About Nelnet

Nelnet, Inc. engages in loan servicing and education technology, services, and payment processing businesses. The company also makes investments to further diversify both within and outside of its historical core education-related businesses, including but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, 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 builds on 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. LSS LSS includes Nelnet Diversified Services (NDS); focuses on student and consumer loan servicing, loan servicing-related technology solutions, and outsourcing business services; and the brands Nelnet Diversified Solutions, Nelnet Loan Servicing, Nelnet Servicing, Firstmark Services, Sloan Servicing, GreatNet, and Nelnet Government Services. ETSP ETSP includes 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 the divisions of FACTS, Nelnet Campus Commerce, Nelnet Payment Services, and Nelnet International. AGM AGM includes Nelnet Financial Services (NFS) division; and the acquisition and management of student and other loan assets, including investment interests therein. Nelnet Bank Nelnet Bank includes the Nelnet Financial Services (NFS) division; and 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 call center, processing, and technology services. Servicing federally owned student loans for the Department Nelnet Servicing, LLC (Nelnet Servicing), a subsidiary of the company, is one of the current four private sector entities that have student loan servicing contracts with the Department to service loans that include Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department. The Department evaluates each federal loan servicer and allocates new borrower accounts on a quarterly basis based on service level and portfolio performance metrics. Nelnet Servicing earns a monthly fee from the Department for each unique borrower it services on behalf of the Department. The Department is the company's largest customer, representing 32% of its revenue and 74% of the LSS operating segment’s revenue in 2023. The company’s student loan servicing contract with the Department was scheduled to expire on December 14, 2023. In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department’s student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the New Government Servicing Contract), which will replace the existing legacy Department student loan servicing contract. The New Government Servicing Contract has a five year base period, with 2 two-year and 1 one-year possible extensions. The Department’s total loan servicing volume of more than 40 million existing borrowers will be allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract. Until servicing under the New Government Servicing Contract goes live, which is anticipated to be in April 2024, the Company will continue to earn revenue for servicing borrowers under its legacy servicing contract with the Department. Incremental revenue components earned by Nelnet Servicing from the Department under its existing contract (in addition to loan servicing revenue) include: Administration of the Total and Permanent Disability (TPD) Discharge Program: Nelnet Servicing processes applications for the TPD discharge program and is responsible for discharge, monitoring, and servicing TPD loans. Individuals who are totally and permanently disabled may qualify for a discharge of their federal student loans, and the company processes applications under the program and receives a fee from the Department on a per application basis, as well as a monthly servicing fee during the monitoring period. Nelnet Servicing is the exclusive provider of this service to the Department. Origination of Consolidation Loans: The Department outsources the origination of consolidation loans whereby servicers receive Federal Direct Loan consolidation origination volume based on borrower choice. The Department pays the company a fee for each completed consolidation loan application it processes. Nelnet Servicing services the consolidation volume it originates. Servicing FFELP Loans NDS services AGM’s FFELP student loan portfolio and the portfolios of third parties. 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. These activities are performed internally for the company's portfolio, in addition to generating external fee revenue when performed for third-party clients. 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 serviced FFELP loans on behalf of 94 third-party servicing customers as of December 31, 2023. The company's FFELP servicing customers include national and regional banks, credit unions, and various state and nonprofit secondary markets. The majority of the company's external FFELP loan servicing activities are performed under life of loan contracts, which essentially provide that as long as the applicable loan exists, the company shall be the sole servicer of that loan; however, the agreement may contain deconversion provisions where, for a fee, the lender may move the loan to another servicer. 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 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 installment assets. The company is in the process of a modernization of its private education and consumer servicing systems. Presenting a very wide market opportunity of new entrants and existing players, consumer lending is expected to be a growth area. In both backup servicing and full servicing partnerships, the company is a valuable resource for consumer lenders and asset holders as it allows for leveraged economies of scale, high compliance, and secure service to client partners. As of December 31, 2023, NDS serviced private education and consumer loans on behalf of 28 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, 2023, NDS provided backup servicing arrangements to nine entities for more than 26 million borrowers. Providing Student Loan Servicing Software and Other Information Technology Products and Services NDS provides student loan servicing software for servicing federal and private education loans, guaranty servicing software, data center services, and consulting and professional services to support the technology platforms. These proprietary software systems are used internally by the Company and/or licensed to third-party student loan holders and servicers. These software systems 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, 2023 and 2022, 0.1 million and 6.1 million borrowers, respectively, 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. These transfer decisions were not based on the company’s performance. The company has executed an agreement with a third-party servicer awarded a USDS contract with the Department to license its servicing software to such entity and the company will earn remote hosted servicing revenue from this new customer when USDS goes live, which is anticipated to be in the second quarter of 2024. Providing Outsourced Services including Call Center, Processing, and Technology 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. NDS also outsources technology expertise and capacity to supplement development needs in organizations. As of December 31, 2023, NDS provided business process and technology outsourcing to 11 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, and believes there are opportunities to increase its customer base and revenues internationally. FACTS NBS uses the FACTS brand in the K-12 private and faith-based markets. FACTS provides solutions that elevate the K-12 education experience for school administrators, teachers, and families. FACTS solutions include various products, such as financial management; school management; and learning management. The combination of the company’s financial, school, and learning management products has significantly increased the value of the company’s 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 over 4.5 million students and families. Financial Management - FACTS is the market leader in education financial management with services in various 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. School Management - The company’s school management solutions include various products, such as Student Information System (SIS); Family App; Parent Alert; Application & Enrollment; and School Site. 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. Learning Management - The company’s learning management solutions include various products, such as Learning Management System; Content Development; Professional Development and Coaching; School Evaluation & Observation; Instructional Services; and ESSA Consulting. 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 provides customized professional development and coaching services for teachers and school leaders, as well as instructional services for students experiencing academic challenges. The company also offers an innovative technology product that aids in both teacher and student evaluation. 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 the Every Student Succeeds Act (ESSA). Due to the increases in federal pandemic-related funds supporting K-12 education under the Emergency Assistance to Non-Public Schools (EANS) program, the company has experienced a spike in schools asking for services in these areas. One EANS award period ended September 30, 2023 and the final EANS award period ends September 30, 2024, which will have a significant 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 various products, such as Tuition Management; and Integrated Commerce. Nelnet Campus Commerce provides service for over 1,000 colleges and universities worldwide and serves over 8 million students and families. Tuition Management – Higher education institutions contract with the company to administer tuition payment plans that allow the student and family to make recurring payments on either a semester or annual basis. The company earns tuition payment plan services revenue by collecting a fee from either the student or family to administer the plan. Additionally, the company may earn payment processing revenue when families 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 NBS uses the Nelnet Payment Services brand to provide secure payment processing technology. Nelnet Payment Services supports and provides 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 mobile, in-person, and online solutions for customers to collect, process, and view credit card and Automated Clearing House (ACH) payments. Services rendered by Nelnet Payment Services are Payment Card Industry (PCI) compliant. 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. Nelnet International offers various products, such as Integrated Commerce; Financial Management; and School Management. Nelnet International provides its services and technology to schools in 64 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region. Integrated Commerce – Nelnet International’s Xetta platform provides commerce payment solutions to its customers. Xetta captures and centralizes financial information across organizations and integrates with core business systems to simplify workflows, expand payment capabilities, streamline reconciliation, reduce security and compliance risk, and provide reporting and analytics. The company earns subscription and consulting fees for the utilization of the Xetta platform. Financial Management – Tuition payment plans and other financial management services are provided to customers internationally using the FACTS brand and service platforms. School Management – PCSchool is a cloud-based school management platform that provides administrative, information management, financial management, and communication functions for K-12 schools in Australia and New Zealand. Outside of Australia and New Zealand, Nelnet International provides administration products under the FACTS brand. The technology and services provided are consistent with the School Management products described under the FACTS division. The company earns subscription fees and per transaction revenues for providing these services. Nelnet Financial Services The company formally established the Nelnet Financial Services 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. The creation of NFS resulted in financial results grouped and reported differently to the company’s chief operating decision maker. In addition to the reportable operating segments of AGM and Nelnet Bank being part of the NFS division, NFS’s other operating segments that are not reportable (that were previously included in Corporate and Other Activities) 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 causality policies; The operating results of the company’s investment activities in real estate; and The operating results of the company’s investment 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. Loans Nelnet Bank serves a niche market, with a concentration in 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. 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 consist of brokered certificates of deposit (CDs), retail and other savings deposits and CDs, and intercompany deposits. Retail and other savings deposits include deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trusts (STFIT), and commercial and institutional CDs. The intercompany deposits are deposits from Nelnet, Inc. (parent company) and its subsidiaries and include a pledged deposit from Nelnet, Inc., as required under a Capital and Liquidity Maintenance Agreement with the 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. 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. Accordingly, 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 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. WRCM earns annual management fees of five basis points for Nelnet stock under management. Nelnet Insurance Services The company launched a wholly-owned captive insurance subsidiary in 2013 to provide insurance to Nelnet, Inc. and its subsidiaries. Nelnet Insurance Services, the company’s operating segment established to include all its insurance products, entered into multiple reinsurance treaties with third parties on property and casualty policies in 2022 to leverage the captive insurance company’s capital. Reinsurance is an arrangement under which the company has agreed to indemnify an insurance company, the ceding company, for a portion of the insurance and/or investment risks underwritten by the ceding company. As of December 31, 2023, the company had five treaties that reinsure risk on roughly 70 different insurance programs issued by four carriers. The company has also entered into arrangements to cede a portion of its exposure, typically 50%, to a third party. Investments - Real Estate As of December 31, 2023, the company has approximately 40 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 certain 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; The operating results of Nelnet Renewable Energy, which include solar tax equity investments made by the company, administrative and management services provided by the company on tax equity investments made by third parties, and solar construction and development; 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); and Other product and service offerings that are not considered reportable operating segments. Nelnet Renewable Energy As of December 31, 2023, the company had invested in tax equity investments in renewable energy solar partnerships to support the development and operations of solar projects throughout the country. In addition to making these tax equity investments for the company’s own portfolio, the company is syndicating these investments with co-investors with similar tax attributes. In addition to solar tax equity investments, the company has a strategy to own solar energy project assets. These assets provide long-term, predictable, and recurring cash flows based on energy production and energy sales to entities, such as utilities, governmental bodies, commercial companies, educational institutions, multi-family landlords, and health care groups. Accordingly, the company has begun to execute a multi-faceted approach to construct, finance, own, and operate these assets. As part of this strategy, on July 1, 2022, the company acquired 80% of the ownership interest of two subsidiaries of GRNE Solutions, LLC named GRNE-Nelnet, LLC (GRNE) and ENRG-Nelnet, LLC (ENRG) (collectively referred to as GRNE Solar). GRNE is a solar construction company and ENRG is a solar development company. During 2023, the company rebranded GRNE Solar to gain greater leverage with its overall brand, Nelnet Renewable Energy. The company’s solar construction company provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities and contracts to build solar on a fixed fee basis. The development company performs services such as site control, permitting, execution of power purchase agreements, utility interconnections, construction oversight, project finance, and other ancillary services to enable a successful solar photovoltaic project. 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, 2023, ALLO served 34 communities and is currently in the process of building their network in 11 communities. The total households in these communities is approximately 440,000. As of December 31, 2023, ALLO served more than 109,000 residential customers and had almost 49,000 business lines, increases from more than 90,000 and nearly 41,000 as of December 31, 2022, 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, 2023, the carrying amount of the company’s voting membership interests was $10.7 million. The company also holds non-voting preferred membership interests in ALLO, which it accounts for as a separate equity investment. The non-voting preferred membership interests of ALLO earns a preferred annual return of 6.25% that will increase to 10.0% in April 2024. The accrued preferred return capitalizes to preferred membership interests annually on each December 31. Venture Capital Investments The company has invested in early-stage and emerging growth companies and various funds. As of December 31, 2023, the company had investments in 91 entities and 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 230,000 teams across 40 sports and in 150 countries the insights to be more competitive. Intellectual Property The company owns numerous trademarks and service marks (Marks) to identify its various products and services. As of December 31, 2023, the company had a significant number of registered Marks. 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 California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), which enhances the privacy rights and consumer protection for residents of California; 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; and 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 New Government Servicing Contract that became effective April 24, 2023, requires it 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. The CFPB has authority to draft new regulations implementing federal consumer financial protection laws, to enforce those laws and regulations, and to conduct examinations and investigations of the company's operations to determine compliance. 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 continues to be a focus for policymakers at the federal and state levels. NBS provides tuition management services, payment processing solutions, and school information software for K-12 schools and tuition management services and payment processing solutions for higher education institutions. The company also provides payment technologies and payment services for software platforms, businesses, and nonprofits beyond the K-12 and higher education space. As a service provider that takes payment instructions from institutions and their constituents and sends them to bank partners, the company is directly or indirectly subject to a variety of federal and state laws and regulations. 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 it 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). As an originator of private education and consumer loans, 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. Some of the more significant laws and regulations applicable to Nelnet Bank include: Regulation W and Federal Reserve Act Sections 23A and 23B, which prevents 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; and BSA/AML, which specifies the bank’s commitment to compliance with the Bank Secrecy Act, Anti-Money Laundering (BSA/AML) laws and regulations, including the USA PATRIOT Act, that were enacted to require financial institutions in the United States to assist U.S. government agencies with detecting and preventing money laundering and terrorist financing. Regulation D, the Truth in Savings Act (reserve requirements), and Regulation DD (disclosure of deposit terms to customers) will be applicable to Nelnet Bank once consumer deposit products are launched, which is tentatively scheduled for the third quarter of 2024. 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 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 in significant part upon complex federal, state, and other laws and regulations, including the Inflation Reduction Act, which regulate and, in some instances, incentivize the production of renewable energy. History Nelnet, Inc. was founded in 1978. The company was incorporated in 1977.