UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 6, 2015

NELNET, INC.
(Exact name of registrant as specified in its charter)

					
Nebraska	 	001-31924	 	84-0748903	
(State or other jurisdiction of incorporation)	 	(Commission File Number)	 	(I.R.S. Employer Identification No.)	

	
			
121 South 13th Street, Suite 100
Lincoln, Nebraska	 	68508	
(Address of principal executive offices)	 	(Zip Code)	

Registrant's telephone number, including area code (402) 458-2370
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))

 
Item 2.02 Results of Operations and Financial Condition.
On August 6, 2015 , Nelnet, Inc. (the “Company”) issued a press release with respect to its financial results for the quarter ended June 30, 2015 . A copy of the press release is furnished as Exhibit 99.1 to this report. In addition, a copy of the supplemental financial information for the quarter ended June 30, 2015 , which was made available on the Company's website at www.nelnetinvestors.com on August 6, 2015 in connection with the press release, is furnished as Exhibit 99.2 to this report.

The above information and Exhibits 99.1 and 99.2 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall such information and Exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. In addition, information on the Company's website is not incorporated by reference into this report and should not be considered part of this report.

Certain statements contained in the exhibits furnished with this report may be considered forward looking in nature and are subject to various risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual results may vary materially from those anticipated, estimated, or expected. Among the key risks and uncertainties that may have a direct bearing on the Company's future operating results, performance, or financial condition expressed or implied by the forward-looking statements are the matters discussed in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 26, 2015. Although the Company may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

Item 9.01 Financial Statements and Exhibits.

(d)      Exhibits. The following exhibits are furnished as part of this report:

			
Exhibit
No.	 	Description	
 	 	 	
99.1	 	Press Release dated August 6, 2015 - “Nelnet Reports Second Quarter 2015 Results”	
99.2	 	Supplemental Financial Information for the Quarter Ended June 30, 2015	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 6, 2015
NELNET, INC.
By:       /s/ JAMES D. KRUGER      
		
Name:	James D. Kruger	
		
Title:	Chief Financial Officer	

Nelnet Reports Second Quarter 2015 Results

•	GAAP net income $1.54 per share, $1.38 per share excluding adjustments	
		
•	27 percent increase in Tuition Payment Processing and Campus Commerce revenue	
		
•	Repurchased nearly one million shares of Class A common stock	
		
•	Purchased $1.5 billion of FFELP student loans on August 3	

LINCOLN, Neb., August 6, 2015-Nelnet (NYSE: NNI) today reported GAAP net income of $70.9 million, or $1.54 per share, for the second quarter of 2015, compared with GAAP net income of $75.0 million, or $1.61 per share, for the same period a year ago.

Excluding derivative market value and foreign currency adjustments, net income was $63.5 million, or $1.38 per share, for the second quarter of 2015, compared with $70.2 million, or $1.51 per share, for the same period in 2014. The company reported income from derivative market value and foreign currency adjustments of $7.4 million after tax, or $0.16 per share, for the second quarter of 2015, compared with income of $4.8 million after tax, or $0.10 per share, for the second quarter of 2014.

"As a result of our ongoing success, we are in a strong position financially and continue to generate significant cash flow from our portfolio and operations," said Jeff Noordhoek, chief executive officer of Nelnet. "With our focus on delivering long-term value, we deployed capital in the second quarter to repurchase shares and acquire student loan portfolios. We continue to look for additional strategic investments in our core businesses and other opportunities."

Nelnet operates three primary business segments, earning interest income on student loans in its Asset Generation and Management segment, and fee-based revenue in its Student Loan and Guaranty Servicing and Tuition Payment Processing and Campus Commerce segments.

As expected, net income decreased for the second quarter of 2015, compared with the same period a year ago, due to decreases in earnings from the company’s Student Loan and Guaranty Servicing segment and investment advisory fees.

Asset Generation and Management

Historically low interest rates continue to provide the opportunity for the company to generate substantial cash flow from its student loan portfolio. For the second quarter of 2015, Nelnet reported net interest income of $105.1 million, compared with $107.7 million for the same period a year ago.  Net interest income included $45.1 million and $43.6 million of fixed rate floor income in the second quarters of 2015 and 2014, respectively. As a result of recent acquisitions of lower margin but longer term consolidation loans, core student loan spread decreased to 1.41 percent for the three months ended June 30, 2015, compared with 1.46 percent for the same period in 2014.

The company intends to use its strong liquidity position to acquire legacy Federal Family Education Loan Program (FFELP) loans and private education loans. The company acquired $1.2 billion of student loans during the second quarter of 2015. As of June 30, 2015, Nelnet’s student loan portfolio was $28.1 billion. On August 3, 2015, Nelnet acquired the residual interests in two securitized student loan trusts, which collectively hold $1.5 billion of FFELP student loans.

Student Loan and Guaranty Servicing

The company was servicing $141.5 billion of loans for 5.8 million borrowers on behalf of the U.S. Department of Education as of June 30, 2015, compared with $123.2 billion of loans for 5.5 million borrowers as of June 30, 2014. Revenue from this contract increased 8 percent to $33.6 million for the second quarter of 2015, up from $31.0 million for the same period a year ago.

The growth in government servicing revenue partially offset the impact of federal legislative changes that reduced the collections revenue earned for guaranty servicing. As a result, total revenue from the Student Loan and Guaranty Servicing segment decreased 4 percent, or $2.6 million, to $63.8 million for the second quarter of 2015, compared with the same period in 2014.

A significant amount of the company's guaranty servicing revenue comes from a single guaranty servicing client. The current term of the contract with this client expires on October 31, 2015. During the second quarter of 2015, the client notified the company of their intent to not renew this contract.

Tuition Payment Processing and Campus Commerce

For the second quarter of 2015, revenue from the Tuition Payment Processing and Campus Commerce segment was $27.7 million, an increase of $5.9 million, or 27 percent, from the same period in 2014. The increase in revenue was primarily driven by the acquisition of RenWeb in June 2014, along with growth in managed tuition payment plans, campus commerce transaction volume, and new school customers.

Other Income

Other income decreased $7.8 million to $7.5 million for the second quarter of 2015, compared with $15.3 million for the same period in 2014. During the three months ended June 30, 2015, investment advisory fees were $0.8 million, compared with $7.0 million for the same period a year ago. Due to improvements in the capital markets, the opportunities to earn performance fees on the sale of student loan asset-backed securities are becoming increasingly limited.

Stock Repurchases

During the six months ended June 30, 2015, the company repurchased a total of 1,174,008 shares of Class A common stock for $51.0 million, including 998,210 shares for $43.1 million during the second quarter.

Board of Directors Approves Dividend

The Nelnet Board of Directors declared a third quarter cash dividend on the company's outstanding shares of Class A common stock and Class B common stock of $0.10 per share. The dividend will be paid on Tuesday, September 15, 2015, to shareholders of record at the close of business on Tuesday, September 1, 2015.

Non-GAAP Performance Measures

The company provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results, including specifically, the impact of unrealized gains and losses resulting from changes in fair values of derivative instruments which do not qualify for “hedge treatment” under GAAP and foreign currency transaction gains or losses resulting from the re-measurement of the company's Euro-denominated bonds to U.S. dollars. The company believes these point in time estimates of asset and liability values related to financial instruments that are subject to interest and currency rate fluctuations, and items whose timing and/or amount cannot be reasonably estimated in advance, affect the period to period comparability of the results of the company's fundamental business operations on a recurring basis. Accordingly, the company provides operating results excluding these items for comparability purposes.

Forward-looking and Cautionary Statements

This press release contains forward-looking statements within the meaning of federal securities laws.  These statements are based on management's current expectations as of the date of this release and are subject to known and unknown risks and uncertainties that may cause actual results or performance to differ materially from those expressed or implied by the forward-looking statements. Such risks include, among others, risks related to the company's student loan portfolio such as interest rate basis and repricing risk, the use of derivatives to manage exposure to interest rate fluctuations, and the uncertain nature of expected benefits from recent FFELP and private education loan purchases and initiatives to purchase additional FFELP and private education loans; financing and liquidity risks, including risks of changes in the securitization and other financing markets for student loans; risks related to the company's ability to maintain and increase volumes under the company’s loan servicing contract with the Department of Education to service federally owned student loans; changes in the educational credit and services marketplace resulting from changes in applicable laws, regulations, and government programs and budgets; risks related to the recent reduction in government payments to guaranty agencies to rehabilitate defaulted FFELP loans and services in support of those activities, including potential adverse effects on the Company's guaranty servicing contracts; and changes in general economic and credit market conditions. For more information, see the "Risk Factors" sections and other cautionary discussions of risks and uncertainties included in documents filed or furnished by the company with the Securities and Exchange Commission, including the cautionary information about forward-looking statements contained in the company's supplemental financial information for the second quarter ended June 30, 2015.  All forward-looking statements in this release are as of the date of this release. Although the company may from time to time voluntarily update or revise its forward-looking statements to reflect actual results or changes in the company's expectations, the company disclaims any commitment to do so except as required by securities laws.

Consolidated Statements of Income
(Dollars in thousands, except share data)
(unaudited)

																
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30, 2015	 	June 30, 2014	
Interest income:	 	 	 	 	 	 	 	 	 	
Loan interest	$	175,835		 	171,944		 	175,466		 	347,779		 	332,362		
Investment interest	1,887		 	2,205		 	1,482		 	4,092		 	3,461		
Total interest income	177,722		 	174,149		 	176,948		 	351,871		 	335,823		
Interest expense:	 	 	 	 	 	 	 	 	 	
Interest on bonds and notes payable	72,626		 	71,554		 	69,235		 	144,180		 	129,239		
Net interest income	105,096		 	102,595		 	107,713		 	207,691		 	206,584		
Less provision for loan losses	2,150		 	2,000		 	1,500		 	4,150		 	4,000		
Net interest income after provision for loan losses	102,946		 	100,595		 	106,213		 	203,541		 	202,584		
Other income (expense):	 	 	 	 	 	 	 	 	 	
Loan and guaranty servicing revenue	63,833		 	57,811		 	66,460		 	121,644		 	131,217		
Tuition payment processing, school information, and campus commerce revenue	27,686		 	34,680		 	21,834		 	62,366		 	47,069		
Enrollment services revenue	17,161		 	17,863		 	20,145		 	35,024		 	42,156		
Other income	7,504		 	6,918		 	15,315		 	14,422		 	33,446		
Gain on sale of loans and debt repurchases, net	1,515		 	2,875		 	18		 	4,390		 	57		
Derivative settlements, net	(5,442	)	 	(5,215	)	 	(6,214	)	 	(10,657	)	 	(12,443	)	
Derivative market value and foreign currency adjustments, net	11,944		 	2,137		 	7,784		 	14,081		 	9,748		
Total other income	124,201		 	117,069		 	125,342		 	241,270		 	251,250		
Operating expenses:	 	 	 	 	 	 	 	 	 	
Salaries and benefits	58,787		 	61,050		 	53,888		 	119,837		 	106,372		
Cost to provide enrollment services	11,162		 	11,702		 	13,311		 	22,864		 	27,786		
Loan servicing fees	7,420		 	7,616		 	7,317		 	15,036		 	12,720		
Depreciation and amortization	6,501		 	5,662		 	5,214		 	12,163		 	9,997		
Other	31,958		 	29,198		 	33,060		 	61,156		 	63,284		
Total operating expenses	115,828		 	115,228		 	112,790		 	231,056		 	220,159		
Income before income taxes	111,319		 	102,436		 	118,765		 	213,755		 	233,675		
Income tax expense	40,356		 	37,630		 	43,078		 	77,986		 	83,689		
Net income	70,963		 	64,806		 	75,687		 	135,769		 	149,986		
Net income attributable to noncontrolling interest	54		 	41		 	693		 	95		 	1,206		
Net income attributable to Nelnet, Inc.	$	70,909		 	64,765		 	74,994		 	135,674		 	148,780		
Earnings per common share:	 	 	 	 	 	 	 	 	 	
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	1.54		 	1.40		 	1.61		 	2.94		 	3.20		
Weighted average common shares outstanding - basic and diluted	45,946,415		 	46,290,590		 	46,529,377		 	46,127,207		 	46,528,651		

Condensed Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)

	
										
 	As of	 	As of	 	As of	
 	June 30, 2015	 	December 31, 2014	 	June 30, 2014	
Assets:	 	 	 	 	 	
Student loans receivable, net	$	28,095,775		 	28,005,195		 	29,342,430		
Cash, cash equivalents, investments, and notes receivable	428,028		 	366,190		 	289,893		
Restricted cash and investments	975,673		 	968,928		 	960,039		
Goodwill and intangible assets, net	163,984		 	168,782		 	171,049		
Other assets	583,363		 	589,048		 	607,611		
Total assets	$	30,246,823		 	30,098,143		 	31,371,022		
Liabilities:	 	 	 	 	 	
Bonds and notes payable	$	28,070,423		 	28,027,350		 	29,492,560		
Other liabilities	370,908		 	345,115		 	298,334		
Total liabilities	28,441,331		 	28,372,465		 	29,790,894		
Equity:	 	 	 	 	 	
Total Nelnet, Inc. shareholders' equity	1,805,192		 	1,725,448		 	1,579,742		
Noncontrolling interest	300		 	230		 	386		
Total equity	1,805,492		 	1,725,678		 	1,580,128		
Total liabilities and equity	$	30,246,823		 	30,098,143		 	31,371,022		

Contacts:
Media, Ben Kiser, +1-402-458-3024, or Investors, Phil Morgan, +1-402-458-3038, both of Nelnet, Inc .

For Release: August 6, 2015
Media Contact: Ben Kiser, 402.458.3024
Investor Contact: Phil Morgan, 402.458.3038

Nelnet, Inc. supplemental financial information for the second quarter 2015
(All dollars are in thousands, except per share amounts, unless otherwise noted)

The following information should be read in connection with Nelnet, Inc.'s (the “Company's”) press release for second quarter 2015 earnings, dated August 6, 2015 , and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 .

This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document.  Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “may,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “assume,” “forecast,” “will,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements.

The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements.  These factors include, among others, the risks and uncertainties set forth in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 (the "2014 Annual Report"), in particular such risks and uncertainties as:

•	student loan portfolio risks such as interest rate basis and repricing risk resulting from the fact that the interest rate characteristics of the student loan assets do not match the interest rate characteristics of the funding for those assets, the risk of loss of floor income on certain student loans originated under the Federal Family Education Loan Program (the "FFEL Program" or "FFELP"), risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from recently purchased securitized and unsecuritized FFELP and private education loans and initiatives to purchase additional FFELP and private education loans, and risks from changes in levels of student loan prepayment or default rates;	

•	financing and liquidity risks, including risks of changes in the general interest rate environment and in the securitization and other financing markets for student loans, which may increase the costs or limit the availability of financings necessary to purchase, refinance, or continue to hold student loans;	

•	risks from changes in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets, such as the expected decline over time in FFELP loan interest income and fee-based revenues due to the discontinuation of new FFELP loan originations in 2010 and potential government initiatives or legislative proposals to consolidate existing FFELP loans to the Federal Direct Loan Program or otherwise allow FFELP loans to be refinanced with Federal Direct Loan Program loans, risks related to reduced government payments to guaranty agencies to rehabilitate defaulted FFELP loans and services in support of those activities, including potential adverse effects on the Company's guaranty servicing contracts, risks related to the Company's ability to maintain or increase volumes under the Company's loan servicing contract with the U.S. Department of Education (the "Department"), which accounted for approximately 10 percent of the Company's revenue in 2014 and for which the loan allocation metrics were modified effective September 1, 2014, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of FFELP, Federal Direct Loan Program, and private education loans;	

•	risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors;	

•	uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations; and	

•	risks and uncertainties associated with litigation matters and with maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company's consolidated financial statements.	

All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this document. Although the Company may from time to time voluntarily update or revise its prior forward-looking statements to reflect actual results or changes in the Company's expectations, the Company disclaims any commitment to do so except as required by securities laws.

1

Consolidated Statements of Income
(Dollars in thousands, except share data)
(unaudited)

																
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30,
2015	 	June 30,
2014	
Interest income:	 	 	 	 	 	 	 	 	 	
Loan interest	$	175,835		 	171,944		 	175,466		 	347,779		 	332,362		
Investment interest	1,887		 	2,205		 	1,482		 	4,092		 	3,461		
Total interest income	177,722		 	174,149		 	176,948		 	351,871		 	335,823		
Interest expense:	 	 	 	 	 	 	 	 	 	
Interest on bonds and notes payable	72,626		 	71,554		 	69,235		 	144,180		 	129,239		
Net interest income	105,096		 	102,595		 	107,713		 	207,691		 	206,584		
Less provision for loan losses	2,150		 	2,000		 	1,500		 	4,150		 	4,000		
Net interest income after provision for loan losses	102,946		 	100,595		 	106,213		 	203,541		 	202,584		
Other income (expense):	 	 	 	 	 	 	 	 	 	
Loan and guaranty servicing revenue	63,833		 	57,811		 	66,460		 	121,644		 	131,217		
Tuition payment processing, school information, and campus commerce revenue	27,686		 	34,680		 	21,834		 	62,366		 	47,069		
Enrollment services revenue	17,161		 	17,863		 	20,145		 	35,024		 	42,156		
Other income	7,504		 	6,918		 	15,315		 	14,422		 	33,446		
Gain on sale of loans and debt repurchases, net	1,515		 	2,875		 	18		 	4,390		 	57		
Derivative settlements, net	(5,442	)	 	(5,215	)	 	(6,214	)	 	(10,657	)	 	(12,443	)	
Derivative market value and foreign currency adjustments, net	11,944		 	2,137		 	7,784		 	14,081		 	9,748		
Total other income	124,201		 	117,069		 	125,342		 	241,270		 	251,250		
Operating expenses:	 	 	 	 	 	 	 	 	 	
Salaries and benefits	58,787		 	61,050		 	53,888		 	119,837		 	106,372		
Cost to provide enrollment services	11,162		 	11,702		 	13,311		 	22,864		 	27,786		
Loan servicing fees	7,420		 	7,616		 	7,317		 	15,036		 	12,720		
Depreciation and amortization	6,501		 	5,662		 	5,214		 	12,163		 	9,997		
Other	31,958		 	29,198		 	33,060		 	61,156		 	63,284		
Total operating expenses	115,828		 	115,228		 	112,790		 	231,056		 	220,159		
Income before income taxes	111,319		 	102,436		 	118,765		 	213,755		 	233,675		
Income tax expense	40,356		 	37,630		 	43,078		 	77,986		 	83,689		
Net income	70,963		 	64,806		 	75,687		 	135,769		 	149,986		
Net income attributable to noncontrolling interest	54		 	41		 	693		 	95		 	1,206		
Net income attributable to Nelnet, Inc.	$	70,909		 	64,765		 	74,994		 	135,674		 	148,780		
Earnings per common share:	 	 	 	 	 	 	 	 	 	
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	1.54		 	1.40		 	1.61		 	2.94		 	3.20		
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding - basic and diluted	45,946,415		 	46,290,590		 	46,529,377		 	46,127,207		 	46,528,651		

2

Condensed Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)

										
 	As of	 	As of	 	As of	
 	June 30, 2015	 	December 31, 2014	 	June 30, 2014	
Assets:	 	 	 	 	 	
Student loans receivable, net	$	28,095,775		 	28,005,195		 	29,342,430		
Cash, cash equivalents, investments, and notes receivable	428,028		 	366,190		 	289,893		
Restricted cash and investments	975,673		 	968,928		 	960,039		
Goodwill and intangible assets, net	163,984		 	168,782		 	171,049		
Other assets	583,363		 	589,048		 	607,611		
Total assets	$	30,246,823		 	30,098,143		 	31,371,022		
Liabilities:	 	 	 	 	 	
Bonds and notes payable	$	28,070,423		 	28,027,350		 	29,492,560		
Other liabilities	370,908		 	345,115		 	298,334		
Total liabilities	28,441,331		 	28,372,465		 	29,790,894		
Equity:	 	 	 	 	 	
Total Nelnet, Inc. shareholders' equity	1,805,192		 	1,725,448		 	1,579,742		
Noncontrolling interest	300		 	230		 	386		
Total equity	1,805,492		 	1,725,678		 	1,580,128		
Total liabilities and equity	$	30,246,823		 	30,098,143		 	31,371,022		

3

Overview

The Company provides educational products and services in loan servicing, payment processing, education planning, and asset management. These products and services help students and families plan, prepare, and pay for their education and make the administrative and financial processes more efficient for schools and financial organizations. In addition, the Company earns interest income on a portfolio of federally insured student loans.

A reconciliation of the Company's GAAP net income to net income, excluding derivative market value and foreign currency adjustments, is provided below.

																
 	Three months ended	 	Year ended	
 	June 30, 2015	 	March 31, 2015	 	June 30, 2014	 	June 30, 2015	 	June 30, 2014	
GAAP net income attributable to Nelnet, Inc.	$	70,909		 	64,765		 	74,994		 	135,674		 	148,780		
Derivative market value and foreign currency adjustments, net of tax	(7,405	)	 	(1,325	)	 	(4,826	)	 	(8,730	)	 	(6,044	)	
Net income, excluding derivative market value and foreign currency adjustments (a)	$	63,504		 	63,440		 	70,168		 	126,944		 	142,736		
 	 	 	 	 	 	 	 	 	 	
Earnings per share:	 	 	 	 	 	 	 	 	 	
GAAP net income attributable to Nelnet, Inc.	$	1.54		 	1.40		 	1.61		 	2.94		 	3.20		
Derivative market value and foreign currency adjustments, net of tax	(0.16	)	 	(0.03	)	 	(0.10	)	 	(0.19	)	 	(0.13	)	
Net income, excluding derivative market value and foreign currency adjustments (a)	$	1.38		 	1.37		 	1.51		 	2.75		 	3.07		

(a)	The Company provides non-GAAP information that reflects specific items management believes to be important in the evaluation of its financial position and performance. "Derivative market value and foreign currency adjustments" include (i) the unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars. The Company believes these point-in-time estimates of asset and liability values related to these financial instruments that are subject to interest and currency rate fluctuations affect the period-to-period comparability of the results of operations. Accordingly, the Company provides operating results excluding these items for comparability purposes.	

The Company earns net interest income on its FFELP student loan portfolio in its Asset Generation and Management ("AGM") operating segment. This segment is expected to generate a stable net interest margin and significant amounts of cash as the FFELP portfolio amortizes. As of June 30, 2015 , the Company had a $28.1 billion student loan portfolio that will amortize over the next approximately 25 years. The Company actively seeks to acquire additional FFELP loan portfolios to leverage its servicing scale and expertise to generate incremental earnings and cash flow.

In addition, the Company earns fee-based revenue through the following reportable operating segments:

•	Student Loan and Guaranty Servicing ("LGS") - referred to as Nelnet Diversified Solutions ("NDS")	
		
•	Tuition Payment Processing and Campus Commerce ("TPP&CC") - referred to as Nelnet Business Solutions ("NBS")	

Other business activities and operating segments that are not reportable are combined and included in Corporate and Other Activities. Corporate and Other Activities also includes income earned on certain investments and interest expense incurred on unsecured debt transactions.

4

The information below provides the operating results for each reportable operating segment and Corporate and Other Activities ("Corporate") for the three and six months ended June 30, 2015 and 2014 (dollars in millions).

		
(a)	Revenue includes intersegment revenue earned by LGS as a result of servicing loans for AGM.	

(b)	Total revenue includes "net interest income after provision for loan losses" and "total other income" from the Company's segment statements of income, excluding the impact from changes in fair values of derivatives and foreign currency transaction adjustments. Net income excludes changes in fair values of derivatives and foreign currency transaction adjustments, net of tax.	

(c)	Computed as income before income taxes divided by total revenue.	

Student Loan and Guaranty Servicing

•	As of June 30, 2015 , the Company was servicing $169.9 billion in FFELP, private, and government owned student loans, as compared with $150.0 billion of loans as of June 30, 2014 .	

•	Revenue decreased in the three and six months ended June 30, 2015 compared to the same periods in 2014 due primarily to a decrease in rehabilitation collection revenue. Federal budget provisions that became effective July 1, 2014 have reduced payments by the Department to guaranty agencies for assisting student loan borrowers with the rehabilitation of defaulted loans under FFELP, and as a result, rehabilitation revenue has been negatively affected. Rehabilitation collection revenue recognized by the Company was $11.5 million and $17.3 million for the three months ended June 30, 2015 and 2014, respectively, and $18.9 million and $30.7 million for the six months ended June 30, 2015 and 2014, respectively.	

•	Revenue from the Department servicing contract increased to $33.6 million for the three months ended June 30, 2015 compared to $31.0 million for the same period in 2014, and increased to $66.0 million for the six months ended June 30, 2015 , compared to $60.9 million for the same period in 2014 . As of June 30, 2015 , the Company was servicing $141.5 billion of loans for 5.8 million borrowers under this contract.	

•	A significant amount of the Company's guaranty servicing revenue comes from a single guaranty servicing client. The current term of the contract with this client expires on October 31, 2015. During the second quarter of 2015, the client notified the Company of their intent to not renew this contract. FFELP guaranty servicing and FFELP guaranty collection revenue recognized by the Company from this client for the year ended December 31, 2014 and six months ended June 30, 2015 was $48.5 million and $21.3 million, respectively. The Company incurs collection costs that are directly related to guaranty collection revenue earned on this contract.	

•	Before tax operating margin was 19.4% and 26.6% for the three months ended June 30, 2015 and 2014 , respectively, and 16.9% and 27.5% for the six months ended June 30, 2015 and 2014, respectively. Operating margin decreased as a result of the implementation of federal budget reductions for guaranty agencies revenue. In addition, as the volume of loans serviced under the Department servicing contract continues to grow and loans serviced under the legacy commercial programs continue to run off, the Company expects operating margins to tighten accordingly. The Company also anticipates that margins will tighten as a result of the loss of the FFELP guaranty servicing and FFELP guaranty collection client discussed above.	

5

Tuition Payment Processing and Campus Commerce

•	Revenue increased in the three and six months ended June 30, 2015 compared to the same periods in 2014 due to the acquisition of RenWeb on June 3, 2014 and due to increases in the number of managed tuition payment plans, campus commerce customer transaction and payments volume, and new school customers.	

•	Excluding the amortization of intangibles, before tax operating margin was 22.6% and 24.1% for the three months ended June 30, 2015 and 2014 , respectively, and 32.6% and 32.7% for the six months ended June 30, 2015 and 2014 , respectively. The decrease in margin is due to new products and services as a result of recent acquisitions.	

Asset Generation and Management

•	The Company acquired $2.1 billion of student loans during the first six months of 2015 , of which $1.2 billion were purchased in the second quarter. The average loan portfolio balance was $28.3 billion and $28.2 billion for the three months ended June 30, 2015 and 2014 , respectively, and $28.3 billion and $27.0 billion for the six months ended June 30, 2015 and 2014, respectively.	

•	Core student loan spread was 1.41% for the three months ended June 30, 2015 , compared to 1.41% and 1.46% for the three months ended March 31, 2015 and June 30, 2014 , respectively. The year over year decrease was the result of recent acquisitions of consolidation loans, which have lower margins but longer terms.	

•	Due to historically low interest rates, the Company continues to earn significant fixed rate floor income. During the three months ended June 30, 2015 and 2014 and six months ended June 30, 2015 and 2014, the Company earned $45.1 million , $43.6 million , $91.3 million, and $81.5 million, respectively, of fixed rate floor income (net of $5.0 million, $7.0 million, $10.0 million, and $13.9 million of derivative settlements, respectively, used to hedge such loans).	

•	On August 3, 2015, the Company acquired the residual interests in two securitized student loan trusts. The two trusts collectively own approximately $1.5 billion of FFELP student loans and related assets and have issued a corresponding amount of related student loan asset-backed debt secured by those FFELP student loans and related assets.  The purchase was funded from the Company’s operating cash and unsecured line of credit.  The acquired FFELP student loans, related assets, and related asset-backed debt will be included in the Company’s consolidated financial statements. 	

Corporate and Other Activities

•	The Company recognized $ 1.9 million and $2.1 million in net gains from investment activity during the three months ended June 30, 2015 and 2014, respectively, and $2.4 million and $9.3 million during the six months ended June 30, 2015 and 2014, respectively. The majority of gains recognized in 2014 were from sales of student loan asset-backed security investments.	

•	Whitetail Rock Capital Management, LLC ("WRCM), the Company's SEC-registered investment advisory subsidiary, recognized investment advisory revenue of $0.8 million and $7.0 million for the three months ended June 30, 2015 and 2014, respectively, and $1.5 million and $12.3 million for the six months ended June 30, 2015 and 2014, respectively. Due to improvements in the capital markets, the opportunities to realize gains and earn performance fees on the sale of student loan asset-backed securities are becoming increasingly limited.	

•	During the three months ended June 30, 2015 and 2014, the Company recognized gains of $1.5 million and $18,000, respectively, on repurchases of its own debt. Gains from debt repurchases in the six months ended June 30, 2015 and 2014 were $4.0 million and $57,000, respectively.	

Liquidity and Capital Resources

•	As of June 30, 2015 , the Company had cash and cash equivalents of $182.3 million . In addition, the Company had a portfolio of available-for-sale and trading investments, consisting primarily of student loan asset-backed securities, with a fair value of $117.8 million as of June 30, 2015 .	

•	For the six months ended June 30, 2015 , the Company generated $192.0 million in net cash provided by operating activities, including $51.9 million from the termination of certain derivative financial instruments.	

6

		
•	Forecasted future cash flows from the Company's FFELP student loan portfolio financed in asset-backed securitization transactions are estimated to be approximately $2.32 billion as of June 30, 2015 .	

•	As of June 30, 2015 , $100.0 million was outstanding on the Company's unsecured line of credit and $250.0 million was available for future use. The unsecured line of credit has a maturity date of June 30, 2019.	

•	During the six months ended June 30, 2015, the Company repurchased a total of 1,174,008 shares of Class A common stock for $51.0 million ($43.46 per share), including 998,210 shares for $43.1 million ($43.17 per share) during the second quarter.	

•	During the six months ended June 30, 2015, the Company paid cash dividends of $9.2 million ($0.20 per share), including $4.6 million ($0.10 per share) during the second quarter.	

•	The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP and private education loan acquisitions; strategic acquisitions and investments; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. Dependent upon the timing and size of the opportunities, the Company may continue to accumulate additional cash and investments.	

Operating Segments

The Company has three reportable operating segments. The Company's reportable operating segments include:

•  Student Loan and Guaranty Servicing
•  Tuition Payment Processing and Campus Commerce
•  Asset Generation and Management

The Company earns fee-based revenue through its Student Loan and Guaranty Servicing and Tuition Payment Processing operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. The Company’s operating segments are defined by the products and services they offer and the types of customers they serve, and they reflect the manner in which financial information is currently evaluated by management. See note 1 of the notes to consolidated financial statements included in the 2014 Annual Report for a description of each operating segment, including the primary products and services offered.

The management reporting process measures the performance of the Company’s operating segments based on the management structure of the Company, as well as the methodology used by management to evaluate performance and allocate resources. Executive management (the "chief operating decision maker") evaluates the performance of the Company’s operating segments based on their financial results prepared in conformity with U.S. generally accepted accounting principles.  

Intersegment revenues are charged by a segment that provides a product or service to another segment.  Intersegment revenues and expenses are included within each segment consistent with the income statement presentation provided to management.  Income taxes are allocated based on 38% of income before taxes for each individual operating segment. The difference between the consolidated income tax expense and the sum of taxes calculated for each operating segment is included in income taxes in Corporate and Other Activities.

Corporate and Other Activities

Other business activities and operating segments that are not reportable are combined and included in Corporate and Other Activities. Corporate and Other Activities includes the following items:

•	Income earned on certain investment activities	
		
•	Interest expense incurred on unsecured debt transactions	
		
•	Other product and service offerings that are not considered reportable operating segments including, but not limited to, WRCM, the Company's SEC-registered investment advisory subsidiary, and the Enrollment Services business	

Corporate and Other Activities also includes certain corporate activities and overhead functions related to executive management, human resources, accounting, legal, enterprise risk management, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services.

7

Effective January 1, 2015, internal reporting to executive management (the "chief operating decision maker") changed to reflect operational changes made within the organization. The operational and internal reporting changes included moving the majority of information technology infrastructure personnel and related functions to Corporate and Other Activities. The associated costs are allocated to the other operating segments based on those segments' actual use of information technology related products and services. Information technology infrastructure personnel and related functions were historically included within the Student Loan and Guaranty Servicing operating segment, and associated costs were allocated to the other operating segments based on those segments' actual use of the related products and services. Prior period segment operating results have been reclassified to reflect these changes; however, the reclassifications had no effect on any operating segment's net income.

Segment Results of Operations

The following tables include the results of each of the Company's operating segments reconciled to the consolidated financial statements.

																			
 	Three months ended June 30, 2015	
 	Student Loan and Guaranty Servicing	 	Tuition Payment Processing and Campus Commerce	 	Asset
Generation and
Management	 	Corporate and Other Activities	 	Eliminations	 	Total	
Total interest income	$	13		 	1		 	176,279		 	1,814		 	(385	)	 	177,722		
Interest expense	—		 	—		 	71,441		 	1,570		 	(385	)	 	72,626		
Net interest income	13		 	1		 	104,838		 	244		 	—		 	105,096		
Less provision for loan losses	—		 	—		 	2,150		 	—		 	—		 	2,150		
Net interest income after provision for loan losses	13		 	1		 	102,688		 	244		 	—		 	102,946		
Other income:	 		 	 		 	 		 	 		 	 		 	 		
Loan and guaranty servicing revenue	63,833		 	—		 	—		 	—		 	—		 	63,833		
Intersegment servicing revenue	12,223		 	—		 	—		 	—		 	(12,223	)	 	—		
Tuition payment processing, school information, and campus commerce revenue	—		 	27,686		 	—		 	—		 	—		 	27,686		
Enrollment services revenue	—		 	—		 	—		 	17,161		 	—		 	17,161		
Other income	—		 	—		 	3,950		 	3,554		 	—		 	7,504		
Gain on sale of loans and debt repurchases	—		 	—		 	1,041		 	474		 	—		 	1,515		
Derivative market value and foreign currency adjustments, net	—		 	—		 	9,404		 	2,540		 	—		 	11,944		
Derivative settlements, net	—		 	—		 	(5,189	)	 	(253	)	 	—		 	(5,442	)	
Total other income	76,056		 	27,686		 	9,206		 	23,476		 	(12,223	)	 	124,201		
Operating expenses:	 		 	 		 	 		 	 		 	 		 	 		
Salaries and benefits	31,585		 	13,583		 	524		 	13,095		 	—		 	58,787		
Cost to provide enrollment services	—		 	—		 	—		 	11,162		 	—		 	11,162		
Loan servicing fees	—		 	—		 	7,420		 	—		 	—		 	7,420		
Depreciation and amortization	527		 	2,195		 	—		 	3,779		 	—		 	6,501		
Other	15,376		 	4,112		 	1,270		 	11,200		 	—		 	31,958		
Intersegment expenses, net	11,566		 	2,785		 	12,398		 	(14,526	)	 	(12,223	)	 	—		
Total operating expenses	59,054		 	22,675		 	21,612		 	24,710		 	(12,223	)	 	115,828		
Income (loss) before income taxes and corporate overhead allocation	17,015		 	5,012		 	90,282		 	(990	)	 	—		 	111,319		
Corporate overhead allocation	(2,294	)	 	(918	)	 	(1,147	)	 	4,359		 	—		 	—		
Income before income taxes	14,721		 	4,094		 	89,135		 	3,369		 	—		 	111,319		
Income tax (expense) benefit	(5,594	)	 	(1,556	)	 	(33,871	)	 	665		 	—		 	(40,356	)	
Net income	9,127		 	2,538		 	55,264		 	4,034		 	—		 	70,963		
  Net income attributable to noncontrolling interest	—		 	—		 	—		 	54		 	—		 	54		
Net income attributable to Nelnet, Inc.	$	9,127		 	2,538		 	55,264		 	3,980		 	—		 	70,909		

8

	
																			
 	Three months ended March 31, 2015	
 	Student Loan and Guaranty Servicing	 	Tuition Payment Processing and Campus Commerce	 	Asset
Generation and
Management	 	Corporate and Other Activities	 	Eliminations	 	Total	
Total interest income	$	7		 	2		 	172,423		 	2,153		 	(436	)	 	174,149		
Interest expense	—		 	—		 	70,540		 	1,450		 	(436	)	 	71,554		
Net interest income	7		 	2		 	101,883		 	703		 	—		 	102,595		
Less provision for loan losses	—		 	—		 	2,000		 	—		 	—		 	2,000		
Net interest income after provision for loan losses	7		 	2		 	99,883		 	703		 	—		 	100,595		
Other income:	 		 	 		 	 		 	 		 	 		 	 		
Loan and guaranty servicing revenue	57,811		 	—		 	—		 	—		 	—		 	57,811		
Intersegment servicing revenue	12,871		 	—		 	—		 	—		 	(12,871	)	 	—		
Tuition payment processing, school information, and campus commerce revenue	—		 	34,680		 	—		 	—		 	—		 	34,680		
Enrollment services revenue	—		 	—		 	—		 	17,863		 	—		 	17,863		
Other income	—		 	—		 	4,576		 	2,342		 	—		 	6,918		
Gain on sale of loans and debt repurchases	—		 	—		 	351		 	2,524		 	—		 	2,875		
Derivative market value and foreign currency adjustments, net	—		 	—		 	3,590		 	(1,453	)	 	—		 	2,137		
Derivative settlements, net	—		 	—		 	(4,963	)	 	(252	)	 	—		 	(5,215	)	
Total other income	70,682		 	34,680		 	3,554		 	21,024		 	(12,871	)	 	117,069		
Operating expenses:	 		 	 		 	 		 	 		 	 		 	 		
Salaries and benefits	33,703		 	13,321		 	541		 	13,485		 	—		 	61,050		
Cost to provide enrollment services	—		 	—		 	—		 	11,702		 	—		 	11,702		
Loan servicing fees	—		 	—		 	7,685		 	—		 	—		 	7,685		
Depreciation and amortization	446		 	2,195		 	—		 	3,021		 	—		 	5,662		
Other	14,600		 	3,802		 	1,068		 	9,659		 	—		 	29,129		
Intersegment expenses, net	9,700		 	2,614		 	13,040		 	(12,483	)	 	(12,871	)	 	—		
Total operating expenses	58,449		 	21,932		 	22,334		 	25,384		 	(12,871	)	 	115,228		
Income (loss) before income taxes and corporate overhead allocation	12,240		 	12,750		 	81,103		 	(3,657	)	 	—		 	102,436		
Corporate overhead allocation	(2,153	)	 	(862	)	 	(1,078	)	 	4,093		 	—		 	—		
Income before income taxes	10,087		 	11,888		 	80,025		 	436		 	—		 	102,436		
Income tax (expense) benefit	(3,834	)	 	(4,518	)	 	(30,409	)	 	1,131		 	—		 	(37,630	)	
Net income	6,253		 	7,370		 	49,616		 	1,567		 	—		 	64,806		
Net income attributable to noncontrolling interest	—		 	—		 	—		 	41		 	—		 	41		
Net income attributable to Nelnet, Inc.	$	6,253		 	7,370		 	49,616		 	1,526		 	—		 	64,765		

9

	
																			
 	Three months ended June 30, 2014	
 	Student Loan and Guaranty Servicing	 	Tuition Payment Processing and Campus Commerce	 	Asset
Generation and
Management	 	Corporate and Other Activities	 	Eliminations	 	Total	
Total interest income	$	9		 	3		 	175,562		 	2,036		 	(662	)	 	176,948		
Interest expense	—		 	—		 	67,936		 	1,961		 	(662	)	 	69,235		
Net interest income	9		 	3		 	107,626		 	75		 	—		 	107,713		
Less provision for loan losses	—		 	—		 	1,500		 	—		 	—		 	1,500		
Net interest income after provision for loan losses	9		 	3		 	106,126		 	75		 	—		 	106,213		
Other income:	 		 	 		 	 		 	 		 	 		 	 		
Loan and guaranty servicing revenue	66,460		 	—		 	—		 	—		 	—		 	66,460		
Intersegment servicing revenue	13,800		 	—		 	—		 	—		 	(13,800	)	 	—		
Tuition payment processing, school information, and campus commerce revenue	—		 	21,834		 	—		 	—		 	—		 	21,834		
Enrollment services revenue	—		 	—		 	—		 	20,145		 	—		 	20,145		
Other income	—		 	—		 	4,496		 	10,819		 	—		 	15,315		
Gain on sale of loans and debt repurchases	—		 	—		 	18		 	—		 	—		 	18		
Derivative market value and foreign currency adjustments, net	—		 	—		 	8,848		 	(1,064	)	 	—		 	7,784		
Derivative settlements, net	—		 	—		 	(5,958	)	 	(256	)	 	—		 	(6,214	)	
Total other income	80,260		 	21,834		 	7,404		 	29,644		 	(13,800	)	 	125,342		
Operating expenses:	 		 	 		 	 		 	 		 	 		 	 		
Salaries and benefits	30,082		 	11,112		 	570		 	12,124		 	—		 	53,888		
Cost to provide enrollment services	—		 	—		 	—		 	13,311		 	—		 	13,311		
Loan servicing fees	—		 	—		 	7,317		 	—		 	—		 	7,317		
Depreciation and amortization	438		 	1,845		 	—		 	2,931		 	—		 	5,214		
Other	16,975		 	2,956		 	1,528		 	11,601		 	—		 	33,060		
Intersegment expenses, net	9,356		 	1,404		 	13,968		 	(10,928	)	 	(13,800	)	 	—		
Total operating expenses	56,851		 	17,317		 	23,383		 	29,039		 	(13,800	)	 	112,790		
Income before income taxes and corporate overhead allocation	23,418		 	4,520		 	90,147		 	680		 	—		 	118,765		
Corporate overhead allocation	(2,060	)	 	(687	)	 	(1,249	)	 	3,996		 	—		 	—		
Income before income taxes	21,358		 	3,833		 	88,898		 	4,676		 	—		 	118,765		
Income tax (expense) benefit	(8,116	)	 	(1,456	)	 	(33,781	)	 	275		 	—		 	(43,078	)	
Net income	13,242		 	2,377		 	55,117		 	4,951		 	—		 	75,687		
  Net income attributable to noncontrolling interest	—		 	—		 	—		 	693		 	—		 	693		
Net income attributable to Nelnet, Inc.	$	13,242		 	2,377		 	55,117		 	4,258		 	—		 	74,994		

10

	
																			
 	Six months ended June 30, 2015	
 	Student Loan and Guaranty Servicing	 	Tuition Payment Processing and Campus Commerce	 	Asset
Generation and
Management	 	Corporate and Other
Activities	 	Eliminations	 	Total	
Total interest income	$	20		 	3		 	348,702		 	3,967		 	(821	)	 	351,871		
Interest expense	—		 	—		 	141,981		 	3,020		 	(821	)	 	144,180		
Net interest income	20		 	3		 	206,721		 	947		 	—		 	207,691		
Less provision for loan losses	—		 	—		 	4,150		 	—		 	—		 	4,150		
Net interest income after provision for loan losses	20		 	3		 	202,571		 	947		 	—		 	203,541		
Other income:	 		 	 		 	 		 	 		 	 		 	 		
Loan and guaranty servicing revenue	121,644		 	—		 	—		 	—		 	—		 	121,644		
Intersegment servicing revenue	25,094		 	—		 	—		 	—		 	(25,094	)	 	—		
Tuition payment processing, school information, and campus commerce revenue	—		 	62,366		 	—		 	—		 	—		 	62,366		
Enrollment services revenue	—		 	—		 	—		 	35,024		 	—		 	35,024		
Other income	—		 	—		 	8,526		 	5,896		 	—		 	14,422		
Gain on sale of loans and debt repurchases	—		 	—		 	1,392		 	2,998		 	—		 	4,390		
Derivative market value and foreign currency adjustments, net	—		 	—		 	12,994		 	1,087		 	—		 	14,081		
Derivative settlements, net	—		 	—		 	(10,152	)	 	(505	)	 	—		 	(10,657	)	
Total other income	146,738		 	62,366		 	12,760		 	44,500		 	(25,094	)	 	241,270		
Operating expenses:	 		 	 		 	 		 	 		 	 		 	 		
Salaries and benefits	65,288		 	26,904		 	1,065		 	26,580		 	—		 	119,837		
Cost to provide enrollment services	—		 	—		 	—		 	22,864		 	—		 	22,864		
Loan servicing fees	—		 	—		 	15,036		 	—		 	—		 	15,036		
Depreciation and amortization	973		 	4,390		 	—		 	6,800		 	—		 	12,163		
Other	29,976		 	7,914		 	2,407		 	20,859		 	—		 	61,156		
Intersegment expenses, net	21,266		 	5,399		 	25,438		 	(27,009	)	 	(25,094	)	 	—		
Total operating expenses	117,503		 	44,607		 	43,946		 	50,094		 	(25,094	)	 	231,056		
Income (loss) before income taxes and corporate overhead allocation	29,255		 	17,762		 	171,385		 	(4,647	)	 	—		 	213,755		
Corporate overhead allocation	(4,447	)	 	(1,780	)	 	(2,225	)	 	8,452		 	—		 	—		
Income before income taxes	24,808		 	15,982		 	169,160		 	3,805		 	—		 	213,755		
Income tax (expense) benefit	(9,428	)	 	(6,074	)	 	(64,280	)	 	1,796		 	—		 	(77,986	)	
Net income	15,380		 	9,908		 	104,880		 	5,601		 	—		 	135,769		
  Net income attributable to noncontrolling interest	—		 	—		 	—		 	95		 	—		 	95		
Net income attributable to Nelnet, Inc.	$	15,380		 	9,908		 	104,880		 	5,506		 	—		 	135,674		

11

	
																			
 	Six months ended June 30, 2014	
 	Student Loan and Guaranty Servicing	 	Tuition Payment Processing and Campus Commerce	 	Asset
Generation and
Management	 	Corporate and Other
Activities	 	Eliminations	 	Total	
Total interest income	$	20		 	3		 	332,565		 	4,694		 	(1,459	)	 	335,823		
Interest expense	—		 	—		 	127,412		 	3,286		 	(1,459	)	 	129,239		
Net interest income	20		 	3		 	205,153		 	1,408		 	—		 	206,584		
Less provision for loan losses	—		 	—		 	4,000		 	—		 	—		 	4,000		
Net interest income after provision for loan losses	20		 	3		 	201,153		 	1,408		 	—		 	202,584		
Other income:	 		 	 		 	 		 	 		 	 		 	 		
Loan and guaranty servicing revenue	131,217		 	—		 	—		 	—		 	—		 	131,217		
Intersegment servicing revenue	28,021		 	—		 	—		 	—		 	(28,021	)	 	—		
Tuition payment processing, school information, and campus commerce revenue	—		 	47,069		 	—		 	—		 	—		 	47,069		
Enrollment services revenue	—		 	—		 	—		 	42,156		 	—		 	42,156		
Other income	—		 	—		 	8,660		 	24,786		 	—		 	33,446		
Gain on sale of loans and debt repurchases	—		 	—		 	57		 	—		 	—		 	57		
Derivative market value and foreign currency adjustments, net	—		 	—		 	12,325		 	(2,577	)	 	—		 	9,748		
Derivative settlements, net	—		 	—		 	(11,935	)	 	(508	)	 	—		 	(12,443	)	
Total other income	159,238		 	47,069		 	9,107		 	63,857		 	(28,021	)	 	251,250		
Operating expenses:	 		 	 		 	 		 	 		 	 		 	 		
Salaries and benefits	59,481		 	21,139		 	1,179		 	24,573		 	—		 	106,372		
Cost to provide enrollment services	—		 	—		 	—		 	27,786		 	—		 	27,786		
Loan servicing fees	—		 	—		 	12,720		 	—		 	—		 	12,720		
Depreciation and amortization	857		 	3,273		 	—		 	5,867		 	—		 	9,997		
Other	32,625		 	5,603		 	3,271		 	21,785		 	—		 	63,284		
Intersegment expenses, net	18,519		 	2,824		 	28,339		 	(21,661	)	 	(28,021	)	 	—		
Total operating expenses	111,482		 	32,839		 	45,509		 	58,350		 	(28,021	)	 	220,159		
Income before income taxes and corporate overhead allocation	47,776		 	14,233		 	164,751		 	6,915		 	—		 	233,675		
Corporate overhead allocation	(3,920	)	 	(1,307	)	 	(2,578	)	 	7,805		 	—		 	—		
Income before income taxes	43,856		 	12,926		 	162,173		 	14,720		 	—		 	233,675		
Income tax (expense) benefit	(16,665	)	 	(4,911	)	 	(61,625	)	 	(488	)	 	—		 	(83,689	)	
Net income	27,191		 	8,015		 	100,548		 	14,232		 	—		 	149,986		
  Net income attributable to noncontrolling interest	—		 	—		 	—		 	1,206		 	—		 	1,206		
Net income attributable to Nelnet, Inc.	$	27,191		 	8,015		 	100,548		 	13,026		 	—		 	148,780		

12

Net Interest Income, Net of Settlements on Derivatives

The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income.

The following table summarizes the components of “net interest income” and “derivative settlements, net” included in the attached consolidated statements of income.

																
 	Three months ended	 	Six months ended	
 	June 30, 2015	 	March 31, 2015	 	June 30, 2014	 	June 30, 2015	 	June 30, 2014	
Variable student loan interest margin, net of settlements on derivatives	$	54,521		 	50,633		 	58,627		 	105,155		 	113,023		
Fixed rate floor income, net of settlements on derivatives	45,069		 	46,244		 	43,607		 	91,313		 	81,451		
Investment interest	1,887		 	2,205		 	1,482		 	4,092		 	3,461		
Non-portfolio related derivative settlements	(253	)	 	(252	)	 	(256	)	 	(506	)	 	(508	)	
Corporate debt interest expense	(1,570	)	 	(1,450	)	 	(1,961	)	 	(3,020	)	 	(3,286	)	
Net interest income (net of settlements on derivatives)	$	99,654		 	97,380		 	101,499		 	197,034		 	194,141		

13

Student Loan Servicing Volumes (dollars in millions)

	
																												
Company owned	 	$22,650	 	$21,237	 	$21,397	 	$21,192	 	$21,110	 	$20,511	 	$19,742	 	$19,369	 	$18,934	
% of total	 	29.8%	 	21.8%	 	15.5%	 	14.3%	 	14.1%	 	12.9%	 	12.2%	 	11.5%	 	11.1%	
Number of servicing borrowers:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Government servicing:	 	3,036,534		 	3,892,929		 	5,305,498		 	5,438,933		 	5,465,395		 	5,824,743		 	5,915,449		 	5,882,446		 	5,817,078		
FFELP servicing:	 	1,799,484		 	1,626,146		 	1,462,122		 	1,426,435		 	1,390,541		 	1,404,619		 	1,397,295		 	1,358,551		 	1,353,785		
Private servicing:	 	164,554		 	173,948		 	195,580		 	191,606		 	186,863		 	200,095		 	202,529		 	205,926		 	209,854		
Total:	 	5,000,572		 	5,693,023		 	6,963,200		 	7,056,974		 	7,042,799		 	7,429,457		 	7,515,273		 	7,446,923		 	7,380,717		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Number of remote hosted borrowers:	 	9,566,296		 	6,912,204		 	1,915,203		 	1,796,287		 	1,735,594		 	1,677,547		 	1,611,654		 	1,592,813		 	1,559,573		

Other Income

The following table summarizes the components of "other income" included in the attached consolidated statements of income.

														
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30,
2015	 	June 30,
2014	
Borrower late fee income	$	3,621		 	4,131		 	3,557		 	7,752	 	7,244	
Investment advisory fees	833		 	657		 	7,035		 	1,490	 	12,264	
Realized and unrealized gains/(losses) on investments, net	1,852		 	516		 	2,081		 	2,369	 	9,291	
Other	1,198		 	1,614		 	2,642		 	2,811	 	4,647	
Other income	$	7,504		 	6,918		 	15,315		 	14,422	 	33,446	

14

Derivative Settlements

The following table summarizes the components of "derivative settlements, net" included in the attached consolidated statements of income.

																
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30,
2015	 	June 30,
2014	
1:3 basis swaps	$	123		 	266		 	858		 	389		 	1,739		
Interest rate swaps - floor income hedges	(5,019	)	 	(5,015	)	 	(6,974	)	 	(10,034	)	 	(13,924	)	
Interest rate swaps - hybrid debt hedges	(253	)	 	(252	)	 	(256	)	 	(505	)	 	(508	)	
Cross-currency interest rate swaps	(293	)	 	(214	)	 	158		 	(507	)	 	250		
Total settlements - expense	$	(5,442	)	 	(5,215	)	 	(6,214	)	 	(10,657	)	 	(12,443	)	

Derivative Market Value and Foreign Currency Adjustments

"Derivative market value and foreign currency adjustments" include (i) the unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars.

The following table summarizes the components of “derivative market value and foreign currency adjustments” included in the attached consolidated statements of income.

																
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30,
2015	 	June 30,
2014	
Change in fair value of derivatives - income (expense)	$	26,615		 	(46,072	)	 	5,033		 	(19,457	)	 	7,950		
Foreign currency transaction adjustment - income (expense)	(14,671	)	 	48,209		 	2,751		 	33,538		 	1,798		
Derivative market value and foreign currency adjustments - income (expense)	$	11,944		 	2,137		 	7,784		 	14,081		 	9,748		

Student Loans Receivable

The table below outlines the components of the Company’s student loan portfolio:

										
 	As of	 	As of	 	As of	
 	June 30,
2015	 	December 31,
2014	 	June 30,
2014	
Federally insured loans	 	 	 	 	 	
Stafford and other	$	6,574,079		 	6,030,825		 	6,479,493		
Consolidation	21,564,569		 	22,165,605		 	23,032,622		
Total	28,138,648		 	28,196,430		 	29,512,115		
Private education loans	175,202		 	27,478		 	67,670		
 	28,313,850		 	28,223,908		 	29,579,785		
Loan discount, net of unamortized loan premiums and deferred origination costs	(168,051	)	 	(169,813	)	 	(184,888	)	
Allowance for loan losses – federally insured loans	(36,762	)	 	(39,170	)	 	(40,921	)	
Allowance for loan losses – private education loans	(13,262	)	 	(9,730	)	 	(11,546	)	
 	$	28,095,775		 	28,005,195		 	29,342,430		

15

Loan Activity

The following table sets forth the activity of loans:

													
 	Three months ended June 30,	 	Six months ended June 30,	
 	2015	 	2014	 	2015	 	2014	
Beginning balance	$	28,107,088		 	25,814,195		 	28,223,908		 	26,121,306		
Loan acquisitions	1,228,030		 	4,800,640		 	2,064,142		 	5,187,898		
Repayments, claims, capitalized interest, participations, and other	(690,556	)	 	(825,365	)	 	(1,318,916	)	 	(1,374,070	)	
Consolidation loans lost to external parties	(330,712	)	 	(209,679	)	 	(651,288	)	 	(355,343	)	
Loans sold	—		 	(6	)	 	(3,996	)	 	(6	)	
Ending balance	$	28,313,850		 	29,579,785		 	28,313,850		 	29,579,785		

Student Loan Spread

The following table analyzes the student loan spread on the Company’s portfolio of student loans, which represents the spread between the yield earned on student loan assets and the costs of the liabilities and derivative instruments used to fund those assets.

																
 	Three months ended	 	Six months ended	
 	June 30,
2015	 	March 31,
2015	 	June 30,
2014	 	June 30,
2015	 	June 30,
2014	
Variable student loan yield, gross	2.57	 %	 	2.53	 %	 	2.54	 %	 	2.55	 %	 	2.52	 %	
Consolidation rebate fees	(0.83	)	 	(0.84	)	 	(0.82	)	 	(0.84	)	 	(0.81	)	
Discount accretion, net of premium and deferred origination costs amortization	0.04		 	0.04		 	0.06		 	0.05		 	0.06		
Variable student loan yield, net	1.78		 	1.73		 	1.78		 	1.76		 	1.77		
Student loan cost of funds - interest expense	(1.01	)	 	(0.98	)	 	(0.95	)	 	(1.00	)	 	(0.94	)	
Student loan cost of funds - derivative settlements	—		 	—		 	0.01		 	—		 	0.01		
Variable student loan spread	0.77		 	0.75		 	0.84		 	0.76		 	0.84		
Fixed rate floor income, net of settlements on derivatives	0.64		 	0.66		 	0.62		 	0.65		 	0.61		
Core student loan spread	1.41	 %		1.41	 %		1.46	 %	 	1.41	 %	 	1.45	 %	
 	 	 	 	 	 	 	 	 	 	
Average balance of student loans	$	28,297,312		 	28,289,420		 	28,163,626		 	28,293,366		 	27,039,339		
Average balance of debt outstanding	28,331,870		 	28,460,627		 	28,229,140		 	28,395,893		 	27,034,535		

16

A trend analysis of the Company's core and variable student loan spreads is summarized below.

(a)	The interest earned on a large portion of the Company's FFELP student loan assets is indexed to the one-month LIBOR rate.  The Company funds the majority of its assets with three-month LIBOR indexed floating rate securities.  The relationship between the indices in which the Company earns interest on its loans and funds such loans has a significant impact on student loan spread.  This table (the right axis) shows the difference between the Company's liability base rate and the one-month LIBOR rate by quarter.	

Variable student loan spread decreased during the three and six months ended June 30, 2015 as compared to the same periods in 2014 as a result of recent acquisitions of consolidation loans, which have lower margins but longer terms.

The primary difference between variable student loan spread and core student loan spread is fixed rate floor income.  A summary of fixed rate floor income and its contribution to core student loan spread follows:

																
 	Three months ended	 	Six months ended	
 	June 30, 2015	 	March 31, 2015	 	June 30, 2014	 	June 30, 2015	 	June 30, 2014	
Fixed rate floor income, gross	$	50,088		 	51,259		 	50,581		 	101,347		 	95,375		
Derivative settlements (a)	(5,019	)	 	(5,015	)	 	(6,974	)	 	(10,034	)	 	(13,924	)	
Fixed rate floor income, net	$	45,069		 	46,244		 	43,607		 	91,313		 	81,451		
Fixed rate floor income contribution to spread, net	0.64	%	 	0.66	%	 	0.62	%	 	0.65	%	 	0.61	%	

		
(a)	Includes settlement payments on derivatives used to hedge student loans earning fixed rate floor income.	

17

Fixed Rate Floor Income

The following table shows the Company’s federally insured student loan assets that were earning fixed rate floor income as of June 30, 2015 .

									
 	 	Borrower/	 	Estimated	 	 	
Fixed	 	lender	 	variable	 	 	
interest	 	weighted	 	conversion	 	Loan	
rate range	 	average yield	 	rate (a)	 	balance	
< 3.0%	 	2.88%	 	0.24%	 	$	1,773,614		
3.0 - 3.49%	 	3.19%	 	0.55%	 	2,229,036		
3.5 - 3.99%	 	3.65%	 	1.01%	 	2,177,619		
4.0 - 4.49%	 	4.20%	 	1.56%	 	1,658,609		
4.5 - 4.99%	 	4.72%	 	2.08%	 	1,025,873		
5.0 - 5.49%	 	5.22%	 	2.58%	 	647,758		
5.5 - 5.99%	 	5.67%	 	3.03%	 	379,620		
6.0 - 6.49%	 	6.18%	 	3.54%	 	440,487		
6.5 - 6.99%	 	6.70%	 	4.06%	 	416,443		
7.0 - 7.49%	 	7.17%	 	4.53%	 	174,664		
7.5 - 7.99%	 	7.71%	 	5.07%	 	298,710		
8.0 - 8.99%	 	8.18%	 	5.54%	 	673,477		
> 9.0%	 	9.04%	 	6.40%	 	261,244		
 	 	 	 	 	 	$	12,157,154		

(a)	The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of June 30, 2015 , the weighted average estimated variable conversion rate was 1.84% and the short-term interest rate was 19 basis points.	

The following table summarizes the outstanding derivative instruments as of June 30, 2015 used by the Company to economically hedge loans earning fixed rate floor income.

								
Maturity	 	Notional amount	 	Weighted average fixed rate paid by the Company (a)	
	 		 		
2015	 	$	500,000		 	0.71	%	
2016	 	750,000		 	0.85		
2017	 	1,850,000		 	0.83		
2018	 	100,000		 	1.02		
2025	 	100,000		 	2.32		
 	 	$	3,300,000		 	0.87	%	

(a)	For all interest rate derivatives, the Company receives discrete three-month LIBOR.	

18