NELNET INC (NNI) Business

ITEM 1. BUSINESS

Overview

Nelnet is an operating holding company with primary businesses in consumer lending, loan servicing, payments, and technology-enabled services, many of which are focused on serving customers in the education sector. The Company conducts these activities both directly and through its wholly owned and majority-owned subsidiaries, and actively manages and operates its businesses on an integrated basis. Nelnet’s largest operating and technology platforms support loan servicing and education-related technology and payment solutions. A significant portion of the Company’s revenue is derived from net interest income earned on a portfolio of federally insured student loans, a substantial portion of which is serviced by the Company.

The Company has also broadened its operating business mix both within and beyond its historical education-focused activities. These businesses include banking and other financial services conducted through the Company’s bank and other subsidiaries, asset management and related customer-facing servicing, real estate development and management, reinsurance operations, renewable energy development, and selected strategic interests in early-stage, emerging growth, and other operating enterprises. The Company actively manages such businesses and holds interests in them for strategic and operational purposes.

The Company earns substantially all of its revenue from external customers in the United States, and substantially all of its long-lived assets are located in the United States.

The Company was formed as a Nebraska corporation in 1978 to service federal student loans for two local banks. 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.

The Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act of 2010”) discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program. This law does not alter or affect the terms and conditions of existing FFELP loans.

Subsequent to the Reconciliation Act of 2010, the Company no longer originates FFELP loans. However, a significant portion of the Company's income continues to be derived from its existing FFELP student loan portfolio. As of December 31, 2025, the Company had an $7.6 billion FFELP loan portfolio. Interest income on the Company's existing FFELP loan portfolio will decline over time as the portfolio is paid down. To reduce its reliance on interest income from FFELP loans, the Company has expanded its services and products. This expansion has been accomplished through internal growth and innovation as well as acquisitions. The Company is also actively expanding its private education and consumer loan portfolios, or residual interests therein, and as part of this strategy launched Nelnet Bank in 2020. In addition, the Company has been servicing federally owned student loans for the Department since 2009.

Operating Segments

The Company has four reportable operating segments as summarized below.

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

•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, and businesses in the United States and internationally

•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

•Includes the acquisition and management of student and other loan assets, including residual 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

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The NFS division has other operating segments that are not reportable as further described below under “Nelnet Financial Services - NFS Other Operating Segments.” All 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”). A more detailed description of each of the Company’s operating segments and Corporate is provided below.

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 private education and consumer loans

•Providing student loan servicing software and other information technology products and services

•Providing outsourced services including contact center, processing, and administrative services

As of December 31, 2025, the Company serviced $486.2 billion of loans for 13.2 million borrowers. See Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) – “Loan Servicing and Systems Operating Segment – Results of Operations – Loan Servicing Volumes” for additional information related to the Company's servicing volume.

Recent Development

On February 2, 2026, the Company acquired a Canadian student loan servicing business for CAD $130.5 million (USD $95.7 million). The acquired business (“NDS Canada”) delivers technology-enabled student loan servicing for governments and financial institutions, managing 2.7 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada will be included in the Loan Servicing and Systems reportable operating segment.

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. As of December 31, 2025, the Company was servicing $434.5 billion of student loans for 11.4 million borrowers for the Department. The Department is the Company's largest customer, representing 21% of the Company's revenue and 68% of the LSS operating segment’s revenue in 2025.

Nelnet Servicing provides continued servicing capabilities for the Department’s student aid recipients under a Unified Servicing and Data Solution (USDS) contract. The USDS contract has a five-year base period (through April 2028), with 2 two-year and 1 one-year possible extensions. Servicing under the USDS contract went live on April 1, 2024 and the Company recognized revenue in accordance with this 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 it 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. The Company earns less revenue from the Department on a per-borrower blended basis under the new USDS servicing contract as compared with the legacy servicing contract. However, consistent with the legacy contract, the Company earns additional revenue from the Department for change requests and other support services.

Servicing FFELP loans

NDS services the Company’s FFELP student loan portfolio, as well as the portfolios of 61 third-party servicing customers as of December 31, 2025. 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. NDS 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.

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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; 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. As of December 31, 2025, NDS serviced private education and consumer loans on behalf of 38 third-party servicing customers. Private education loan servicing volume has increased in recent periods as a result of the conversion of third-party portfolios to the Company’s platform, as discussed in the MD&A – “Loan Servicing and Systems Operating Segment - Results of Operations.”

Providing backup servicing for private education and consumer loans

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. As of December 31, 2025, NDS provided backup servicing arrangements to 14 entities for more than 52 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. 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. 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, 2025, 2.9 million borrowers were hosted on the Company's hosted servicing software solution platforms.

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.

Competition

We believe the Company's scalable servicing platforms allow it to provide compliant, efficient, and reliable service at a low cost, giving the Company a competitive advantage over others in the industry. The Company has segmented its private education loan servicing on a distinct platform, created specifically to meet the needs of private education student loan borrowers, their families, the schools they attend, and the lenders who serve them. This ensures access to specialized teams with a dedicated focus on servicing these borrowers.

NDS is one of the leaders in the development of servicing software for guaranty agencies, consumer and private education loan programs, the Federal Direct Loan Program, and FFELP student loans. Many student loan lenders and servicers utilize the Company's software either directly or indirectly. We believe the investments NDS has made to scale its systems and to create a secure infrastructure to support the Department's servicing volume and requirements increase its competitive advantage as a long-term partner in the loan servicing market.

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

•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.

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See the MD&A – “Education Technology Services and Payments Operating Segment – Results of Operations” for an overview of the seasonality of the business in this operating segment.

A more detailed description of each NBS division is provided below. For a presentation of NBS revenue disaggregated by service offering into tuition payment plan services revenue, payment processing revenue, and education technology services revenue, see the MD&A – “Education Technology Services and Payments Operating Segment – Results of Operations – Summary and Comparison of Operating Results – Education technology services and payments revenue.” In the discussion below, revenues from the described products and services are included in education technology services revenue in such presentation, unless specifically indicated otherwise.

FACTS

NBS uses the FACTS brand in the K-12 private and faith-based education markets. FACTS solutions include the following products: financial management; education technology; and education services.

The FACTS brand allows the Company to deliver a comprehensive suite of solutions to schools. FACTS provides services for nearly 12,000 K-12 schools. FACTS generated $312 million and $308 million in revenue for the years ended December 31, 2025 and 2024, respectively.

Financial Management - FACTS is the market leader in educational financial management with services in the following categories: tuition payment plans; financial aid management; 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, which is included in payment processing revenue. The Company’s financial aid management services, which include grant and aid assessments, help K-12 schools evaluate and determine the amount of financial aid to disburse. 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 earns hosting fees for its advance accounting services and per transaction fees for its incidental billings and Payment Forms products.

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: Student Information System (SIS); Family App; Parent Alert; application and enrollment; website services; learning management; and teacher observance and 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. FACTS SIS, Family App, and Parent Alert are sold as a subscription service to schools.

Application and 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.

Website services 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 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.

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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: professional development; coaching; instructional services; and federal funds.

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.

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: tuition management and integrated commerce.

Nelnet Campus Commerce provides service for more than 1,200 colleges and universities and serves over 8 million students. Nelnet Campus Commerce generated $148 million and $141 million in revenue for the years ended December 31, 2025 and 2024, respectively.

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 either the student or school to administer the plan. Additionally, the Company may earn payment processing revenue when students make tuition payments, which is included in payment processing revenue.

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. Nelnet Cashiering allows higher education institutions to manage all in-person payments on campus. Nelnet Checkout streamlines all payments through one system. 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 delivers secure payment processing solutions for the other divisions of NBS and certain Nelnet businesses, as well as for third-party industries and software platforms nationwide. 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 Payment Services generated $64 million and $59 million in revenue for the years ended December 31, 2025 and 2024, respectively.

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 more than 600 schools in almost 70 countries, with the largest concentrations in Australia, New Zealand, and the Asia-Pacific region. Nelnet International generated $9 million in revenue for each of the years ended December 31, 2025 and 2024, respectively.

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Competition

The Company is the largest provider of tuition management and financial needs assessment services to the private and faith-based K-12 market in the United States. Competitors include financial institutions, tuition management providers, financial needs assessment providers, accounting firms, and a myriad of software companies.

In the higher education market, the Company targets business offices at colleges and universities. In this market, the primary competition is from a relatively small number of campus commerce and tuition payment providers, as well as solutions developed in-house by colleges and universities.

The Company believes its principal competitive advantages are (i) the customer service it provides to institutions and consumers, (ii) the technology provided with the Company's service, and (iii) the Company's ability to integrate its technology with the institution clients and their third-party service providers. The Company believes its clients select products primarily based on technological features, functionality, and the ability to integrate with other systems, but price and service also impact the selection process.

Nelnet Financial Services

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:

•Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and casualty policies

•Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary

•The Company’s ownership and activities in real estate

•The Company’s ownership and management of its bond portfolio (primarily student loan and other asset-backed securities)

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, private education, consumer, and other loans, including residual interests therein. As of December 31, 2025, AGM's loan portfolio was $8.7 billion.

The majority of AGM’s loan portfolio (85.5% as of December 31, 2025) 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. See the MD&A - "Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Spread Analysis,” for further details related to loan spread. In addition, all costs and activity associated with managing the portfolio, such as servicing of the assets, debt maintenance, and administration costs, are included in this reportable operating segment. AGM also derives revenue by providing loan administration services to third-party loan portfolio owners.

Origination and acquisition

The Company is actively acquiring consumer and other non-FFELP loans or residual interests therein (see below under “Beneficial interest in loan securitizations”) and plans to expand these portfolios to diversify its asset base. During 2025, the Company purchased $629.7 million of consumer and other non-FFELP loans (excluding Pay Later receivables as discussed below). AGM's competition for the purchase of loan portfolios includes banks, investment funds, and other finance companies.

During 2025, the Company began to purchase Pay Later receivables via a forward flow agreement from an unrelated third party. Pay Later receivables enable consumers to purchase goods or services at the time of the transaction and split their purchase into installment payments. The Company purchases Pay Later receivables at a discount, and accretes the discount into interest income over the estimated life of the receivable. As of December 31, 2025, the balance of Pay Later receivables was $744.2 million.

Beneficial interest in loan securitizations

AGM has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "other investments and notes receivable, net" on the Company's consolidated balance sheets. The Company’s partial ownership in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. These residual interests were

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acquired by AGM or have been received in consideration of AGM selling portfolios of loans to unrelated third parties who securitized such loans. As of the latest remittance reports filed by the various trusts prior to or as of December 31, 2025, the Company's ownership correlates to approximately $1.83 billion of loans included in these securitizations.

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 cost-efficient funding sources to support the loan originations and portfolio purchases. Asset growth at Nelnet Bank has also been achieved via purchases of high-quality investments (primarily student loan and consumer asset-backed securities and collateralized loan obligations). As of December 31, 2025, Nelnet Bank’s investment portfolio was $1.08 billion.

Loans

Nelnet Bank offers refinance and in-school private education loan options. Unsecured consumer loans consist of home improvement loans and refinance loans for consumers to consolidate debt. Nelnet Bank also owns a portfolio of federally insured student loans. Nelnet Bank extends consumer loans to borrowers in all 50 states plus the District of Columbia. As of December 31, 2025, Nelnet Bank’s loan portfolio was $957.6 million.

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), and Federal Deposit Insurance Corporation (FDIC) sweep deposits. The intercompany deposits are deposits from Nelnet, Inc. (parent company) and its subsidiaries and include a pledged deposit of $40.0 million from Nelnet, Inc., as required under a Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school. 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 which provide diversified funding sources. As of December 31, 2025, Nelnet Bank had $1.76 billion of deposits, of which $93.8 million were intercompany deposits. All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.

NFS Other Operating Segments

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 primarily property and casualty policies. As of December 31, 2025, the Company had 5 treaties that reinsure risk on approximately 80 different insurance programs issued by 5 carriers. The Company has entered into arrangements to cede a portion (33% - 50%) of its exposure to a third party for certain treaties. For the year ended December 31, 2025, the Company recognized $107.5 million in reinsurance premiums (net of $76.3 million retroceded to a third party). 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 claim 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.

Whitetail Rock Capital Management, LLC

Whitetail Rock Capital Management, a subsidiary of the Company, is an SEC-registered investment advisor. As of December 31, 2025, WRCM had $3.3 billion in assets under management for third-party customers, consisting of student loan asset-backed securities ($2.3 billion), collateralized loan obligation securities ($0.1 billion), and Nelnet stock ($0.9 billion) - primarily shares of Class B common stock. 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

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asset-backed asset classes. 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 securities being called or sold prior to the position’s expected modeled maturity (performance fees). WRCM earns annual management fees of five basis points for Nelnet stock under management. During 2025, WRCM earned $5.4 million and $1.0 million in management and performance fees, respectively.

Real estate

As of December 31, 2025, the Company held ownership interests in 55 real estate properties across the United States, with a carrying value of $233.2 million, which are accounted for under the equity method of accounting. The Company has contributed $253.4 million of capital related to its ownership of these properties. In most instances, the Company partners with third parties that possess asset-specific and/or geographic expertise and are responsible for the day-to-day operations of the underlying properties. The Company’s real estate portfolio consists of commercial properties, including office, industrial, multifamily, and mixed-use assets.

Bond portfolio

The Company owns and manages a bond portfolio, primarily student loan and other asset-backed securities. Included in NFS’s debt securities portfolio are $292.2 million (par value) 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. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company’s consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. As of December 31, 2025, the par value and fair value of the Company’s debt securities held in the NFS division, including its own asset backed securities, was $561.3 million and $532.9 million, respectively. Historically, the Company has entered into repurchase agreements (debt), the proceeds of which are collateralized by a portion of the asset-backed securities (bond portfolio). There was no debt outstanding in 2025.

Risk management

Credit risk

AGM and Nelnet Bank's portfolio of federally insured student loans is subject to minimal credit risk, as these loans are guaranteed by the Department at levels ranging from 97% to 100%. Such guarantees are further discussed in Risk Factors - “If we fail to comply with the requirements to maintain the federal guarantees for the FFELP loans we service for us and for third parties, we may lose our guarantees or incur penalties.”

AGM and Nelnet Bank’s private education, consumer, and other loans are unsecured, with neither a government nor a private insurance guarantee. Accordingly, the Company bears the full risk of loss on these loans if the borrower and co-borrower, if applicable, default, which increases the Company’s exposure to credit risk.

In addition, AGM’s partial ownership in loan securitizations (residual interests) grants AGM the right to receive the corresponding percentage of cash flows generated by the securitization. The cash flows generated from the securitizations are highly subject to credit risk arising from borrower defaults.

For additional information on the Company’s credit risk, see “Risk Factors - Loan Portfolio - Credit risk - loans and Credit risk - beneficial interest in loan securitizations.”

Interest rate risk

Since the Company generates a significant portion of its earnings from its loan spread, the interest rate sensitivity of the Company's balance sheet is very important to its operations. The current and future interest rate environment can and will affect the Company's interest income and net income. The Company is exposed to market risk through the management of the Company’s loan and investment portfolios. These activities are closely tied to those related to the management of the Company’s funding and debt. Interest rate risk is further outlined in the MD&A - “Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Spread Analysis” and Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”

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Corporate

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 includes the following items:

•Shared service activities related to 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, innovation initiatives, and other holding company organizational costs

•The operating results of the Company’s participation in renewable energy solar developments through tax equity structures 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 Company sold its ownership interest in Nelnet Renewable Energy during the fourth quarter of 2025.

•The operating results of certain of the Company’s investment activities, including its ownership in ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as “ALLO”) and early-stage and emerging growth companies (venture capital)

•Interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions

•Other product and service offerings that are not considered reportable operating segments

Renewable Energy Solar Developments

The Company has equity interests in partnerships that make solar tax equity contributions in entities that promote renewable energy sources. As of December 31, 2025, the Company has contributed $355.6 million, and third-party partners have contributed $416.0 million, in tax equity to renewable energy solar partnerships that support the development and operations of solar, fuel cell, and battery storage projects across the United States. These contributions provide a federal income tax credit under the Internal Revenue Code, currently equaling 30% to 70% of the eligible project cost, with the tax credit available when the project is placed in service. The Company is then allowed to reduce its tax estimates paid to the U.S. Treasury based on the credits earned. In addition to the credits, the Company structures the partnerships to receive quarterly distributions of cash from the operating earnings of the solar project for a period of at least five years after the project is placed in service. After that period, the contractual agreements typically provide for the Company’s entire interest in the projects to be sold at the fair market value of the discounted forecasted future cash flows allocable to the Company. Given the relatively modest amount of capital funded to solar developments at any point in time, together with the Company’s expertise in underwriting these assets, management believes this activity represents an effective use of capital within its broader capital deployment strategy.

In addition to the Company’s tax equity contributions to solar partnerships, the Company is syndicating a portion of such contributions with third-party partners with similar tax attributes. The Company has developed expertise in sourcing, underwriting, closing, and managing these projects and believes it has strong relationships with solar developers throughout the country. The Company contributes at least 10% of the tax equity requirements for each development, with its syndication partners taking the remaining share. The Company earns upfront management fees and performance fees from third-party partners which are typically five to six percent of the capital contributed by the third-party partner, in the aggregate. These fees are recognized as income over the duration of the investment (typically five years). The Company contributed a total of $147.9 million in tax equity during 2025 on behalf of its third-party partners. Due to the management and control of each of these partnerships, such partnerships are consolidated on the Company’s consolidated financial statements, with the third-party partner’s portion being presented as noncontrolling interests. In addition, during 2025, third-party syndication partners contributed $32.8 million directly into tax equity solar partnerships which are not included in the Company’s consolidated financial statements; however, these contributions are managed by the Company and the Company receives management and performance fees on such activity. The Company also provides consulting services to developers of solar projects and earns a contingent fee at time of monetization of the tax credit by the developer. The fee is based on the increase in economic benefits realized by the project. In 2025, the Company recognized $13.1 million in revenue for such consulting services.

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Nelnet Renewable Energy (NRE)

NRE was the Company’s solar construction subsidiary, providing full‑service engineering, procurement, and construction (EPC) services. The Company entered the EPC business through its acquisition of GRNE Solar in July 2022. Following the acquisition, NRE experienced low and, in certain cases, negative margins on projects. In addition, changes in legislation reducing clean energy tax incentives, tariff uncertainty, and rising construction costs adversely affected revenue and net income. As a result of these factors, the Company sold NRE in November 2025. For the year ended December 31, 2025, NRE generated a net loss before taxes of $57.5 million. Although the Company retained a limited number of construction contracts to complete following the sale, the Company does not expect the operating results from such contracts to be significant in future periods.

Business diversification

The Company has broadened its business mix, both within and beyond its historical education-focused activities, including active engagement and ownership interests in ALLO and early-stage and emerging growth companies (venture capital).

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 partial ownership in ALLO. In June 2025, ALLO executed a financing transaction and used the proceeds to redeem membership interests from certain members in ALLO, including Nelnet (the "Transaction"). As part of the Transaction, ALLO redeemed all of Nelnet's outstanding preferred membership interest, including the preferred return accrued on such membership interest. In addition, ALLO redeemed more than 50% of Nelnet's voting membership interest in ALLO. At the closing of the Transaction, Nelnet received cash proceeds of $410.9 million from ALLO related to these redemptions and recognized a pre-tax gain of $175.0 million, attributable to the redemption of the voting membership interest.

As a result of the Transaction, Nelnet's ownership of voting membership interest in ALLO decreased from 45% to 27%, which the Company continues to account for under the Hypothetical Liquidation at Book Value (HLBV) method of accounting. As of December 31, 2025, the carrying amount of the Company’s voting membership interest in ALLO was $0. The Company believes the fair value of its voting membership interest in ALLO is significantly greater than its carrying value.

ALLO derives its revenue primarily from the sale of telecommunication services, including internet, telephone, and television services to business, governmental, and residential customers. As of December 31, 2025, ALLO served approximately 157,000 residential customers and had approximately 74,000 business lines, increases from approximately 135,000 and approximately 61,000 as of December 31, 2024, respectively. For the year ended December 31, 2025, ALLO recognized approximately $260 million in revenue. ALLO uses debt to fund a significant portion of its operations and capital needs. As of December 31, 2025, ALLO had $1.41 billion of debt outstanding, an increase from $1.14 billion as of December 31, 2024.

Venture capital

The Company holds partial ownership interests in early-stage and emerging growth companies, as well as in various funds. As of December 31, 2025, the venture capital team within the Corporate segment manages a diversified portfolio comprising partial ownership in approximately 110 operating companies and 45 funds, with an aggregate carrying value of $326.9 million. The largest position in the Company’s venture capital portfolio is Hudl, Inc. (“Hudl”). As of December 31, 2025, the Company’s carrying value of Hudl was $172.5 million. The Company accounts for its ownership in Hudl using the measurement alternative method (at cost, plus or minus changes resulting from observable price changes in orderly transactions). The Company believes the fair value of its ownership in Hudl is significantly greater than its carrying value. Hudl is a leading sports performance analysis company, and its software provides more than 325,000 teams across more than 40 sports and in 140 countries the insights to be more competitive. David S. Graff, a member of the Company’s Board of Directors, is a co-founder, the chief executive officer, and a director of Hudl.

Regulation and Supervision

The Company’s businesses operate in highly regulated environments and are subject to extensive federal, state, and international laws and supervision. These requirements affect nearly all aspects of operations, including loan servicing, payments, data privacy and security, banking, insurance, and government contracting. Failure to comply with applicable laws or regulatory expectations could result in fines, penalties, increased compliance costs, contractual remedies, restrictions on business activities, reputational harm, or the loss of licenses, approvals, or government programs. Regulatory requirements continue to evolve and may materially increase the Company’s operating costs or limit its ability to offer products and services.

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Loan Servicing and Systems

The Company’s loan servicing operations are subject to a broad framework of federal and state consumer protection, financial services, privacy, and sanctions laws. These include laws governing student loans, consumer lending disclosures, fair lending, credit reporting, electronic communications and payments, military borrower protections, bankruptcy, anti‑money laundering, economic sanctions, and prohibitions on unfair, deceptive, or abusive acts or practices, as well as comparable state laws and licensing regimes.

As a servicer of federally insured and guaranteed student loans, the Company is subject to the Higher Education Act (HEA) and related regulations and oversight by the Department. The HEA regulates all material aspects of the federally insured student loan program. Non‑compliance could result in fines, remediation and legal costs, loss of insurance and related federal guarantees, suspension or termination of the right to participate in federal programs, and reputational harm. Although the HEA has not been formally reauthorized since 2008, it continues to be extended, and the Company monitors legislative and regulatory developments for potential operational impacts.

The Company’s servicing contracts with the Department also require compliance with applicable provisions of the Federal Acquisition Regulation governing government contractors.

The Company’s servicing activities are subject to supervision and enforcement by the Consumer Financial Protection Bureau (CFPB), which has authority to examine operations, issue regulations, enforce consumer financial protection laws, and impose fines or restitution. State attorneys general and regulators may also bring enforcement actions under state consumer protection and licensing laws, which may differ from or exceed federal standards and could limit the Company’s ability to operate uniformly across jurisdictions.

As a third‑party service provider to financial institutions, the Company is subject to oversight expectations established by the Federal Financial Institutions Examination Council (FFIEC).

The Company is also subject to increasingly stringent data privacy and information security requirements under federal and state law and industry standards. Actual or perceived failures in data protection or incident response could result in regulatory actions, litigation, remediation and legal costs, fines, reputational harm, and increased oversight.

Many states require loan servicers to obtain licenses and submit to examinations and ongoing supervision. The rapidly evolving state regulatory landscape increases compliance complexity and costs and creates risk of inconsistent or conflicting requirements. Failure to comply with applicable state laws could result in loss of licenses, enforcement actions, contractual breaches, and litigation.

Canadian Operations

Following the February 2, 2026 acquisition of NDS Canada, the Company is subject to Canadian federal and provincial laws governing student financial assistance, privacy, foreign investment, competition, and anti‑money laundering. These include the Canada Student Loans Act, Canada Student Financial Assistance Act, federal and provincial privacy frameworks (including Canada’s Personal Information Protection and Electronic Documents Act and Québec’s Law 25), and oversight by agencies such as the Financial Transactions and Reports Analysis Centre of Canada and the Office of the Superintendent of Financial Institutions. Compliance with these regimes increases operational complexity, and non‑compliance could result in regulatory actions, litigation, remediation and legal costs, fines, heightened oversight, reputational harm, and service disruption.

Education Technology Services and Payments

The Company’s education technology and payment processing services are subject to federal and state laws governing electronic payments, consumer disclosures, and financial transactions, including requirements applicable to ACH and card networks. Contracts with clients and bank partners require compliance with these frameworks.

The Company’s higher education clients are subject to laws protecting student information, including the Family Education Rights and Privacy Act (FERPA) and, in certain cases, the Gramm-Leach-Bliley Act (GLBA). The Company’s handling of student and financial data must comply with these requirements and applicable contractual restrictions. Violations could result in loss of access to client data, remediation and legal costs, fines, and reputational harm.

The Company also provides services involving personal information of minors and is subject to federal and state children’s privacy laws, including the Children’s Online Privacy Protection Act, which impose heightened compliance obligations. In addition, services provided to clients with international operations may be subject to foreign privacy regimes, including the European Union’s General Data Protection Regulation (GDPR) and similar laws with extraterritorial application.

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Regulatory scrutiny of tuition payment plans and other educational financing products has increased at both the federal and state level. Changes in law or regulatory interpretation could affect product design and availability, disclosures, and client participation.

Nelnet Financial Services

Nelnet Bank

Nelnet Bank is a Utah‑chartered industrial bank regulated by the FDIC and the Utah Department of Financial Institutions (UDFI). It is subject to extensive federal and state banking laws designed to ensure safety and soundness, consumer protection, and compliance with anti‑money laundering and privacy requirements. Deposits are insured by the FDIC up to applicable limits.

As an FDIC‑insured institution, the Bank is subject to capital requirements, risk management standards, deposit insurance assessments, restrictions on brokered deposits, and periodic examinations. While the Bank is not currently subject to statutory stress testing requirements, it conducts internal stress testing and provides results to regulators upon request.

As a Utah industrial bank, the Bank is also subject to state supervision, capital and surplus requirements, lending limits, governance standards, and examination and reporting obligations.

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.

Reinsurance

The Company’s reinsurance operations are conducted through Utah‑domiciled captive insurance companies regulated by the Utah Insurance Department. The captives are subject to licensing, capital and surplus requirements, regulatory examinations, and ongoing reporting obligations. Failure to comply with applicable insurance laws or regulatory expectations could restrict operations and require additional capital.

Corporate and Other Regulatory Matters

Across its businesses, the Company is subject to an expanding and increasingly complex set of domestic and international data privacy and information security laws. These include requirements under the GLBA, the FERPA, the Fair Credit Reporting Act, state comprehensive privacy laws, and international regimes such as the GDPR. These laws impose obligations relating to transparency, data governance, security safeguards, and breach response, and provide for significant penalties and extraterritorial enforcement.

The Company’s renewable energy business is also subject to evolving federal, state, and local laws and regulations, including those that incentivize renewable energy production. Changes in these laws could affect project economics and operating results.

Intellectual Property

The Company owns a significant number of trademarks and service marks (“Marks”) to identify its various products and services. The Company actively asserts its rights to these Marks when it believes infringement may exist. The Company believes its Marks have developed and continue to develop strong brand-name recognition in the industry and the consumer marketplace. The Company owns many copyright-protected works, including its various computer system codes and displays, websites, and marketing materials. The Company also has trade secret rights to many of its processes and strategies and its software product designs. The Company's software products are protected by both registered and common law copyrights, as well as strict confidentiality and ownership provisions placed in license agreements, which restrict the ability to copy, distribute, or improperly disclose the software products. The Company also has adopted internal procedures designed to protect the Company's intellectual property.

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Human Capital Resources

The Company’s associates are critical to its success, and the executive team puts significant focus on human capital resources. In addition, the executive team regularly updates the Company’s board of directors and its committees on the operation and status of human capital trends and activities.

Headcount data

Total associate headcount as of December 31, 2025, follows:

None of the Company’s associates are covered by collective bargaining agreements. The Company is not involved in any material disputes with any of its associates, and the Company believes that relations with its associates are good.

Employee recruitment, engagement, and retention

The Company works diligently to attract the best talent from a broad range of sources that are expected to meet the current and future demands of its businesses, and has established relationships with trade schools, universities, professional associations, and industry groups to proactively attract talent.

In 2025, the Company conducted an associate culture survey that resulted in an overall engagement score of 79 out of 100, improving from the prior survey conducted in 2023, which recorded a score of 74. The Company’s management team collected all the feedback and continues to focus on making associate-suggested changes so the Company becomes an even better place to work. The Company will conduct its next associate culture survey in the third quarter of 2026.

For 2025, associate voluntary turnover was 14%, a decrease from 15% in 2024 and 24% in 2023. The average associate has eight years of tenure.

Talent, development, and training

The Company’s talent strategy is focused on attracting the best talent from a broad range of sources, recognizing and rewarding associates for their performance, and continually developing, engaging, and retaining associates.

The Company is committed to the continued development of its people. Strategic talent reviews and succession planning occur on a planned cadence annually across all business areas. The executive team convenes meetings with senior leadership and the board of directors to review top enterprise talent.

Training is provided in a number of formats to accommodate the learner’s style, location, and technological knowledge and access, including instructor-led courses and hundreds of online courses in the Company’s learning management system. The Company also offers tuition assistance to associates for degree programs, non-degree seeking individual classes, or certificate programs.

Competitive pay, benefits, and wellness

The general compensation philosophy of the Company, as an organization that values the long-term success of its shareholders, customers, and associates, is that the Company will pay fair, competitive, and equitable compensation designed to encourage focus on the long-term performance objectives of the Company and is differentiated based on both the individual’s performance and the performance of their respective business segment. In carrying out this philosophy, the Company structures its overall compensation framework with the general objectives of encouraging equity ownership in the Company, savings, wellness, productivity, and innovation. In addition, total compensation is intended to be market competitive, internally consistent, and aligned with the philosophy of a performance-based organization. The Company provides a comprehensive benefits package, opportunities for retirement savings, and a robust wellness program.

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Culture and values

The Company believes acting ethically and responsibly is the right thing to do, and it embraces core values of open, honest communication in work environments. The Company is also committed to strengthen the communities in which the Company does business; and as part of this philosophy, encourages and supports its associates to contribute time, talent, and resources to support causes and organizations within their local area.

Available Information

The Company's internet website address is www.nelnetinc.com and the Company's investor relations website address is www.nelnetinvestors.com. Copies of the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports are available on the Company's investor relations website free of charge as soon as reasonably practicable after such reports are filed with or furnished to the SEC. The Company routinely posts important information for investors on its investor relations website.

The Company has adopted a Code of Ethics and Conduct that applies to directors, officers, and associates, including the Company's principal executive officer and its principal financial and accounting officer, and has posted such Code of Ethics and Conduct on its investor relations website. Amendments to and waivers granted with respect to the Company's Code of Ethics and Conduct relating to its executive officers and directors, which are required to be disclosed pursuant to applicable securities laws and stock exchange rules and regulations, will also be posted on its investor relations website. The Company's Corporate Governance Guidelines, Audit Committee Charter, People Development and Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Risk and Finance Committee Charter, and Compliance Committee Charter are also posted on its investor relations website.

Information on the Company's websites is not incorporated by reference into this report and should not be considered part of this report.