Nelnet, Inc. (Nelnet) is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space.
The largest operating businesses engage in loan servicing and education technology services and payments. The company also makes and manages investments to further diversify both within and outside of its historical core education-related businesses, including but not limit...
Nelnet, Inc. (Nelnet) is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space.
The largest operating businesses engage in loan servicing and education technology services and payments. The company also makes and manages investments to further diversify both within and outside of its historical core education-related businesses, including but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). Substantially all revenue from external customers is earned, and all long-lived assets are located, in the United States.
The company built on this initial foundation as a servicer to become a leading originator, holder, and servicer of federal student loans, principally consisting of loans originated under the Federal Family Education Loan Program.
Segments
The company operates through four segments: Loan Servicing and Systems (LSS); Education Technology Services and Payments (ETSP); Asset Generation and Management (AGM); and Nelnet Bank.
Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS): Focuses on student and consumer loan servicing, loan servicing-related technology solutions, and outsourcing business services; and includes the brands Nelnet Diversified Solutions, Nelnet Loan Servicing, Nelnet Servicing, Firstmark Services, Sloan Servicing, and Nelnet Government Services.
Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS): NBS provides education and payment technology and services for K-12 schools, higher education institutions, churches, and businesses in the United States and internationally; and includes the divisions of FACTS, Nelnet Campus Commerce, Nelnet Payment Services, and Nelnet International.
Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division: Focused on comprehensive asset management including strategic asset investing, asset allocation, risk management, and performance monitoring within a diverse portfolio; and Includes the acquisition and management of student and other loan assets, including investment interests therein.
Nelnet Bank, part of the Nelnet Financial Services (NFS) division: Internet Utah-chartered industrial bank focused on the private education and unsecured consumer loan markets.
Loan Servicing and Systems
The primary service offerings of this operating segment include servicing federally owned student loans for the department; servicing FFELP loans; servicing private education and consumer loans; providing backup servicing for FFELP, private education, and consumer loans; providing student loan servicing software and other information technology products and services; and providing outsourced services, including contact center, processing, and administrative services.
Servicing federally owned student loans for the Department
Nelnet Servicing, LLC (Nelnet Servicing), a subsidiary of the company, earns loan servicing revenue from a servicing contract with the Department. The Department is the company's largest customer, representing 26% of the company's revenue and 74% of the LSS operating segment’s revenue in 2024.
In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department’s student aid recipients under a new Unified Servicing and Data Solution (USDS) contract which replaced its legacy Department student loan servicing contract. The USDS contract has a five-year base period (through April 2028), with 2 two-year and 1 one-year possible extensions. The Department’s total loan servicing volume of existing borrowers was allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract. Servicing under the USDS contract went live on April 1, 2024, and the company recognized revenue in accordance with this new contract beginning in the second quarter of 2024. The company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024.
Nelnet Servicing earns a monthly fee from the Department based on borrower volume its services on behalf of the Department. The USDS contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contract was primarily based on borrower status. Assuming borrower volume remains consistent under the USDS contract, revenue earned on a per borrower blended basis will decrease under the new contract versus the legacy contract. However, consistent with the legacy contract, the company expects to earn additional revenue from the Department for change requests and other support services.
Servicing FFELP loans
NDS services AGM’s FFELP student loan portfolio, as well as the portfolios of 93 third-party servicing customers as of December 31, 2024. The loan servicing activities include loan conversion activities, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliations, and claim processing. The company uses proprietary systems to manage the servicing process. These systems provide for automated compliance with most of the federal student loan regulations adopted under Title IV of the Higher Education Act of 1965, as amended (the Higher Education Act). The company's FFELP servicing customers include national and regional banks, credit unions, and various state and nonprofit secondary markets.
The discontinuation of new FFELP loan originations in July 2010 has caused and will continue to cause FFELP servicing revenue to decline as these loan portfolios are paid down.
Servicing Private Education and Consumer Loans
NDS conducts servicing activities for private education and consumer loans. Private education loans are non-federal private credit loans made to students or their family; as such, the loans are not issued or guaranteed by the federal government. Although similar in terms of activities and functions as FFELP loan servicing, private education loan servicing activities are not required to comply with the provisions of the Higher Education Act and may be more customized to individual client requirements.
The company has invested and plans to continue to invest in modernizing key technologies and services to position its consumer loan servicing business for the long-term, expanding services to include personal loan products and other consumer instalment assets.
As of December 31, 2024, NDS serviced private education and consumer loans on behalf of 39 third-party servicing customers.
Providing backup servicing for FFELP, private education, and consumer loans
NDS offers protection against unexpected business failure, or any event that stretches a third-party service provider’s resources beyond its capability to perform essential services, through backup servicing. Backup servicing for loan asset owners, investors, financiers, and other stakeholders is a way to safeguard assets and mitigate financial risk, generally in conjunction with a structured long-term financing of the assets (like an asset-backed securitization).
NDS’s backup service provides a trigger response plan with pre-built system profiles that remain on standby, ready to be utilized if a contracted asset manager or service provider cannot perform its duties. The company performs testing and maintenance against the loan transfer process each month with backup clients and certifies compliance. For a monthly fee, these arrangements require a 30-to-90-day notice from a triggering event to transfer the customer's servicing volume to the company's platform and becoming a full servicing customer. NDS offers backup servicing for FFELP, private education, and consumer loans that leverages existing servicing systems and full-service experience.
As of December 31, 2024, NDS provided backup servicing arrangements to 14 entities for more than 45 million borrowers.
Providing student loan servicing software and other information technology products and services
NDS provides student loan and guaranty servicing software, data center services, and consulting and professional services to support technology platforms, including outsourcing technology expertise and capacity to supplement development needs in organizations. The servicing software systems provided to third parties have been adapted so they can be offered as hosted servicing software solutions that can be used by third parties for guaranty servicing and to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans. The company earns a monthly fee from its remote hosting customers for each loan or unique borrower on the company's platform, with a minimum monthly charge for most contracts. As of December 31, 2024, 0.8 million borrowers were hosted on the company's hosted servicing software solution platforms.
During 2023, the company’s two Department remote hosted servicing borrowers, representing 6.0 million borrowers as of December 31, 2022, were transferred to other servicers. However, the company has executed an agreement with a third-party servicer that was awarded a USDS contract with the Department to license its servicing software to such entity and the company began earning remote hosted servicing revenue from this new customer during the second quarter of 2024. The amount of revenue earned by this new customer will depend on the number of servicing borrowers allocated by the Department to this servicer.
Providing outsourced services including contact center, processing, and administrative services
NDS provides business process outsourcing primarily specializing in contact center management. The contact center solutions and services include taking inbound calls, helping with outreach campaigns and sales, and interacting with customers through multi-channels. Processing services include application processing and verification, payment processing, credit dispute, and account management services. As of December 31, 2024, NDS provided business process outsourcing to 37 customers.
Education Technology Services and Payments
NBS is a service and technology company that operates as the following divisions: FACTS; Nelnet Campus Commerce; Nelnet Payment Services; and Nelnet International.
The majority of this segment’s customers are located in the United States; however, the company also provides services and technology as part of its Nelnet International division primarily in Australia, New Zealand, and Southeast Asia.
FACTS
NBS uses the FACTS brand in the K-12 private and faith-based education markets. FACTS provides solutions that elevate the K-12 educational experience for school administrators, teachers, and families. FACTS solutions include the following products such as financial management; education technology; and education services.
The combination of the company’s products has significantly increased the value of its offerings and allows the company to deliver a comprehensive suite of solutions to schools. FACTS provides services for nearly 12,000 K-12 schools and serves 4.5 million students and families.
Financial Management - FACTS is the market leader in educational financial management with services in the following categories such as Tuition Management Grant & Aid; Advanced Accounting; Incidental Billing; Payment Forms; and FACTS Giving.
K-12 educational institutions contract with the company to administer tuition payment plans that allow families to make recurring payments generally over six to 12 months. The company earns tuition payment plan services revenue by collecting a fee from either the institution or the payer to administer the plan. Additionally, the company may earn payment processing revenue when families make tuition payments. The company’s grant and aid assessment service helps K-12 schools evaluate and determine the amount of financial aid to disburse to the families it serves. The company earns service revenue by charging a fee for grant and aid applications processed.
The company’s advanced accounting services create efficiencies in school accounting processes with a single system that captures and tracks all tuition and fees. Incidental billing allows schools to bill families for fees that fall outside of regular tuition costs. Payment Forms allows schools to create forms for event registrations and permissions coupled with an automated way to collect payments.
The company’s giving solution is a comprehensive donation platform that streamlines donor communications, organizes donor information, and provides access to data analysis and reporting. The company earns subscription fees and payment processing revenues for these services.
Education Technology - The company’s education technology solutions include the following products such as Student Information System (SIS); Family App; Parent Alert; Application & Enrollment; School Site; Learning Management; and Teacher Observance & Assessment.
FACTS SIS automates the flow of information between school administrators, teachers, and parents and includes administrative processes such as scheduling, cafeteria management, attendance, and grade book management. Family App provides families with mobile access to the information they need, and Parent Alert allows for instant communication with families when needed. The company’s SIS, Family App, and Parent Alert are sold as a subscription service to schools.
Application & Enrollment provides a paperless experience for the admissions office and provides schools with real-time information as applications and enrollment forms are completed. The company earns a fee per completed application and/or enrollment form. FACTS School Site is a website content management system for schools to promote and share information with current and prospective families.
The company’s learning management system uses innovations such as extended enterprise, social collaborations, and gamification to expand capabilities and engage and motivate learners. In-person and online training and certification is managed with simplified reporting, tracking, and record maintenance. FACTS’ technologies allow customers to update certificate programs or create new custom learning programs to meet emerging needs. The company earns subscription and content creation fees for these services. Additionally, a fee may be earned from learners completing course offerings.
The company’s teacher observation and assessment solution helps schools and districts retain and support their teachers with evidence-based growth opportunities, using video and AI to measure ongoing improvement. The company earns a subscription fee for this service.
Education Services - The company’s education services include the following products such as Instructional Services; Coaching; Federal Funds; and Professional Development.
The company provides customized professional development and coaching services for teachers and school leaders, as well as instructional services for students experiencing academic challenges. These services provide continuous advanced learning and professional development while helping private schools identify and attain equitable participation in Title I and Title II federal education programs under Every Student Succeeds Act (ESSA). Federal pandemic-related funds under the Emergency Assistance to Non-Public Schools (EANS) program provided funding for these learning management solutions. One EANS award period ended on September 30, 2023 and the final EANS award period ended on September 30, 2024, which will have an adverse impact to education technology services revenue in future periods.
Nelnet Campus Commerce
NBS uses the Nelnet Campus Commerce brand to offer payment technologies to higher education institutions. Nelnet Campus Commerce offers the following products such as Tuition Management and Integrated Commerce.
Nelnet Campus Commerce provides service for nearly 1,000 colleges and universities and serves over 8 million students.
Tuition Management – Higher education institutions contract with the company to administer tuition payment plans that allow students to make recurring payments on either a semester or annual basis. The company earns tuition payment plan services revenue by collecting a fee from the student or school to administer the plan. Additionally, the company may earn payment processing revenue when students make tuition payments.
Nelnet Billing & Payments allows schools to send automated bills for tuition and fees, housing, parking, and other campus service offerings and allows students to safely make online payments from anywhere. Nelnet Refunds helps schools stay compliant with federal refund regulations and allows students choice in their refund method. The company earns hosting, per transaction, and credit card processing fees for its Nelnet Billing & Payments and Nelnet Refunds products. Credit card processing fees are included in payment processing revenue.
Integrated Commerce – Nelnet Campus Commerce integrated commerce solutions help schools maintain revenue sources across campuses, including in-person payments, online shopping experiences, and a mobile app. Nelnet Storefront provides online stores for departments across campuses with consolidated views and management by the business office. Nelnet Cashiering allows higher education institutions to manage all in-person payments on campus. Nelnet Checkout streamlines all payments through one system and provides a common make-a-payment experience. The company earns hosting, per transaction, and credit card processing fees for its integrated commerce solutions. Credit card processing fees are included in payment processing revenue.
Nelnet Payment Services
Nelnet Payment Services supports and provides secure payment processing services, including credit card and electronic transfers, to the other divisions of NBS and Nelnet in addition to other third-party industries and software platforms across the United States. Nelnet Payment Services offers Payment Card Industry (PCI) compliant mobile, in-person, and online solutions for customers to collect, process, and view credit card and Automated Clearing House (ACH) payments. Nelnet Payment Services earns payment processing revenues through fees for credit card and ACH transactions.
Nelnet International
NBS uses the Nelnet International brand to serve customers in the education, local government, and health care industries. Nelnet International products include services and technology that align with the similarly named product categories for FACTS and Nelnet Campus Commerce, including an integrated commerce payment platform, financial management and tuition payment plan services, and a school management platform.
Nelnet International provides its services and technology to approximately 675 schools in 69 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region.
Nelnet Financial Services
The company formally established the NFS division in 2023 intended to focus on the company’s key objective to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment by expanding its private education, consumer, and other loan portfolios while sustaining credit quality and maintaining cost-efficient funding sources to support the loan portfolios.
NFS includes the reportable operating segments of AGM and Nelnet Bank. NFS’s other operating segments that are not reportable include:
The operating results of Whitetail Rock Capital Management, LLC (WRCM), the company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary;
The operating results of Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and casualty policies;
The operating results of the company’s investment activities in real estate;
The operating results of the company’s investment in debt securities (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments.
Asset Generation and Management
AGM includes the acquisition, management, and ownership of the company's loan assets (excluding loan assets held by Nelnet Bank). Loans consist of federally insured student (originated under the FFEL Program), private education, consumer, and other loans, including investment interests therein.
Substantially all of AGM’s loan portfolio is federally insured. The company earns net interest income on its loan portfolio and generates a substantial portion of its earnings from the spread, referred to as loan spread, between the yield it receives on its loan portfolio and the associated costs to finance such portfolio.
Nelnet Bank
Nelnet Bank operates as an internet industrial bank franchise with a home office in Salt Lake City, Utah. Nelnet Bank is governed by a board of directors, a majority of the members of which are independent of the company. As a consolidated subsidiary of the company, the bank’s assets, liabilities, results of operations, and cash flows are reflected in the company’s consolidated financial statements, and the industrial bank charter allows the company to maintain its other diversified business offerings. The growth of Nelnet Bank is primarily driven by its ability to achieve loan growth by originating and purchasing loan portfolios while sustaining credit quality and maintaining funding sources to support the loan originations and portfolio purchases.
Loans
Nelnet Bank serves the private education and unsecured consumer loan markets. Nelnet Bank offers refinance private education loan options to borrowers that have higher priced private education and/or federal student loan debt and in-school private education loans to students attending higher education institutions. Private education loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, federal loans, and borrowers’ personal resources. Unsecured consumer loans consist of home improvement loans and refinance loans for consumers to consolidate credit card and other general-purpose debt. Nelnet Bank extends consumer loans to borrowers in all 50 states plus the District of Columbia.
Deposits
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 plans, Health Savings plans, retirement savings plans, Short Term Federal Investment Trust (STFIT), commercial and consumer savings, and Federal Deposit Insurance Corporation (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. The bank accepts, through various partners, non-brokered large omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. These omnibus accounts include the Educational 529 College Savings and Health Savings plans, STFIT, and FDIC sweep deposits. A network of brokers provides brokered CDs as a stable source of funding. Retail, commercial, and institutional deposits are sourced through a direct banking platform and a deposit marketplace and provide diversified funding sources.
NFS Other Operating Segments
Whitetail Rock Capital Management, LLC
Whitetail Rock Capital Management, a majority-owned subsidiary of the company, is an SEC-registered investment advisor. WRCM's core assets under management are FFELP asset-backed securities. As new FFELP loans are not being originated, WRCM is beginning to transition away from FFELP asset-backed securities to additional asset-backed asset classes (consumer and collateralized loan obligations). WRCM earns annual management fees of 10 basis points to 25 basis points for asset-backed securities under management (management fees) and a share of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory services (performance fees). WRCM earns annual management fees of five basis points for Nelnet stock under management.
Nelnet Insurance Services
The Nelnet Insurance Services operating segment leverages the company’s captive insurance companies’ capital through multiple reinsurance treaties with third parties on property and casualty policies. As of December 31, 2024, the company had 6 treaties that reinsure risk on approximately 50 different insurance programs issued by 5 carriers. The company has entered into arrangements to cede a portion of its exposure, typically 50%, to a third party. For the year ended December 31, 2024. In addition to premium revenue, the company earns investment income on its capital and cash premiums it receives, until such amounts are paid out for claims. If premiums exceed the total amount of expenses and eventual losses, the company recognizes an underwriting profit that adds to the investment income earned. Conversely, if the total amount of expenses and eventual claim losses exceed premiums, the company would recognize an underwriting loss.
Investments - Real Estate
As of December 31, 2024, the company had approximately 45 real estate investments across the United States. For the majority of its real estate investments, the company partners with a third-party co-investor that has asset-specific and/or geographic expertise of the underlying property and manages the day-to-day operations. The company’s real estate portfolio includes commercial properties, including office space, industrial, multifamily, and mixed-use properties.
Investment Portfolio - Debt Securities
The company invests excess cash in debt securities, primarily student loan and other asset-backed securities. Included in NFS’s debt securities portfolio are of the company’s own asset-backed securities (bonds and notes payable) that were issued to finance student loans that the company repurchased in the secondary market.
Corporate and Other Activities
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 and Other Activities include the following items:
Shared service 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;
Corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs;
The operating results of solar tax equity investments made by the company and administrative and management services provided by the company on solar tax equity investments made by third parties;
The operating results of Nelnet Renewable Energy, the company’s solar engineering, procurement, and construction business;
The operating results of certain of the company’s investment activities, including its investment in ALLO and early-stage and emerging growth companies (venture capital investments);
Interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions; and
Other product and service offerings that are not considered reportable operating segments.
Nelnet Renewable Energy (NRE)
The company has a solar construction company (Nelnet Renewable Energy, formerly GRNE Solar) that provides full-service engineering, procurement, and construction (EPC) services to entities including utilities, governmental bodies, commercial companies, educational institutions, multi-unit landlords, and healthcare groups on a fixed fee contract basis. In April 2024, the company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and consequently discontinued its residential solar operations.
Investments
The company makes investments to further diversify itself both within and outside of its historical core education-related businesses, including investments in ALLO and early-stage and emerging growth companies (venture capital investments).
ALLO
The company provided fiber communication services through ALLO, a former majority-owned subsidiary, until a recapitalization in 2020 resulted in a deconsolidation of ALLO from the company’s consolidated financial statements. The company continues to hold a significant investment in ALLO.
ALLO derives its revenue primarily from the sale of telecommunication services, including internet, telephone, and television services to business, governmental, and residential customers in Nebraska, Colorado, and Arizona and specializes in high-speed internet and broadband services available through its all-fiber network. As of December 31, 2024, ALLO is actively serving customers in 28 communities where fiber network construction is complete and is serving customers and building their network in 19 additional communities. The total households in these communities is approximately 490,000. As of December 31, 2024, ALLO served approximately 135,000 residential customers and had approximately 61,000 business lines, increases from approximately 109,000 and approximately 49,000 as of December 31, 2023, respectively.
The company accounts for its approximately 45% voting membership interests in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting. As of December 31, 2024, the carrying amount of the company’s voting membership interests was zero. The company also holds non-voting preferred membership interests in ALLO that earns a preferred annual return, which it accounts for as a separate equity investment.
Venture Capital Investments
The company has invested in early-stage and emerging growth companies and various funds. As of December 31, 2024, the company had investments in approximately 75 entities and approximately 35 funds. The largest investment in the company’s venture capital portfolio is Agile Sports Technologies, Inc. (doing business as Hudl). Hudl is a leading sports performance analysis company, and its software provides more than 300,000 teams across more than 40 sports and in 180 countries the insights to be more competitive.
Intellectual Property
The company owns a significant number of trademarks and service marks (Marks) to identify its various products and services.
Regulation and Supervision
NDS, which services Federal Direct Loan Program, FFELP (Federal Direct Loan Program, Federal Family Education Loan Program), private education, and consumer loans, is subject to federal and state consumer protection, privacy, and related laws and regulations. Some of the more significant federal laws and regulations include:
The Higher Education Act, which establishes financial responsibility and administrative capability requirements that govern all third-party servicers of federally insured student loans;
The Telephone Consumer Protection Act (TCPA), which governs communication methods that may be used to contact customers;
The Truth-In-Lending Act (TILA) and Regulation Z, which govern disclosures of credit terms to consumer borrowers;
The Fair Credit Reporting Act (FCRA) and Regulation V, which govern the use and provision of information to consumer reporting agencies;
The Equal Credit Opportunity Act (ECOA) and Regulation B, which prohibit discrimination on the basis of race, creed, or other prohibited factors in extending credit;
The Servicemembers Civil Relief Act (SCRA), which applies to all debts incurred prior to commencement of active military service and limits the amount of interest, including certain fees or charges that are related to the obligation or liability;
The Military Lending Act (MLA), which protects active-duty members of the military, their spouses, and their dependents from certain lending practices;
The Electronic Funds Transfer Act (EFTA) and Regulation E, which protect individual consumers engaged in electronic fund transfers (EFTs);
The Gramm-Leach-Bliley Act (GLBA) and Regulation P, which govern a financial institution’s treatment of nonpublic personal information about consumers and require that an institution, under certain circumstances, notify consumers about its privacy policies and practices;
The Federal Bankruptcy laws Title 11?of the?U.S. Code, which provides for the reduction or elimination of certain debts;
The Electronic Signatures in Global and National Commerce Act (ESIGN), which allows the use of electronic records if the consumer has affirmatively consented to such use and has not withdrawn such consent;
Laws prohibiting unfair, deceptive, or abusive acts or practices (UDAAP);
Anti-Money Laundering (AML) laws and regulations designed to detect and prevent money laundering and terrorist financing;
Regulations administered and enforced by the Office of Foreign Assets Control (OFAC), which is a U.S. government agency that administers and enforces economic and trade sanctions;
Privacy regulations that enhance privacy rights and consumer protection in various states;
Various laws, regulations, and standards that govern government contractors.
As a student loan servicer for the federal government and for financial institutions, including the company’s FFELP student loan portfolio, the company is subject to the Higher Education Act (HEA) and related laws, rules, regulations, and policies. The company is subject to oversight by the Department through the Federal Student Aid Office and the Financial Institution Oversight Service (FIOS) division. The company has designed its servicing operations to comply with the HEA, and it regularly monitors the company's operations to maintain compliance. The company monitors for potential changes to the HEA and evaluates possible impacts to its business operations.
The company’s USDS contract with the Department that became effective in April 2023 requires the company to comply with the Federal Acquisition Regulations, which regulates the procurement, award, administration, and performance of U.S. government contracts.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) established the Consumer Financial Protection Bureau (CFPB), which has broad authority to regulate a wide range of consumer financial products and services. The company's student loan servicing business is subject to CFPB supervision and oversight authority.
As a third-party service provider to financial institutions, the company is subject to the standards set by the Federal Financial Institutions Examination Council (FFIEC). FFIEC is a formal interagency body of the U.S. government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Federal Reserve Banks, the FDIC, and the CFPB, and to make recommendations to promote uniformity in the supervision of financial institutions.
Data privacy and security standards, laws, and regulations that may apply to the company, such as the National Institute of Standards and Technology (NIST) Special Publication 800-53, Payment Card Industry Data Security Standard (PCI DSS), FTC Safeguards Rule, and New York Codes, Rules, and Regulations (NYCRR) Chapter 23 part 500, among others, are becoming more rigorous. In addition, data security and breach incident response continue to be a focus for policymakers at the federal and state levels.
The company's payment processing services are subject to the EFTA and Regulation E, which govern automatic deposits to and withdrawals from deposit accounts, and customers’ rights and liabilities arising from the use of debit cards and certain other electronic banking services. The company assists bank partners with fulfilling their compliance obligations pursuant to these requirements.
The company's payment processing services are also subject to the National Automated Clearing House Association (NACHA) requirements, which include operating rules and risk management procedures to govern the use of the ACH Network. These rules are designed to make the ACH Network efficient, reliable, and secure for its members. Because the ACH Network uses a batch process, the importance of proper submissions by NACHA members is magnified. The company is also impacted by laws and regulations that affect the bankcard industry. The company is registered with the card brand payment networks as a service provider and is subject to their respective rules.
The company's higher education institution clients are subject to the Family Educational Rights and Privacy Act (FERPA), which protects the privacy of student education records. These clients disclose certain non-directory information concerning their students to the company, including contact information, student identification numbers, and the amount of students’ credit balances pursuant to one or more exceptions under FERPA. Additionally, as the company is indirectly subject to FERPA, it may not permit the transfer of any personally identifiable information to another party other than in a manner in which an educational institution may properly disclose it.
The company's contracts with higher education institution clients also require the company to comply with regulations promulgated by the Department regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV of the HEA.
Nelnet Bank is a Utah industrial bank that is regulated by the FDIC and the Utah Department of Financial Institutions (UDFI) and is subject to an extensive regulatory framework designed to ensure its safety and soundness, protect depositors, and promote compliance with applicable laws and regulations. As an originator of private education and consumer loans, and a provider of federally insured consumer deposit products, Nelnet Bank is subject to federal and state consumer protection, privacy, and related laws and regulations. In addition to having to comply with the majority of laws and regulations addressed in the Loan Servicing and Systems section, there are additional laws and regulations Nelnet Bank must follow. Nelnet, Inc. (the parent) is not a bank holding company under the Bank Holding Company Act and therefore is not subject to the federal regulations applicable to bank holding companies. Some of the more significant laws and regulations applicable to Nelnet Bank include:
Regulation W and Federal Reserve Act Sections 23A and 23B, which is designed to prevent losses to a bank resulting from affiliate engagement and transfer of a bank’s federal deposit insurance safety net to an affiliate;
Community Reinvestment Act, which encourages depository institutions to help meet the credit needs of the communities in which they operate;
Federal Trade Commission (FTC) Act, which prevents unfair or deceptive acts or practices and ensures consumer privacy (including the Telephone Sales Rule, FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, and FTC Policy Statement Regarding Advertising Substantiation);
Regulation O, which places limits and conditions on credit extensions that a bank can offer to its executive officers, principal shareholders, directors, and related interests;
Right to Financial Privacy Act, which establishes specific procedures that government authorities must follow when requesting a customer’s financial records from a bank or other financial institution;
BSA/AML, which requires the Bank’s compliance with the Bank Secrecy Act, Anti-Money Laundering (BSA/AML) laws and regulations, including the USA PATRIOT Act, which were enacted to require financial institutions in the United States to assist the U.S. government agencies with detecting and preventing money laundering and terrorist financing;
Regulation D, which establishes requirements for depository institutions regarding reserve requirements; and
Regulation DD, which requires depository institutions to provide clear and accurate disclosures about the terms, fees, and interest rates of deposit accounts to help consumers make informed decisions and compare financial products effectively.
In the United States, certain of the company’s operating segments and their financial institution clients are within the corresponding capacities in which they operate, subject to the FTC’s, CFPB’s, and the federal banking regulators’ privacy and information safeguarding requirements under the GLBA. Other federal and state laws and regulations also impact the company’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. Depending on the company operating segment and the capacities in which they operate, various other domestic federal laws with data privacy and protection requirements may also be relevant such as the FERPA and Fair Credit Reporting Act. Data privacy and data protection are also areas of increasing state legislative focus.
The company’s renewable energy business is subject to and depends upon complex federal, state, and other laws and regulations, including the Inflation Reduction Act and related guidance from the U.S. Treasury and Internal Revenue Service, which regulate and, in some instances, incentivize the production of renewable energy.
History
Nelnet, Inc. was incorporated in 1977.
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