	Fixed-rate loan assets	$	536,445	5.0		5.0		%			$	510,666	4.2		4.2	%
Variable-rate loan assets	Variable-rate loan assets	12,444,234		92.3		12,829,871		90.5
Total	Total	$	13,482,620	100.0	%	$	14,169,771	100.0	%	Total	$	10,799,942	100.0		100.0		%			$	12,049,462	100.0		100.0	%

Fixed-rate debt instruments	Fixed-rate debt instruments	$	570,787	4.5	%	$	617,083	4.5	%
Fixed-rate debt instruments
Fixed-rate debt instruments											$	509,294		4.8		%			$	561,557			4.8	%
Variable-rate debt instruments	Variable-rate debt instruments	12,253,817		95.5		13,199,327		95.5
Total	Total	$	12,824,604	100.0	%	$	13,816,410	100.0	%	Total	$	10,539,917	100.0		100.0		%			$	11,704,153	100.0		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 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.

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.

No variable-rate floor income was earned by the Company in ~~2023~~2024 or ~~2022.~~2023.

A summary of fixed rate floor income earned by the AGM operating segment follows.


		Three months ended March 31,
		2023		2022
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
		2024
		2024
		2024
Fixed rate floor income, gross
Fixed rate floor income, gross
Fixed rate floor income, gross	Fixed rate floor income, gross	$	1,110	28,993
Derivative settlements (a)	Derivative settlements (a)	22,478		(3,205)
Derivative settlements (a)
Derivative settlements (a)
Fixed rate floor income, net	Fixed rate floor income, net	$	23,588	25,788
Fixed rate floor income, net
Fixed rate floor income, net

(a) Derivative settlements consist of settlements received ~~(paid)~~ related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

Gross fixed rate floor income decreased for the three months ended March 31, ~~2023~~2024 compared with the same period in ~~2022~~2023 due to higher interest rates in ~~2023~~2024 compared with ~~2022.~~2023.

The Company had a significant portfolio of derivative instruments in which the Company paid a fixed rate and received a floating rate to economically hedge loans earning fixed rate floor income. ~~The~~During the first quarter of 2023, to minimize the Company's exposure to market volatility and increase ~~in net derivative settlements received by~~liquidity, the Company ~~during the three months ended March 31, 2023, compared with net~~terminated its derivative settlements paid during the same period in 2022, was due to an increase in interest rates, partially offset by a decrease in the notional amount of derivatives outstanding. See note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's derivative portfolio.

~~The Company's derivatives that hedge~~portfolio hedging loans earning fixed rate floor income ~~are cleared post-execution at a regulated clearinghouse. Clearing is a process by which a third party, the clearinghouse, steps~~($2.8 billion in ~~between the original counterparties and guarantees the performance~~notional amount of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default.derivatives). Through March 15, 2023, the Company had received cash or had a receivable from ~~the~~its clearinghouse related to variation margin equal to the fair value of the $2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $183.2 million, which included $19.1 million related to current period settlements. ~~To minimize~~Subsequent to terminating these derivatives, during the ~~Company's exposure to market volatility, on March 15,~~second and fourth quarters of 2023, the Company ~~terminated its entire derivative portfolio hedging~~entered into a total of $400.0 million notional amount of derivatives to hedge loans earning fixed rate floor ~~income. As~~income and other loans and investments in which the Company receives a ~~result of terminating these derivatives, there will be no~~fixed rate.

The decrease in net derivative settlements received by the Company during the three months ended March 31, 2024, compared with the same period in 2023, was due to a decrease in the notional amount of derivatives outstanding and less favorable terms on ~~these~~the $400.0 million of notional derivatives entered into in ~~future periods.~~2023 compared with the $2.8 billion notional derivatives that were terminated due to an increase in interest rates from when the terminated derivatives were initially executed.

~~The following graph depicts~~For further details of the Company’s derivatives used to hedge fixed rate ~~floor income for a borrower with a fixed rate~~loans, see note 4 of ~~6.75% and a SAP rate~~the notes to consolidated financial statements included in Part I, Item 1 of ~~2.64%:~~

this report.

The following table shows AGM’s federally insured student loan assets that were earning fixed rate floor income as of March 31, ~~2023.~~2024.


Fixed interest rate range	Fixed interest rate range	Borrower/lender weighted average yield	Estimated variable conversion rate (a)		Loan balance		Fixed interest rate range	Borrower/lender weighted average yield	Estimated variable conversion rate (a)	Loan balance

7.0 - 7.49%		7.38%	4.74%		$	14,294
7.5 - 7.99%		7.73%	5.09%		124,236

8.0 - 8.99%

8.0 - 8.99%

8.0 - 8.99%	8.0 - 8.99%	8.18%	5.54%		339,275
> 9.0%	> 9.0%	9.05%	6.41%		131,116
					$	608,921
				$

(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, ~~2023,~~2024, the weighted average estimated variable conversion rate was ~~5.62%~~5.93% and the short-term interest rate was ~~470~~556 basis points.

AGM is also exposed to interest rate risk in the form of ~~basis~~repricing risk and ~~repricing~~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, ~~2023.~~2024.


Index	Index	Frequency of variable resets	Assets		Funding of student loan assets	Index	Frequency of variable resets	Assets	Funding of student loan assets
1 month LIBOR (a)		Daily	$	12,099,443	—
3 month H15 financial commercial paper		Daily	432,655		—
3 month Treasury bill		Daily	399,461		—
1 month LIBOR		Monthly	—		7,612,093
3 month LIBOR (a)		Quarterly	—		3,431,852
30-day average SOFR (a)
3-month H15 financial commercial paper
3-month Treasury bill
30-day average SOFR / 1-month CME Term SOFR
90-day average SOFR / 3-month CME Term SOFR (a)
Asset-backed commercial paper (b)	Asset-backed commercial paper (b)	Varies	—		919,337
Fixed rate	Fixed rate	—	—		548,642
Auction-rate (c)	Auction-rate (c)	Varies	—		142,385
Other (d)	Other (d)	—	1,315,962		1,593,212
			$	14,247,521	14,247,521

(a) The Company has certain basis swaps outstanding in which the Company receives and pays the term adjusted SOFR plus the tenor spread adjustment to LIBOR. Prior to the discontinuation of LIBOR on June 30, 2023, the Company received three-month LIBOR set discretely in advance and ~~pays~~paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 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 1:3 Basis Swaps outstanding as of March 31, ~~2023.~~2024.


Maturity	Notional amount (i)
2024	$	1,750,000
2026	1,150,000
2027	250,000









	$	3,150,000

(i) The weighted average rate paid by the Company on the 1:3 Basis Swaps as of March 31, ~~2023~~2024 was ~~one-month LIBOR~~the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.1 basis points.

(b) The interest rate on the Company's FFELP warehouse ~~facility~~facilities is indexed to asset-backed commercial paper rates.

(c) As of March 31, ~~2023,~~2024, the Company was sponsor for ~~$142.4~~$84.7 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 ~~LIBOR~~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 ~~facility.~~

LIBOR is in the process of being discontinued as a benchmark rate, and the market transition away from the current LIBOR framework could result in significant changes to the interest rate characteristics of the Company's LIBOR-indexed assets and funding for those assets. See Item 1A, "Risk Factors - Loan Portfolio - Interest rate risk - replacement of LIBOR as a benchmark rate" in the Company's 2022 Annual Report for additional information.

facilities.

Sensitivity Analysis

The following tables summarize the effect on the Company’s consolidated earnings, based upon a sensitivity analysis performed on AGM’s assets and liabilities assuming hypothetical increases and decreases in interest rates of 100 basis points and 300 basis points while funding spreads remain constant. In addition, a 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. The sensitivity analysis was performed on AGM’s variable rate assets (including loans earning fixed rate floor income) and liabilities.


		Interest rates																		Interest rates
	Change from increase of 100 basis points																								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
		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					Dollars			Percent				Dollars						Percent			Dollars						Percent				Dollars						Percent
						Three months ended March 31, 2024
Effect on earnings:																			Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements																			Increase in pre-tax net income before impact of derivative settlements	$	711		0.7		%		$	2,500					2.7	%		$	1,941					2.1	%			$	8,557					9.1	%
Impact of derivative settlements
Increase in net income before taxes																			Increase in net income before taxes	$	1,457		1.5		%		$	4,738					5.0	%		$	1,195					1.3	%			$	6,319					6.7	%
Increase in basic and diluted earnings per share
				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

		Three months ended March 31, 2023																	Three months ended March 31, 2023
Effect on earnings:	Effect on earnings:																		Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements	Increase in pre-tax net income before impact of derivative settlements	$	772	2.5	%		$	4,403	14.1	%	$	76	0.2	%	$	3,650	11.7	%	Increase in pre-tax net income before impact of derivative settlements	$	772	2.5		2.5		%		$	4,403		14.1			14.1	%			$	76		0.2			0.2	%				$	3,650	11.7			11.7	%
Impact of derivative settlements (a)	Impact of derivative settlements (a)	—		—			—		—		—		—		—		—
Increase in net income before taxes	Increase in net income before taxes	$	772	2.5	%		$	4,403	14.1	%	$	76	0.2	%	$	3,650	11.7	%	Increase in net income before taxes	$	772	2.5		2.5		%		$	4,403		14.1			14.1	%			$	76		0.2			0.2	%				$	3,650	11.7			11.7	%
Increase in basic and diluted earnings per share	Increase in basic and diluted earnings per share	$	0.02				$	0.09			$	0.00			$	0.07

(a)On March 15, 2023, the Company terminated its ~~entire~~ derivative portfolio hedging loans earning fixed rate floor income. The table above excludes the impact of these derivatives for the entire period.

Asset and funding index mismatches
Increase of
10 basis points Increase of
30 basis points

Dollars Percent Dollars Percent
Three months ended March 31, 2023
Effect on earnings:
Decrease in pre-tax net income before impact of derivative settlements $ (1,113) (3.6) % $ (3,339) (10.7) %
Impact of derivative settlements 777 2.5 2,330 7.5
Decrease in net income before taxes $ (336) (1.1) % $ (1,009) (3.2) %
Decrease in basic and diluted earnings per share $ (0.01) $ (0.02)


	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
	Dollars		Percent		Dollars		Percent		Dollars		Percent		Dollars		Percent
	Three months ended March 31, 2024								Three months ended March 31, 2023
Effect on earnings:
Decrease in pre-tax net income before impact of derivative settlements	$	(1,017)	(1.0)	%	$	(3,050)	(3.2)	%	$	(1,113)	(3.6)	%	$	(3,339)	(10.7)	%
Impact of derivative settlements	783		0.8		2,349		2.5		777		2.5		2,330		7.5
Decrease in net income before taxes	$	(234)	(0.2)	%	$	(701)	(0.7)	%	$	(336)	(1.1)	%	$	(1,009)	(3.2)	%
Decrease in basic and diluted earnings per share	$ (0.00)				$	(0.01)			$	(0.01)			$	(0.02)

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.~~liabilities and the use of derivative instruments.

The following table presents Nelnet Bank's loan assets, asset-backed security investments, and deposits by rate characteristics:


		As of March 31, 2023				As of December 31, 2022					As of March 31, 2024									As of December 31, 2023
		Dollars		Percent		Dollars		Percent			Dollars					Percent						Dollars					Percent
Fixed-rate loan assets	Fixed-rate loan assets	$	364,818			$	341,776
Fixed-rate investments	Fixed-rate investments	142,152				123,809
Fixed-rate investments
Fixed-rate investments
Total fixed-rate assets
Total fixed-rate assets
Total fixed-rate assets	Total fixed-rate assets	506,970		51.9	%	465,585		52.2	%	546,522			50.3		50.3		%				458,928				47.7		47.7	%
Variable-rate loan assets	Variable-rate loan assets	74,189				78,019
Variable-rate investments	Variable-rate investments	395,259				347,559
Variable-rate investments
Variable-rate investments
Total variable rate assets
Total variable rate assets
Total variable rate assets	Total variable rate assets	469,448		48.1		425,578		47.8
Total assets	Total assets	$	976,418	100.0	%	$	891,163	100.0	%	Total assets	$	1,085,529		100.0			100.0		%				$	962,520		100.0		100.0	%

Fixed-rate deposits	Fixed-rate deposits	$	284,387	32.7	%	$	336,040	42.6	%
Variable-rate deposits		585,391		67.3		453,604		57.4
Fixed-rate deposits
Fixed-rate deposits											$	279,331				29.1		%				$	280,736				33.1	%
Variable-rate deposits (a)
Total deposits	Total deposits	$	869,778	100.0	%	$	789,644	100.0	%	Total deposits	$	960,633		100.0			100.0		%				$	847,564		100.0		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 4 of the notes to the 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, 2024.

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,
		2023					2022
		Average balance		Interest income/ expense	Average yields/ rates		Average balance		Interest income/ expense	Average yields/ rates

		Three months ended March 31,

		Three months ended March 31,

		Three months ended March 31,
	2024																					2024										2023
	Average balance																Average balance				Interest income/ expense				Average yields/ rates				Average balance				Interest income/ expense				Average yields/ rates
Investments:	Investments:
Asset-backed securities available-for-sale (a) (b)
Asset-backed securities available-for-sale (a) (b)
Asset-backed securities available-for-sale (a) (b)	Asset-backed securities available-for-sale (a) (b)	$	1,309,752	17,486	5.41	%	$	1,092,640	3,242	1.20	%	$	863,634			14,012		14,012		6.51			6.51	%		$	1,309,752	17,486			17,486		5.41		5.41	%

Debt funding asset-backed securities available-for-sale:	Debt funding asset-backed securities available-for-sale:
Debt funding asset-backed securities available-for-sale:
Debt funding asset-backed securities available-for-sale:
Participation agreement - variable rate (c)	Participation agreement - variable rate (c)	$	365,115	5,059	5.62	%	$	256,535	560	0.89	%
Repurchases agreements - variable rate (d)		511,759		6,768	5.36		404,040		1,031	1.03
		$	876,874	11,827	5.47		$	660,575	1,591	0.98
Participation agreement - variable rate (c)
Participation agreement - variable rate (c)														$	91				1				4.41	%		$	365,115			5,059				5.62	%
Repurchase agreements - variable rate (d)
	$

(a) The Company has repurchased certain of its own ~~FFELP loan~~ 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 ~~LIBOR~~SOFR + 100 to 350 basis points to maturity. As of March 31, ~~2023, $259.4~~2024, $212.3 million (par value) of the Company’s asset-backed securities earn a weighted average fixed rate of ~~3.23%~~3.17%.

(c) Interest incurred by the Company on amounts borrowed under the participation agreement is at a variable rate of ~~LIBOR~~SOFR + 62.5 basis points.

(d) Interest incurred by the Company on amounts borrowed under ~~the~~ repurchase agreements is at a variable rate of ~~LIBOR + 70.0 to 90.0 basis points or~~ SOFR + ~~75.0~~100 to ~~141.0~~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, ~~2023,~~2024, the ~~net~~gross unrealized loss on the Company’s available-for-sale debt securities was ~~$35.2~~$27.8 million, and the aggregate fair value of available-for-sale debt securities with unrealized losses was ~~$852.6~~$482.7 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 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

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, ~~2023.~~2024. 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, ~~2023.~~2024.

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, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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, ~~2022~~2023 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, ~~2022~~2023 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 ~~2023~~2024 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. Certain share repurchases included in the table below were made pursuant to a trading plan adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.

Period Total number of shares purchased (a) Average price paid per share Total 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, 2023 — $ — — 4,467,021
February 1 - February 28, 2023 — — — 4,467,021
March 1 - March 31, 2023 36,513 90.43 — 4,467,021
Total 36,513 $ 90.43 —


Period	Total number of shares purchased (a)	Average price paid per share (b)		Total number of shares purchased as part of publicly announced plans or programs (c)	Maximum number of shares that may yet be purchased under the plans or programs (c)
January 1 - January 31, 2024	13,523	$	82.79	13,523	4,167,651
February 1 - February 29, 2024	—	—		—	4,167,651
March 1 - March 31, 2024	383,201	89.03		342,884	3,824,767
Total	396,724	$	88.82	356,407

(a) The total number of shares ~~includes~~includes: (i) shares repurchased pursuant to the stock repurchase program discussed in footnote (c) below; and (ii) shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. Shares of Class A common stock tendered by employees to satisfy tax withholding obligations included ~~36,513~~40,317 shares in March ~~2023.~~2024. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the ~~Company's~~Company’s shares on the date of vesting.

(b) The average price of shares repurchased excludes excise taxes.

(c) 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.

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 is subject to laws and regulations that restrict the ability of Nelnet Bank to pay dividends to the Company, and authorize regulatory authorities to prohibit or limit the payment of dividends by Nelnet Bank 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

The following table describes contracts, instructions, or written plans for the purchase or sale of the Company's securities adopted by the Company's directors or executive officers during the first quarter of 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans.

Name and Title

Date of Adoption of Rule 10b5-1 Trading Plan

Scheduled Expiration Date of Rule 10b5-1 Trading Plan (a)

Aggregate Number of Securities to Be Purchased or Sold

Kathleen A. Farrell

Director

3/6/2024

3/5/2025

Sale of 1,700 shares of Class A common stock

(a) A trading plan may also expire on such earlier date as all transactions under the trading plan are completed.

ITEM 6. EXHIBITS


~~10.1~~10.1*+			~~Form of Modification of Contract~~Guaranty Supplement to the Third Amended and Restated Guaranty, dated ~~effective~~ as of ~~April 1, 2023 for Student Loan Servicing Contract between the United States Department~~March 15, 2024, in favor of ~~Education and Nelnet Servicing, LLC, filed~~U.S. Bank National Association, as ~~Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on March 30, 2023 and incorporated herein by reference.~~Administrative Agent.

~~10.2~~			Form of Modification of Contract dated effective as of April 1, 2023 for Student Loan Servicing Contract between the United States Department of Education and Great Lakes Educational Loan Services, Inc., filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on March 30, 2023 and incorporated herein by reference.

~~10.3#~~			Student Loan Servicing Contract between the United States Department of Education and Nelnet Diversified Solutions, LLC, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on April 25, 2023 and incorporated herein by reference.

31.1*			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer Jeffrey R. Noordhoek.

31.2*			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer James D. Kruger.

32**			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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




#+			~~Certain portions~~Filed herewith for purposes of ~~this exhibit have been omitted pursuant~~providing a complete set of all documents to ~~Item 601(b)(10)(iv) of Regulation S-K.~~the Third Amended and Restated Guaranty related to the Third Amended and Restated Credit Agreement, both dated September 22, 2021.

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, 2023~~9, 2024

By:

/s/ JEFFREY R. NOORDHOEK

Name:

Jeffrey R. Noordhoek

Title:

Chief Executive Officer

Principal Executive Officer

Date:

May ~~8, 2023~~9, 2024

By:

/s/ JAMES D. KRUGER

Name:

James D. Kruger

Title:

Chief Financial Officer

Principal Financial Officer and Principal Accounting Officer


	Loan balance as of March 31, 2023
	Three months ended March 31, 2023		2022	2021	2020	Total
FICO at origination:
Less than 705	$	836	5,956	5,258	344	12,394
705 - 734	2,657		23,313	9,979	536	36,485
735 - 764	2,874		35,250	16,284	1,419	55,827
765 - 794	1,413		56,325	29,900	1,579	89,217
Greater than 794	3,006		86,055	66,882	5,839	161,782
	$	10,786	206,899	128,303	9,717	355,705


	Loan balance as of December 31, 2022
	2022		2021	2020	Total
FICO at origination:
Less than 705	$	5,898	5,389	348	11,635
705 - 734	23,392		10,543	542	34,477
735 - 764	35,456		16,686	1,473	53,615
765 - 794	57,141		31,035	1,622	89,798
Greater than 794	87,959		70,135	6,263	164,357
	$	209,846	133,788	10,248	353,882


	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Asset Generation and Management	Nelnet Bank	Corporate and Other Activities	Total




Goodwill balance	$	23,639	92,507	41,883	—	18,873	176,902


				Nelnet Renewable Energy (c)
	Shared services (a)		WRCM (b)	Tax equity investments / syndication / administration	GRNE Solar	ALLO investment (d)	Real estate investments (e)	Venture capital investments (f)	Interest income/expense, net (g)	Other	Total
	Three months ended March 31, 2023
Interest income	$	—	2	—	41	—	141	670	20,237	108	21,199
Interest expense	—		—	—	(273)	—	—	—	(11,977)	(68)	(12,318)
Net interest income	—		2	—	(232)	—	141	670	8,260	40	8,881
Solar construction revenue	—		—	—	8,651	—	—	—	—	—	8,651
Other, net	626		1,612	(1,948)	44	(17,864)	800	67	(3,941)	2,870	(17,734)
Cost to provide solar construction services	—		—	—	(8,299)	—	—	—	—	—	(8,299)
Salaries and benefits	(23,384)		(56)	(1,007)	(1,196)	(30)	(81)	(177)	—	(1,488)	(27,419)
Depreciation and amortization	(8,830)		—	—	(617)	—	(6)	—	—	(78)	(9,531)
Other expenses	(10,566)		(81)	(821)	(948)	12	(16)	(165)	(2,218)	1,192	(13,611)
Intersegment expenses, net	29,165		(3)	15	(513)	—	(95)	(10)	(97)	(675)	27,787
Income (loss) before income taxes	(12,989)		1,474	(3,761)	(3,110)	(17,882)	743	385	2,004	1,861	(31,275)
Income tax (expense) benefit	3,117		(319)	206	610	4,292	(180)	(92)	(481)	(372)	6,781
Net (income) loss attributable to noncontrolling interests	—		(146)	2,903	569	—	6	—	—	—	3,332
Net income (loss)	$	(9,872)	1,009	(652)	(1,931)	(13,590)	569	293	1,523	1,489	(21,162)

	Three months ended March 31, 2022
Interest income	$	—	—	—	—	—	289	—	3,603	100	3,992
Interest expense	—		—	—	—	—	—	—	(1,745)	(281)	(2,026)
Net interest income	—		—	—	—	—	289	—	1,858	(181)	1,966
Solar construction revenue	—		—	—	—	—	—	—	—	—	—
Other, net	689		1,281	(869)	—	(11,014)	4,472	4,902	(864)	2,528	1,125
Cost to provide solar construction services	—		—	—	—	—	—	—	—	—	—
Salaries and benefits	(21,868)		(55)	(258)	—	(84)	(110)	(239)	—	(1,398)	(24,012)
Depreciation and amortization	(9,615)		—	—	—	—	—	—	—	(69)	(9,684)
Other expenses	(12,261)		(100)	(102)	—	(24)	(2)	(23)	(449)	(843)	(13,804)
Intersegment expenses, net	25,755		(3)	(3)	—	—	(95)	—	(56)	(202)	25,396
Income (loss) before income taxes	(17,300)		1,123	(1,232)	—	(11,122)	4,554	4,640	489	(165)	(19,013)
Income tax (expense) benefit	4,152		(243)	(153)	—	2,669	(1,092)	(1,114)	(117)	2,496	6,598
Net (income) loss attributable to noncontrolling interests	—		(112)	1,869	—	—	(6)	—	—	10	1,761
Net income (loss)	$	(13,148)	768	484	—	(8,453)	3,456	3,526	372	2,341	(10,654)


Period	Total number of shares purchased (a)	Average price paid per share		Total 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, 2023	—	$	—	—	4,467,021
February 1 - February 28, 2023	—	—		—	4,467,021
March 1 - March 31, 2023	36,513	90.43		—	4,467,021
Total	36,513	$	90.43	—