Nelnet (NNI) 8-K Nelnet Reports Year-End and Fourth Quarter 2008 Results; Strong Fee-based Revenue and Improved Liquidity

Exhibit 99.2

For Release:3/2/09
Media Contact:Ben Kiser, 402.458.3024
Investor Contact:Phil Morgan, 402.458.3038

Nelnet, Inc. supplemental financial information for the fourth quarter 2008

This earnings supplement 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 expectations and statements that assume or are dependent upon future events, are forward-looking statements. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that may cause the actual results to be materially different from those reflected in such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2008, changes in the terms of student loans and the educational credit marketplace arising from the implementation of, or changes in, applicable laws and regulations, which may reduce the volume, average term, special allowance payments, and yields on student loans under the Federal Family Education Loan Program (the “FFEL Program” or “FFELP”) of the U.S. Department of Education (the “Department”) or result in loans being originated or refinanced under non-FFEL programs or may affect the terms upon which banks and others agree to sell FFELP loans to the Company. The Company could also be affected by changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families; the Company’s ability to maintain its credit facilities or obtain new facilities; the ability of lenders under the Company’s credit facilities to fulfill their lending commitments under these facilities; changes to the terms and conditions of the liquidity programs offered by the Department; changes in the general interest rate environment and in the securitization markets for education loans, which may increase the costs or limit the availability of financings necessary to initiate, purchase, or carry education loans; losses from loan defaults; changes in prepayment rates, guaranty rates, loan floor rates, and credit spreads; incorrect estimates or assumptions by management in connection with the preparation of the consolidated financial statements; and changes in general economic conditions. Additionally, financial projections may not prove to be accurate and may vary materially. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this Supplement. The Company is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this Supplement or unforeseen events. Although the Company may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

Condensed Consolidated Statements of Income

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
	(unaudited)			(unaudited)			(unaudited)
	(dollars in thousands, except share data)
Interest income:
Loan interest	$	286,279			304,226			437,128			1,224,678			1,755,064
Variable rate floor income		—			1,580			2,416			42,325			3,013
Amortization of loan premiums and deferred origination costs		(21,036	)		(21,338	)		(23,878	)		(90,620	)		(91,020	)
Investment interest		8,084			9,118			18,988			37,998			80,219
Total interest income		273,327			293,586			434,654			1,214,381			1,747,276
Interest expense:
Interest on bonds and notes payable		234,868			234,016			390,399			1,026,489			1,502,662
Net interest income		38,459			59,570			44,255			187,892			244,614
Less provision for loan losses		7,000			7,000			4,550			25,000			28,178
Net interest income after provision for loan losses		31,459			52,570			39,705			162,892			216,436
Other income:
Loan and guaranty servicing income		22,526			30,633			32,953			104,176			128,069
Other fee-based income		46,082			45,887			44,572			178,699			160,888
Software services income		3,892			4,217			5,647			19,757			22,669
Other income		462			1,242			1,564			4,760			15,612
Gain (loss) on sale of loans		(3,988	)		—			309			(51,414	)		3,597
Derivative market value, foreign currency, and put option adjustments		46,348			6,085			14,940			10,827			26,806
Derivative settlements, net		9,668			789			11,577			55,657			18,677
Total other income		124,990			88,853			111,562			322,462			376,318
Operating expenses:
Salaries and benefits		41,262			44,739			54,621			183,393			236,631
Other expenses		62,413			52,332			59,256			212,157			219,048
Amortization of intangible assets		6,511			6,598			6,412			26,230			30,426
Impairment expense		—			—			—			18,834			49,504
Total operating expenses		110,186			103,669			120,289			440,614			535,609
Income before income taxes		46,263			37,754			30,978			44,740			57,145
Income tax expense		16,103			13,969			11,810			17,896			21,716
Income from continuing operations		30,160			23,785			19,168			26,844			35,429
Income (loss) from discontinued operations, net of tax		837			—			(159	)		1,818			(2,575	)
Net income	$	30,997			23,785			19,009			28,662			32,854
Earnings per share, basic and diluted:
Income from continuing operations	$	0.61			0.48			0.39			0.54			0.71
Income (loss) from discontinued operations, net of tax		0.02			—			—			0.04			(0.05	)
Net income	$	0.63			0.48			0.39			0.58			0.66
Weighted average shares outstanding		49,075,755			49,176,436			49,047,048			49,099,967			49,618,107

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Condensed Consolidated Balance Sheets and Financial Data

	As of		As of		As of
	December 31,		September 30,		December 31,
	2008		2008		2007
	(unaudited) (dollars in thousands)
Assets:
Student loans receivable, net	$	25,413,008		26,376,269		26,736,122
Unrestricted cash and liquid investments		189,847		325,007		111,746
Restricted cash, cash equivalents, and investments		1,158,257		1,129,874		1,009,092
Goodwill		175,178		175,178		164,695
Intangible assets, net		77,054		83,565		112,830
Other assets		841,553		880,122		1,028,298
Total assets	$	27,854,897		28,970,015		29,162,783
Liabilities:
Bonds and notes payable	$	26,787,959		28,004,835		28,115,829
Other liabilities		423,712		355,450		438,075
Total liabilities		27,211,671		28,360,285		28,553,904
Shareholders’ equity		643,226		609,730		608,879
Total liabilities and shareholders’ equity	$	27,854,897		28,970,015		29,162,783

Non-GAAP Performance Measures

In accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), the Company prepares financial statements in accordance with generally accepted accounting principles (“GAAP”). In addition to evaluating the Company’s GAAP-based financial information, management also evaluates the Company on a non-GAAP performance measure referred to as base net income. While base net income is not a substitute for reported results under GAAP, the Company provides base net income as additional information regarding its financial results.

Base net income is the primary financial performance measure used by management to develop financial plans, allocate resources, track results, evaluate performance, establish corporate performance targets, and determine incentive compensation. The Company’s board of directors utilizes base net income to set performance targets and evaluate management’s performance. The Company also believes analysts, rating agencies, and creditors use base net income in their evaluation of the Company’s results of operations. While base net income is not a substitute for reported results under GAAP, the Company utilizes base net income in operating its business because base net income permits management to make meaningful period-to-period comparisons by eliminating the temporary volatility in the Company’s performance that arises from certain items that are primarily affected by factors beyond the control of management. Management believes base net income provides additional insight into the financial performance of the core business activities of the Company’s operations.

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The following table provides a reconciliation of GAAP net income to base net income.

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
	(dollars in thousands, except share data)
GAAP net income	$	30,997			23,785			19,009			28,662			32,854
Base adjustments:
Derivative market value, foreign currency, and put option adjustments		(46,348	)		(6,085	)		(14,940	)		(10,361	)		(26,806	)
Amortization of intangible assets		6,511			6,598			6,412			26,230			30,426
Compensation related to business combinations		476			477			655			2,999			2,111
Variable rate floor income, net of settlements on derivatives		—			(1,580	)		(2,416	)		(32,360	)		(3,013	)
Total base adjustments before income taxes		(39,361	)		(590	)		(10,289	)		(13,492	)		2,718
Net tax effect (a)		13,776			218			4,474			5,792			346
Total base adjustments		(25,585	)		(372	)		(5,815	)		(7,700	)		3,064
Base net income		5,412			23,413			13,194			20,962			35,918
Discontinued operations, net of tax		(837	)		—			159			(1,818	)		2,575
Base net income, excluding discontinued operations	$	4,575			23,413			13,353			19,144			38,493
Earnings per share, basic and diluted:
GAAP net income	$	0.63			0.48			0.39			0.58			0.66
Total base adjustments		(0.52	)		(0.01	)		(0.12	)		(0.15	)		0.06
Base net income		0.11			0.47			0.27			0.43			0.72
Discontinued operations, net of tax		(0.02	)		—			—			(0.04	)		0.06
Base net income, excluding discontinued operations	$	0.09			0.47			0.27			0.39			0.78

(a) Beginning in 2008, tax effect is computed using the Company’s consolidated effective tax rate for each applicable quarterly period. In prior periods, tax effect was computed at 38%. The change in the value of the put options for prior periods was not tax effected as this is not deductible for income tax purposes.

Limitations of Base Net Income

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons discussed above, management believes that base net income is an important additional tool for providing a more complete understanding of the Company’s results of operations. Nevertheless, base net income is subject to certain general and specific limitations that investors should carefully consider. For example, unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. The Company’s base net income is not a defined term within GAAP and may not be comparable to similarly titled measures reported by other companies. Investors, therefore, may not be able to compare the Company’s performance with that of other companies based upon base net income. Base net income results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely monitored and used by the Company’s management and board of directors to assess performance and information which the Company believes is important to analysts, rating agencies, and creditors.

Other limitations of base net income arise from the specific adjustments that management makes to GAAP results to derive base net income results. These differences are described below.

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Differences between GAAP and Base Net Income

Management’s financial planning and evaluation of operating results does not take into account the following items because their volatility and/or inherent uncertainty affect the period-to-period comparability of the Company’s results of operations. A more detailed discussion of the differences between GAAP and base net income follows.

Derivative market value, foreign currency, and put option adjustments: “Base net income” excludes the periodic unrealized gains and losses that are caused by the change in fair value on derivatives used in the Company’s risk management strategy in which the Company does not qualify for “hedge treatment” under GAAP. Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging Activities(“SFAS No. 133”), requires that changes in fair value of derivative instruments be recognized currently in earnings unless specific hedge accounting criteria, as specified by SFAS No. 133, are met. The Company maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative instruments primarily used by the Company include interest rate swaps, basis swaps, and cross-currency interest rate swaps. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective. However, the Company does not qualify its derivatives for “hedge treatment” as defined by SFAS No. 133, and the stand-alone derivative must be marked-to-market in the income statement with no consideration for the corresponding change in fair value of the hedged item. The Company believes these point-in-time estimates of asset and liability values that are subject to interest rate fluctuations make it difficult to evaluate the ongoing results of operations against its business plan and affect the period-to-period comparability of the results of operations. Included in “base net income” are the economic effects of the Company’s derivative instruments, which includes any cash paid or received being recognized as an expense or revenue upon actual derivative settlements. These settlements are included in “Derivative settlements, net” on the attached consolidated statements of income.

“Base net income” excludes the foreign currency transaction gains or losses caused by the re-measurement of the Company’s Euro-denominated bonds to U.S. dollars. In connection with the issuance of the Euro-denominated bonds, the Company has entered into cross-currency interest rate swaps. Under the terms of these agreements, the principal payments on the Euro-denominated notes will effectively be paid at the exchange rate in effect at the issuance date of the bonds. The cross-currency interest rate swaps also convert the floating rate paid on the Euro-denominated bonds (EURIBOR index) to an index based on LIBOR. Included in “base net income” are the economic effects of any cash paid or received being recognized as an expense or revenue upon actual settlements of the cross-currency interest rate swaps. These settlements are included in “Derivative settlements, net” on the attached consolidated statements of income. However, the gains or losses caused by the re-measurement of the Euro-denominated bonds to U.S. dollars and the change in market value of the cross-currency interest rate swaps are excluded from “base net income” as the Company believes the point-in-time estimates of value that are subject to currency rate fluctuations related to these financial instruments make it difficult to evaluate the ongoing results of operations against the Company’s business plan and affect the period-to-period comparability of the results of operations. The re-measurement of the Euro-denominated bonds correlates with the change in fair value of the cross-currency interest rate swaps. However, the Company will experience unrealized gains or losses related to the cross-currency interest rate swaps if the two underlying indices (and related forward curve) do not move in parallel.

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“Base net income” also excludes the change in fair value of put options issued by the Company for certain business acquisitions. The put options are valued by the Company each reporting period using a Black-Scholes pricing model. Therefore, the fair value of these options is primarily affected by the strike price and term of the underlying option, the Company’s current stock price, and the dividend yield and volatility of the Company’s stock. The Company believes these point-in-time estimates of value that are subject to fluctuations make it difficult to evaluate the ongoing results of operations against the Company’s business plans and affects the period-to-period comparability of the results of operations.

The gains and/or losses included in “Derivative market value, foreign currency, and put option adjustments” on the attached consolidated statements of income are primarily caused by interest rate and currency volatility, changes in the value of put options based on the inputs used in the Black-Scholes pricing model, as well as the volume and terms of put options and of derivatives not receiving hedge treatment. “Base net income” excludes these unrealized gains and losses and isolates the effect of interest rate, currency, and put option volatility on the fair value of such instruments during the period. Under GAAP, the effects of these factors on the fair value of the put options and the derivative instruments (but not the underlying hedged item) tend to show more volatility in the short term.

Amortization of intangible assets:“Base net income” excludes the amortization of acquired intangibles, which arises primarily from the acquisition of definite life intangible assets in connection with the Company’s acquisitions, since the Company feels that such charges do not drive the Company’s operating performance on a long-term basis and can affect the period-to-period comparability of the results of operations.

Compensation related to business combinations:The Company has structured certain business combinations in which the consideration paid has been dependent on the sellers’ continued employment with the Company. As such, the value of the consideration paid is recognized as compensation expense by the Company over the term of the applicable employment agreement. “Base net income” excludes this expense because the Company believes such charges do not drive its operating performance on a long-term basis and can affect the period-to-period comparability of the results of operations. If the Company did not enter into the employment agreements in connection with the acquisition, the amount paid to these former shareholders of the acquired entity would have been recorded by the Company as additional consideration of the acquired entity, thus, not having an effect on the Company’s results of operations.

Variable rate floor income, net of settlements on derivatives:Loans that reset annually on July 1 can generate excess spread income compared with the rate based on the special allowance payment formula in declining interest rate environments. The Company refers to this additional income as variable rate floor income. The Company excludes variable rate floor income, net of settlements paid on derivatives used to hedge student loan assets earning variable rate floor income, from its base net income since the timing and amount of variable rate floor income (if any) is uncertain, it has been eliminated by legislation for all loans originated on and after April 1, 2006, and it is in excess of expected spreads. In addition, because variable rate floor income is subject to the underlying rate for the subject loans being reset annually on July 1, it is a factor beyond the Company’s control which can affect the period-to-period comparability of results of operations.

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Variable rate floor income was calculated by the Company on a statutory maximum basis. However, as a result of the disruption in the capital markets beginning in August 2007, the full benefit of variable rate floor income calculated on a statutory maximum basis has not been realized by the Company due to the widening of the spread between short term interest rate indices and the Company’s actual cost of funds. As a result of the ongoing volatility of interest rates, effective October 1, 2008, the Company changed its calculation of variable rate floor income to better reflect the economic benefit received by the Company related to this income taking into consideration the volatility of certain rate indices which offset the value received. For the year ended December 31, 2008, the economic benefit received by the Company related to variable rate floor income was $25.7 million. There was no economic benefit received by the Company related to variable rate floor income for the three months ended December 31, 2008. Variable rate floor income calculated on a statutory maximum basis for the three months and year ended December 31, 2008 was $2.2 million and $44.5 million, respectively. Beginning October 1, 2008, the economic benefit used by the Company has been used to determine core student loan spread and base net income.

Discontinued operations:In May 2007, the Company sold EDULINX. As a result of this transaction, the results of operations for EDULINX are reported as discontinued operations for all periods presented. The Company presents “base net income” excluding discontinued operations since the operations and cash flows of EDULINX have been eliminated from the ongoing operations of the Company.

The following table summarizes the impact of legislative, restructuring, and liquidity related charges to base net income.

	Three months ended								Year ended
	December 31,			September 30,			December 31,		December 31,		December 31,
	2008			2008			2007		2008		2007
	(dollars in thousands, except share data)
Base net income, excluding discontinued operations	$	4,575			23,413			13,353		19,144		38,493
Legislative charges, net of tax		—			—			—		—		34,197
Restructuring charges, net of tax		(26	)		(3	)		3,270		17,881		12,580
Liquidity related charges, net of tax (a)		11,300			—			—		44,070		—
Base net income, excluding discontinued operations, legislative and restructuring charges (net of tax), and liquidity related charges (net of tax)	$	15,849			23,410			16,623		81,095		85,270
Earnings per share, basic and diluted:
Base net income, excluding discontinued operations	$	0.09			0.47			0.27		0.39		0.78
Legislative charges, net of tax		—			—			—		—		0.69
Restructuring charges, net of tax		—			—			0.07		0.36		0.25
Liquidity related charges, net of tax (a)		0.23			—			—		0.90		—
Base net income, excluding discontinued operations, legislative and restructuring charges (net of tax), and liquidity related charges (net of tax)	$	0.32			0.47			0.34		1.65		1.72

(a) Liquidity related charges includes the loss on sale of loans of $4.0 million and $51.4 million ($2.5 million and $35.3 million, net of tax), for the quarter and year ended December 31, 2008, respectively, and $13.5 million ($8.8 million, net of tax), in fees paid related to liquidity contingency planning. All of these charges were incurred in order to reduce the amount of loans in the Company’s FFELP loan warehouse facility to reduce exposure related to the facility’s equity support provisions.

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Operating Segments

The Company has five operating segments as defined in Statement of Financial Accounting Standards No. 131,Disclosures about Segments of Enterprise and Related Information(“SFAS No. 131”) as follows: Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce, Enrollment Services, Software and Technical Services, and Asset Generation and Management. The Company’s operating segments are defined by the products and services they offer or the types of customers they serve, and they reflect the manner in which financial information is currently evaluated by management. The accounting policies of the Company’s operating segments are the same as those described in the summary of significant accounting policies included in the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. Intersegment revenues are charged by a segment to another segment that provides the product or service. Intersegment revenues and expenses are included within each segment consistent with the income statement presentation provided to management. Changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial information.

The management reporting process measures the performance of the Company’s operating segments based on the management structure of the Company as well as the methodology used by management to evaluate performance and allocate resources. Management, including the Company’s chief operating decision maker, evaluates the performance of the Company’s operating segments based on their profitability. As discussed further, management measures the profitability of the Company’s operating segments based on base net income. Accordingly, information regarding the Company’s operating segments is provided based on base net income. The Company’s base net income is not a defined term within GAAP and may not be comparable to similarly titled measures reported by other companies. Unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting.

In May 2007, the Company sold EDULINX, a Canadian student loan service provider and subsidiary of the Company. As a result of this transaction, the results of operations for EDULINX are reported as discontinued operations for all periods presented. The operating results of EDULINX were included in the Student Loan and Guaranty Servicing operating segment. The Company presents base net income excluding discontinued operations since the operations and cash flows of EDULINX have been eliminated from the ongoing operations of the Company. Therefore, the results of operations for the Student Loan and Guaranty Servicing segment exclude the operating results of EDULINX for all periods presented.

Fee-based Operating Segments

Historically, the Company generated the majority of its revenue from net interest income earned in its Asset Generation and Management operating segment. In recent years, the Company has made several acquisitions that have expanded the Company’s products and services and has diversified its revenue — primarily from fee-based businesses. The Company currently offers a broad range of pre-college, in-college, and post-college products and services to students, families, schools, and financial institutions. These products and services help students and families plan and pay for their education and students plan their careers. The Company’s products and services are designed to simplify the education planning and financing process and are focused on providing value to students, families, and schools throughout the education life cycle. The Company continues to diversify its sources of revenue, including those generated from businesses that are not dependent upon government programs, reducing legislative and political risk.

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Student Loan and Guaranty Servicing

The Student Loan and Guaranty Servicing segment provides for the servicing of the Company’s student loan portfolios and the portfolios of third parties and servicing provided to guaranty agencies. The servicing and business process outsourcing activities include loan origination activities, application processing, borrower updates, payment processing, due diligence procedures, and claim processing. These activities are performed internally for the Company’s portfolio in addition to generating fee revenue when performed for third-party clients. The guaranty servicing, servicing support, and business process outsourcing activities include providing software and data center services, borrower and loan updates, default aversion tracking services, claim processing services, and post-default collection services to guaranty agencies. The following are the primary product and service offerings the Company offers as part of its Student Loan and Guaranty Servicing segment:

• Origination and servicing of FFELP loans

• Servicing of non-federally insured student loans

• Servicing and support outsourcing for guaranty agencies

Tuition Payment Processing and Campus Commerce

The Tuition Payment Processing and Campus Commerce segment provides products and services to help institutions and education seeking families manage the payment of education costs during the pre-college and college stages of the education life cycle. The Company provides actively managed tuition payment solutions, online payment processing, detailed information reporting, financial needs analysis, and data integration services to K-12 and higher educational institutions, families, and students. In addition, the Company provides customer-focused electronic transactions, information sharing, and account and bill presentment to colleges and universities.

Enrollment Services

The Enrollment Services segment offers products and services that are focused on helping (i) students plan and prepare for life after high school (content management) and (ii) colleges recruit and retain students (lead generation). Content management products and services include test preparation study guides and online courses, admissions consulting, licensing of scholarship data, essay and resume editing services, and call center services. Lead generation products and services include vendor lead management services, pay per click marketing management, email marketing, admissions lead generation, and list marketing services.

Software and Technical Services

The Software and Technical Services segment provides information technology products and full-service technical consulting, with core areas of business in educational loan software solutions, business intelligence, technical consulting services, and Enterprise Content Management (ECM) solutions.

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Asset Generation and Management Operating Segments

The Asset Generation and Management segment includes the acquisition, management, and ownership of the Company’s student loan assets. Revenues are primarily generated from the Company’s earnings from the spread, referred to as the Company’s student loan spread, between the yield received on the student loan portfolio and the costs associated with originating, acquiring, and financing the student loan portfolio. The Company generates student loan assets through direct origination or through acquisitions. The student loan assets are held in a series of education lending subsidiaries designed specifically for this purpose. In addition to the student loan portfolio, all costs and activity associated with the generation of assets, funding of those assets, and maintenance of the debt transactions are included in this segment. This includes derivative activity and the related derivative market value and foreign currency adjustments. The Company is also able to leverage its capital market expertise by providing investment advisory services and other related services to third parties through a licensed broker dealer subsidiary. Revenues and expenses for those functions are also included in the Asset Generation and Management segment.

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Segment Operating Results

The tables below reflect base net income for each of the Company’s operating segments. Reconciliation of the segment totals to the Company’s operating results in accordance with GAAP is also included in the tables below.

	Three months ended December 31, 2008
	(dollars in thousands)
	Fee-Based
	Student			Tuition																					"Base net
	Loan			Payment						Software						Asset			Corporate						income"
	and			Processing						and			Total			Generation			Activity			Eliminations			Adjustments		GAAP
	Guaranty			and Campus			Enrollment			Technical			Fee-			and			and			and			to GAAP		Results of
	Servicing			Commerce			Services			Services			Based			Management			Overhead			Reclassifications			Results		Operations
Total interest income	$	217			218			1			24			460			271,639			2,029			(801	)		—		273,327
Interest expense		—			—			(3	)		—			(3	)		223,867			11,805			(801	)		—		234,868
Net interest income		217			218			4			24			463			47,772			(9,776	)		—			—		38,459
Less provision for loan losses		—			—			—			—			—			7,000			—			—			—		7,000
Net interest income after provision for loan losses		217			218			4			24			463			40,772			(9,776	)		—			—		31,459
Other income:
Loan and guaranty servicing income		22,663			—			—			—			22,663			(10	)		(127	)		—			—		22,526
Other fee-based income		—			12,460			29,257			—			41,717			4,365			—			—			—		46,082
Software services income		—			—			—			3,879			3,879			—			13			—			—		3,892
Other income		7			(285	)		—			—			(278	)		(741	)		1,481			—			—		462
Gain (loss) on sale of loans		—			—			—			—			—			(5,609	)		1,621			—			—		(3,988	)
Intersegment revenue		18,353			60			—			1,838			20,251			—			16,541			(36,792	)		—		—
Derivative market value, foreign currency, and put option adjustments		—			—			—			—			—			—			—			—			46,348		46,348
Derivative settlements, net		—			—			—			—			—			9,668			—			—			—		9,668
Total other income		41,023			12,235			29,257			5,717			88,232			7,673			19,529			(36,792	)		46,348		124,990
Operating expenses:
Salaries and benefits		10,955			5,840			5,678			4,050			26,523			2,159			13,329			(1,225	)		476		41,262
Restructure expense — severance and contract termination costs		—			—			—			—			—			—			(40	)		40			—		—
Other expenses		6,792			3,136			20,326			588			30,842			19,886			11,712			(27	)		6,511		68,924
Intersegment expenses		6,824			124			965			56			7,969			19,032			714			(27,715	)		—		—
Corporate allocations		5,873			228			740			705			7,546			319			—			(7,865	)		—		—
Total operating expenses		30,444			9,328			27,709			5,399			72,880			41,396			25,715			(36,792	)		6,987		110,186
Income (loss) before income taxes		10,796			3,125			1,552			342			15,815			7,049			(15,962	)		—			39,361		46,263
Income tax expense (benefit) (a)		3,779			1,094			543			119			5,535			2,467			(5,675	)		—			13,776		16,103
Net income (loss) from continuing operations		7,017			2,031			1,009			223			10,280			4,582			(10,287	)		—			25,585		30,160
Income (loss) from discontinued operations, net of tax		—			—			—			—			—			—			—			—			837		837
Net income (loss)	$	7,017			2,031			1,009			223			10,280			4,582			(10,287	)		—			26,422		30,997
(a) Beginning in 2008, the consolidated effective tax rate for each applicable quarterly period is used to calculate income taxes for each operating segment.
Three months ended December 31, 2008:
Before Tax Operating Margin		26.2	%		25.1	%		5.3	%		6.0	%		17.8	%		14.6	%
Before Tax Operating Margin - excluding restructure expense, loss on sale of loans, liquidity contingency planning fees, and corporate allocations		40.4	%		26.9	%		7.8	%		18.2	%		26.3	%		24.0	%
Three months ended December 31, 2007:
Before Tax Operating Margin		36.9	%		40.4	%		17.9	%		25.5	%		30.7	%		58.1	%
Before Tax Operating Margin -		38.1	%		40.4	%		18.6	%		25.5	%		31.5	%		58.9	%
excluding restructure expense

11

	Three months ended December 31, 2007
	(dollars in thousands)
	Fee-Based
	Student			Tuition																	"Base net
	Loan			Payment					Software				Asset		Corporate						income"
	and			Processing					and		Total		Generation		Activity			Eliminations			Adjustments			GAAP
	Guaranty			and Campus			Enrollment		Technical		Fee-		and		and			and			to GAAP			Results of
	Servicing			Commerce			Services		Services		Based		Management		Overhead			Reclassifications			Results			Operations
Total interest income	$	852			1,139			57		—		2,048		428,935		1,255			—			2,416			434,654
Interest expense		—			—			2		—		2		381,091		9,306			—			—			390,399
Net interest income		852			1,139			55		—		2,046		47,844		(8,051	)		—			2,416			44,255
Less provision for loan losses		—			—			—		—		—		4,550		—			—			—			4,550
Net interest income after provision for loan losses		852			1,139			55		—		2,046		43,294		(8,051	)		—			2,416			39,705
Other income:
Loan and guaranty servicing income		32,947			—			—		—		32,947		6		—			—			—			32,953
Other fee-based income		—			11,190			29,970		—		41,160		2,876		536			—			—			44,572
Software services income		—			—			138		5,509		5,647		—		—			—			—			5,647
Other income		(11	)		25			—		—		14		414		1,445			—			—			1,873
Intersegment revenue		15,866			180			—		2,657		18,703		—		1,432			(20,135	)		—			—
Derivative market value, foreign currency, and put option adjustments		—			—			—		—		—		—		—			—			14,940			14,940
Derivative settlements, net		—			—			—		—		—		11,577		—			—			—			11,577
Total other income		48,802			11,395			30,108		8,166		98,471		14,873		3,413			(20,135	)		14,940			111,562
Operating expenses:
Salaries and benefits		18,474			5,114			6,994		5,090		35,672		2,501		15,170			623			655			54,621
Restructure expense — severance and contract termination costs		609			—			192		—		801		485		3,989			(5,275	)		—			—
Other expenses		10,399			2,379			17,488		771		31,037		6,265		19,153			2,801			6,412			65,668
Intersegment expenses		1,871			(20	)		83		225		2,159		15,120		1,005			(18,284	)		—			—
Total operating expenses		31,353			7,473			24,757		6,086		69,669		24,371		39,317			(20,135	)		7,067			120,289
Income (loss) before income taxes		18,301			5,061			5,406		2,080		30,848		33,796		(43,955	)		—			10,289			30,978
Income tax expense (benefit) (a)		6,954			1,923			2,054		790		11,721		12,842		(17,226	)		—			4,473			11,810
Net income (loss) from continuing operations		11,347			3,138			3,352		1,290		19,127		20,954		(26,729	)		—			5,816			19,168
Income (loss) from discontinued operations, net of tax		—			—			—		—		—		—		—			—			(159	)		(159	)
Net income (loss)	$	11,347			3,138			3,352		1,290		19,127		20,954		(26,729	)		—			5,657			19,009
(a) Income taxes are based on 38% of net income (loss) before tax for the individual operating segment.

12

	Year ended December 31, 2008
	Fee-Based
	Student			Tuition																					“Base net
	Loan			Payment						Software						Asset			Corporate						income”
	and			Processing						and			Total			Generation			Activity			Eliminations			Adjustments			GAAP
	Guaranty			and Campus			Enrollment			Technical			Fee-			and			and			and			to GAAP			Results of
	Servicing			Commerce			Services			Services			Based			Management			Overhead			Reclassifications			Results			Operations
Total interest income	$	1,377			1,689			17			24			3,107			1,164,329			6,810			(2,190	)		42,325			1,214,381
Interest expense		—			—			—			—			—			986,556			42,123			(2,190	)		—			1,026,489
Net interest income (loss)		1,377			1,689			17			24			3,107			177,773			(35,313	)		—			42,325			187,892
Less provision for loan losses		—			—			—			—			—			25,000			—			—			—			25,000
Net interest income (loss) after provision for loan losses		1,377			1,689			17			24			3,107			152,773			(35,313	)		—			42,325			162,892
Other income (expense):
Loan and guaranty servicing income		104,287			—			—			—			104,287			16			(127	)		—			—			104,176
Other fee-based income		—			48,435			112,405			—			160,840			17,859			—			—			—			178,699
Software services income		—			—			37			19,707			19,744			—			13			—			—			19,757
Other income		51			(280	)		—			—			(229	)		(448	)		5,437			—			—			4,760
Gain (loss) on sale of loans		—			—			—			—			—			(53,035	)		1,621			—			—			(51,414	)
Intersegment revenue		75,361			302			2			6,831			82,496			—			63,385			(145,881	)		—			—
Derivative market value, foreign currency, and put option adjustments		—			—			—			—			—			466			—			—			10,361			10,827
Derivative settlements, net		—			—			—			—			—			65,622			—			—			(9,965	)		55,657
Total other income (expense)		179,699			48,457			112,444			26,538			367,138			30,480			70,329			(145,881	)		396			322,462
Operating expenses:
Salaries and benefits		51,320			23,290			24,379			18,081			117,070			8,316			54,910			98			2,999			183,393
Restructure expense — severance and contract termination costs		747			—			282			487			1,516			1,845			3,706			(7,067	)		—			—
Impairment expense		5,074			—			—			—			5,074			9,351			4,409			—			—			18,834
Other expenses		33,922			9,879			76,189			2,489			122,479			35,679			53,975			24			26,230			238,387
Intersegment expenses		25,111			478			3,240			37			28,866			74,609			3,733			(107,208	)		—			—
Corporate allocations		22,626			919			3,401			2,286			29,232			2,496			—			(31,728	)		—			—
Total operating expenses		138,800			34,566			107,491			23,380			304,237			132,296			120,733			(145,881	)		29,229			440,614
Income (loss) before income taxes		42,276			15,580			4,970			3,182			66,008			50,957			(85,717	)		—			13,492			44,740
Income tax expense (benefit) (a)		14,321			5,175			1,730			1,021			22,247			18,356			(28,499	)		—			5,792			17,896
Net income (loss) from continuing operations		27,955			10,405			3,240			2,161			43,761			32,601			(57,218	)		—			7,700			26,844
Income from discontinued operations, net of tax		—			—			—			—			—			—			—			—			1,818			1,818
Net income (loss)	$	27,955			10,405			3,240			2,161			43,761			32,601			(57,218	)		—			9,518			28,662
(a) Beginning in 2008, the consolidated effective tax rate for each applicable quarterly period is used to calculate income taxes for each operating segment.
Year ended December 31, 2008:
Before Tax Operating Margin		23.3	%		31.1	%		4.4	%		12.0	%		17.8	%		27.8	%
Before Tax Operating Margin - excluding restructure expense, impairment expense, loss on sale of loans, liquidity contingency planning fees, and corporate allocations		39.1	%		32.9	%		7.7	%		22.4	%		27.5	%		55.5	%
Year ended December 31, 2007:
Before Tax Operating Margin		35.3	%		37.2	%		(1.4	%)		26.4	%		25.0	%		40.5	%
Before Tax Operating Margin -		36.2	%		37.2	%		10.3	%		26.6	%		28.6	%		54.8	%
excluding restructure expense, impairment expense, and provision for loan losses related to the loss of Exceptional Performer

13

	Year ended December 31, 2007
	Fee-Based
	Student		Tuition																	"Base net
	Loan		Payment					Software				Asset		Corporate						income"
	and		Processing					and		Total		Generation		Activity			Eliminations			Adjustments			GAAP
	Guaranty		and Campus		Enrollment			Technical		Fee-		and		and			and			to GAAP			Results of
	Servicing		Commerce		Services			Services		Based		Management		Overhead			Reclassifications			Results			Operations
Total interest income	$	5,459		3,809		347			18		9,633		1,730,882		7,485			(3,737	)		3,013			1,747,276
Interest expense		—		7		7			—		14		1,465,883		40,502			(3,737	)		—			1,502,662
Net interest income (loss)		5,459		3,802		340			18		9,619		264,999		(33,017	)		—			3,013			244,614
Less provision for loan losses		—		—		—			—		—		28,178		—			—			—			28,178
Net interest income (loss) after provision for loan losses		5,459		3,802		340			18		9,619		236,821		(33,017	)		—			3,013			216,436
Other income (expense):
Loan and guaranty servicing income		127,775		—		—			—		127,775		294		—			—			—			128,069
Other fee-based income		—		42,682		103,311			—		145,993		13,387		1,508			—			—			160,888
Software services income		—		—		594			22,075		22,669		—		—			—			—			22,669
Other income		—		84		—			—		84		4,433		11,095			—			—			15,612
Gain on sale of loans		—		—		—			—		—		3,597		—			—			—			3,597
Intersegment revenue		74,687		688		891			15,683		91,949		—		9,040			(100,989	)		—			—
Derivative market value, foreign currency, and put option adjustments		—		—		—			—		—		—		—			—			26,806			26,806
Derivative settlements, net		—		—		—			—		—		6,628		12,049			—			—			18,677
Total other income (expense)		202,462		43,454		104,796			37,758		388,470		28,339		33,692			(100,989	)		26,806			376,318
Operating expenses:
Salaries and benefits		85,462		20,426		33,480			23,959		163,327		23,101		49,839			(1,747	)		2,111			236,631
Restructure expense- severance and contract termination costs		1,840		—		929			58		2,827		2,406		4,998			(10,231	)		—			—
Impairment expense		—		—		11,401			—		11,401		28,291		9,812			—			—			49,504
Other expenses		36,618		8,901		60,445			2,995		108,959		29,205		77,915			2,969			30,426			249,474
Intersegment expenses		10,552		364		335			775		12,026		74,714		5,240			(91,980	)		—			—
Total operating expenses		134,472		29,691		106,590			27,787		298,540		157,717		147,804			(100,989	)		32,537			535,609
Income (loss) before income taxes		73,449		17,565		(1,454	)		9,989		99,549		107,443		(147,129	)		—			(2,718	)		57,145
Income tax expense (benefit) (a)		27,910		6,675		(553	)		3,796		37,828		40,828		(57,285	)		—			345			21,716
Net income (loss) from continuing operations		45,539		10,890		(901	)		6,193		61,721		66,615		(89,844	)		—			(3,063	)		35,429
Income (loss) from discontinued operations, net of tax		—		—		—			—		—		—		—			—			(2,575	)		(2,575	)
Net income (loss)	$	45,539		10,890		(901	)		6,193		61,721		66,615		(89,844	)		—			(5,638	)		32,854
(a) Income taxes are based on 38% of net income (loss) before tax for the individual operating segment.

Corporate Activity and Overhead in the previous tables primarily includes the following items:

• Income earned on certain investment activities

• Interest expense incurred on unsecured debt transactions

• Other products and service offerings that are not considered operating segments

• Corporate activities and overhead functions such as executive management, human resources, accounting and finance, legal, marketing, and corporate technology support

The adjustments required to reconcile from the Company’s base net income measure to its GAAP results of operations relate to differing treatments for derivatives, foreign currency transaction adjustments, amortization of intangible assets, discontinued operations, and certain other items that management does not consider in evaluating the Company’s operating results. See “Non-GAAP Performance Measures.” The following tables reflect adjustments associated with these areas by operating segment and Corporate Activity and Overhead:

14

	Student			Tuition
	Loan			Payment						Software			Asset			Corporate
	and			Processing						and			Generation			Activity
	Guaranty			and Campus			Enrollment			Technical			and			and
	Servicing			Commerce			Services			Services			Management			Overhead			Total
	Three months ended December 31, 2008
Derivative market value, foreign currency, and put option adjustments	$	—			—			—			—			(46,348	)		—			(46,348	)
Amortization of intangible assets		1,165			1,889			3,258			199			—			—			6,511
Compensation related to business combinations		—			—			—			—			—			476			476
Variable rate floor income, net of settlements on derivatives		—			—			—			—			—			—			—
Income (loss) from discontinued operations, net of tax		(837	)		—			—			—			—			—			(837	)
Net tax effect (a)		(408	)		(661	)		(1,140	)		(70	)		16,222			(167	)		13,776
Total adjustments to GAAP	$	(80	)		1,228			2,118			129			(30,126	)		309			(26,422	)
	Three months ended December 31, 2007
Derivative market value, foreign currency, and put option adjustments	$	—			—			—			—			(16,423	)		1,483			(14,940	)
Amortization of intangible assets		1,350			1,443			2,895			287			437			—			6,412
Compensation related to business combinations		—			—			—			—			—			655			655
Variable rate floor income, net of settlements on derivatives		—			—			—			—			(2,416	)		—			(2,416	)
Income (loss) from discontinued operations, net of tax		159			—			—			—			—			—			159
Net tax effect (a)		(513	)		(548	)		(1,100	)		(109	)		6,993			(250	)		4,473
Total adjustments to GAAP	$	996			895			1,795			178			(11,409	)		1,888			(5,657	)
	Year ended December 31, 2008
Derivative market value, foreign currency, and put option adjustments	$	—			—			—			—			(13,844	)		3,483			(10,361	)
Amortization of intangible assets		4,751			7,826			12,451			1,057			145			—			26,230
Compensation related to business combinations		—			—			—			—			—			2,999			2,999
Variable rate floor income, net of settlements on derivatives		—			—			—			—			(32,360	)		—			(32,360	)
Income (loss) from discontinued operations, net of tax		(1,818	)		—			—			—			—			—			(1,818	)
Net tax effect (a)		(1,590	)		(2,615	)		(4,185	)		(354	)		16,770			(2,234	)		5,792
Total adjustments to GAAP	$	1,343			5,211			8,266			703			(29,289	)		4,248			(9,518	)
	Year ended December 31, 2007
Derivative market value, foreign currency, and put option adjustments	$	—			—			—			—			(24,224	)		(2,582	)		(26,806	)
Amortization of intangible assets		5,094			5,815			12,692			1,191			5,634			—			30,426
Compensation related to business combinations		—			—			—			—			—			2,111			2,111
Variable rate floor income, net of settlements on derivatives		—			—			—			—			(3,013	)		—			(3,013	)
Income (loss) from discontinued operations, net of tax		2,575			—			—			—			—			—			2,575
Net tax effect (a)		(1,936	)		(2,209	)		(4,823	)		(452	)		8,209			1,556			345
Total adjustments to GAAP	$	5,733			3,606			7,869			739			(13,394	)		1,085			5,638

(a) Beginning in 2008, tax effect is computed using the Company’s consolidated effective tax rate for each applicable quarterly period. In prior periods, tax effect was computed at 38%. The change in the value of the put options for prior periods (included in Corporate Activity and Overhead) was not tax effected as this is not deductible for income tax purposes.

15

Fee-Based Businesses

In recent years, the Company has expanded products and services generated from businesses that are not dependent upon government programs reducing legislative and political risk. This revenue is primarily generated from products and services offered in the Company’s Tuition Payment Processing and Campus Commerce and Enrollment Services operating segments. The only product and service offering in these segments that was affected by the recent student loan legislative developments is list marketing services. Excluding list marketing services, the revenue from these businesses increased $3 million, or 9 percent, and $25 million, or 20 percent, for the quarter and year ended December 31, 2008, respectively. The table below includes the Company’s revenue from fee-based businesses and shows the revenue earned by the Company’s operating segments that are less dependent upon government programs, excluding list marketing services.

	Three months ended December 31,									Year ended December 31,
	2008		2007		$ Change		% Change			2008		2007		$ Change		% Change
Tuition Payment Processing and Campus Commerce	$	12,678		12,329		349				$	50,124		46,484		3,640
Enrollment Services — Content Management and Lead Generation		26,225		23,519		2,706					103,014		81,649		21,365
Total revenue from fee-based businesses less dependent upon government programs		38,903		35,848	$	3,055		8.5	%		153,138		128,133	$	25,005		19.5	%
Enrollment Services — List Marketing Services		3,036		6,644							9,445		22,596
Student Loan and Guaranty Servicing		22,880		33,799							105,664		133,234
Software and Technical Services		3,903		5,509							19,731		22,093
Total revenue from fee-based businesses	$	68,722		81,800						$	287,978		306,056

Operating Expenses

As a result of the restructuring plans implemented in September 2007 and January 2008, as well as the Company’s continued focus on capitalizing on the operating leverage of the Company’s business structure and strategies, operating expenses decreased $10 million and $95 million for the quarter and year ended December 31, 2008, respectively, compared to the same periods a year ago. Excluding restructuring expense, impairment expense, and liquidity contingency fees, operating expenses decreased $18 million, or 16%, and $75 million, or 16%, for the quarter and year ended December 31, 2008, respectively, compared to the same periods in 2007.

16

	Three months ended December 31,											Year ended December 31,
	2008			2007		$ Change			% Change			2008		2007		$ Change			% Change
Salaries and benefits	$	41,302			53,094		(11,792	)				$	177,724		230,316		(52,592	)
Other expenses		55,399			61,920		(6,521	)					223,464		245,558		(22,094	)
Operating expenses, excluding restructure expense, impairment expense, and liquidity related fees		96,701			115,014	$	(18,313	)		(15.9	)%		401,188		475,874	$	(74,686	)		(15.7	)%
Restructure expense		(40	)		5,275								7,067		10,231
Impairment expense		—			—								18,834		49,504
Liquidity related fees		13,525			—								13,525		—
Total operating expenses	$	110,186			120,289							$	440,614		535,609

Student Loans Receivable

Student loans receivable includes all student loans owned by or on behalf of the Company and includes the unamortized cost of acquisition or origination less an allowance for loan losses. The following table describes the components of the Company’s loan portfolio:

	As of December 31, 2008						As of September 30, 2008						As of December 31, 2007
	Dollars			Percent			Dollars			Percent			Dollars			Percent
Federally insured: (a) (b)
Stafford
Originated prior to 10/1/07	$	6,641,817			26.1	%	$	6,780,214			25.7	%	$	6,624,009			24.8	%
Originated on or after 10/1/07		960,751			3.8			689,097			2.6			101,901			0.4
PLUS/SLS
Originated prior to 10/1/07		412,142			1.6			428,037			1.6			414,708			1.5
Originated on or after 10/1/07		115,528			0.5			85,066			0.3			15,233			0.1
Consolidation
Originated prior to 10/1/07		16,614,950			65.3			17,427,448			66.2			18,646,993			69.8
Originated on or after 10/1/07		42,753			0.2			316,031			1.2			251,554			0.9
Non-federally insured		273,108			1.1			275,520			1.0			274,815			1.0
Total		25,061,049			98.6			26,001,413			98.6			26,329,213			98.5
Unamortized premiums and deferred origination costs		402,881			1.6			423,926			1.6			452,501			1.7
Allowance for loan losses:
Allowance — federally insured		(25,577	)		(0.1	)		(24,366	)		(0.1	)		(24,534	)		(0.1	)
Allowance — non-federally insured		(25,345	)		(0.1	)		(24,704	)		(0.1	)		(21,058	)		(0.1	)
Net	$	25,413,008			100.0	%	$	26,376,269			100.0	%	$	26,736,122			100.0	%

(a)

The College Cost Reduction Act reduced the yield on federally insured loans originated on or after October 1, 2007. As of December 31, 2008, September 30, 2008, and December 31, 2007, $548.4 million, $221.6 million, and $278.9 million, respectively, of federally insured student loans are excluded from the above table as these loans are accounted for as participation interests sold under an agreement with Union Bank. As of December 31, 2008, $377.1 million of the loans accounted for as participation interests sold under this agreement were originated on or after October 1, 2007, of which $32.8 million were eligible to be participated to the Department under the Participation Program.

(b)

As of December 31, 2008, $637.3 million of federally insured student loans from the above table were eligible to be sold or participated to the Department under the Department’s Loan Purchase Commitment and Participation Programs, of which $622.2 million were participated to the Department under the Participation Program.

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Origination and Acquisition

The Company originates and acquires loans through various methods and channels including: (i) direct-to-consumer channel (in which the Company originates student loans directly with student and parent borrowers), (ii) campus based origination channels, and (iii) spot purchases.

The Company will originate or acquire loans through its campus based channel either directly under one of its brand names or through other originating lenders. In addition to its brands, the Company acquires student loans from lenders to whom the Company provides marketing and/or origination services established through various contracts. Branding partners are lenders for which the Company acts as a marketing agent in specified geographic areas. A forward flow lender is one for whom the Company provides origination services but provides no marketing services or whom simply agrees to sell loans to the Company under forward sale commitments. The following table sets forth the activity of loans originated or acquired through each of the Company’s channels:

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
Beginning balance	$	26,001,413			25,612,126			26,179,970			26,329,213			23,414,468
Direct channel:
Consolidation loan originations		5			44			280,963			69,078			3,096,754
Less consolidation of existing portfolio		—			(27	)		(152,509	)		(28,474	)		(1,602,835	)
Net consolidation loan originations		5			17			128,454			40,604			1,493,919
Stafford/PLUS loan originations		306,911			416,721			162,949			1,258,961			1,086,398
Branding partner channel		52			334,685			79,416			936,044			662,629
Forward flow channel		3			114,488			158,803			517,551			1,105,145
Other channels		—			—			12,932			55,922			804,019
Total channel acquisitions		306,971			865,911			542,554			2,809,082			5,152,110
Repayments, claims, capitalized interest, participations, and other		(622,702	)		(369,940	)		(208,178	)		(1,877,885	)		(1,321,055	)
Consolidation loans lost to external parties		(86,194	)		(106,684	)		(173,505	)		(369,145	)		(800,978	)
Loans sold		(538,439	)		—			(11,628	)		(1,830,216	)		(115,332	)
Ending balance	$	25,061,049			26,001,413			26,329,213			25,061,049			26,329,213

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Student Loan Spread

The following table analyzes the student loan spread on the Company’s portfolio of student loans and represents the spread on assets earned in conjunction with the liabilities and derivative instruments used to fund the assets.

	Three months ended									Year ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
Student loan yield		5.18	%		5.38	%		7.42	%		5.58	%		7.76	%
Consolidation rebate fees		(0.72	)		(0.72	)		(0.76	)		(0.73	)		(0.77	)
Premium and deferred origination costs amortization		(0.33	)		(0.33	)		(0.36	)		(0.35	)		(0.36	)
Student loan net yield		4.13			4.33			6.30			4.50			6.63
Student loan cost of funds		(3.23	)		(3.29	)		(5.33	)		(3.45	)		(5.49	)
Student loan spread		0.90			1.04			0.97			1.05			1.14
Variable rate floor income, net of settlements on derivatives		—			(0.02	)		(0.04	)		(0.12	)		(0.01	)
Core student loan spread		0.90	%		1.02	%		0.93	%		0.93	%		1.13	%
Average balance of student loans	$	25,516,571			26,035,006			26,173,480			26,044,507			25,143,059
Average balance of debt outstanding		26,121,885			26,769,955			27,507,440			26,869,364			26,599,361

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