Nelnet (NNI) risk factors, FY2025 10-K

Nelnet's FY2025 10-K, filed Feb 26, 2026, lists 32 risk factors. Against the prior year's 33: 8 new, 9 dropped, 15 substantially reworded.

Open NNI in Gloom →
Nelnet's chart, financials and news, free in your browser.Open NNI in Gloom →
Risk factors listed
320 groups
New this year
8vs 33 last year
Dropped
9since the prior 10-K
Substantially reworded
15of those kept
Section length
12k wordsItem 1A

What the changes say

  • Nelnet faces risks from accelerated loan prepayments, Department of Education servicing contract changes, and derivative valuation exposure.
  • The company's asset-backed security investments grew to $1.5 billion, while Department revenue dropped to 21%.

What changed since the prior 10-K

New

  • New

    Higher rates of prepayments of loans reduces our loan interest income from our loan portfolio and investment interest income on our beneficial interest in loan securitizations

    Higher loan prepayment rates reduce our loan and investment interest income.

  • New

    favorable terms or at all, potentially leading to a mismatch in the duration and cost of our funding sources compared to the maturity profile of our loan assets

    Maturity mismatches in short-term warehouse facilities could increase our cost of funds.

  • New

    Nelnet Servicing provides servicing capabilities for the Department’s student aid recipients under a USDS contract, which went live on April 1, 2024. Under the USDS contract, revenue earned on a per borrower blended basis has decreased compared to our legacy contract with the Department

    The USDS contract with the Department of Education yields lower per borrower blended revenue, and the Bill caps federal lending.

  • New

    and scale our systems and operational infrastructure or products and services, our LSS and ETSP segments may lose their competitive advantage, which could have a material adverse impact on our business, financial condition, or results of operations

    Technology staffing shortages and software bugs in our LSS and ETSP segments could cause development delays and liability claims.

  • New

    results of operations. Further, legislation to address the federal deficit and spending could impose changes that would adversely affect the Federal Direct Loan Program and FFELP servicing businesses

    Changes to the Higher Education Act or negative audit findings could adversely affect our servicing cash flows and expose us to False Claims Act penalties.

  • New

    markets, and difficulties in supporting new product lines. Our failure to successfully manage acquisitions or other interests, or successfully integrate acquisitions, could have a material adverse effect on our businesses, financial condition, or results of operations

    Our investment in Hudl exposes us to macroeconomic, competitive, and valuation risks.

  • New

    International operations expose us to significant regulatory, operational, and geopolitical risks

    International operations expose us to diverse foreign financial regulations, data privacy laws, tax regimes, and currency volatility.

  • New

    complexity and volume associated with these informational forms creates a risk of error which could result in penalties or damage to our reputation

    Our articles of incorporation mandate Nebraska state or federal district courts as the exclusive forum for certain lawsuits.

Dropped

  • Dropped

    Higher rates of prepayments of student loans, including consolidation of FFELP loans by the Department through the Federal Direct Loan Program or private refinancing programs, reduce our interest income

  • Dropped

    Interest rate risk - loss of floor income

    Higher rates of prepayments of student loans reduce our interest income.

  • Dropped

    As of December 31, 2024, Nelnet Servicing was servicing $489.9 billion of government owned student loans for 14.0 million borrowers. For the year ended December 31, 2024, our LSS segment recognized $380.9 million in revenue from the Department, which represented 26% of our revenue

  • Dropped

    service we are able to provide, that may result in additional scrutiny from federal and state government regulatory agencies and reputation damage

    Interest rate risk and loss of floor income on FFELP loans.

  • Dropped

    The profitability and risk profile of our solar tax equity investments may be impacted by the terms and availability of federal incentives and regulatory uncertainty, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities

  • Dropped

    The profitability and risk profile of our solar construction business may be impacted by the terms and availability of federal incentives, regulatory uncertainty, not completing projects on time and within budget, construction and operational risks, and length and complexity of entering into new contracts

  • Dropped

    tax credits and benefits, loss of environmental incentives, or delayed or diminished returns, which could require us to write off all or a portion of our investment in the applicable project(s) and/or recognize costs in excess of contractual revenue to be earned from third party construction customers

  • Dropped

    ultimate resolution or settlement of the claim; (ii) the diversity of development patterns among different types of reinsurance treaties; and (iii) the necessary reliance on the ceding company for information regarding claims

  • Dropped

    incorporation or bylaws (as each may be amended from time to time); or (iv) any action asserting a claim governed by the internal affairs doctrine

    Servicing $489.9 billion of government loans representing 26% of revenue in 2024.

Reworded

  • 95% rewritten

    Interest rate risk - use of derivatives

    Added that unhedged or mismatched derivatives could result in material losses.

  • 87% rewritten

    Our Department of Education servicing contract and our third-party FFELP loan servicing business involve additional risks inherent in government contracts and programs

    Truncated the discussion regarding federal debt ceiling and government shutdown impacts.

  • 85% rewritten

    Our business involves risks associated with funding loan assets on our balance sheet and in our loan warehouse financing facilities, particularly market, liquidity, and credit risks, which could materially and adversely affect our financial condition, results of operations, and ability to meet our obligations

    Removed specific details about capital market access limits and duration mismatches.

  • 70% rewritten

    If we are unable to adapt to rapid technological change, take advantage of technological developments, or our software products experience quality problems and development delays, the demand for our products and services may decline

    Truncated the final sentence regarding the consequences of failing to scale infrastructure in LSS and ETSP segments.

  • 66% rewritten

    Our development and deployment of artificial intelligence (AI) technologies has improved operational performance but these advancements also present risks that could result in reputational or competitive harm, legal liability, regulatory scrutiny, and other adverse effects on our business

    Identical text retained but reclassified or reformatted by the filer.

    Was: Our development and use of artificial intelligence (“AI”) has improved operational performance but these advancements could also result in reputational or competitive harm, legal liability, and other adverse effects on our business

  • 63% rewritten

    Failure to successfully manage acquired businesses and assets, as well as other interests, including in venture capital and real estate, could have a material adverse effect on our businesses, financial condition, or results of operations

    Broadened acquisitions to venture capital and real estate deployments of capital.

    Was: Our failure to successfully manage acquired businesses and assets, as well as other investments, including venture capital and real estate investments, could have a material adverse effect on our businesses, financial condition, or results of operations

  • 60% rewritten

    Federal and state laws and regulations and changes in the regulatory environment can restrict our businesses and increase compliance costs, and noncompliance could result in penalties, litigation, reputation damage, and a loss of customers

    Identical text retained but reclassified or reformatted by the filer.

  • 47% rewritten

    We are subject to economic and market fluctuations related to our investments

    Updated asset-backed security investments to $1.5 billion, expected returns to SOFR + 50 to 350 bps, and Department revenue to 21%.

  • 47% rewritten

    Climate change manifesting as physical, transition, and regulatory risks could have a material adverse impact on our operations, vendors, and customers

    Was: Climate change manifesting as physical or transition risks could have a material adverse impact on our operations, vendors, and customers

  • 45% rewritten

    Exposure related to certain tax issues could decrease our net income

  • 40% rewritten

    Credit risk - beneficial interest in loan securitizations

  • 37% rewritten

    Nelnet Bank may not be able to achieve its business objectives and effectively deploy loan and deposit strategies in accordance with regulatory requirements

  • 29% rewritten

    As a result of the discontinuation of new FFELP loan originations in 2010, our existing FFELP loan portfolio will continue to decline over time

    Was: As a result of the discontinuation of new FFELP loan originations in 2010, the existing FFELP loan portfolio in our AGM segment will continue to decline over time

  • 26% rewritten

    Our contractual arrangements and transactions with Union Bank, which is under common control with us, present conflicts of interest and pose risks to our shareholders that the terms may not be as favorable to us as we could receive from unrelated third parties

  • 21% rewritten

    Interest rate risk - basis and repricing risk

All 32 risk factors

Headings as the filing states them, in filing order.

Other

  1. 01Credit risk - beneficial interest in loan securitizations40% rewritten
  2. 02Higher rates of prepayments of loans reduces our loan interest income from our loan portfolio and investment interest income on our beneficial interest in loan securitizationsNew
  3. 03Interest rate risk - basis and repricing risk21% rewritten
  4. 04Interest rate risk - use of derivatives95% rewritten
  5. 05Our loan portfolios and other assets and operations could experience adverse impacts from natural disasters, widespread health crises, terrorist activities, or international hostilities
  6. 06Our business involves risks associated with funding loan assets on our balance sheet and in our loan warehouse financing facilities, particularly market, liquidity, and credit risks, which could materially and adversely affect our financial condition, results of operations, and ability to meet our obligations85% rewritten
  7. 07favorable terms or at all, potentially leading to a mismatch in the duration and cost of our funding sources compared to the maturity profile of our loan assetsNew
  8. 08We are subject to economic and market fluctuations related to our investments47% rewritten
  9. 09Nelnet Servicing provides servicing capabilities for the Department’s student aid recipients under a USDS contract, which went live on April 1, 2024. Under the USDS contract, revenue earned on a per borrower blended basis has decreased compared to our legacy contract with the DepartmentNew
  10. 10A failure or security breach of our information technology infrastructure could disrupt our businesses, cause material financial losses, result in regulatory action and legal exposure, and damage our reputation
  11. 11If we are unable to adapt to rapid technological change, take advantage of technological developments, or our software products experience quality problems and development delays, the demand for our products and services may decline70% rewritten
  12. 12and scale our systems and operational infrastructure or products and services, our LSS and ETSP segments may lose their competitive advantage, which could have a material adverse impact on our business, financial condition, or results of operationsNew
  13. 13Our development and deployment of artificial intelligence (AI) technologies has improved operational performance but these advancements also present risks that could result in reputational or competitive harm, legal liability, regulatory scrutiny, and other adverse effects on our business66% rewritten
  14. 14We rely on third parties for a wide array of services for our customers, and to meet our contractual obligations. The failure of a third party with which we work could adversely affect our business performance and reputation
  15. 15If 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
  16. 16Our Department of Education servicing contract and our third-party FFELP loan servicing business involve additional risks inherent in government contracts and programs87% rewritten
  17. 17results of operations. Further, legislation to address the federal deficit and spending could impose changes that would adversely affect the Federal Direct Loan Program and FFELP servicing businessesNew
  18. 18Our ability to continue to grow and maintain our contracts with commercial businesses and government agencies is partly dependent on our ability to maintain compliance with various laws, regulations, and industry standards applicable to those contracts
  19. 19Failure to safeguard the privacy of personal information could result in significant legal and reputational harm
  20. 20Nelnet Bank may not be able to achieve its business objectives and effectively deploy loan and deposit strategies in accordance with regulatory requirements37% rewritten
  21. 21Climate change manifesting as physical, transition, and regulatory risks could have a material adverse impact on our operations, vendors, and customers47% rewritten
  22. 22Failure to successfully manage acquired businesses and assets, as well as other interests, including in venture capital and real estate, could have a material adverse effect on our businesses, financial condition, or results of operations63% rewritten
  23. 23markets, and difficulties in supporting new product lines. Our failure to successfully manage acquisitions or other interests, or successfully integrate acquisitions, could have a material adverse effect on our businesses, financial condition, or results of operationsNew
  24. 24Reliance on financial models, tools, or third-party data may expose us to risks of inaccurate forecasting, decision-making, and incorrect estimates and assumptions used by management in connection with the preparation of our consolidated financial statements
  25. 25Federal and state laws and regulations and changes in the regulatory environment can restrict our businesses and increase compliance costs, and noncompliance could result in penalties, litigation, reputation damage, and a loss of customers60% rewritten
  26. 26As a result of the discontinuation of new FFELP loan originations in 2010, our existing FFELP loan portfolio will continue to decline over time29% rewritten
  27. 27International operations expose us to significant regulatory, operational, and geopolitical risksNew
  28. 28Exposure related to certain tax issues could decrease our net income45% rewritten
  29. 29complexity and volume associated with these informational forms creates a risk of error which could result in penalties or damage to our reputationNew
  30. 30Our Executive Chairman beneficially owns 78.6% of the voting rights of our shareholders and effectively has control over all of our matters
  31. 31Our contractual arrangements and transactions with Union Bank, which is under common control with us, present conflicts of interest and pose risks to our shareholders that the terms may not be as favorable to us as we could receive from unrelated third parties26% rewritten
  32. 32We intend to maintain our relationship with Union Bank, which our management believes provides certain benefits to us, including Union Bank's willingness to provide services, and at times liquidity and capital resources, on an expedient basis, and its proximity to our corporate headquarters in Lincoln, Nebraska

Other Nelnet 10-Ks

  • FY2024 10-K risk factors
    33 risks

    Nelnet faces heavy regulatory and economic concentration risks in student loan servicing, solar energy investments, and banking operations.

    Filed Feb 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.