NELNET INC, 10-Q filed on 8/9/2012
Quarterly Report
Document and Entity Information Document
6 Months Ended
Jun. 30, 2012
Jul. 31, 2012
Common Class A [Member]
Jul. 31, 2012
Common Class B [Member]
Document Information [Line Items]
 
 
 
Entity Registrant Name
NELNET INC 
 
 
Document Type
10-Q 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Common Stock, Shares Outstanding
 
35,836,368 
11,495,377 
Amendment Flag
false 
 
 
Entity Central Index Key
0001258602 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Period End Date
Jun. 30, 2012 
 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
Q2 
 
 
Consolidated Balance Sheets (unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Assets:
 
 
Student loans receivable (net of allowance for loan losses of $49,657 and $48,482, respectively)
$ 23,501,382 
$ 24,297,876 
Cash and cash equivalents:
 
 
Cash and cash equivalents - not held at a related party
9,845 
7,299 
Cash and cash equivalents - held at a related party
46,410 
35,271 
Total cash and cash equivalents
56,255 
42,570 
Investments
74,055 
50,780 
Restricted cash and investments
912,955 
614,322 
Restricted cash - due to customers
63,753 
109,809 
Accrued interest receivable
286,133 
308,401 
Accounts receivable (net of allowance for doubtful accounts of $1,438 and $1,284, respectively)
67,001 
63,654 
Goodwill
117,118 
117,118 
Intangible assets, net
19,006 
28,374 
Property and equipment, net
33,105 
34,819 
Other assets
89,714 
92,275 
Fair value of derivative instruments
48,665 
92,219 
Total assets
25,269,142 
25,852,217 
Liabilities:
 
 
Bonds and notes payable
23,836,250 
24,434,540 
Accrued interest payable
18,187 
19,634 
Other liabilities
143,845 
178,189 
Due to customers
63,753 
109,809 
Fair value of derivative instruments
62,209 
43,840 
Total liabilities
24,124,244 
24,786,012 
Nelnet, Inc. shareholders' equity:
 
 
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding
0 
0 
Common stock:
 
 
Additional paid-in capital
52,194 
49,245 
Retained earnings
1,092,715 
1,017,629 
Accumulated other comprehensive loss
(409)
0 
Employee notes receivable
(368)
(1,140)
Total Nelnet, Inc. shareholders' equity
1,144,605 
1,066,205 
Noncontrolling interest
293 
0 
Total equity
1,144,898 
1,066,205 
Total liabilities and equity
25,269,142 
25,852,217 
Common Class A [Member]
 
 
Common stock:
 
 
Common stock
358 
356 
Common Class B [Member]
 
 
Common stock:
 
 
Common stock
$ 115 
$ 115 
Consolidated Balance Sheets (unaudited) (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Allowance for loan losses (in Dollars)
$ 49,657 
$ 48,482 
Allowance for doubtful accounts (in Dollars)
$ 1,438 
$ 1,284 
Preferred stock, par value (in Dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, authorized shares
50,000,000 
50,000,000 
Preferred stock, issued shares
0 
0 
Preferred stock, outstanding shares
0 
0 
Common Class A [Member]
 
 
Par Value (in Dollars per share)
$ 0.01 
$ 0.01 
Shares Authorized
600,000,000 
600,000,000 
Shares Issued
35,847,801 
35,643,102 
Shares Outstanding
35,847,801 
35,643,102 
Common Class B [Member]
 
 
Par Value (in Dollars per share)
$ 0.01 
$ 0.01 
Shares Authorized
60,000,000 
60,000,000 
Shares Issued
11,495,377 
11,495,377 
Shares Outstanding
11,495,377 
11,495,377 
Consolidated Statements of Income (unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Interest income:
 
 
 
 
Loan interest
$ 150,988 
$ 138,934 
$ 304,046 
$ 276,292 
Investment interest
1,055 
856 
2,150 
1,582 
Total interest income
152,043 
139,790 
306,196 
277,874 
Interest expense:
 
 
 
 
Interest on bonds and notes payable
67,476 
51,054 
136,773 
103,361 
Net interest income
84,567 
88,736 
169,423 
174,513 
Less provision for loan losses
7,000 
5,250 
13,000 
9,000 
Net interest income (loss) after provision for loan losses
77,567 
83,486 
156,423 
165,513 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
52,391 
41,735 
101,879 
82,148 
Tuition payment processing and campus commerce revenue
16,834 
14,761 
38,747 
34,130 
Enrollment services revenue
29,710 
32,315 
61,374 
66,183 
Other income
8,800 
6,826 
19,754 
13,318 
Gain on sale of loans and debt repurchases
935 
0 
935 
8,307 
Derivative market value and foreign currency adjustments and derivative settlements, net
(21,618)
(20,335)
(36,798)
(23,371)
Total other income (expense)
87,052 
75,302 
185,891 
180,715 
Operating expenses:
 
 
 
 
Salaries and benefits
48,703 
42,881 
97,798 
86,793 
Cost to provide enrollment services
20,374 
22,140 
42,052 
44,979 
Depreciation and amortization
8,226 
6,769 
16,362 
13,545 
Other
30,908 
28,767 
63,171 
54,872 
Total operating expenses
108,211 
100,557 
219,383 
200,189 
Income before income taxes
56,408 
58,231 
122,931 
146,039 
Income tax expense
(14,878)
(21,106)
(38,108)
(54,034)
Net income (loss)
41,530 
37,125 
84,823 
92,005 
Net income attributable to noncontrolling interest
136 
0 
288 
0 
Net income (loss) attributable to Nelnet, Inc.
$ 41,394 
$ 37,125 
$ 84,535 
$ 92,005 
Earnings per common share:
 
 
 
 
Net income attributable to Nelnet, Inc. shareholders - basic
$ 0.87 
$ 0.76 
$ 1.78 
$ 1.90 
Net income attributable to Nelnet, Inc. shareholders - diluted
$ 0.87 
$ 0.76 
$ 1.78 
$ 1.89 
Weighted average common shares outstanding:
 
 
 
 
Basic
47,049,055 
48,302,779 
47,020,811 
48,237,411 
Diluted
47,292,147 
48,488,046 
47,240,659 
48,425,886 
Consolidated Statements of Comprehensive Income (unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Net income
$ 41,530 
$ 37,125 
$ 84,823 
$ 92,005 
Available-for-sale securities:
 
 
 
 
Unrealized holding gains (losses) arising during period, net
(586)
0 
1,596 
0 
Less: reclassification adjustment for (gains) losses recognized in net income, net
(966)
0 
(2,246)
0 
Income tax effect
538 
0 
209 
0 
Total other comprehensive income (loss)
(1,014)
0 
(409)
0 
Comprehensive income
40,516 
37,125 
84,414 
92,005 
Comprehensive income attributable to noncontrolling interest
136 
0 
288 
0 
Comprehensive income attributable to Nelnet, Inc.
$ 40,380 
$ 37,125 
$ 84,126 
$ 92,005 
Consolidated Statements of Shareholders' Equity (unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Preferred Stock [Member]
Common Class A [Member]
Common Class B [Member]
Additional paid-in capital [Member]
Retained earnings [Member]
Accumulated other comprehensive loss [Member]
Employee notes receivable [Member]
Noncontrolling interest [Member]
Balance at Mar. 31, 2011
$ 955,367 
$ 0 
$ 370 
$ 115 
$ 73,502 
$ 882,550 
$ 0 
$ (1,170)
$ 0 
Balance (in Shares) at Mar. 31, 2011
 
0 
36,983,557 
11,495,377 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
Net income
37,125 
 
 
 
 
37,125 
 
 
0 
Other comprehensive income
0 
 
 
 
 
 
 
 
 
Cash dividend on Class A and Class B common stock
(4,852)
 
 
 
 
(4,852)
 
 
 
Issuance of common stock, net of forfeitures
1,028 
 
1 
0 
1,027 
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
70,794 
0 
 
 
 
 
 
Compensation expense for stock based awards
342 
 
 
 
342 
 
 
 
 
Repurchase of common stock
(226)
 
(1)
0 
(225)
 
 
 
 
Repurchase of common stock (in Shares)
 
 
(9,979)
0 
 
 
 
 
 
Balance at Jun. 30, 2011
988,784 
0 
370 
115 
74,646 
914,823 
0 
(1,170)
0 
Balance (in Shares) at Jun. 30, 2011
 
0 
37,044,372 
11,495,377 
 
 
 
 
 
Balance at Dec. 31, 2010
906,633 
0 
368 
115 
76,263 
831,057 
0 
(1,170)
0 
Balance (in Shares) at Dec. 31, 2010
 
0 
36,846,353 
11,495,377 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
Net income
92,005 
 
 
 
 
92,005 
 
 
0 
Other comprehensive income
0 
 
 
 
 
 
 
 
 
Cash dividend on Class A and Class B common stock
(8,239)
 
 
 
 
(8,239)
 
 
 
Contingency payment related to business combination
(5,893)
 
 
 
(5,893)
 
 
 
 
Issuance of common stock, net of forfeitures
4,116 
 
3 
0 
4,113 
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
222,463 
0 
 
 
 
 
 
Compensation expense for stock based awards
697 
 
 
 
697 
 
 
 
 
Repurchase of common stock
(535)
 
(1)
0 
(534)
 
 
 
 
Repurchase of common stock (in Shares)
 
 
(24,444)
0 
 
 
 
 
 
Balance at Jun. 30, 2011
988,784 
0 
370 
115 
74,646 
914,823 
0 
(1,170)
0 
Balance (in Shares) at Jun. 30, 2011
 
0 
37,044,372 
11,495,377 
 
 
 
 
 
Balance at Dec. 31, 2011
1,066,205 
0 
356 
115 
49,245 
1,017,629 
0 
(1,140)
0 
Balance (in Shares) at Dec. 31, 2011
 
0 
35,643,102 
11,495,377 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
Issuance of minority membership interest
5 
 
 
 
 
 
 
 
5 
Net income
84,823 
 
 
 
 
84,535 
 
 
288 
Other comprehensive income
(409)
 
 
 
 
 
(409)
 
 
Cash dividend on Class A and Class B common stock
(9,449)
 
 
 
 
(9,449)
 
 
 
Issuance of common stock, net of forfeitures
3,278 
 
3 
0 
3,275 
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
255,718 
0 
 
 
 
 
 
Compensation expense for stock based awards
988 
 
 
 
988 
 
 
 
 
Repurchase of common stock
(1,315)
 
(1)
0 
(1,314)
 
 
 
 
Repurchase of common stock (in Shares)
 
 
(51,019)
0 
 
 
 
 
 
Reduction of employee stock notes receivable
772 
 
 
 
 
 
 
772 
 
Balance at Jun. 30, 2012
1,144,898 
0 
358 
115 
52,194 
1,092,715 
(409)
(368)
293 
Balance (in Shares) at Jun. 30, 2012
 
0 
35,847,801 
11,495,377 
 
 
 
 
 
Balance at Mar. 31, 2012
1,107,873 
0 
358 
115 
50,948 
1,056,058 
605 
(368)
157 
Balance (in Shares) at Mar. 31, 2012
 
0 
35,821,057 
11,495,377 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
Net income
41,530 
 
 
 
 
41,394 
 
 
136 
Other comprehensive income
(1,014)
 
 
 
 
 
(1,014)
 
 
Cash dividend on Class A and Class B common stock
(4,737)
 
 
 
 
(4,737)
 
 
 
Issuance of common stock, net of forfeitures
852 
 
1 
0 
851 
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
35,134 
0 
 
 
 
 
 
Compensation expense for stock based awards
593 
 
 
 
593 
 
 
 
 
Repurchase of common stock
(199)
 
(1)
0 
(198)
 
 
 
 
Repurchase of common stock (in Shares)
 
 
(8,390)
0 
 
 
 
 
 
Balance at Jun. 30, 2012
$ 1,144,898 
$ 0 
$ 358 
$ 115 
$ 52,194 
$ 1,092,715 
$ (409)
 
$ 293 
Balance (in Shares) at Jun. 30, 2012
 
0 
35,847,801 
11,495,377 
 
 
 
 
 
Consolidated Statements of Shareholders' Equity (unaudited) (Parentheticals)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Dividends paid per common share
$ 0.10 
$ 0.10 
$ 0.20 
$ 0.17 
Common Class A [Member]
 
 
 
 
Dividends paid per common share
$ 0.10 
$ 0.10 
$ 0.20 
$ 0.17 
Common Class B [Member]
 
 
 
 
Dividends paid per common share
$ 0.10 
$ 0.10 
$ 0.20 
$ 0.17 
Consolidated Statements of Cash Flows (unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net income attributable to Nelnet, Inc.
$ 84,535 
$ 92,005 
Net income attributable to noncontrolling interest
288 
0 
Net income (loss)
84,823 
92,005 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization, including loan and debt premiums/discounts and deferred origination costs
35,524 
35,841 
Provision for loan losses
13,000 
9,000 
Derivative market value adjustment
61,923 
(68,658)
Foreign currency transaction adjustment
(26,984)
84,354 
Proceeds to terminate and/or amend derivative instruments, net
0 
11,847 
Gain on sale of loans
(33)
(1,345)
Gain from debt repurchases
(902)
(6,962)
Change in investments - trading securities, net
(229)
11,572 
Deferred income tax (benefit) expense
(20,483)
(8,715)
Non-cash compensation expense
1,412 
1,092 
Other non-cash items
(1,302)
108 
Decrease in accrued interest receivable
22,268 
15,671 
(Increase) decrease in accounts receivable
(3,347)
1,498 
Decrease in other assets
2,264 
3,258 
Decrease in accrued interest payable
(1,447)
(2,060)
Decrease in other liabilities
(5,220)
(10,290)
Net cash provided by operating activities
161,267 
168,216 
Cash flows from investing activities:
 
 
Purchases of student loans
(729,485)
(662,324)
Purchases of student loans from a related party
(290)
(29)
Net proceeds from student loan repayments, claims, capitalized interest, participations, and other
1,449,610 
1,350,344 
Proceeds from sale of student loans
59,965 
95,131 
Purchases of available-for-sale securities
(53,662)
0 
Proceeds from sales of available-for-sale securities
28,216 
0 
Purchases of property and equipment, net
(4,405)
(8,281)
(Increase) decrease in restricted cash and investments, net
(298,633)
58,027 
Business and asset acquisition contingency payments
0 
(14,080)
Net cash provided by investing activities
451,316 
818,788 
Cash flows from financing activities:
 
 
Payments on bonds and notes payable
(1,520,127)
(1,782,953)
Proceeds from issuance of bonds and notes payable
936,560 
745,554 
Payments on bonds payable due to a related party
0 
(107,050)
Payments of debt issuance costs
(5,593)
(1,506)
Dividends paid
(9,449)
(8,239)
Repurchases of common stock
(1,315)
(535)
Proceeds from issuance of common stock
249 
265 
Payments received on employee stock notes receivable
772 
0 
Issuance of minority membership interest
5 
0 
Net cash used in financing activities
(598,898)
(1,154,464)
Net increase (decrease) in cash and cash equivalents
13,685 
(167,460)
Cash and cash equivalents, beginning of period
42,570 
283,801 
Cash and cash equivalents, end of period
56,255 
116,341 
Supplemental disclosures of cash flow information:
 
 
Interest paid
120,823 
101,007 
Income taxes paid, net of refunds
$ 57,113 
$ 63,331 
Basis of Financial Reporting
Basis of Financial Reporting
Basis of Financial Reporting

The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company”) as of June 30, 2012 and for the three and six month periods ended June 30, 2012 and 2011 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2011 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results for the year ending December 31, 2012. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Noncontrolling Interest

Noncontrolling interest reflects the proportionate share of membership interest (equity) and net income attributable to the holders of minority membership interests in Whitetail Rock Capital Management, LLC ("WRCM"), a subsidiary of the Company that issued minority membership interests on January 1, 2012.
Student Loans Receivable and Allowance for Loan Losses
Student Loans Receivable and Allowance for Loan Losses
 Student Loans Receivable and Allowance for Loan Losses

Student loans receivable consisted of the following:
 
As of
 
As of
 
June 30, 2012
 
December 31, 2011
Federally insured loans
$
23,551,124

 
24,332,709

Non-federally insured loans
31,471

 
26,916

 
23,582,595

 
24,359,625

Unamortized loan premiums (discounts) and deferred origination costs, net
(31,556
)
 
(13,267
)
Allowance for loan losses – federally insured loans
(36,992
)
 
(37,205
)
Allowance for loan losses – non-federally insured loans
(12,665
)
 
(11,277
)
 
$
23,501,382

 
24,297,876

Allowance for federally insured loans as a percentage of such loans
0.16
%
 
0.15
%
Allowance for non-federally insured loans as a percentage of such loans
40.24
%
 
41.90
%

 
Activity in the Allowance for Loan Losses

The provision for loan losses represents the periodic expense of maintaining an allowance sufficient to absorb losses, net of recoveries, inherent in the portfolio of student loans. Activity in the allowance for loan losses is shown below.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Balance at beginning of period
$
48,435

 
41,097

 
48,482

 
43,626

Provision for loan losses:
 

 
 

 
 

 
 

Federally insured loans
7,000

 
5,000

 
13,000

 
8,500

Non-federally insured loans
—

 
250

 
—

 
500

Total provision for loan losses
7,000

 
5,250

 
13,000

 
9,000

Charge-offs:
 

 
 

 
 

 
 

Federally insured loans
(5,999
)
 
(4,585
)
 
(11,494
)
 
(9,440
)
Non-federally insured loans
(528
)
 
(1,226
)
 
(1,297
)
 
(2,220
)
Total charge-offs
(6,527
)
 
(5,811
)
 
(12,791
)
 
(11,660
)
Recoveries - non-federally insured loans
354

 
283

 
705

 
653

Purchase (sale) of loans, net:
 
 
 
 
 
 
 
Federally insured loans
(792
)
 
—

 
(1,719
)
 
—

Non-federally insured loans
—

 
—

 
—

 
—

Total purchase (sale) of loans, net
(792
)
 
—

 
(1,719
)
 
—

Transfer (to) from repurchase obligation related to loans (sold) purchased, net
1,187

 
1,481

 
1,980

 
681

Balance at end of period
$
49,657

 
42,300

 
49,657

 
42,300

Allocation of the allowance for loan losses:
 
 
 

 
 

 
 

Federally insured loans
$
36,992

 
31,968

 
36,992

 
31,968

Non-federally insured loans
12,665

 
10,332

 
12,665

 
10,332

Total allowance for loan losses
$
49,657

 
42,300

 
49,657

 
42,300



Repurchase Obligations

As of June 30, 2012, the Company had participated a cumulative amount of $107.7 million of non-federally insured loans to third parties. Loans participated under these agreements have been accounted for by the Company as loan sales. Accordingly, the participation interests sold are not included on the Company’s consolidated balance sheets. Per the terms of the servicing agreements, the Company’s servicing operations are obligated to repurchase loans subject to the participation interests in the event such loans become 60 or 90 days delinquent.

In addition, on January 13, 2011, the Company sold a portfolio of non-federally insured loans for proceeds of $91.3 million (100% of par value).  The Company retained credit risk related to this portfolio and will pay cash to purchase back any loans which become 60 days delinquent.

The Company’s estimate related to its obligation to repurchase these loans is included in “other liabilities” in the Company’s consolidated balance sheets. The activity related to this accrual is detailed below.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Beginning balance
$
18,430

 
19,670

 
19,223

 
12,600

Transfer (to) from the allowance for loan losses related to loans (purchased) sold, net
(1,187
)
 
(1,481
)
 
(1,980
)
 
(681
)
Repurchase obligation associated with loans sold on January 13, 2011
—

 
—

 
—

 
6,270

Current period expense
—

 
2,500

 
—

 
2,500

Ending balance
$
17,243

 
20,689

 
17,243

 
20,689


Student Loan Status and Delinquencies

Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs.  The table below shows the Company’s student loan delinquencies.
 
As of June 30, 2012
 
As of December 31, 2011
 
As of June 30, 2011
Federally Insured Loans:
 
 
 
 
 
 
 
 
 
 
 
Loans in-school/grace/deferment (a)
$
3,379,586

 
 
 
$
3,664,899

 
 
 
$
4,061,955

 
 
Loans in forbearance (b)
3,223,004

 
 
 
3,330,452

 
 
 
3,263,802

 
 
Loans in repayment status:
 
 
 
 
 
 
 
 
 
 
 
Loans current
14,647,003

 
86.5
%
 
14,600,372

 
84.2
%
 
13,748,083

 
87.2
%
Loans delinquent 31-60 days (c)
667,766

 
3.9

 
844,204

 
4.9

 
583,443

 
3.7

Loans delinquent 61-90 days (c)
409,288

 
2.4

 
407,094

 
2.3

 
358,539

 
2.3

Loans delinquent 91-270 days (c)
918,587

 
5.4

 
1,163,437

 
6.7

 
854,095

 
5.4

Loans delinquent 271 days or greater (c)(d)
305,890

 
1.8

 
322,251

 
1.9

 
213,240

 
1.4

Total loans in repayment
16,948,534

 
100.0
%
 
17,337,358

 
100.0
%
 
15,757,400

 
100.0
%
Total federally insured loans
$
23,551,124

 
 

 
$
24,332,709

 
 

 
$
23,083,157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Federally Insured Loans:
 

 
 

 
 

 
 

 
 
 
 
Loans in-school/grace/deferment (a)
$
2,795

 
 

 
$
2,058

 
 

 
$
3,749

 
 
Loans in forbearance (b)
451

 
 

 
371

 
 

 
510

 
 
Loans in repayment status:
 
 
 

 
 
 
 

 
 
 
 
Loans current
21,094

 
74.8
%
 
16,776

 
68.5
%
 
22,221

 
84.2
%
Loans delinquent 31-60 days (c)
690

 
2.4

 
706

 
2.9

 
624

 
2.4

Loans delinquent 61-90 days (c)
1,546

 
5.5

 
1,987

 
8.1

 
587

 
2.2

Loans delinquent 91 days or greater (c)
4,895

 
17.3

 
5,018

 
20.5

 
2,964

 
11.2

Total loans in repayment
28,225

 
100.0
%
 
24,487

 
100.0
%
 
26,396

 
100.0
%
Total non-federally insured loans
$
31,471

 
 

 
$
26,916

 
 

 
$
30,655

 
 
 
(a)
Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation for law students.

(b)
Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies.

(c)
The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance.

(d)
A portion of loans included in loans delinquent 271 days or greater includes federally insured loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency.

Bonds and Notes Payable
Bonds and Notes Payable
Bonds and Notes Payable

The following tables summarize the Company’s outstanding debt obligations by type of instrument:
 
As of June 30, 2012
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes (a):
 
 
 
 
 
Bonds and notes based on indices
$
19,852,956

 
0.48% - 6.90%
 
11/25/15 - 7/27/48
Bonds and notes based on auction or remarketing
970,075

 
0.17% - 2.10%
 
5/1/28 - 5/25/42
Total variable-rate bonds and notes
20,823,031

 
 
 
 
FFELP warehouse facilities
829,449

 
0.22% - 0.35%
 
1/31/15 - 6/30/15
Department of Education Conduit
2,140,492

 
0.79%
 
5/8/14
Secured line of credit
50,000

 
1.75%
 
4/11/14
Unsecured line of credit
10,000

 
1.75%
 
2/17/16
Unsecured debt - Junior Subordinated Hybrid Securities
100,697

 
3.84%
 
9/15/61
Other borrowings
33,653

 
3.72% - 5.72%
 
11/14/12 - 3/1/22
 
23,987,322

 
 
 
 
Discount on bonds and notes payable
(151,072
)
 
 
 
 
Total
$
23,836,250

 
 
 
 
 
As of December 31, 2011
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes (a):
 
 
 
 
 
Bonds and notes based on indices
$
20,252,403

 
0.42% - 6.90%
 
11/25/15 - 7/27/48
Bonds and notes based on auction or remarketing
970,575

 
0.11% - 2.19%
 
5/1/28 - 5/25/42
Total variable-rate bonds and notes
21,222,978

 
 
 
 
FFELP warehouse facilities
824,410

 
0.26% - 0.70%
 
7/1/14
Department of Education Conduit
2,339,575

 
0.74%
 
5/8/14
Unsecured line of credit
64,390

 
0.69%
 
5/8/12
Unsecured debt - Junior Subordinated Hybrid Securities
100,697

 
3.95%
 
9/15/61
Other borrowings
43,119

 
3.78% - 5.72%
 
11/14/12 - 3/1/22
 
24,595,169

 
 
 
 
Discount on bonds and notes payable
(160,629
)
 
 
 
 
Total
$
24,434,540

 
 
 
 
(a)
Issued in asset-backed securitizations

Secured Financing Transactions

The Company has historically relied upon secured financing vehicles as its most significant source of funding for student loans. The net cash flow the Company receives from the securitized student loans generally represents the excess amounts, if any, generated by the underlying student loans over the amounts required to be paid to the bondholders, after deducting servicing fees and any other expenses relating to the securitizations. The Company’s rights to cash flow from securitized student loans are subordinate to bondholder interests and may fail to generate any cash flow beyond what is due to bondholders. The Company’s secured student loan financing vehicles during the periods presented above include loan warehouse facilities, asset-backed securitizations, and the government’s Conduit Program.

The majority of the bonds and notes payable are primarily secured by the student loans receivable, related accrued interest, and by the amounts on deposit in the accounts established under the respective bond resolutions or financing agreements. Certain variable rate bonds and notes are secured by a letter of credit and reimbursement agreement issued by a third-party liquidity provider.

FFELP warehouse facilities

The Company funds a portion of its Federal Family Education Loan Program (the “FFEL Program” or “FFELP”) loan acquisitions using its FFELP warehouse facilities. Student loan warehousing allows the Company to buy and manage student loans prior to transferring them into more permanent financing arrangements.

As of June 30, 2012, the Company has three FFELP warehouse facilities as summarized below.
 
NHELP-II (a)
 
NHELP-I (b)
 
NFSLW-I (c)
 
Total
Maximum financing amount
$
250,000

 
500,000

 
500,000

 
1,250,000

Amount outstanding
160,149

 
331,412

 
337,888

 
829,449

Amount available
$
89,851

 
168,588

 
162,112

 
420,551

Expiration of liquidity provisions
January 31, 2013

 
October 2, 2013

 
June 28, 2013

 
 
Final maturity date
January 31, 2015

 
April 2, 2015

 
June 30, 2015

 
 
Maximum advance rates
90.5 - 93.5%

 
93 - 95%

 
90 - 95%

 
 
Minimum advance rates
90.5 - 93.5%

 
80 - 95%

 
84.5 - 90%

 
 
Advanced as equity support
$
15,150

 
19,505

 
26,723

 
61,378


(a)
The Company entered into this facility on February 1, 2012.

(b)
The terms of this facility were amended on April 2, 2012. The table above reflects all amended terms.

(c)
The terms of this facility were amended on June 29, 2012. The table above reflects all amended terms.

Each FFELP warehouse facility is supported by 364-day liquidity provisions, which are subject to the respective expiration date shown in the table above. In the event the Company is unable to renew the liquidity provisions by such date, the facility would become a term facility at a stepped-up cost, with no additional student loans being eligible for financing, and the Company would be required to refinance the existing loans in the facility by the facility's final maturity date. The warehouse facilities provide for formula-based advance rates, depending on FFELP loan type, up to a maximum of the principal and interest of loans financed as shown in the table above. The advance rates for collateral may increase or decrease based on market conditions, but they are subject to minimums as disclosed above.

The FFELP warehouse facilities contain financial covenants relating to levels of the Company’s consolidated net worth, ratio of adjusted EBITDA to corporate debt interest, and unencumbered cash. Any noncompliance with these covenants could result in a requirement for the immediate repayment of any outstanding borrowings under the facilities.

Asset-backed securitizations

On May 4, 2012 and June 11, 2012, the Company completed asset-backed securitizations of $343.9 million and $333.0 million, respectively. Notes issued in the June securitization were issued at a $3.6 million discount. The discount is being accreted using the effective interest method over the expected term of the notes issued in the securitization. The notes issued in these asset-backed securities transactions carry interest rates based on a spread to one-month LIBOR. As part of the Company's issuance of these asset-backed securities, the Company purchased the Class B subordinated notes of $17.6 million (par value). These notes are not included on the Company's consolidated balance sheet. If the Company sells these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. Upon sale, these notes would be shown as “bonds and notes payable” on the Company's consolidated balance sheet. The Company believes the market value of such notes is currently less than par value. Any excess of the par value over the market value on the date of sale would be recognized by the Company as interest expense over the life of the bonds.

Secured line of credit

On April 12, 2012, the Company entered into a $50.0 million line of credit, which is collateralized by asset-backed security investments. The line of credit has a maturity date of April 11, 2014 and has covenants and cross default provisions similar to those under the Company's unsecured line of credit discussed below. As of June 30, 2012, $50.0 million was outstanding on this line of credit.

Unsecured Line of Credit

As of December 31, 2011, the Company had a $750.0 million unsecured line of credit with a maturity date of May 8, 2012. As of December 31, 2011, there was $64.4 million outstanding on this line. On February 17, 2012, the Company entered into a new $250.0 million unsecured line of credit. In conjunction with entering into this new agreement, the outstanding balance on the $750.0 million unsecured line of credit of $64.4 million was paid off in full and the agreement was terminated. As of June 30, 2012, the $250.0 million unsecured line of credit had an outstanding balance of $10.0 million and $240.0 million was available for future use. The $250.0 million line of credit has a maturity date of February 17, 2016.

The new line of credit agreement contains certain financial covenants that, if not met, lead to an event of default under the agreement.  The covenants include maintaining:

•
A minimum consolidated net worth
•
A minimum adjusted EBITDA to corporate debt interest (over the last four rolling quarters)
•
A limitation on subsidiary indebtedness
•
A limitation on the percentage of non-federally insured loans in the Company’s portfolio
As of June 30, 2012, the Company was in compliance with all of these requirements. Many of these covenants are duplicated in the Company’s other lending facilities, including its FFELP warehouse facilities.

The Company’s new operating line of credit does not have any covenants related to unsecured debt ratings.  However, changes in the Company’s ratings (as well as the amounts the Company borrows) have modest implications on the pricing level at which the Company obtains funding.

A default on the Company’s FFELP warehouse facilities would result in an event of default on the Company’s unsecured line of credit that would result in the outstanding balance on the line of credit becoming immediately due and payable.
Gain on Sale of Loans and Debt Repurchases
Gain on Sale of Loans and Debt Repurchases
Gain on Sale of Loans and Debt Repurchases

During the three months ended June 30, 2012, the Company recognized a gain of $0.9 million from the purchase of $17.6 million (par value) of the Company's asset-backed debt securities. During the three months ended March 31, 2011, the Company recognized a gain of $6.9 million from the purchase of $62.6 million (par value) of Junior Subordinated Hybrid Securities and $1.4 million from the sale of non-federally insured loans.
Derivative Financial Instruments
Derivative Financial Instruments
Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk and foreign currency exchange risk.

Interest Rate Risk

The Company is exposed to interest rate risk in the form of basis risk and repricing risk because the interest rate characteristics of the Company’s assets do not match the interest rate characteristics of the funding for those assets. The Company has adopted a policy of periodically reviewing the mismatch related to the interest rate characteristics of its assets and liabilities together with the Company’s outlook as to current and future market conditions. Based on those factors, the Company uses derivative instruments as part of its overall risk management strategy. Derivative instruments used as part of the Company’s interest rate risk management strategy currently include basis swaps and interest rate swaps.

Basis Swaps

Prior to April 1, 2012, the interest earned on the majority of the Company's FFELP student loan assets were indexed to the three-month commercial paper index.  As allowed by recent legislation, effective April 1, 2012, the Company elected to change the index on which the Special Allowance Payments ("SAP") are calculated for the majority of the Company's' FFELP loans from the commercial paper rate to the one-month LIBOR rate.  Meanwhile, the Company funds the majority of its assets with three-month LIBOR indexed floating rate securities.  The different interest rate characteristics of the Company's loan assets and liabilities funding these assets results in basis risk.
The Company also faces repricing risk due to the timing of the interest rate resets on its liabilities, which may occur as infrequently as once a quarter, in contrast to the timing of the interest rate resets on its assets, which generally occur daily. In a declining interest rate environment, this may cause the Company’s student loan spread to compress, while in a rising rate environment, it may cause the spread to increase.

As of June 30, 2012, the Company had $22.7 billion and $0.9 billion of FFELP loans indexed to the one-month LIBOR rate and the three-month treasury bill rate, respectively, both of which reset daily, and $18.6 billion of debt indexed to three-month LIBOR, which resets quarterly, and $1.6 billion of debt indexed to one-month LIBOR, which resets monthly.

The Company has used derivative instruments to hedge its basis risk and repricing risk.  The Company has entered into basis swaps in which the Company receives three-month LIBOR set discretely in advance and pays one-month LIBOR plus or minus a spread as defined in the agreements (the 1:3 Basis Swaps).

The following table summarizes the Company’s 1:3 Basis Swaps outstanding as of both June 30, 2012 and December 31, 2011:
 
 
Maturity
 
Notional amount
 
 
2021
 
 
$
250,000

 
 
2023
 
 
1,250,000

 
 
2024
 
 
250,000

 
 
2026
 
 
800,000

 
 
2028
 
 
100,000

 
 
2036
 
 
700,000

 
 
2039
(a)
 
150,000

 
 
2040
(b)
 
200,000

 
 
 
 
 
$
3,700,000

(c)

(a)This derivative has a forward effective start date in 2015.

(b)This derivative has a forward effective start date in 2020.

(c)
As of June 30, 2012, the weighted average rate paid by the Company was one-month LIBOR plus 1.2 basis points.

Interest rate swaps – floor income hedges

FFELP loans originated prior to April 1, 2006 generally earn interest at the higher of a floating rate based on the SAP formula set by the Department of Education (the "Department") and the borrower rate, which is fixed over a period of time. The SAP formula is based on an applicable indice plus a fixed spread that is dependent upon when the loan was originated, the loan’s repayment status, and funding sources for the loan. The Company generally finances its student loan portfolio with variable rate debt. In low and/or declining interest rate environments, when the fixed borrower rate is higher than the rate produced by the SAP formula, the Company’s student loans earn at a fixed rate while the interest on the variable rate debt typically continues to decline. In these interest rate environments, the Company may earn additional spread income that it refers to as floor income.

Depending on the type of loan and when it was originated, the borrower rate is either fixed to term or is reset to an annual rate each July 1. As a result, for loans where the borrower rate is fixed to term, the Company may earn floor income for an extended period of time, which the Company refers to as fixed rate floor income, and for those loans where the borrower rate is reset annually on July 1, the Company may earn floor income to the next reset date, which the Company refers to as variable rate floor income. In accordance with legislation enacted in 2006, lenders are required to rebate fixed rate floor income and variable rate floor income to the Department for all FFELP loans first originated on or after April 1, 2006.

Absent the use of derivative instruments, a rise in interest rates may reduce the amount of floor income received and this may have an impact on earnings due to interest margin compression caused by increasing financing costs, until such time as the federally insured loans earn interest at a variable rate in accordance with their SAP formulas. In higher interest rate environments, where the interest rate rises above the borrower rate and fixed rate loans effectively become variable rate loans, the impact of the rate fluctuations is reduced.



As of June 30, 2012 and December 31, 2011, the Company had $8.9 billion and $10.9 billion, respectively, of student loan assets that were earning fixed rate floor income of which the weighted average estimated variable conversion rate for these loans, which is the estimated short-term interest rate at which loans would convert to a variable rate, was 2.09% and 1.79%, respectively. The following tables summarize the outstanding derivative instruments used by the Company to economically hedge these loans.
As of June 30, 2012
 
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
 
 
 
 
2013
 
 
$
2,150,000

 
0.85
%
 
2014
 
 
750,000

 
0.85

 
2015
(b)
 
1,100,000

 
0.89

 
2016
 
 
750,000

 
0.85

 
2017
 
 
750,000

 
0.99

 
2020
 
 
50,000

 
3.23

 
 
 
 
$
5,550,000

 
0.90
%
As of December 31, 2011
 
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
 
 
 
 
2013
 
$
2,150,000

 
0.85
%
 
2014
 
750,000

 
0.85

 
2015
 
100,000

 
2.26

 
2020
 
50,000

 
3.23

 
 
 
$
3,050,000

 
0.93
%

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

(b)
$500 million of these derivatives have a forward effective start date in 2013.

Interest rate swaps – unsecured debt hedges

The Company has $100.7 million of unsecured Junior Subordinated Hybrid Securities debt outstanding. The interest rate on the Hybrid Securities through September 29, 2036 is equal to three-month LIBOR plus 3.375%, payable quarterly. The Company had the following derivatives outstanding that are used to effectively convert the variable interest rate on the Hybrid Securities to a fixed rate.
As of June 30, 2012
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
2036
 
$
75,000

 
4.28
%
2042
 
25,000

 
2.42

 
 
$
100,000

 
3.82
%
 
As of December 31, 2011
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
2036
 
$
75,000

 
4.28
%

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

Foreign Currency Exchange Risk

During 2006, the Company completed separate debt offerings of student loan asset-backed securities that included €420.5 million and €352.7 million Euro Notes with interest rates based on a spread to the EURIBOR index. As a result of these transactions, the Company is exposed to market risk related to fluctuations in foreign currency exchange rates between the U.S. dollar and Euro. The principal and accrued interest on these notes are re-measured at each reporting period and recorded on the Company’s balance sheet in U.S. dollars based on the foreign currency exchange rate on that date. Changes in the principal and accrued interest amounts as a result of foreign currency exchange rate fluctuations are included in the Company’s consolidated statements of income.

The Company entered into cross-currency interest rate swaps in connection with the issuance of the Euro Notes. Under the terms of these derivative instrument agreements, the Company receives from a counterparty a spread to the EURIBOR indice based on notional amounts of €420.5 million and €352.7 million and pays a spread to the LIBOR indice based on notional amounts of $500.0 million and $450.0 million, respectively. In addition, under the terms of these agreements, all principal payments on the Euro Notes will effectively be paid at the exchange rate in effect between the U.S. dollar and Euro as of the issuance of the notes.

The following table shows the income statement impact as a result of the re-measurement of the Euro Notes and the change in the fair value of the related derivative instruments. These items are included in the Company's consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Re-measurement of Euro Notes
$
59,226

 
(19,020
)
 
26,984

 
(84,355
)
Change in fair value of cross currency interest rate swaps
(62,546
)
 
18,734

 
(49,520
)
 
81,266

Total impact to statements of income - income (expense) (a)
$
(3,320
)
 
(286
)
 
(22,536
)
 
(3,089
)

(a)
The financial statement impact of the above items are included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income.

The re-measurement of the Euro-denominated bonds generally correlates with the change in fair value of the cross-currency interest rate swaps. However, the Company will experience unrealized gains or losses related to the cross-currency interest rate swaps if the two underlying indices (and related forward curve) do not move in parallel. Management currently intends to hold the cross-currency interest rate swaps through the maturity of the Euro-denominated bonds.

Accounting for Derivative Financial Instruments

The Company records derivative instruments on the consolidated balance sheets as either an asset or liability measured at its fair value. Management has structured the majority of the Company’s derivative transactions with the intent that each is economically effective; however, the Company’s derivative instruments do not qualify for hedge accounting.  As a result, the change in fair value of the Company’s derivatives at each reporting date are included in the Company’s consolidated statements of income. Changes or shifts in the forward yield curve and fluctuations in currency rates can significantly impact the valuation of the Company’s derivatives. Accordingly, changes or shifts to the forward yield curve and fluctuations in currency rates will impact the financial position and results of operations of the Company.

Any proceeds received or payments made by the Company to terminate a derivative in advance of its expiration date, or to amend the terms of an existing derivative, are included in the Company's consolidated statements of income and are accounted for as a change in fair value of such derivative.
 
The following table summarizes the fair value of the Company’s derivatives:
 
Fair value of asset derivatives
 
Fair value of liability derivatives
 
As of
 
As of
 
As of
 
As of
 
June 30, 2012
 
December 31, 2011
 
June 30, 2012
 
December 31, 2011
1:3 basis swaps
$
13,595

 
10,988

 
674

 
641

Interest rate swaps - floor income hedges
—

 
592

 
29,571

 
18,384

Interest rate swaps - hybrid debt hedges
377

 
—

 
27,777

 
24,814

Cross-currency interest rate swaps
33,616

 
80,631

 
2,505

 
—

Other
1,077

 
8

 
1,682

 
1

Total
$
48,665

 
92,219

 
62,209

 
43,840


The following table summarizes the effect of derivative instruments in the consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Settlements:
 

 
 

 
 

 
 

1:3 basis swaps
$
1,169

 
373

 
2,551

 
581

T-Bill/LIBOR basis swaps
—

 
(64
)
 
—

 
(194
)
Interest rate swaps - floor income hedges
(3,505
)
 
(6,345
)
 
(6,642
)
 
(12,563
)
Interest rate swaps - hybrid debt hedges
(723
)
 
(248
)
 
(746
)
 
(494
)
Cross-currency interest rate swaps
1,055

 
2,770

 
3,163

 
4,880

Other
(82
)
 
(8
)
 
(185
)
 
116

Total settlements - income (expense)
(2,086
)
 
(3,522
)
 
(1,859
)
 
(7,674
)
Change in fair value:
 

 
 

 
 

 
 

1:3 basis swaps
(428
)
 
(1,228
)
 
2,574

 
(5,438
)
T-Bill/LIBOR basis swaps
—

 
92

 
—

 
121

Interest rate swaps - floor income hedges
(6,143
)
 
(11,109
)
 
(11,778
)
 
(4,714
)
Interest rate swaps - hybrid debt hedges
(8,783
)
 
(3,897
)
 
(2,585
)
 
(2,449
)
Cross-currency interest rate swaps
(62,546
)
 
18,734

 
(49,520
)
 
81,266

Other
(858
)
 
(385
)
 
(614
)
 
(128
)
Total change in fair value - income (expense)
(78,758
)
 
2,207

 
(61,923
)
 
68,658

Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense)
59,226

 
(19,020
)
 
26,984

 
(84,355
)
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense)
$
(21,618
)
 
(20,335
)
 
(36,798
)
 
(23,371
)


Derivative Instruments - Credit and Market Risk

By using derivative instruments, the Company is exposed to credit and market risk.

The Company manages credit and market risks associated with interest rates by establishing and monitoring limits as to the types and degree of risk that may be undertaken and by entering into transactions with high-quality counterparties that are reviewed periodically by the Company's risk committee. As of June 30, 2012, all of the Company's derivative counterparties had investment grade credit ratings. The Company also has a policy of requiring that all derivative contracts be governed by an International Swaps and Derivatives Association, Inc. Master Agreement.

Credit Risk

When the fair value of a derivative contract is positive (an asset on the Company's balance sheet), this generally indicates that the counterparty would owe the Company if the derivative was settled. If the counterparty fails to perform, credit risk with such counterparty is equal to the extent of the fair value gain in the derivative less any collateral held by the Company. If the Company was unable to collect from a counterparty, it would have a loss equal to the amount the derivative is recorded on the consolidated balance sheet. As of June 30, 2012, the trustee for certain of the Company's asset-backed securities transactions held $33.8 million of collateral from the counterparty on the cross-currency interest rate swaps.
The Company considers counterparties' credit risk when determining the fair value of derivative positions on its exposure net of collateral. However, the Company does not use the collateral to offset fair value amounts recognized in the financial statements for derivative instruments.

Market Risk

When the fair value of a derivative instrument is negative (a liability on the Company's balance sheet), the Company would owe the counterparty if the derivative was settled and, therefore, has no immediate credit risk.  If the negative fair value of derivatives with a counterparty exceeds a specified threshold, the Company may have to make a collateral deposit with the counterparty. The threshold at which the Company may be required to post collateral is dependent upon the Company's unsecured credit rating.  At the Company's current unsecured credit rating (Standard & Poor's: BBB- (stable outlook) and Moody's: Ba1 (stable outlook)), the Company has substantially collateralized its corporate derivative liability position with its counterparties. As such, any downgrades from the current rating would not result in additional collateral requirements of a material nature. In addition, no counterparty has the right to terminate its contracts in the event of downgrades from the current rating. However, some derivative contracts have mutual optional termination provisions that can be exercised in 2016, 2017, and 2021. As of June 30, 2012, the fair value of derivatives with early termination provisions was a positive $1.6 million (an asset on the Company's balance sheet). As of June 30, 2012, the Company had $55.7 million posted as collateral to derivative counterparties, which is included in “restricted cash and investments” in the Company's consolidated balance sheet.

Interest rate movements have an impact on the amount of collateral the Company is required to deposit with its derivative instrument counterparties. With the Company's current derivative portfolio, the Company does not currently anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor expects that any movement in interest rates would have a material impact on its ability to meet potential collateral deposits with its counterparties. Due to the existing low interest rate environment, the Company's exposure to downward movements in interest rates on its interest rate swaps is limited.  In addition, the historical high correlation between one-month and three-month LIBOR and the limited notional amount of 1:3 Basis Swaps derivatives outstanding limits the Company's exposure to interest rate movements on these derivatives. 

The Company's cross-currency interest rate swaps are derivatives entered into as a result of certain asset-backed security financings. These derivatives are entered into at the securitization trust level with the counterparty. Trust related derivatives do not contain credit contingent features related to the Company or the trust's credit ratings.
Investments
Investments
Investments

The Company's available-for-sale investment portfolio consists of student loan asset-backed securities and equity and debt securities. These securities are carried at fair value, with the temporary changes in fair value carried as a separate component of stockholders’ equity, net of taxes. The amortized cost of debt securities in this category (including the student loan asset-backed securities) is adjusted for amortization of premiums and accretion of discounts, which are amortized using the effective interest rate method. Other-than-temporary impairment is evaluated by considering several factors, including the length of time and extent to which the fair value has been less than the amortized cost basis, the financial condition and near-term prospects of the security (considering factors such as adverse conditions specific to the security and ratings agency actions), and the intent and ability to retain the investment to allow for an anticipated recovery in fair value. The entire fair value loss on a security that is other-than-temporary impairment is recorded in earnings if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell the security before the expected recovery of the loss. However, if the impairment is other-than-temporary, and either of those two conditions does not exist, the portion of the impairment related to credit losses is recorded in earnings and the impairment related to other factors is recorded in other comprehensive income.

Securities classified as trading are accounted for at fair value with unrealized gains and losses included in "other income" on the consolidated statements of income.

Securities that the Company has the intent and ability to hold to maturity are classified as held-to-maturity and are accounted for at amortized cost unless the security is determined to have an other-than-temporary impairment. In that case, it is accounted for in the same manner as described above for available-for-sale investments.

A summary of the Company's investments and restricted investments follows:
 
As of June 30, 2012
 
 
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
 
As of
 
 
 
 
 
December 31, 2011
Investments:
 
 
 
 
 
 
 
 
 
Available-for-sale investments (a):
 
 
 
 
 
 
 
 
 
Student loan asset-backed securities
$
61,428

 
288

 
(2,040
)
 
59,676

 
—

Equity securities
3,452

 
1,304

 
(170
)
 
4,586

 
—

Debt securities (b)
850

 
—

 
—

 
850

 
—

Total available-for-sale investments
$
65,730

 
1,592

 
(2,210
)
 
65,112

 
—

Trading investments (a):
 
 
 
 
 
 
 
 
 
Student loan asset-backed securities
 
 
 
 
 
 
$
8,943

 
42,412

Equity securities
 
 
 
 
 
 
—

 
6,847

Debt securities (b)
 
 
 
 
 
 
—

 
1,521

Total trading investments

 
 
 
 
 
$
8,943

 
50,780

Total available-for-sale and trading investments

 

 

 
$
74,055

 
50,780

Restricted Investments (c):
 
 
 
 
 
 
 
 
 
Guaranteed investment contracts - held-to-maturity
 
 
 
 
 
 
$
14,074

 
236,899


(a)
The Company transferred the majority of its investments from trading to available-for-sale on January 1, 2012 to reflect management's intention regarding such securities.

(b)
Debt securities include corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities.
    
(c)
Restricted investments are included in “Restricted cash and investments” on the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit in guaranteed investment contracts that are held for the related note holders. These investments are classified as held-to-maturity and the Company accounts for them at amortized cost, which approximates fair value.

On May 1, 2012, the majority of the Company's guaranteed investment contracts were terminated due to a downgrade in the credit rating of a guaranteed investment contract counterparty.  The sales of these investments were at par and had no income statement impact.  The proceeds from the sale of these investments were used to purchase permitted investments as specified by each underlying student loan asset-backed securitization trust indenture.  The new investments remain as assets within their respective trust estates and continue to be classified as “restricted cash and investments” on the consolidated balance sheet.

The Company sold available-for-sale securities during 2012 as summarized below. The net realized gain (loss) is included in "other income" in the Company's consolidated statements of income. The cost basis for these securities was determined through specific identification of the securities sold.

 
Three months ended June 30, 2012
 
Six months ended June 30, 2012
Gross realized gains
$
1,020

 
$
2,476

Gross realized losses
(54
)
 
(262
)
Net gain (loss)
$
966

 
$
2,214






The Company recognized the following unrealized gains (losses) related to its trading securities. These gains (losses) are included in "other income" in the Company's consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Unrealized gain (loss) - trading securities
$
578

 
(95
)
 
$
33

 
1,828



As of June 30, 2012, the stated maturities of the Company's student loan asset-backed securities and debt securities classified as available-for-sale, are shown in the following table:
Year of Maturity:
Amortized cost
 
Fair value
2013-2016
$
200

 
200

2017-2021
644

 
644

After 2021
61,434

 
59,682

Total
$
62,278

 
60,526


As of June 30, 2012, the stated maturities of the Company's restricted investments, which are classified as held-to-maturity, are shown in the following table.
Year of Maturity:
 
2017-2021
$
11,645

After 2021
2,429

Total
$
14,074

Intangible Assets
Intangible Assets
Intangible Assets

Intangible assets consist of the following:
 
Weighted average remaining useful life as of June 30, 2012 (months)
 
As of June 30, 2012
 
As of December 31, 2011
Customer relationships (net of accumulated amortization of $66,694 and $59,893, respectively)
71

 
$
16,439

 
23,240

Computer software (net of accumulated amortization of $6,510 and $5,103, respectively)
6

 
1,408

 
2,815

Trade names (net of accumulated amortization of $10,434 and $9,274, respectively)
6

 
1,159

 
2,319

 
62

 
$
19,006

 
28,374



The Company recorded amortization expense on its intangible assets of $4.7 million and $4.0 million for three months ended June 30, 2012 and 2011, and $9.4 million and $7.9 million for the six months ended June 30, 2012 and 2011, respectively. The Company will continue to amortize intangible assets over their remaining useful lives.  As of June 30, 2012, the Company estimates it will record amortization expense as follows:
 
2012 (July 1 - December 31)
$
9,265

2013
3,399

2014
2,102

2015
829

2016
639

2017 and thereafter
2,772

 
$
19,006

Goodwill
Goodwill Disclosure
Goodwill

The following table summarizes the Company’s allocation of goodwill by operating segment as of June 30, 2012 and December 31, 2011:
Student Loan and Guaranty Servicing
$
8,596

Tuition Payment Processing and Campus Commerce
58,086

Enrollment Services
8,553

Asset Generation and Management
41,883

 
$
117,118

Income taxes
Income Tax Disclosure
Income Taxes

During the second quarter of 2012, state income tax laws were enacted that reduced the Company's income tax expense in the second quarter by $4.6 million.
Earnings per Common Share
Earnings Per Common Share
Earnings per Common Share

Presented below is a summary of the components used to calculate basic and diluted earnings per share. The Company applies the two-class method of computing earnings per share, which requires the calculation of separate earnings per share amounts for unvested share-based awards and for common stock. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Earnings per share attributable to common stock and a reconciliation of weighted average shares outstanding are shown in the table below.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Net income attributable to Nelnet, Inc.
$
41,394

 
37,125

 
84,535

 
92,005

Less earnings allocated to holders of unvested restricted stock
336

 
226

 
619

 
570

Net income available to Nelnet, Inc. common shareholders
$
41,058

 
36,899

 
83,916

 
91,435

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
47,049,055

 
48,302,779

 
47,020,811

 
48,237,411

Dilutive effect of the assumed vesting of restricted stock awards
243,092

 
185,267

 
219,848

 
188,475

Weighted average common shares outstanding - diluted
47,292,147


48,488,046

 
47,240,659

 
48,425,886

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Net income attributable to Nelnet, Inc. shareholders - basic
$
0.87

 
0.76

 
1.78

 
1.90

Net income attributable to Nelnet, Inc. shareholders - diluted
$
0.87

 
0.76

 
1.78

 
1.89



There were no shares that were antidilutive and not included in average shares outstanding for the diluted earnings per share calculation.
Segment Reporting
Segment Reporting
Segment Reporting

The Company earns fee-based revenue through its Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce, and Enrollment Services operating segments. In addition, the Company earns net 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.

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 profitability.  Prior to 2012, management measured the profitability of the Company’s operating segments based on “base net income.”  The Company's "base net income" was not a defined term within U.S. generally accepted accounting principles ("GAAP") and was not necessarily comparable to similarly titled measures reported by other companies. However, “base net income,” which consisted of GAAP net income excluding the derivative market value and foreign currency adjustments, amortization of intangible assets, compensation related to business combinations, and variable rate floor income, net of settlements on derivatives, was the primary financial performance measure used by management to develop the Company’s financial plans, track results, and establish corporate performance targets and incentive compensation. Unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. Accordingly, information regarding the Company’s operating segments was historically provided based on “base net income.”  Due to the decrease in the number and dollar amount of differences between "base net income" and GAAP net income, during the first quarter of 2012, executive management determined to discontinue utilizing "base net income" and began to evaluate the performance and profitability of the Company's operating segments based on financial results prepared in conformity with GAAP. As such, the Company has changed its operating segment income measurement from "base net income" to GAAP net income. Prior period segment operating results have been restated to conform to the current period presentation.

The accounting policies of the Company’s operating segments are the same as those described in note 2 in the notes to the consolidated financial statements included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2011 (the "2011 Annual Report"). 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.  Changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial information. The Company allocates certain corporate overhead expenses to the individual operating segments.  These expenses include certain corporate activities related to executive management, human resources, accounting, legal, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services. In addition, income taxes are allocated based on 38% of income (loss) 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 Activity and Overhead.

The following describes the products and services of each operating segment. In addition, the tables below include the results of each of the Company's operating segments reconciled to the consolidated financial statements.

Fee-Based Operating Segments

Student Loan and Guaranty Servicing

The following are the primary products and services the Company offers as part of its Student Loan and Guaranty Servicing segment:

•
Servicing FFELP loans
•
Origination and servicing of non-federally insured student loans
•
Servicing federally-owned student loans for the Department of Education
•
Servicing and support outsourcing for guaranty agencies
•
Student loan servicing software and other information technology products and services

The Student Loan and Guaranty Servicing operating segment provides for the servicing of the Company’s student loan portfolios and the portfolios of third parties. The loan servicing activities include loan origination activities, loan conversion activities, application processing, borrower updates, payment processing, due diligence procedures, funds management reconciliations, and claim processing. These activities are performed internally for the Company’s portfolio in addition to generating external fee revenue when performed for third party clients.

In June 2009, the Department named the Company as one of four private sector companies awarded a servicing contract to service federally-owned student loans. In September 2009, the Company began servicing loans under this contract. The contract spans five years, with one five-year renewal at the option of the Department.

This operating segment also provides servicing activities for guaranty agencies. These activities include providing software and data center services, borrower and loan updates, default aversion tracking services, claim processing services, and managing third-party collection agencies.
This operating segment also provides student loan servicing software, which is used internally by the Company and licensed to third-party student loan holders and servicers. This software system has been adapted so that it can be offered as a hosted servicing software solution that can be used by third parties to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans. The Company earns a monthly fee from remote hosting customers for each unique borrower on the Company's platform. In addition, this operating segment provides information technology products and services, with core areas of business in educational loan software solutions, technical consulting services, and enterprise content management solutions.

Tuition Payment Processing and Campus Commerce

The Company’s Tuition Payment Processing and Campus Commerce operating segment provides products and services to help students and families manage the payment of education costs at all levels (K-12 and higher education).  It also provides innovative education-focused technologies, services, and support solutions to help schools with the everyday challenges of collecting and processing commerce data.

In the K-12 market, this operating segment offers actively managed tuition payment plans and billing services as well as assistance with financial needs assessment and donor management. This operating segment offers two principal products to the higher education market: actively managed tuition payment plans and campus commerce technologies and payment processing.

Enrollment Services

The Enrollment Services operating segment offers products and services that are focused on helping colleges recruit and retain students and helping students plan and prepare for life after high school and/or military service. The following are the primary products and services the Company offers as part of the Enrollment Services segment:

•
Inquiry Generation - Inquiry generation services include delivering qualified inquiries or clicks to third-party customers, primarily for-profit schools.

•
Inquiry Management (Agency) - Agency services include managing the marketing activities for third-party customers, primarily for-profit schools, in order to provide qualified inquiries or clicks.

•
Inquiry Management (Software) -  Software services include the licensing of software to third-party customers, primarily for-profit schools. This software is also used internally by the Company. The inquiry management software has been adapted so that it can be offered as a hosted software solution that can be used by third-parties to manage and obtain qualified inquiries or clicks.

•
Digital Marketing - Digital marketing services include on-line information about colleges and universities and are sold primarily based on subscriptions. Digital marketing services also include editing services for admission essays.

•
Content Solutions - Content solutions includes test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning, and on-line information about colleges and universities. Content solutions also includes providing list marketing services to help higher education institutions and businesses reach the middle school, high school, college bound high school, college, and young adult market places.

Asset Generation and Management Operating Segment

The Asset Generation and Management operating segment includes the acquisition, management, and ownership of the Company’s student loan assets, which has historically been the Company’s largest product and service offering. The Company generates a substantial portion of its earnings from the spread, referred to as the Company’s student loan spread, between the yield it receives on its student loan portfolio and the associated costs to finance such portfolio. The student loan assets are held in a series of education lending subsidiaries and associated securitization trusts designed specifically for this purpose. In addition to the student loan spread earned on its portfolio, all costs and activity associated with managing the portfolio, such as servicing of the assets and debt maintenance, are included in this segment.

As a result of legislation effective July 1, 2010, all new federal student loan originations are made by the Department through the Direct Loan Program and the Company no longer originates FFELP loans. This legislation does not alter or affect the terms and conditions of existing FFELP loans.


Corporate Activity and Overhead

Corporate Activity and Overhead includes the following items:

•
The operating results of WRCM, the Company's SEC-registered investment advisory subsidiary
•
Income earned on certain investment activities
•
Interest expense incurred on unsecured debt transactions
•
Other product and service offerings that are not considered operating segments

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

Segment Results of Operations
 
Three months ended June 30, 2012
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
12

 
1

 
—

 
13

 
151,240

 
1,747

 
(957
)
 
152,043

Interest expense
—

 
—

 
—

 
—

 
66,017

 
2,416

 
(957
)
 
67,476

Net interest income
12

 
1

 
—

 
13

 
85,223

 
(669
)
 
—

 
84,567

Less provision for loan losses
—

 
—

 
—

 
—

 
7,000

 
—

 
—

 
7,000

Net interest income after provision for loan losses
12

 
1

 
—

 
13

 
78,223

 
(669
)
 
—

 
77,567

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
52,391

 
—

 
—

 
52,391

 
—

 
—

 
—

 
52,391

Intersegment servicing revenue
16,401

 
—

 
—

 
16,401

 
—

 
—

 
(16,401
)
 
—

Tuition payment processing and campus commerce revenue
—

 
16,834

 
—

 
16,834

 
—

 
—

 
—

 
16,834

Enrollment services revenue
—

 
—

 
29,710

 
29,710

 
—

 
—

 
—

 
29,710

Other income
—

 
—

 
—

 
—

 
3,581

 
5,219

 
—

 
8,800

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
935

 
—

 
—

 
935

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(10,053
)
 
(9,479
)
 
—

 
(19,532
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(1,339
)
 
(747
)
 
—

 
(2,086
)
Total other income (expense)
68,792

 
16,834

 
29,710

 
115,336

 
(6,876
)
 
(5,007
)
 
(16,401
)
 
87,052

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
28,905

 
8,575

 
6,161

 
43,641

 
542

 
4,520

 
—

 
48,703

Cost to provide enrollment services
—

 
—

 
20,374

 
20,374

 
—

 
—

 
—

 
20,374

Depreciation and amortization
4,525

 
1,731

 
1,617

 
7,873

 
—

 
353

 
—

 
8,226

Other
17,539

 
2,456

 
1,745

 
21,740

 
3,120

 
6,048

 
—

 
30,908

Intersegment expenses, net
1,185

 
1,330

 
976

 
3,491

 
16,635

 
(3,725
)
 
(16,401
)
 
—

Total operating expenses
52,154

 
14,092

 
30,873

 
97,119

 
20,297

 
7,196

 
(16,401
)
 
108,211

Income (loss) before income taxes and corporate overhead allocation
16,650

 
2,743

 
(1,163
)
 
18,230

 
51,050

 
(12,872
)
 
—

 
56,408

Corporate overhead allocation
(1,275
)
 
(425
)
 
(425
)
 
(2,125
)
 
(1,400
)
 
3,525

 
—

 
—

Income (loss) before income taxes
15,375

 
2,318

 
(1,588
)
 
16,105

 
49,650

 
(9,347
)
 
—

 
56,408

Income tax (expense) benefit
(5,843
)
 
(881
)
 
603

 
(6,121
)
 
(18,866
)
 
10,109

 
—

 
(14,878
)
Net income (loss)
9,532

 
1,437

 
(985
)
 
9,984

 
30,784

 
762

 
—

 
41,530

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
136

 
—

 
136

Net income (loss) attributable to Nelnet, Inc.
$
9,532

 
1,437

 
(985
)
 
9,984

 
30,784

 
626

 
—

 
41,394

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2011
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
12

 
2

 
—

 
14

 
139,284

 
1,147

 
(655
)
 
139,790

Interest expense
—

 
—

 
—

 
—

 
49,269

 
2,440

 
(655
)
 
51,054

Net interest income (loss)
12

 
2

 
—

 
14

 
90,015

 
(1,293
)
 
—

 
88,736

Less provision for loan losses
—

 
—

 
—

 
—

 
5,250

 
—

 
—

 
5,250

Net interest income (loss) after provision for loan losses
12

 
2

 
—

 
14

 
84,765

 
(1,293
)
 
—

 
83,486

Other income (expense):
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
41,735

 
—

 
—

 
41,735

 
—

 
—

 
—

 
41,735

Intersegment servicing revenue
16,793

 
—

 
—

 
16,793

 
—

 
—

 
(16,793
)
 
—

Tuition payment processing and campus commerce revenue
—

 
14,761

 
—

 
14,761

 
—

 
—

 
—

 
14,761

Enrollment services revenue
—

 
—

 
32,315

 
32,315

 
—

 
—

 
—

 
32,315

Other income
—

 
—

 
—

 
—

 
3,997

 
2,829

 
—

 
6,826

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(12,531
)
 
(4,282
)
 
—

 
(16,813
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(3,274
)
 
(248
)
 
—

 
(3,522
)
Total other income (expense)
58,528

 
14,761

 
32,315

 
105,604

 
(11,808
)
 
(1,701
)
 
(16,793
)
 
75,302

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
24,731

 
7,249

 
5,931

 
37,911

 
709

 
4,261

 
—

 
42,881

Cost to provide enrollment services
—

 
—

 
22,140

 
22,140

 
—

 
—

 
—

 
22,140

Depreciation and amortization
3,436

 
1,326

 
1,658

 
6,420

 
—

 
349

 
—

 
6,769

Other
14,605

 
2,327

 
2,442

 
19,374

 
5,139

 
4,254

 
—

 
28,767

Intersegment expenses, net
1,060

 
1,118

 
959

 
3,137

 
17,047

 
(3,391
)
 
(16,793
)
 
—

Total operating expenses
43,832

 
12,020

 
33,130

 
88,982

 
22,895

 
5,473

 
(16,793
)
 
100,557

Income (loss) before income taxes and corporate overhead allocation
14,708

 
2,743

 
(815
)
 
16,636

 
50,062

 
(8,467
)
 
—

 
58,231

Corporate overhead allocation
(1,233
)
 
(411
)
 
(411
)
 
(2,055
)
 
(2,054
)
 
4,109

 
—

 
—

Income (loss) before income taxes
13,475

 
2,332

 
(1,226
)
 
14,581

 
48,008

 
(4,358
)
 
—

 
58,231

Income tax (expense) benefit
(5,119
)
 
(886
)
 
466

 
(5,539
)
 
(18,650
)
 
3,083

 
—

 
(21,106
)
Net income (loss)
8,356

 
1,446

 
(760
)
 
9,042

 
29,358

 
(1,275
)
 
—

 
37,125

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to Nelnet, Inc.
$
8,356

 
1,446

 
(760
)
 
9,042

 
29,358

 
(1,275
)
 
—

 
37,125

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2012
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
32

 
5

 
—

 
37

 
304,752

 
3,335

 
(1,928
)
 
306,196

Interest expense
—

 
—

 
—

 
—

 
134,846

 
3,855

 
(1,928
)
 
136,773

Net interest income
32

 
5

 
—

 
37

 
169,906

 
(520
)
 
—

 
169,423

Less provision for loan losses
—

 
—

 
—

 
—

 
13,000

 
—

 
—

 
13,000

Net interest income after provision for loan losses
32

 
5

 
—

 
37

 
156,906

 
(520
)
 
—

 
156,423

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
101,879

 
—

 
—

 
101,879

 
—

 
—

 
—

 
101,879

Intersegment servicing revenue
33,355

 
—

 
—

 
33,355

 
—

 
—

 
(33,355
)
 
—

Tuition payment processing and campus commerce revenue
—

 
38,747

 
—

 
38,747

 
—

 
—

 
—

 
38,747

Enrollment services revenue
—

 
—

 
61,374

 
61,374

 
—

 
—

 
—

 
61,374

Other income
—

 
—

 
—

 
—

 
8,581

 
11,173

 
—

 
19,754

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
935

 
—

 
—

 
935

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(31,657
)
 
(3,282
)
 
—

 
(34,939
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(1,112
)
 
(747
)
 
—

 
(1,859
)
Total other income (expense)
135,234

 
38,747

 
61,374

 
235,355

 
(23,253
)
 
7,144

 
(33,355
)
 
185,891

Operating expenses:
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

Salaries and benefits
57,947

 
17,193

 
12,440

 
87,580

 
1,261

 
8,957

 
—

 
97,798

Cost to provide enrollment services
—

 
—

 
42,052

 
42,052

 
—

 
—

 
—

 
42,052

Depreciation and amortization
8,938

 
3,471

 
3,234

 
15,643

 
—

 
719

 
—

 
16,362

Other
36,205

 
5,272

 
3,701

 
45,178

 
6,752

 
11,241

 
—

 
63,171

Intersegment expenses, net
2,570

 
2,663

 
1,824

 
7,057

 
33,778

 
(7,480
)
 
(33,355
)
 
—

Total operating expenses
105,660

 
28,599

 
63,251

 
197,510

 
41,791

 
13,437

 
(33,355
)
 
219,383

Income (loss) before income taxes and corporate overhead allocation
29,606

 
10,153

 
(1,877
)
 
37,882

 
91,862

 
(6,813
)
 
—

 
122,931

Corporate overhead allocation
(2,778
)
 
(926
)
 
(926
)
 
(4,630
)
 
(2,792
)
 
7,422

 
—

 
—

Income (loss) before income taxes
26,828

 
9,227

 
(2,803
)
 
33,252

 
89,070

 
609

 
—

 
122,931

Income tax (expense) benefit
(10,195
)
 
(3,506
)
 
1,065

 
(12,636
)
 
(33,845
)
 
8,373

 
—

 
(38,108
)
Net income (loss)
16,633

 
5,721

 
(1,738
)
 
20,616

 
55,225

 
8,982

 
—

 
84,823

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
288

 
—

 
288

Net income (loss) attributable to Nelnet, Inc.
$
16,633

 
5,721

 
(1,738
)
 
20,616

 
55,225

 
8,694

 
—

 
84,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2011
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
27

 
8

 
—

 
35

 
276,923

 
2,293

 
(1,377
)
 
277,874

Interest expense
—

 
—

 
—

 
—

 
98,985

 
5,753

 
(1,377
)
 
103,361

Net interest income
27

 
8

 
—

 
35

 
177,938

 
(3,460
)
 
—

 
174,513

Less provision for loan losses
—

 
—

 
—

 
—

 
9,000

 
—

 
—

 
9,000

Net interest income after provision for loan losses
27

 
8

 
—

 
35

 
168,938

 
(3,460
)
 
—

 
165,513

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
82,148

 
—

 
—

 
82,148

 
—

 
—

 
—

 
82,148

Intersegment servicing revenue
34,650

 
—

 
—

 
34,650

 
—

 
—

 
(34,650
)
 
—

Tuition payment processing and campus commerce revenue
—

 
34,130

 
—

 
34,130

 
—

 
—

 
—

 
34,130

Enrollment services revenue
—

 
—

 
66,183

 
66,183

 
—

 
—

 
—

 
66,183

Other income
—

 
—

 
—

 
—

 
8,133

 
5,185

 
—

 
13,318

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
1,400

 
6,907

 
—

 
8,307

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(13,120
)
 
(2,577
)
 
—

 
(15,697
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(7,312
)
 
(362
)
 
—

 
(7,674
)
Total other income (expense)
116,798

 
34,130

 
66,183

 
217,111

 
(10,899
)
 
9,153

 
(34,650
)
 
180,715

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
50,119

 
14,401

 
12,188

 
76,708

 
1,487

 
8,598

 
—

 
86,793

Cost to provide enrollment services
—

 
—

 
44,979

 
44,979

 
—

 
—

 
—

 
44,979

Depreciation and amortization
6,842

 
2,660

 
3,349

 
12,851

 
—

 
694

 
—

 
13,545

Other
29,184

 
4,961

 
4,760

 
38,905

 
6,677

 
9,290

 
—

 
54,872

Intersegment expenses, net
2,429

 
2,211

 
1,777

 
6,417

 
35,194

 
(6,961
)
 
(34,650
)
 
—

Total operating expenses
88,574

 
24,233

 
67,053

 
179,860

 
43,358

 
11,621

 
(34,650
)
 
200,189

Income (loss) before income taxes and corporate overhead allocation
28,251

 
9,905

 
(870
)
 
37,286

 
114,681

 
(5,928
)
 
—

 
146,039

Corporate overhead allocation
(1,986
)
 
(662
)
 
(662
)
 
(3,310
)
 
(3,309
)
 
6,619

 
—

 
—

Income (loss) before income taxes
26,265

 
9,243

 
(1,532
)
 
33,976

 
111,372

 
691

 
—

 
146,039

Income tax (expense) benefit
(9,979
)
 
(3,512
)
 
583

 
(12,908
)
 
(42,728
)
 
1,602

 
—

 
(54,034
)
Net income (loss)
16,286

 
5,731

 
(949
)
 
21,068

 
68,644

 
2,293

 
—

 
92,005

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to Nelnet, Inc.
$
16,286

 
5,731

 
(949
)
 
21,068

 
68,644

 
2,293

 
—

 
92,005

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related Party Transactions
Related Party Transactions
Related Party Transactions

The Company has entered into certain contractual arrangements with related parties as described in note 19 in the notes to the consolidated financial statements included in the Company's 2011 Annual Report.  The following provides an update for related party transactions that have occurred during the first six months of 2012.

Transactions with Union Financial Services, Inc.

Union Financial Services, Inc. (“UFS”) is a corporation which is owned 50 percent by Michael S. Dunlap, a significant shareholder, Chief Executive Officer, Chairman, and a member of the Board of Directors of the Company, and 50 percent by Stephen F. Butterfield, Vice Chairman and a member of the Board of Directors of the Company.

The Company owns a majority interest in an aircraft due to the frequent business travel needs of the Company's executives and the limited availability of commercial flights in Lincoln, Nebraska, where the Company's headquarters are located. UFS owns the remaining interest in the same aircraft. On March 1, 2012, the Company sold an additional 9.753 percent of its ownership in the aircraft to UFS for total consideration of approximately $156,000. The purchase price was determined by a third-party and the sale had no income statement impact to the Company. After this transaction, the Company and UFS own 65 percent and 35 percent of the aircraft, respectively.

Investment Services

Union Bank and Trust Company ("Union Bank"), an entity under common control, has established various trusts whereby Union Bank serves as trustee for the purpose of purchasing, holding, managing, and selling investments in student loan asset-backed securities. On May 9, 2011, WRCM, an SEC-registered investment advisor and a subsidiary of the Company, entered into a management agreement with Union Bank, effective as of May 1, 2011, under which WRCM performs various advisory and management services on behalf of Union Bank with respect to investments in securities by the trusts, including identifying securities for purchase or sale by the trusts.  The agreement provides that Union Bank will pay to WRCM annual fees of 25 basis points on the outstanding balance of the investments in the trusts.  As of June 30, 2012, the outstanding balance of investments in the trusts was $506.8 million. In addition, Union Bank will pay additional fees to WRCM of up to 50 percent of the gains from the sale of securities from the trusts.  

On January 20, 2012, WRCM entered into a management agreement with Union Bank under which it was designated to serve as investment advisor with respect to the assets within several trusts established by Michael S. Dunlap. Union Bank serves as trustee for the trusts. Per the terms of this agreement, Union Bank pays WRCM five basis points of the aggregate value of the assets of the trusts as of the last day of each calendar quarter. Mr. Dunlap contributed a total of 3,375,000 shares of the Company's Class B common stock to the trusts upon the establishment thereof.

On February 9, 2012, WRCM established a private investment fund (the “Fund”) for the primary purpose of purchasing, selling, investing, and trading, directly or indirectly, in student loan asset-backed securities, and to engage in financial transactions related thereto.  As of the date the Fund was established, the total amount invested in the Fund was $48.9 million, and Mr. Dunlap, UFS, Jeffrey R. Noordhoek (an executive officer of the Company), Farmers & Merchants Investment Inc. ("F&M") (which owns 81.4 percent of Union Bank and of which Mr. Dunlap along with his spouse owns 40.3 percent of its stock), Angela L. Muhleisen (who is a sister of Mr. Dunlap, as well as Director, Chairperson, President, and Chief Executive Officer of Union Bank, and owner of 38.6 percent of F&M stock) and her spouse, and WRCM had investments in the Fund in the amounts of $2.5 million, $1.0 million, $1.0 million, $2.0 million, $2.6 million, and $0.1 million, respectively.  The management agreement for the Fund provides non-affiliated limited partners the ability to remove WRCM as manager of the Fund without cause. WRCM earns 50 basis points (annually) from the Fund on the outstanding balance of the investments in the Fund, of which WRCM pays approximately 50 percent of such amount to Union Bank as custodian.  As of June 30, 2012, the outstanding balance of investments in the Fund was $51.5 million. In addition, WRCM earns up to 50 percent of the gains from the sale of securities from the Fund. 

The Company recognized $2.2 million and $5.1 million of fee revenue for the three and six months ended June 30, 2012, respectively, and $1.2 million of fee revenue for the three and six months ended June 30, 2011, related to the agreements discussed above, which is included in "other income" in the Company's consolidated statements of income.
Fair Value
Fair Value
Fair Value

The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.
 
As of June 30, 2012
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Investments: (a)
 
 
 
 


Student loan asset-backed securities
$
—

 
68,619

 
68,619

Equity securities
4,586

 
—

 
4,586

Debt securities
850

 
—

 
850

Total investments
5,436

 
68,619

 
74,055

Fair value of derivative instruments (b)
—

 
48,665

 
48,665

Total assets
$
5,436

 
117,284

 
122,720

Liabilities:
 

 
 

 
 

Fair value of derivative instruments (b)
$
—

 
62,209

 
62,209

Total liabilities
$
—

 
62,209

 
62,209

 
As of December 31, 2011
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Investments: (a)
 
 
 
 
 
Student loan asset-backed securities
$
—

 
42,412

 
42,412

Equity securities
6,847

 
—

 
6,847

Debt securities
1,521

 
—

 
1,521

Total investments
8,368

 
42,412

 
50,780

Fair value of derivative instruments (b)
—

 
92,219

 
92,219

Total assets
$
8,368

 
134,631

 
142,999

Liabilities:
 
 
 
 
 
Fair value of derivative instruments (b)
$
—

 
43,840

 
43,840

Total liabilities
$
—

 
43,840

 
43,840


(a)
Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.

(b)
All derivatives are accounted for at fair value on a recurring basis.  The fair value of derivative financial instruments is determined by derivative pricing models using the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets.  

When determining the fair value of derivatives, the Company takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held. The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.

There were no transfers into or out of level 1, level 2, or level 3 for the six months ended June 30, 2012.

The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:
 
As of June 30, 2012
 
Fair value
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Student loans receivable
$
23,526,456

 
23,501,382

 
—

 
—

 
23,526,456

Cash and cash equivalents
56,255

 
56,255

 
56,255

 
—

 
—

Investments
74,055

 
74,055

 
5,436

 
68,619

 
—

Restricted cash
898,881

 
898,881

 
898,881

 
—

 
—

Restricted cash – due to customers
63,753

 
63,753

 
63,753

 
—

 
—

Restricted investments
14,074

 
14,074

 
14,074

 
—

 
—

Accrued interest receivable
286,133

 
286,133

 
286,133

 
—

 
—

Derivative instruments
48,665

 
48,665

 
—

 
48,665

 
—

Financial liabilities:
 

 
 

 
 
 
 
 
 
Bonds and notes payable
22,872,568

 
23,836,250

 
—

 
22,872,568

 
—

Accrued interest payable
18,187

 
18,187

 
18,187

 
—

 
—

Due to customers
63,753

 
63,753

 
63,753

 
—

 
—

Derivative instruments
62,209

 
62,209

 
—

 
62,209

 
—

 
As of December 31, 2011
 
Fair value
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Student loans receivable
$
23,894,005

 
24,297,876

 
—

 
—

 
23,894,005

Cash and cash equivalents
42,570

 
42,570

 
42,570

 
—

 
—

Investments
50,780

 
50,780

 
8,368

 
42,412

 
—

Restricted cash
377,423

 
377,423

 
377,423

 
—

 
—

Restricted cash – due to customers
109,809

 
109,809

 
109,809

 
—

 
—

Restricted investments
236,899

 
236,899

 
236,899

 
—

 
—

Accrued interest receivable
308,401

 
308,401

 
308,401

 
—

 
—

Derivative instruments
92,219

 
92,219

 
—

 
92,219

 
—

Financial liabilities:
 

 
 

 
 
 
 
 
 
Bonds and notes payable
23,003,453

 
24,434,540

 
—

 
23,003,453

 
—

Accrued interest payable
19,634

 
19,634

 
19,634

 
—

 
—

Due to customers
109,809

 
109,809

 
109,809

 
—

 
—

Derivative instruments
43,840

 
43,840

 
—

 
43,840

 
—

 
The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring basis are discussed above.  The fair values of the remaining financial assets and liabilities were estimated using the following methods and assumptions:

Student Loans Receivable

If the Company has the ability and intent to hold loans for the foreseeable future, such loans are held for investment and carried at amortized cost. Fair values for student loan receivables were determined by modeling loan cash flows using stated terms of the assets and internally-developed assumptions to determine aggregate portfolio yield, net present value, and average life. The significant assumptions used to project cash flows are prepayment speeds, default rates, cost of funds, required return on equity, and future interest rate and indice relationships. A number of significant inputs into the models are internally derived and not observable to market participants.

Cash and Cash Equivalents, Restricted Cash, Restricted Cash – Due to Customers, Restricted Investments, Accrued Interest Receivable/Payable and Due to Customers

The carrying amount approximates fair value due to the variable rate of interest and/or the short maturities of these instruments.

Bonds and Notes Payable

Bonds and notes payable are accounted for at cost in the financial statements except when denominated in a foreign currency. Foreign currency-denominated borrowings are re-measured at current currency spot rates in the financial statements. The fair value of bonds and notes payable was determined from quotes from broker dealers or through standard bond pricing models using the stated terms of the borrowings, observable yield curves, and market credit spreads. Fair value adjustments for unsecured corporate debt are made based on indicative quotes from observable trades.

Limitations

The fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Therefore, the calculated fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument.  Changes in assumptions could significantly affect the estimates.
Legal Proceedings
Legal Proceedings
Legal Proceedings

General

The Company is subject to various claims, lawsuits, and proceedings that arise in the normal course of business. These matters principally consist of claims by student loan borrowers disputing the manner in which their student loans have been processed and disputes with other business entities. Other than as specifically discussed below, on the basis of present information, anticipated insurance coverage, and advice received from counsel, it is the opinion of the Company's management that the disposition or ultimate determination of these claims, lawsuits, and proceedings will not have a material adverse effect on the Company's business, financial position, or results of operations.

Bais Yaakov of Spring Valley v. Peterson's Nelnet, LLC

On January 4, 2011, a complaint against Peterson's Nelnet, LLC (“Peterson's”), a subsidiary of the Company, was filed in the U.S. federal District Court for the District of New Jersey (the “District Court”). The complaint alleges that Peterson's sent six advertising faxes to the named plaintiff in 2008-2009 that were not the result of express invitation or permission granted by the plaintiff and did not include certain opt out language.  The complaint also alleges that such faxes violated the federal Telephone Consumer Protection Act (the “TCPA”), purportedly entitling the plaintiff to $500 per violation, trebled for willful violations for each of the six faxes.  The complaint further alleges that Peterson's had sent putative class members more than 10,000 faxes that violated the TCPA, amounting to more than $5 million in statutory penalty damages and more than $15 million if trebled for willful violations. The complaint seeks to establish a class action.  As of the filing date of this report, the District Court has not established or recognized any class.

On April 14, 2012, the U.S. Court of Appeals for the Third Circuit, which has jurisdiction over the District Court, issued an order in an unrelated TCPA case which remanded that case to the District Court to determine whether the statutory provisions of the TCPA limit whether or to what extent a TCPA claim can be heard as a class action in federal court where applicable state law would impose limitations on a class action if the claim were brought in state court.  The resolution of this issue may affect whether the claim against Peterson's can be pursued as a class action, and in light of the ruling, Peterson's requested and received the District Court's permission to file a renewed motion to dismiss the complaint. Peterson's filed that motion on May 29, 2012. The District Court has not yet ruled on the motion.

Peterson's intends to continue to contest the suit vigorously.  Due to the preliminary stage of this matter and the uncertainty and risks inherent in class determination and the overall litigation process, the Company believes that a meaningful estimate of a reasonably possible loss, if any, or range of reasonably possible losses, if any, cannot currently be made.
Basis of Financial Reporting Significant Accounting Policies (Policies)
Basis of Financial Reporting 
Basis of Financial Reporting

The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company”) as of June 30, 2012 and for the three and six month periods ended June 30, 2012 and 2011 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2011 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results for the year ending December 31, 2012. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.
Derivatives, Policy 
Accounting for Derivative Financial Instruments

The Company records derivative instruments on the consolidated balance sheets as either an asset or liability measured at its fair value. Management has structured the majority of the Company’s derivative transactions with the intent that each is economically effective; however, the Company’s derivative instruments do not qualify for hedge accounting.  As a result, the change in fair value of the Company’s derivatives at each reporting date are included in the Company’s consolidated statements of income. Changes or shifts in the forward yield curve and fluctuations in currency rates can significantly impact the valuation of the Company’s derivatives. Accordingly, changes or shifts to the forward yield curve and fluctuations in currency rates will impact the financial position and results of operations of the Company.
Investment, Policy 
The Company's available-for-sale investment portfolio consists of student loan asset-backed securities and equity and debt securities. These securities are carried at fair value, with the temporary changes in fair value carried as a separate component of stockholders’ equity, net of taxes. The amortized cost of debt securities in this category (including the student loan asset-backed securities) is adjusted for amortization of premiums and accretion of discounts, which are amortized using the effective interest rate method. Other-than-temporary impairment is evaluated by considering several factors, including the length of time and extent to which the fair value has been less than the amortized cost basis, the financial condition and near-term prospects of the security (considering factors such as adverse conditions specific to the security and ratings agency actions), and the intent and ability to retain the investment to allow for an anticipated recovery in fair value. The entire fair value loss on a security that is other-than-temporary impairment is recorded in earnings if the Company intends to sell the security or if it is more likely than not that the Company will be required to sell the security before the expected recovery of the loss. However, if the impairment is other-than-temporary, and either of those two conditions does not exist, the portion of the impairment related to credit losses is recorded in earnings and the impairment related to other factors is recorded in other comprehensive income.

Securities classified as trading are accounted for at fair value with unrealized gains and losses included in "other income" on the consolidated statements of income.

Securities that the Company has the intent and ability to hold to maturity are classified as held-to-maturity and are accounted for at amortized cost unless the security is determined to have an other-than-temporary impairment. In that case, it is accounted for in the same manner as described above for available-for-sale investments.
Fair Value of Financial Instruments, Policy 

(a)
Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.

(b)
All derivatives are accounted for at fair value on a recurring basis.  The fair value of derivative financial instruments is determined by derivative pricing models using the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets.  

When determining the fair value of derivatives, the Company takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held. The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.
Student Loans Receivable and Allowance for Loan Losses (Tables)
Schedule of Accounts, Notes, Loans and Financing Receivable 
Student loans receivable consisted of the following:
 
As of
 
As of
 
June 30, 2012
 
December 31, 2011
Federally insured loans
$
23,551,124

 
24,332,709

Non-federally insured loans
31,471

 
26,916

 
23,582,595

 
24,359,625

Unamortized loan premiums (discounts) and deferred origination costs, net
(31,556
)
 
(13,267
)
Allowance for loan losses – federally insured loans
(36,992
)
 
(37,205
)
Allowance for loan losses – non-federally insured loans
(12,665
)
 
(11,277
)
 
$
23,501,382

 
24,297,876

Allowance for federally insured loans as a percentage of such loans
0.16
%
 
0.15
%
Allowance for non-federally insured loans as a percentage of such loans
40.24
%
 
41.90
%
Allowance for Credit Losses on Financing Receivables 
The provision for loan losses represents the periodic expense of maintaining an allowance sufficient to absorb losses, net of recoveries, inherent in the portfolio of student loans. Activity in the allowance for loan losses is shown below.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Balance at beginning of period
$
48,435

 
41,097

 
48,482

 
43,626

Provision for loan losses:
 

 
 

 
 

 
 

Federally insured loans
7,000

 
5,000

 
13,000

 
8,500

Non-federally insured loans
—

 
250

 
—

 
500

Total provision for loan losses
7,000

 
5,250

 
13,000

 
9,000

Charge-offs:
 

 
 

 
 

 
 

Federally insured loans
(5,999
)
 
(4,585
)
 
(11,494
)
 
(9,440
)
Non-federally insured loans
(528
)
 
(1,226
)
 
(1,297
)
 
(2,220
)
Total charge-offs
(6,527
)
 
(5,811
)
 
(12,791
)
 
(11,660
)
Recoveries - non-federally insured loans
354

 
283

 
705

 
653

Purchase (sale) of loans, net:
 
 
 
 
 
 
 
Federally insured loans
(792
)
 
—

 
(1,719
)
 
—

Non-federally insured loans
—

 
—

 
—

 
—

Total purchase (sale) of loans, net
(792
)
 
—

 
(1,719
)
 
—

Transfer (to) from repurchase obligation related to loans (sold) purchased, net
1,187

 
1,481

 
1,980

 
681

Balance at end of period
$
49,657

 
42,300

 
49,657

 
42,300

Allocation of the allowance for loan losses:
 
 
 

 
 

 
 

Federally insured loans
$
36,992

 
31,968

 
36,992

 
31,968

Non-federally insured loans
12,665

 
10,332

 
12,665

 
10,332

Total allowance for loan losses
$
49,657

 
42,300

 
49,657

 
42,300

Accrual Related to Repurchase Obligation Rollforward 
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Beginning balance
$
18,430

 
19,670

 
19,223

 
12,600

Transfer (to) from the allowance for loan losses related to loans (purchased) sold, net
(1,187
)
 
(1,481
)
 
(1,980
)
 
(681
)
Repurchase obligation associated with loans sold on January 13, 2011
—

 
—

 
—

 
6,270

Current period expense
—

 
2,500

 
—

 
2,500

Ending balance
$
17,243

 
20,689

 
17,243

 
20,689

Financing Receivable Credit Quality Indicators 
The table below shows the Company’s student loan delinquencies.
 
As of June 30, 2012
 
As of December 31, 2011
 
As of June 30, 2011
Federally Insured Loans:
 
 
 
 
 
 
 
 
 
 
 
Loans in-school/grace/deferment (a)
$
3,379,586

 
 
 
$
3,664,899

 
 
 
$
4,061,955

 
 
Loans in forbearance (b)
3,223,004

 
 
 
3,330,452

 
 
 
3,263,802

 
 
Loans in repayment status:
 
 
 
 
 
 
 
 
 
 
 
Loans current
14,647,003

 
86.5
%
 
14,600,372

 
84.2
%
 
13,748,083

 
87.2
%
Loans delinquent 31-60 days (c)
667,766

 
3.9

 
844,204

 
4.9

 
583,443

 
3.7

Loans delinquent 61-90 days (c)
409,288

 
2.4

 
407,094

 
2.3

 
358,539

 
2.3

Loans delinquent 91-270 days (c)
918,587

 
5.4

 
1,163,437

 
6.7

 
854,095

 
5.4

Loans delinquent 271 days or greater (c)(d)
305,890

 
1.8

 
322,251

 
1.9

 
213,240

 
1.4

Total loans in repayment
16,948,534

 
100.0
%
 
17,337,358

 
100.0
%
 
15,757,400

 
100.0
%
Total federally insured loans
$
23,551,124

 
 

 
$
24,332,709

 
 

 
$
23,083,157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Federally Insured Loans:
 

 
 

 
 

 
 

 
 
 
 
Loans in-school/grace/deferment (a)
$
2,795

 
 

 
$
2,058

 
 

 
$
3,749

 
 
Loans in forbearance (b)
451

 
 

 
371

 
 

 
510

 
 
Loans in repayment status:
 
 
 

 
 
 
 

 
 
 
 
Loans current
21,094

 
74.8
%
 
16,776

 
68.5
%
 
22,221

 
84.2
%
Loans delinquent 31-60 days (c)
690

 
2.4

 
706

 
2.9

 
624

 
2.4

Loans delinquent 61-90 days (c)
1,546

 
5.5

 
1,987

 
8.1

 
587

 
2.2

Loans delinquent 91 days or greater (c)
4,895

 
17.3

 
5,018

 
20.5

 
2,964

 
11.2

Total loans in repayment
28,225

 
100.0
%
 
24,487

 
100.0
%
 
26,396

 
100.0
%
Total non-federally insured loans
$
31,471

 
 

 
$
26,916

 
 

 
$
30,655

 
 
 
(a)
Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation for law students.

(b)
Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies.

(c)
The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance.

(d)
A portion of loans included in loans delinquent 271 days or greater includes federally insured loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency.
Bonds and Notes payable (Tables)
Schedule of Debt 
The following tables summarize the Company’s outstanding debt obligations by type of instrument:
 
As of June 30, 2012
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes (a):
 
 
 
 
 
Bonds and notes based on indices
$
19,852,956

 
0.48% - 6.90%
 
11/25/15 - 7/27/48
Bonds and notes based on auction or remarketing
970,075

 
0.17% - 2.10%
 
5/1/28 - 5/25/42
Total variable-rate bonds and notes
20,823,031

 
 
 
 
FFELP warehouse facilities
829,449

 
0.22% - 0.35%
 
1/31/15 - 6/30/15
Department of Education Conduit
2,140,492

 
0.79%
 
5/8/14
Secured line of credit
50,000

 
1.75%
 
4/11/14
Unsecured line of credit
10,000

 
1.75%
 
2/17/16
Unsecured debt - Junior Subordinated Hybrid Securities
100,697

 
3.84%
 
9/15/61
Other borrowings
33,653

 
3.72% - 5.72%
 
11/14/12 - 3/1/22
 
23,987,322

 
 
 
 
Discount on bonds and notes payable
(151,072
)
 
 
 
 
Total
$
23,836,250

 
 
 
 
 
As of December 31, 2011
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes (a):
 
 
 
 
 
Bonds and notes based on indices
$
20,252,403

 
0.42% - 6.90%
 
11/25/15 - 7/27/48
Bonds and notes based on auction or remarketing
970,575

 
0.11% - 2.19%
 
5/1/28 - 5/25/42
Total variable-rate bonds and notes
21,222,978

 
 
 
 
FFELP warehouse facilities
824,410

 
0.26% - 0.70%
 
7/1/14
Department of Education Conduit
2,339,575

 
0.74%
 
5/8/14
Unsecured line of credit
64,390

 
0.69%
 
5/8/12
Unsecured debt - Junior Subordinated Hybrid Securities
100,697

 
3.95%
 
9/15/61
Other borrowings
43,119

 
3.78% - 5.72%
 
11/14/12 - 3/1/22
 
24,595,169

 
 
 
 
Discount on bonds and notes payable
(160,629
)
 
 
 
 
Total
$
24,434,540

 
 
 
 
(a)
Issued in asset-backed securitizations
Schedule of Line of Credit Facilities 
As of June 30, 2012, the Company has three FFELP warehouse facilities as summarized below.
 
NHELP-II (a)
 
NHELP-I (b)
 
NFSLW-I (c)
 
Total
Maximum financing amount
$
250,000

 
500,000

 
500,000

 
1,250,000

Amount outstanding
160,149

 
331,412

 
337,888

 
829,449

Amount available
$
89,851

 
168,588

 
162,112

 
420,551

Expiration of liquidity provisions
January 31, 2013

 
October 2, 2013

 
June 28, 2013

 
 
Final maturity date
January 31, 2015

 
April 2, 2015

 
June 30, 2015

 
 
Maximum advance rates
90.5 - 93.5%

 
93 - 95%

 
90 - 95%

 
 
Minimum advance rates
90.5 - 93.5%

 
80 - 95%

 
84.5 - 90%

 
 
Advanced as equity support
$
15,150

 
19,505

 
26,723

 
61,378


(a)
The Company entered into this facility on February 1, 2012.

(b)
The terms of this facility were amended on April 2, 2012. The table above reflects all amended terms.

(c)
The terms of this facility were amended on June 29, 2012. The table above reflects all amended terms.
Derivative Financial Instruments (Tables)
Interest Rate Swaps - 1:3 Basis swaps 
The following table summarizes the Company’s 1:3 Basis Swaps outstanding as of both June 30, 2012 and December 31, 2011:
 
 
Maturity
 
Notional amount
 
 
2021
 
 
$
250,000

 
 
2023
 
 
1,250,000

 
 
2024
 
 
250,000

 
 
2026
 
 
800,000

 
 
2028
 
 
100,000

 
 
2036
 
 
700,000

 
 
2039
(a)
 
150,000

 
 
2040
(b)
 
200,000

 
 
 
 
 
$
3,700,000

(c)

(a)This derivative has a forward effective start date in 2015.

(b)This derivative has a forward effective start date in 2020.

(c)
As of June 30, 2012, the weighted average rate paid by the Company was one-month LIBOR plus 1.2 basis points.
Interest Rate Swaps - Floor Income Hedges 
The following tables summarize the outstanding derivative instruments used by the Company to economically hedge these loans.
As of June 30, 2012
 
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
 
 
 
 
2013
 
 
$
2,150,000

 
0.85
%
 
2014
 
 
750,000

 
0.85

 
2015
(b)
 
1,100,000

 
0.89

 
2016
 
 
750,000

 
0.85

 
2017
 
 
750,000

 
0.99

 
2020
 
 
50,000

 
3.23

 
 
 
 
$
5,550,000

 
0.90
%
As of December 31, 2011
 
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
 
 
 
 
2013
 
$
2,150,000

 
0.85
%
 
2014
 
750,000

 
0.85

 
2015
 
100,000

 
2.26

 
2020
 
50,000

 
3.23

 
 
 
$
3,050,000

 
0.93
%

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

(b)
$500 million of these derivatives have a forward effective start date in 2013.

Interest Rate Swaps - Unsecured Debt Hedges 
The Company had the following derivatives outstanding that are used to effectively convert the variable interest rate on the Hybrid Securities to a fixed rate.
As of June 30, 2012
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
2036
 
$
75,000

 
4.28
%
2042
 
25,000

 
2.42

 
 
$
100,000

 
3.82
%
 
As of December 31, 2011
Maturity
 
Notional amount
 
Weighted average fixed rate paid by the Company (a)
2036
 
$
75,000

 
4.28
%

(a)
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
Impact of Foreign Exchange Contracts on the Statement of Income 
The following table shows the income statement impact as a result of the re-measurement of the Euro Notes and the change in the fair value of the related derivative instruments. These items are included in the Company's consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Re-measurement of Euro Notes
$
59,226

 
(19,020
)
 
26,984

 
(84,355
)
Change in fair value of cross currency interest rate swaps
(62,546
)
 
18,734

 
(49,520
)
 
81,266

Total impact to statements of income - income (expense) (a)
$
(3,320
)
 
(286
)
 
(22,536
)
 
(3,089
)

(a)
The financial statement impact of the above items are included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income.
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value 
The following table summarizes the fair value of the Company’s derivatives:
 
Fair value of asset derivatives
 
Fair value of liability derivatives
 
As of
 
As of
 
As of
 
As of
 
June 30, 2012
 
December 31, 2011
 
June 30, 2012
 
December 31, 2011
1:3 basis swaps
$
13,595

 
10,988

 
674

 
641

Interest rate swaps - floor income hedges
—

 
592

 
29,571

 
18,384

Interest rate swaps - hybrid debt hedges
377

 
—

 
27,777

 
24,814

Cross-currency interest rate swaps
33,616

 
80,631

 
2,505

 
—

Other
1,077

 
8

 
1,682

 
1

Total
$
48,665

 
92,219

 
62,209

 
43,840

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance 
The following table summarizes the effect of derivative instruments in the consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Settlements:
 

 
 

 
 

 
 

1:3 basis swaps
$
1,169

 
373

 
2,551

 
581

T-Bill/LIBOR basis swaps
—

 
(64
)
 
—

 
(194
)
Interest rate swaps - floor income hedges
(3,505
)
 
(6,345
)
 
(6,642
)
 
(12,563
)
Interest rate swaps - hybrid debt hedges
(723
)
 
(248
)
 
(746
)
 
(494
)
Cross-currency interest rate swaps
1,055

 
2,770

 
3,163

 
4,880

Other
(82
)
 
(8
)
 
(185
)
 
116

Total settlements - income (expense)
(2,086
)
 
(3,522
)
 
(1,859
)
 
(7,674
)
Change in fair value:
 

 
 

 
 

 
 

1:3 basis swaps
(428
)
 
(1,228
)
 
2,574

 
(5,438
)
T-Bill/LIBOR basis swaps
—

 
92

 
—

 
121

Interest rate swaps - floor income hedges
(6,143
)
 
(11,109
)
 
(11,778
)
 
(4,714
)
Interest rate swaps - hybrid debt hedges
(8,783
)
 
(3,897
)
 
(2,585
)
 
(2,449
)
Cross-currency interest rate swaps
(62,546
)
 
18,734

 
(49,520
)
 
81,266

Other
(858
)
 
(385
)
 
(614
)
 
(128
)
Total change in fair value - income (expense)
(78,758
)
 
2,207

 
(61,923
)
 
68,658

Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense)
59,226

 
(19,020
)
 
26,984

 
(84,355
)
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense)
$
(21,618
)
 
(20,335
)
 
(36,798
)
 
(23,371
)
Investments (Tables)
Summary Investment Holdings 
A summary of the Company's investments and restricted investments follows:
 
As of June 30, 2012
 
 
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
 
As of
 
 
 
 
 
December 31, 2011
Investments:
 
 
 
 
 
 
 
 
 
Available-for-sale investments (a):
 
 
 
 
 
 
 
 
 
Student loan asset-backed securities
$
61,428

 
288

 
(2,040
)
 
59,676

 
—

Equity securities
3,452

 
1,304

 
(170
)
 
4,586

 
—

Debt securities (b)
850

 
—

 
—

 
850

 
—

Total available-for-sale investments
$
65,730

 
1,592

 
(2,210
)
 
65,112

 
—

Trading investments (a):
 
 
 
 
 
 
 
 
 
Student loan asset-backed securities
 
 
 
 
 
 
$
8,943

 
42,412

Equity securities
 
 
 
 
 
 
—

 
6,847

Debt securities (b)
 
 
 
 
 
 
—

 
1,521

Total trading investments

 
 
 
 
 
$
8,943

 
50,780

Total available-for-sale and trading investments

 

 

 
$
74,055

 
50,780

Restricted Investments (c):
 
 
 
 
 
 
 
 
 
Guaranteed investment contracts - held-to-maturity
 
 
 
 
 
 
$
14,074

 
236,899


(a)
The Company transferred the majority of its investments from trading to available-for-sale on January 1, 2012 to reflect management's intention regarding such securities.

(b)
Debt securities include corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities.
    
(c)
Restricted investments are included in “Restricted cash and investments” on the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit in guaranteed investment contracts that are held for the related note holders. These investments are classified as held-to-maturity and the Company accounts for them at amortized cost, which approximates fair value.

On May 1, 2012, the majority of the Company's guaranteed investment contracts were terminated due to a downgrade in the credit rating of a guaranteed investment contract counterparty.  The sales of these investments were at par and had no income statement impact.  The proceeds from the sale of these investments were used to purchase permitted investments as specified by each underlying student loan asset-backed securitization trust indenture.  The new investments remain as assets within their respective trust estates and continue to be classified as “restricted cash and investments” on the consolidated balance sheet.

Gain (Loss) on Investments 
The Company sold available-for-sale securities during 2012 as summarized below. The net realized gain (loss) is included in "other income" in the Company's consolidated statements of income. The cost basis for these securities was determined through specific identification of the securities sold.

 
Three months ended June 30, 2012
 
Six months ended June 30, 2012
Gross realized gains
$
1,020

 
$
2,476

Gross realized losses
(54
)
 
(262
)
Net gain (loss)
$
966

 
$
2,214






The Company recognized the following unrealized gains (losses) related to its trading securities. These gains (losses) are included in "other income" in the Company's consolidated statements of income.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Unrealized gain (loss) - trading securities
$
578

 
(95
)
 
$
33

 
1,828

Investments Classified by Contractual Maturity Date 
As of June 30, 2012, the stated maturities of the Company's student loan asset-backed securities and debt securities classified as available-for-sale, are shown in the following table:
Year of Maturity:
Amortized cost
 
Fair value
2013-2016
$
200

 
200

2017-2021
644

 
644

After 2021
61,434

 
59,682

Total
$
62,278

 
60,526


As of June 30, 2012, the stated maturities of the Company's restricted investments, which are classified as held-to-maturity, are shown in the following table.
Year of Maturity:
 
2017-2021
$
11,645

After 2021
2,429

Total
$
14,074



Intangible Assets (Tables)
Schedule of Finite-Lived Intangible Assets by Major Class 
Intangible assets consist of the following:
 
Weighted average remaining useful life as of June 30, 2012 (months)
 
As of June 30, 2012
 
As of December 31, 2011
Customer relationships (net of accumulated amortization of $66,694 and $59,893, respectively)
71

 
$
16,439

 
23,240

Computer software (net of accumulated amortization of $6,510 and $5,103, respectively)
6

 
1,408

 
2,815

Trade names (net of accumulated amortization of $10,434 and $9,274, respectively)
6

 
1,159

 
2,319

 
62

 
$
19,006

 
28,374

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense 
As of June 30, 2012, the Company estimates it will record amortization expense as follows:
 
2012 (July 1 - December 31)
$
9,265

2013
3,399

2014
2,102

2015
829

2016
639

2017 and thereafter
2,772

 
$
19,006

Goodwill (Tables)
Schedule of Goodwill
The following table summarizes the Company’s allocation of goodwill by operating segment as of June 30, 2012 and December 31, 2011:
Student Loan and Guaranty Servicing
$
8,596

Tuition Payment Processing and Campus Commerce
58,086

Enrollment Services
8,553

Asset Generation and Management
41,883

 
$
117,118

Earnings per Common Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
Earnings per share attributable to common stock and a reconciliation of weighted average shares outstanding are shown in the table below.
 
Three months ended June 30,
 
Six months ended June 30,
 
2012
 
2011
 
2012
 
2011
Net income attributable to Nelnet, Inc.
$
41,394

 
37,125

 
84,535

 
92,005

Less earnings allocated to holders of unvested restricted stock
336

 
226

 
619

 
570

Net income available to Nelnet, Inc. common shareholders
$
41,058

 
36,899

 
83,916

 
91,435

 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
47,049,055

 
48,302,779

 
47,020,811

 
48,237,411

Dilutive effect of the assumed vesting of restricted stock awards
243,092

 
185,267

 
219,848

 
188,475

Weighted average common shares outstanding - diluted
47,292,147


48,488,046

 
47,240,659

 
48,425,886

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Net income attributable to Nelnet, Inc. shareholders - basic
$
0.87

 
0.76

 
1.78

 
1.90

Net income attributable to Nelnet, Inc. shareholders - diluted
$
0.87

 
0.76

 
1.78

 
1.89

Segment Reporting (Tables)
Schedule of Segment Reporting Information, by Segment
Segment Results of Operations
 
Three months ended June 30, 2012
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
12

 
1

 
—

 
13

 
151,240

 
1,747

 
(957
)
 
152,043

Interest expense
—

 
—

 
—

 
—

 
66,017

 
2,416

 
(957
)
 
67,476

Net interest income
12

 
1

 
—

 
13

 
85,223

 
(669
)
 
—

 
84,567

Less provision for loan losses
—

 
—

 
—

 
—

 
7,000

 
—

 
—

 
7,000

Net interest income after provision for loan losses
12

 
1

 
—

 
13

 
78,223

 
(669
)
 
—

 
77,567

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
52,391

 
—

 
—

 
52,391

 
—

 
—

 
—

 
52,391

Intersegment servicing revenue
16,401

 
—

 
—

 
16,401

 
—

 
—

 
(16,401
)
 
—

Tuition payment processing and campus commerce revenue
—

 
16,834

 
—

 
16,834

 
—

 
—

 
—

 
16,834

Enrollment services revenue
—

 
—

 
29,710

 
29,710

 
—

 
—

 
—

 
29,710

Other income
—

 
—

 
—

 
—

 
3,581

 
5,219

 
—

 
8,800

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
935

 
—

 
—

 
935

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(10,053
)
 
(9,479
)
 
—

 
(19,532
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(1,339
)
 
(747
)
 
—

 
(2,086
)
Total other income (expense)
68,792

 
16,834

 
29,710

 
115,336

 
(6,876
)
 
(5,007
)
 
(16,401
)
 
87,052

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
28,905

 
8,575

 
6,161

 
43,641

 
542

 
4,520

 
—

 
48,703

Cost to provide enrollment services
—

 
—

 
20,374

 
20,374

 
—

 
—

 
—

 
20,374

Depreciation and amortization
4,525

 
1,731

 
1,617

 
7,873

 
—

 
353

 
—

 
8,226

Other
17,539

 
2,456

 
1,745

 
21,740

 
3,120

 
6,048

 
—

 
30,908

Intersegment expenses, net
1,185

 
1,330

 
976

 
3,491

 
16,635

 
(3,725
)
 
(16,401
)
 
—

Total operating expenses
52,154

 
14,092

 
30,873

 
97,119

 
20,297

 
7,196

 
(16,401
)
 
108,211

Income (loss) before income taxes and corporate overhead allocation
16,650

 
2,743

 
(1,163
)
 
18,230

 
51,050

 
(12,872
)
 
—

 
56,408

Corporate overhead allocation
(1,275
)
 
(425
)
 
(425
)
 
(2,125
)
 
(1,400
)
 
3,525

 
—

 
—

Income (loss) before income taxes
15,375

 
2,318

 
(1,588
)
 
16,105

 
49,650

 
(9,347
)
 
—

 
56,408

Income tax (expense) benefit
(5,843
)
 
(881
)
 
603

 
(6,121
)
 
(18,866
)
 
10,109

 
—

 
(14,878
)
Net income (loss)
9,532

 
1,437

 
(985
)
 
9,984

 
30,784

 
762

 
—

 
41,530

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
136

 
—

 
136

Net income (loss) attributable to Nelnet, Inc.
$
9,532

 
1,437

 
(985
)
 
9,984

 
30,784

 
626

 
—

 
41,394

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2011
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
12

 
2

 
—

 
14

 
139,284

 
1,147

 
(655
)
 
139,790

Interest expense
—

 
—

 
—

 
—

 
49,269

 
2,440

 
(655
)
 
51,054

Net interest income (loss)
12

 
2

 
—

 
14

 
90,015

 
(1,293
)
 
—

 
88,736

Less provision for loan losses
—

 
—

 
—

 
—

 
5,250

 
—

 
—

 
5,250

Net interest income (loss) after provision for loan losses
12

 
2

 
—

 
14

 
84,765

 
(1,293
)
 
—

 
83,486

Other income (expense):
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
41,735

 
—

 
—

 
41,735

 
—

 
—

 
—

 
41,735

Intersegment servicing revenue
16,793

 
—

 
—

 
16,793

 
—

 
—

 
(16,793
)
 
—

Tuition payment processing and campus commerce revenue
—

 
14,761

 
—

 
14,761

 
—

 
—

 
—

 
14,761

Enrollment services revenue
—

 
—

 
32,315

 
32,315

 
—

 
—

 
—

 
32,315

Other income
—

 
—

 
—

 
—

 
3,997

 
2,829

 
—

 
6,826

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(12,531
)
 
(4,282
)
 
—

 
(16,813
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(3,274
)
 
(248
)
 
—

 
(3,522
)
Total other income (expense)
58,528

 
14,761

 
32,315

 
105,604

 
(11,808
)
 
(1,701
)
 
(16,793
)
 
75,302

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
24,731

 
7,249

 
5,931

 
37,911

 
709

 
4,261

 
—

 
42,881

Cost to provide enrollment services
—

 
—

 
22,140

 
22,140

 
—

 
—

 
—

 
22,140

Depreciation and amortization
3,436

 
1,326

 
1,658

 
6,420

 
—

 
349

 
—

 
6,769

Other
14,605

 
2,327

 
2,442

 
19,374

 
5,139

 
4,254

 
—

 
28,767

Intersegment expenses, net
1,060

 
1,118

 
959

 
3,137

 
17,047

 
(3,391
)
 
(16,793
)
 
—

Total operating expenses
43,832

 
12,020

 
33,130

 
88,982

 
22,895

 
5,473

 
(16,793
)
 
100,557

Income (loss) before income taxes and corporate overhead allocation
14,708

 
2,743

 
(815
)
 
16,636

 
50,062

 
(8,467
)
 
—

 
58,231

Corporate overhead allocation
(1,233
)
 
(411
)
 
(411
)
 
(2,055
)
 
(2,054
)
 
4,109

 
—

 
—

Income (loss) before income taxes
13,475

 
2,332

 
(1,226
)
 
14,581

 
48,008

 
(4,358
)
 
—

 
58,231

Income tax (expense) benefit
(5,119
)
 
(886
)
 
466

 
(5,539
)
 
(18,650
)
 
3,083

 
—

 
(21,106
)
Net income (loss)
8,356

 
1,446

 
(760
)
 
9,042

 
29,358

 
(1,275
)
 
—

 
37,125

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to Nelnet, Inc.
$
8,356

 
1,446

 
(760
)
 
9,042

 
29,358

 
(1,275
)
 
—

 
37,125

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2012
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
32

 
5

 
—

 
37

 
304,752

 
3,335

 
(1,928
)
 
306,196

Interest expense
—

 
—

 
—

 
—

 
134,846

 
3,855

 
(1,928
)
 
136,773

Net interest income
32

 
5

 
—

 
37

 
169,906

 
(520
)
 
—

 
169,423

Less provision for loan losses
—

 
—

 
—

 
—

 
13,000

 
—

 
—

 
13,000

Net interest income after provision for loan losses
32

 
5

 
—

 
37

 
156,906

 
(520
)
 
—

 
156,423

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
101,879

 
—

 
—

 
101,879

 
—

 
—

 
—

 
101,879

Intersegment servicing revenue
33,355

 
—

 
—

 
33,355

 
—

 
—

 
(33,355
)
 
—

Tuition payment processing and campus commerce revenue
—

 
38,747

 
—

 
38,747

 
—

 
—

 
—

 
38,747

Enrollment services revenue
—

 
—

 
61,374

 
61,374

 
—

 
—

 
—

 
61,374

Other income
—

 
—

 
—

 
—

 
8,581

 
11,173

 
—

 
19,754

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
935

 
—

 
—

 
935

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(31,657
)
 
(3,282
)
 
—

 
(34,939
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(1,112
)
 
(747
)
 
—

 
(1,859
)
Total other income (expense)
135,234

 
38,747

 
61,374

 
235,355

 
(23,253
)
 
7,144

 
(33,355
)
 
185,891

Operating expenses:
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

Salaries and benefits
57,947

 
17,193

 
12,440

 
87,580

 
1,261

 
8,957

 
—

 
97,798

Cost to provide enrollment services
—

 
—

 
42,052

 
42,052

 
—

 
—

 
—

 
42,052

Depreciation and amortization
8,938

 
3,471

 
3,234

 
15,643

 
—

 
719

 
—

 
16,362

Other
36,205

 
5,272

 
3,701

 
45,178

 
6,752

 
11,241

 
—

 
63,171

Intersegment expenses, net
2,570

 
2,663

 
1,824

 
7,057

 
33,778

 
(7,480
)
 
(33,355
)
 
—

Total operating expenses
105,660

 
28,599

 
63,251

 
197,510

 
41,791

 
13,437

 
(33,355
)
 
219,383

Income (loss) before income taxes and corporate overhead allocation
29,606

 
10,153

 
(1,877
)
 
37,882

 
91,862

 
(6,813
)
 
—

 
122,931

Corporate overhead allocation
(2,778
)
 
(926
)
 
(926
)
 
(4,630
)
 
(2,792
)
 
7,422

 
—

 
—

Income (loss) before income taxes
26,828

 
9,227

 
(2,803
)
 
33,252

 
89,070

 
609

 
—

 
122,931

Income tax (expense) benefit
(10,195
)
 
(3,506
)
 
1,065

 
(12,636
)
 
(33,845
)
 
8,373

 
—

 
(38,108
)
Net income (loss)
16,633

 
5,721

 
(1,738
)
 
20,616

 
55,225

 
8,982

 
—

 
84,823

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
288

 
—

 
288

Net income (loss) attributable to Nelnet, Inc.
$
16,633

 
5,721

 
(1,738
)
 
20,616

 
55,225

 
8,694

 
—

 
84,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2011
 
Fee-Based
 
 
 
 
 
 
 
 
 
 
 
Student Loan and Guaranty Servicing
 
Tuition Payment Processing and Campus Commerce
 
Enrollment
Services
 
Total Fee-
Based
 
Asset
Generation and
Management
 
Corporate
Activity
and
Overhead
 
Eliminations
 
Total
Total interest income
$
27

 
8

 
—

 
35

 
276,923

 
2,293

 
(1,377
)
 
277,874

Interest expense
—

 
—

 
—

 
—

 
98,985

 
5,753

 
(1,377
)
 
103,361

Net interest income
27

 
8

 
—

 
35

 
177,938

 
(3,460
)
 
—

 
174,513

Less provision for loan losses
—

 
—

 
—

 
—

 
9,000

 
—

 
—

 
9,000

Net interest income after provision for loan losses
27

 
8

 
—

 
35

 
168,938

 
(3,460
)
 
—

 
165,513

Other income (expense):
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loan and guaranty servicing revenue
82,148

 
—

 
—

 
82,148

 
—

 
—

 
—

 
82,148

Intersegment servicing revenue
34,650

 
—

 
—

 
34,650

 
—

 
—

 
(34,650
)
 
—

Tuition payment processing and campus commerce revenue
—

 
34,130

 
—

 
34,130

 
—

 
—

 
—

 
34,130

Enrollment services revenue
—

 
—

 
66,183

 
66,183

 
—

 
—

 
—

 
66,183

Other income
—

 
—

 
—

 
—

 
8,133

 
5,185

 
—

 
13,318

Gain on sale of loans and debt repurchases
—

 
—

 
—

 
—

 
1,400

 
6,907

 
—

 
8,307

Derivative market value and foreign currency adjustments, net
—

 
—

 
—

 
—

 
(13,120
)
 
(2,577
)
 
—

 
(15,697
)
Derivative settlements, net
—

 
—

 
—

 
—

 
(7,312
)
 
(362
)
 
—

 
(7,674
)
Total other income (expense)
116,798

 
34,130

 
66,183

 
217,111

 
(10,899
)
 
9,153

 
(34,650
)
 
180,715

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and benefits
50,119

 
14,401

 
12,188

 
76,708

 
1,487

 
8,598

 
—

 
86,793

Cost to provide enrollment services
—

 
—

 
44,979

 
44,979

 
—

 
—

 
—

 
44,979

Depreciation and amortization
6,842

 
2,660

 
3,349

 
12,851

 
—

 
694

 
—

 
13,545

Other
29,184

 
4,961

 
4,760

 
38,905

 
6,677

 
9,290

 
—

 
54,872

Intersegment expenses, net
2,429

 
2,211

 
1,777

 
6,417

 
35,194

 
(6,961
)
 
(34,650
)
 
—

Total operating expenses
88,574

 
24,233

 
67,053

 
179,860

 
43,358

 
11,621

 
(34,650
)
 
200,189

Income (loss) before income taxes and corporate overhead allocation
28,251

 
9,905

 
(870
)
 
37,286

 
114,681

 
(5,928
)
 
—

 
146,039

Corporate overhead allocation
(1,986
)
 
(662
)
 
(662
)
 
(3,310
)
 
(3,309
)
 
6,619

 
—

 
—

Income (loss) before income taxes
26,265

 
9,243

 
(1,532
)
 
33,976

 
111,372

 
691

 
—

 
146,039

Income tax (expense) benefit
(9,979
)
 
(3,512
)
 
583

 
(12,908
)
 
(42,728
)
 
1,602

 
—

 
(54,034
)
Net income (loss)
16,286

 
5,731

 
(949
)
 
21,068

 
68,644

 
2,293

 
—

 
92,005

  Net income attributable to noncontrolling interest
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to Nelnet, Inc.
$
16,286

 
5,731

 
(949
)
 
21,068

 
68,644

 
2,293

 
—

 
92,005

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis 
The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.
 
As of June 30, 2012
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Investments: (a)
 
 
 
 


Student loan asset-backed securities
$
—

 
68,619

 
68,619

Equity securities
4,586

 
—

 
4,586

Debt securities
850

 
—

 
850

Total investments
5,436

 
68,619

 
74,055

Fair value of derivative instruments (b)
—

 
48,665

 
48,665

Total assets
$
5,436

 
117,284

 
122,720

Liabilities:
 

 
 

 
 

Fair value of derivative instruments (b)
$
—

 
62,209

 
62,209

Total liabilities
$
—

 
62,209

 
62,209

 
As of December 31, 2011
 
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Investments: (a)
 
 
 
 
 
Student loan asset-backed securities
$
—

 
42,412

 
42,412

Equity securities
6,847

 
—

 
6,847

Debt securities
1,521

 
—

 
1,521

Total investments
8,368

 
42,412

 
50,780

Fair value of derivative instruments (b)
—

 
92,219

 
92,219

Total assets
$
8,368

 
134,631

 
142,999

Liabilities:
 
 
 
 
 
Fair value of derivative instruments (b)
$
—

 
43,840

 
43,840

Total liabilities
$
—

 
43,840

 
43,840


(a)
Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.

(b)
All derivatives are accounted for at fair value on a recurring basis.  The fair value of derivative financial instruments is determined by derivative pricing models using the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets.  

When determining the fair value of derivatives, the Company takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held. The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.

Fair Value, by Balance Sheet Grouping 
The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:
 
As of June 30, 2012
 
Fair value
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Student loans receivable
$
23,526,456

 
23,501,382

 
—

 
—

 
23,526,456

Cash and cash equivalents
56,255

 
56,255

 
56,255

 
—

 
—

Investments
74,055

 
74,055

 
5,436

 
68,619

 
—

Restricted cash
898,881

 
898,881

 
898,881

 
—

 
—

Restricted cash – due to customers
63,753

 
63,753

 
63,753

 
—

 
—

Restricted investments
14,074

 
14,074

 
14,074

 
—

 
—

Accrued interest receivable
286,133

 
286,133

 
286,133

 
—

 
—

Derivative instruments
48,665

 
48,665

 
—

 
48,665

 
—

Financial liabilities:
 

 
 

 
 
 
 
 
 
Bonds and notes payable
22,872,568

 
23,836,250

 
—

 
22,872,568

 
—

Accrued interest payable
18,187

 
18,187

 
18,187

 
—

 
—

Due to customers
63,753

 
63,753

 
63,753

 
—

 
—

Derivative instruments
62,209

 
62,209

 
—

 
62,209

 
—

 
As of December 31, 2011
 
Fair value
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
Student loans receivable
$
23,894,005

 
24,297,876

 
—

 
—

 
23,894,005

Cash and cash equivalents
42,570

 
42,570

 
42,570

 
—

 
—

Investments
50,780

 
50,780

 
8,368

 
42,412

 
—

Restricted cash
377,423

 
377,423

 
377,423

 
—

 
—

Restricted cash – due to customers
109,809

 
109,809

 
109,809

 
—

 
—

Restricted investments
236,899

 
236,899

 
236,899

 
—

 
—

Accrued interest receivable
308,401

 
308,401

 
308,401

 
—

 
—

Derivative instruments
92,219

 
92,219

 
—

 
92,219

 
—

Financial liabilities:
 

 
 

 
 
 
 
 
 
Bonds and notes payable
23,003,453

 
24,434,540

 
—

 
23,003,453

 
—

Accrued interest payable
19,634

 
19,634

 
19,634

 
—

 
—

Due to customers
109,809

 
109,809

 
109,809

 
—

 
—

Derivative instruments
43,840

 
43,840

 
—

 
43,840

 
—

 
The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value on a recurring basis are discussed above.  The fair values of the remaining financial assets and liabilities were estimated using the following methods and assumptions:

Student Loans Receivable

If the Company has the ability and intent to hold loans for the foreseeable future, such loans are held for investment and carried at amortized cost. Fair values for student loan receivables were determined by modeling loan cash flows using stated terms of the assets and internally-developed assumptions to determine aggregate portfolio yield, net present value, and average life. The significant assumptions used to project cash flows are prepayment speeds, default rates, cost of funds, required return on equity, and future interest rate and indice relationships. A number of significant inputs into the models are internally derived and not observable to market participants.

Cash and Cash Equivalents, Restricted Cash, Restricted Cash – Due to Customers, Restricted Investments, Accrued Interest Receivable/Payable and Due to Customers

The carrying amount approximates fair value due to the variable rate of interest and/or the short maturities of these instruments.

Bonds and Notes Payable

Bonds and notes payable are accounted for at cost in the financial statements except when denominated in a foreign currency. Foreign currency-denominated borrowings are re-measured at current currency spot rates in the financial statements. The fair value of bonds and notes payable was determined from quotes from broker dealers or through standard bond pricing models using the stated terms of the borrowings, observable yield curves, and market credit spreads. Fair value adjustments for unsecured corporate debt are made based on indicative quotes from observable trades.

Limitations

The fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Therefore, the calculated fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument.  Changes in assumptions could significantly affect the estimates.

Student Loans Receivable and Allowance for Loan Losses (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
Student loans receivable, gross
$ 23,582,595 
 
$ 24,359,625 
 
 
 
Unamortized loan premiums (discounts) and deferred origination costs, net
(31,556)
 
(13,267)
 
 
 
Allowance for loan losses
49,657 
48,435 
48,482 
42,300 
41,097 
43,626 
Student loans receivable
23,501,382 
 
24,297,876 
 
 
 
Federally insured loans [Member]
 
 
 
 
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
Student loans receivable, gross
23,551,124 
 
24,332,709 
 
 
 
Allowance for loan losses
36,992 
 
37,205 
 
 
 
Allowance for student loans receivable as a percentage
0.16% 
 
0.15% 
 
 
 
Non-federally insured loans [Member]
 
 
 
 
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
Student loans receivable, gross
31,471 
 
26,916 
 
 
 
Allowance for loan losses
$ 12,665 
 
$ 11,277 
 
 
 
Allowance for student loans receivable as a percentage
40.24% 
 
41.90% 
 
 
 
Student Loans Receivable and Allowance for Loan Losses Allowance for Loan Losses (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Roll Forward]
 
 
 
 
 
Allowance for loan losses - balance
$ 48,435 
$ 41,097 
$ 48,482 
$ 43,626 
 
Provision for loan losses
7,000 
5,250 
13,000 
9,000 
 
Charge-offs
(6,527)
(5,811)
(12,791)
(11,660)
 
Recoveries - non-federally insured loans
354 
283 
705 
653 
 
Purchase (sale) of loans, net
(792)
0 
(1,719)
0 
 
Transfer (to) from repurchase obligation related to loans (sold) purchased, net
1,187 
1,481 
1,980 
681 
 
Allowance for loan losses - balance
49,657 
42,300 
49,657 
42,300 
 
Allocation of the Allowance for Loan Losses:
 
 
 
 
 
Allowance for loan losses
49,657 
 
49,657 
 
48,482 
Federally insured loans [Member]
 
 
 
 
 
Financing Receivable, Allowance for Credit Losses [Roll Forward]
 
 
 
 
 
Allowance for loan losses - balance
 
 
37,205 
 
 
Provision for loan losses
7,000 
5,000 
13,000 
8,500 
 
Charge-offs
(5,999)
(4,585)
(11,494)
(9,440)
 
Purchase (sale) of loans, net
(792)
0 
(1,719)
0 
 
Allowance for loan losses - balance
36,992 
 
36,992 
 
 
Allocation of the Allowance for Loan Losses:
 
 
 
 
 
Allowance for loan losses
36,992 
31,968 
36,992 
31,968 
 
Non-federally insured loans [Member]
 
 
 
 
 
Financing Receivable, Allowance for Credit Losses [Roll Forward]
 
 
 
 
 
Allowance for loan losses - balance
 
 
11,277 
 
 
Provision for loan losses
0 
250 
0 
500 
 
Charge-offs
(528)
(1,226)
(1,297)
(2,220)
 
Recoveries - non-federally insured loans
354 
283 
705 
653 
 
Purchase (sale) of loans, net
0 
0 
0 
0 
 
Transfer (to) from repurchase obligation related to loans (sold) purchased, net
1,187 
1,481 
1,980 
681 
 
Allowance for loan losses - balance
12,665 
 
12,665 
 
 
Allocation of the Allowance for Loan Losses:
 
 
 
 
 
Allowance for loan losses
$ 12,665 
$ 10,332 
$ 12,665 
$ 10,332 
 
Student Loans Receivable and Allowance for Loan Losses Repurchase Obligations (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Change in Repurchase Obligation [Roll Forward]
 
 
 
 
Beginning balance
$ 18,430,000 
$ 19,670,000 
$ 19,223,000 
$ 12,600,000 
Transfer (to) from the allowance for loan losses related to loans (purchased) sold, net
(1,187,000)
(1,481,000)
(1,980,000)
(681,000)
Repurchase obligation associated with loans sold on January 13, 2011
0 
0 
0 
6,270,000 
Current period expense
0 
2,500,000 
0 
2,500,000 
Ending balance
17,243,000 
20,689,000 
17,243,000 
20,689,000 
Cumulative non-federally insured loans participated subject to repurchase agreement [Member]
 
 
 
 
Repurchase Obligation [Line Items]
 
 
 
 
Cumulative amount of participated non-federally insured student loans
107,700,000 
 
107,700,000 
 
Days delinquent to trigger repurchase range, minimum
60 
 
60 
 
Days delinquent to trigger repurchase range, maximum
90 
 
90 
 
Non-federally insured loans sold subject to repurchase agreement [Member]
 
 
 
 
Repurchase Obligation [Line Items]
 
 
 
 
Date of sale of non-federally insured student loans subject to repurchase agreements
 
 
 
Jan. 13, 2011 
Proceeds from sale of non-federally insured student loans subject to repurchase agreements
 
 
 
$ 91,300,000 
Percent of par value of non-federally insured student loans subject to repurchase agreements
 
 
 
100.00% 
Days delinquent to trigger repurchase
 
 
 
60 
Student Loans Receivable and Allowance for Loan Losses Student Loan Status and Delinquency (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Jun. 30, 2011
Federally insured loans [Member]
 
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
 
Loans in-school/grace/deferment
$ 3,379,586 1
$ 3,664,899 1
$ 4,061,955 1
Loans in forbearance
3,223,004 2
3,330,452 2
3,263,802 2
Total loans in repayment
16,948,534 
17,337,358 
15,757,400 
Student loans receivable, gross
23,551,124 
24,332,709 
23,083,157 
Loans in repayment status:
 
 
 
Loans current
14,647,003 
14,600,372 
13,748,083 
Loans current, percentage
86.50% 
84.20% 
87.20% 
Loans delinquent 31-60 days
667,766 3
844,204 3
583,443 3
Loans delinquent 31-60 days, percentage
3.90% 3
4.90% 3
3.70% 3
Loans delinquent 61-90 days
409,288 3
407,094 3
358,539 3
Loans delinquent 61-90 days, percentage
2.40% 3
2.30% 3
2.30% 3
Loans delinquent 91-270 days
918,587 3
1,163,437 3
854,095 3
Loans delinquent 91-270 days, percentage
5.40% 3
6.70% 3
5.40% 3
Loans delinquent 271 days or greater
305,890 3 4
322,251 3 4
213,240 3 4
Loans delinquent 271 days or greater, percentage
1.80% 3 4
1.90% 3 4
1.40% 3 4
Total loans in repayment
16,948,534 
17,337,358 
15,757,400 
Total loans in repayment, percentage
100.00% 
100.00% 
100.00% 
Non-federally insured loans [Member]
 
 
 
Financing Receivable, Recorded Investment, Past Due [Line Items]
 
 
 
Loans in-school/grace/deferment
2,795 1
2,058 1
3,749 1
Loans in forbearance
451 2
371 2
510 2
Total loans in repayment
28,225 
24,487 
26,396 
Student loans receivable, gross
31,471 
26,916 
30,655 
Loans in repayment status:
 
 
 
Loans current
21,094 
16,776 
22,221 
Loans current, percentage
74.80% 
68.50% 
84.20% 
Loans delinquent 31-60 days
690 3
706 3
624 3
Loans delinquent 31-60 days, percentage
2.40% 3
2.90% 3
2.40% 3
Loans delinquent 61-90 days
1,546 3
1,987 3
587 3
Loans delinquent 61-90 days, percentage
5.50% 3
8.10% 3
2.20% 3
Loans delinquent 91 days or greater
4,895 3
5,018 3
2,964 3
Loans delinquent 91 days or greater, percentage
17.30% 3
20.50% 3
11.20% 3
Total loans in repayment
$ 28,225 
$ 24,487 
$ 26,396 
Total loans in repayment, percentage
100.00% 
100.00% 
100.00% 
Bonds and Notes payable (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Debt Instrument [Line Items]
 
 
Bonds and notes payable
$ 23,836,250 
$ 24,434,540 
Variable-rate bonds and notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
20,823,031 
21,222,978 
FFELP warehouse facilities [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
829,449 
824,410 
Interest rate range - minimum
0.22% 
0.26% 
Interest rate range - maximum
0.35% 
0.70% 
Final maturity, start
1/31/2015 
7/1/2014 
Final maturity, end
6/30/2015 
7/1/2014 
Secured line of credit [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
50,000 
 
Interest rate range - minimum
1.75% 
 
Interest rate range - maximum
1.75% 
 
Final maturity, start
4/11/2014 
 
Final maturity, end
4/11/2014 
 
Department of Education Conduit [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
2,140,492 
2,339,575 
Interest rate range - minimum
0.79% 
0.74% 
Interest rate range - maximum
0.79% 
0.74% 
Final maturity, start
5/8/2014 
5/8/2014 
Final maturity, end
5/8/2014 
5/8/2014 
Unsecured line of credit [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
10,000 
64,390 
Interest rate range - minimum
1.75% 
0.69% 
Interest rate range - maximum
1.75% 
0.69% 
Final maturity, start
2/17/2016 
5/8/2012 
Final maturity, end
2/17/2016 
5/8/2012 
Unsecured debt - Junior Subordinated Hybrid Securities [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
100,697 
100,697 
Interest rate range - minimum
3.84% 
3.95% 
Interest rate range - maximum
3.84% 
3.95% 
Final maturity, start
9/15/2061 
9/15/2061 
Final maturity, end
9/15/2061 
9/15/2061 
Other borrowings [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
33,653 
43,119 
Interest rate range - minimum
3.72% 
3.78% 
Interest rate range - maximum
5.72% 
5.72% 
Final maturity, start
11/14/2012 
11/14/2012 
Final maturity, end
3/1/2022 
3/1/2022 
Bonds and notes payable, gross [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
23,987,322 
24,595,169 
Discount on bonds and notes payable [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
(151,072)
(160,629)
Bonds and notes based on indicies [Member] |
Variable-rate bonds and notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
19,852,956 1
20,252,403 1
Interest rate range - minimum
0.48% 1
0.42% 1
Interest rate range - maximum
6.90% 1
6.90% 1
Final maturity, start
11/25/2015 1
11/25/2015 1
Final maturity, end
7/27/2048 1
7/27/2048 1
Bonds and notes based on auction or remarketing [Member] |
Variable-rate bonds and notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Bonds and notes payable
$ 970,075 1
$ 970,575 1
Interest rate range - minimum
0.17% 1
0.11% 1
Interest rate range - maximum
2.10% 1
2.19% 1
Final maturity, start
5/1/2028 1
5/1/2028 1
Final maturity, end
5/25/2042 1
5/25/2042 1
Secured line of credit [Member]
 
 
Debt Instrument [Line Items]
 
 
Debt instrument, maturity date
Apr. 11, 2014 
 
Bonds and Notes Payable Details 2 (Details) (USD $)
3 Months Ended 12 Months Ended 6 Months Ended
Mar. 31, 2012
Paid in Full/Terminated Line of Credit [Member]
Dec. 31, 2011
Paid in Full/Terminated Line of Credit [Member]
Jun. 30, 2012
Secured line of credit [Member]
Jun. 30, 2012
Unsecured line of credit [Member]
Jun. 30, 2012
NHELP-II Warehouse [Member]
Jun. 30, 2012
NHELP-I Warehouse [Member]
Jun. 30, 2012
NFSLW-I Warehouse [Member]
Jun. 30, 2012
FFELP Warehouse Total [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
Maximum financing amount
 
$ 750,000,000 
$ 50,000,000 
$ 250,000,000 
$ 250,000,000 1
$ 500,000,000 2
$ 500,000,000 3
$ 1,250,000,000 
Line of Credit Facility, Decrease, Repayments
64,400,000 
 
 
 
 
 
 
 
Amount outstanding
 
64,400,000 
50,000,000 
10,000,000 
160,149,000 1
331,412,000 2
337,888,000 3
829,449,000 
Amount available
 
 
 
240,000,000 
89,851,000 1
168,588,000 2
162,112,000 3
420,551,000 
Initiation date
 
 
April 12, 2012 
February 17, 2012 
February 1, 2012 
 
 
 
Expiration of liquidity provisions
 
 
 
 
Jan. 31, 2013 1
Oct. 02, 2013 2
Jun. 28, 2013 3
 
Final maturity date
 
May 08, 2012 
Apr. 11, 2014 
Feb. 17, 2016 
Jan. 31, 2015 1
Apr. 02, 2015 2
Jun. 30, 2015 3
 
Date paid in full and terminated
February 17, 2012 
 
 
 
 
 
 
 
Advanced as equity support
 
 
 
 
$ 15,150,000 1
$ 19,505,000 2
$ 26,723,000 3
$ 61,378,000 
Minimum advance rates - range minimum
 
 
 
 
90.50% 1
80.00% 2
84.50% 3
 
Minimum advance rates - range maximum
 
 
 
 
93.50% 1
95.00% 2
90.00% 3
 
Maximum advance rates - range minimum
 
 
 
 
90.50% 1
93.00% 2
90.00% 3
 
Maximum advance rates - range maximum
 
 
 
 
93.50% 1
95.00% 2
95.00% 3
 
Bonds and Notes Payable Details 4 (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Debt Instrument [Line Items]
 
Asset-backed securitization issuances, Description of Variable Rate Basis
one-month LIBOR 
Class B subordinated notes purchased with issuance of asset-backed securitizations (off-balance sheet)
$ 17.6 
May 4, 2012 Asset-Backed Securitization [Member]
 
Debt Instrument [Line Items]
 
Asset-backed securitization issuance, Face Amount
343.9 
June 11, 2012 Asset-Backed Securitization [Member]
 
Debt Instrument [Line Items]
 
Asset-backed securitization issuance, Face Amount
333.0 
Asset-backed securitization issuance, Unamortized Premium
$ 3.6 
Gain on Sale of Loans and Debt Repurchases (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Asset-backed Securities [Member]
Jun. 30, 2011
Junior Subordinated Debt [Member]
Jun. 30, 2011
Non-federally insured student loans [Member]
Extinguishment of Debt [Line Items]
 
 
 
Extinguishment of debt, amount (par value)
$ 17.6 
$ 62.6 
 
Gain on sale of loans and debt repurchases
$ 0.9 
$ 6.9 
$ 1.4 
Derivative Financial Instruments (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Derivative [Line Items]
 
 
Student loans receivable
$ 23,501,382,000 
$ 24,297,876,000 
Bonds and notes payable
23,836,250,000 
24,434,540,000 
Junior subordinated hybrid securities, description of variable rate basis
one-month LIBOR 
 
Junior Subordinated Hybrid Securities [Member]
 
 
Derivative [Line Items]
 
 
Bonds and notes payable
100,697,000 
100,697,000 
Unsecured debt scheduled interest rate change date
Sep. 29, 2036 
 
Junior subordinated hybrid securities, description of variable rate basis
three-month LIBOR 
 
Junior subordinated hybrid securities, basis spread on variable rate
3.375% 
 
Notional amount
100,000,000 
 
Weighted average fixed rate paid by the Company
3.82% 1
 
Junior Subordinated Hybrid Securities [Member] |
Maturity 2036 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
75,000,000 
75,000,000 
Weighted average fixed rate paid by the Company
4.28% 1
4.28% 1
Junior Subordinated Hybrid Securities [Member] |
Maturity 2042 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
25,000,000 
 
Weighted average fixed rate paid by the Company
2.42% 1
 
1:3 basis swaps [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
3,700,000,000 2
3,700,000,000 
Derivative, Type of Interest Rate Received on Swap
three-month LIBOR 
 
Derivative, Type of Interest Rate Paid on Swap
one-month LIBOR 
 
Derivative, Basis Spread on Variable Rate
0.012% 
 
1:3 basis swaps [Member] |
One-month LIBOR, Daily reset [Member]
 
 
Derivative [Line Items]
 
 
Student loans receivable
22,700,000,000 
 
Derivative, Description of Variable Rate Basis
one-month LIBOR 
 
1:3 basis swaps [Member] |
Three-month treasury bill, Daily reset [Member]
 
 
Derivative [Line Items]
 
 
Student loans receivable
900,000,000 
 
Derivative, Description of Variable Rate Basis
three-month treasury bill rate 
 
1:3 basis swaps [Member] |
Three-month LIBOR, Quarterly reset [Member]
 
 
Derivative [Line Items]
 
 
Bonds and notes payable
18,600,000,000 
 
Derivative, Description of Variable Rate Basis
three-month LIBOR 
 
1:3 basis swaps [Member] |
One-month LIBOR, Monthly reset [Member]
 
 
Derivative [Line Items]
 
 
Bonds and notes payable
1,600,000,000 
 
Derivative, Description of Variable Rate Basis
one-month LIBOR 
 
1:3 basis swaps [Member] |
Maturity 2021 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
250,000,000 
250,000,000 
1:3 basis swaps [Member] |
Maturity 2023 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
1,250,000,000 
1,250,000,000 
1:3 basis swaps [Member] |
Maturity 2024 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
250,000,000 
250,000,000 
1:3 basis swaps [Member] |
Maturity 2026 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
800,000,000 
800,000,000 
1:3 basis swaps [Member] |
Maturity 2028 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
100,000,000 
100,000,000 
1:3 basis swaps [Member] |
Maturity 2036 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
700,000,000 
700,000,000 
1:3 basis swaps [Member] |
Maturity 2039 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
150,000,000 3
150,000,000 
1:3 basis swaps [Member] |
Maturity 2040 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
200,000,000 4
200,000,000 
Interest rate swaps - floor income hedges [Member]
 
 
Derivative [Line Items]
 
 
Student loans earning fixed rate floor income
8,900,000,000 
10,900,000,000 
Notional amount
5,550,000,000 
3,050,000,000 
Weighted average fixed rate paid by the Company
0.90% 1
0.93% 1
Interest rate swaps - floor income hedges [Member] |
Maturity 2013 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
2,150,000,000 
2,150,000,000 
Weighted average fixed rate paid by the Company
0.85% 1
0.85% 1
Interest rate swaps - floor income hedges [Member] |
Maturity 2014 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
750,000,000 
750,000,000 
Weighted average fixed rate paid by the Company
0.85% 1
0.85% 1
Interest rate swaps - floor income hedges [Member] |
Maturity 2015 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
 
100,000,000 
Weighted average fixed rate paid by the Company
0.89% 1
2.26% 1
Interest rate swaps - floor income hedges [Member] |
Maturity 2015 [Member] |
Maturity 2015, forward effective start date in 2013 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
500,000,000 
 
Interest rate swaps - floor income hedges [Member] |
Maturity 2015 [Member] |
Maturity 2015 Total [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
1,100,000,000 5
 
Interest rate swaps - floor income hedges [Member] |
Maturity 2016 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
750,000,000 
 
Weighted average fixed rate paid by the Company
0.85% 1
 
Interest rate swaps - floor income hedges [Member] |
Maturity 2017 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
750,000,000 
 
Weighted average fixed rate paid by the Company
0.99% 1
 
Interest rate swaps - floor income hedges [Member] |
Maturity 2020 [Member]
 
 
Derivative [Line Items]
 
 
Notional amount
$ 50,000,000 
$ 50,000,000 
Weighted average fixed rate paid by the Company
3.23% 1
3.23% 1
Derivative Financial Instruments Details 2 (Details)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
USD ($)
Jun. 30, 2011
USD ($)
Jun. 30, 2012
USD ($)
Jun. 30, 2011
USD ($)
Dec. 31, 2011
USD ($)
Jun. 30, 2012
Cross-currency interest rate swap 1 [Member]
USD ($)
Jun. 30, 2012
Cross-currency interest rate swap 1 [Member]
EUR (€)
Jun. 30, 2012
Cross currency interest rate swap 2 [Member]
USD ($)
Jun. 30, 2012
Cross currency interest rate swap 2 [Member]
EUR (€)
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
 
 
 
 
 
Bonds and notes payable
$ 23,836,250 
 
$ 23,836,250 
 
$ 24,434,540 
 
€ 420,500 
 
€ 352,700 
Notional Amount of Foreign Currency Derivative Instruments Not Designated as Hedging Instruments
 
 
 
 
 
500,000 
420,500 
450,000 
352,700 
Re-measurement of Euro Notes
59,226 
(19,020)
26,984 
(84,355)
 
 
 
 
 
Change in fair value of cross currency interest rate swaps
(62,546)
18,734 
(49,520)
81,266 
 
 
 
 
 
Total impact to statements of income - income (expense)
$ (3,320)1
$ (286)1
$ (22,536)1
$ (3,089)1
 
 
 
 
 
Derivative Financial Instruments Details 3 (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
$ 48,665 
$ 92,219 
Fair value of liability derivatives
62,209 
43,840 
1:3 basis swaps [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
13,595 
10,988 
Fair value of liability derivatives
674 
641 
Interest rate swaps - floor income hedges [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
0 
592 
Fair value of liability derivatives
29,571 
18,384 
Interest rate swaps - hybrid debt hedges [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
377 
0 
Fair value of liability derivatives
27,777 
24,814 
Cross-currency interest rate swaps [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
33,616 
80,631 
Fair value of liability derivatives
2,505 
0 
Other [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of asset derivatives
1,077 
8 
Fair value of liability derivatives
$ 1,682 
$ 1 
Derivative Financial Instruments Details 4 (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
$ (2,086)
$ (3,522)
$ (1,859)
$ (7,674)
Change in fair value
(78,758)
2,207 
(61,923)
68,658 
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense)
59,226 
(19,020)
26,984 
(84,355)
Derivative market value and foreign currency adjustments and derivative settlements - income (expense)
(21,618)
(20,335)
(36,798)
(23,371)
1:3 basis swaps [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
1,169 
373 
2,551 
581 
Change in fair value
(428)
(1,228)
2,574 
(5,438)
T-Bill/LIBOR basis swaps [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
0 
(64)
0 
(194)
Change in fair value
0 
92 
0 
121 
Interest rate swaps - floor income hedges [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
(3,505)
(6,345)
(6,642)
(12,563)
Change in fair value
(6,143)
(11,109)
(11,778)
(4,714)
Interest rate swaps - hybrid debt hedges [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
(723)
(248)
(746)
(494)
Change in fair value
(8,783)
(3,897)
(2,585)
(2,449)
Cross-currency interest rate swaps [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
1,055 
2,770 
3,163 
4,880 
Change in fair value
(62,546)
18,734 
(49,520)
81,266 
Other [Member]
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Derivative settlements, net
(82)
(8)
(185)
116 
Change in fair value
$ (858)
$ (385)
$ (614)
$ (128)
Derivative Financial Instruments Details textual (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Derivative [Line Items]
 
Collateral held by the trustee on cross-currency interest rate swaps
$ 33.8 
Fair value of derivatives with early termination provisions
1.6 
Collateral posted to derivative counterparties
$ 55.7 
Investments (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Investment Holdings [Line Items]
 
 
Fair value
$ 74,055 
$ 50,780 
Guaranteed investment contracts - held-to-maturity
14,074 1
236,899 1
Investments [Member] |
Available-for-sale investments [Member]
 
 
Investment Holdings [Line Items]
 
 
Amortized cost
65,730 
 
Gross unrealized gains
1,592 
 
Gross unrealized losses
(2,210)
 
Fair value
65,112 
0 
Investments [Member] |
Available-for-sale investments [Member] |
Student loan asset-backed securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Amortized cost
61,428 2
 
Gross unrealized gains
288 2
 
Gross unrealized losses
(2,040)2
 
Fair value
59,676 2
0 2
Investments [Member] |
Available-for-sale investments [Member] |
Equity securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Amortized cost
3,452 2
 
Gross unrealized gains
1,304 2
 
Gross unrealized losses
(170)2
 
Fair value
4,586 2
0 2
Investments [Member] |
Available-for-sale investments [Member] |
Debt securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Amortized cost
850 3
 
Gross unrealized gains
0 3
 
Gross unrealized losses
0 3
 
Fair value
850 3
0 3
Investments [Member] |
Trading investments [Member]
 
 
Investment Holdings [Line Items]
 
 
Fair value
8,943 
50,780 
Investments [Member] |
Trading investments [Member] |
Student loan asset-backed securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Fair value
8,943 2
42,412 2
Investments [Member] |
Trading investments [Member] |
Equity securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Fair value
0 2
6,847 2
Investments [Member] |
Trading investments [Member] |
Debt securities [Member]
 
 
Investment Holdings [Line Items]
 
 
Fair value
$ 0 3
$ 1,521 3
[1] Restricted investments are included in “Restricted cash and investments” on the Company's consolidated balance sheets. The Company's restricted investments include cash balances that the Company's indentured securitization trusts deposit in guaranteed investment contracts that are held for the related note holders. These investments are classified as held-to-maturity and the Company accounts for them at amortized cost, which approximates fair value.On May 1, 2012, the majority of the Company's guaranteed investment contracts were terminated due to a downgrade in the credit rating of a guaranteed investment contract counterparty. The sales of these investments were at par and had no income statement impact. The proceeds from the sale of these investments were used to purchase permitted investments as specified by each underlying student loan asset-backed securitization trust indenture. The new investments remain as assets within their respective trust estates and continue to be classified as “restricted cash and investments” on the consolidated balance sheet.
Investments Details 2 (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Available-for-sale securities [Member]
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Gross realized gains
$ 1,020 
 
$ 2,476 
 
Gross realized losses
(54)
 
(262)
 
Net gain (loss)
966 
 
2,214 
 
Trading securities [Member]
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Unrealized gain (loss) - trading securities
$ 578 
$ (95)
$ 33 
$ 1,828 
Investments Details 3 (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Available-for-sale Securities, Amortized Cost Basis [Abstract]
 
Amortized cost - Matures 2013-2016
$ 200 
Amortized cost - Matures 2017-2021
644 
Amortized cost - Matures after 2021
61,434 
Amortized cost - Total
62,278 
Available-for-Sale Securities, Fair Value [Abstract]
 
Fair value - Matures 2013-2016
200 
Fair value - Matures 2017-2021
644 
Fair value - Matures after 2021
59,682 
Fair value - Total
$ 60,526 
Investments Details 4 (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Schedule of Held-to-maturity Securities [Line Items]
 
Matures 2017-2021
$ 11,645 
Matures after 2021
2,429 
Total
$ 14,074 
Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2012
M
Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
 
 
Weighted average remaining useful life (in months)
62 
 
Intangible assets, net of accumulated amortization
$ 19,006 
$ 28,374 
Customer relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Weighted average remaining useful life (in months)
71 
 
Accumulated amortization
66,694 
59,893 
Intangible assets, net of accumulated amortization
16,439 
23,240 
Computer software [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Weighted average remaining useful life (in months)
6 
 
Accumulated amortization
6,510 
5,103 
Intangible assets, net of accumulated amortization
1,408 
2,815 
Trade names [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Weighted average remaining useful life (in months)
6 
 
Accumulated amortization
10,434 
9,274 
Intangible assets, net of accumulated amortization
$ 1,159 
$ 2,319 
Intangible Assets (Details 2) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Intangible Assets [Abstract]
 
 
 
 
Amortization expense
$ 4,700,000 
$ 4,000,000 
$ 9,400,000 
$ 7,900,000 
Intangible Assets Future Amortization Expense [Abstract]
 
 
 
 
Future amortization expense - 2012 (July 1 - December 31)
 
 
9,265,000 
 
Future amortization expense - 2013
 
 
3,399,000 
 
Future amortization expense - 2014
 
 
2,102,000 
 
Future amortization expense - 2015
 
 
829,000 
 
Future amortization expense - 2016
 
 
639,000 
 
Future amortization expense - 2017 and thereafter
 
 
2,772,000 
 
Total
 
 
$ 19,006,000 
 
Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Goodwill
 
 
Goodwill
$ 117,118 
$ 117,118 
Student Loan and Guaranty Servicing [Member]
 
 
Goodwill
 
 
Goodwill
8,596 
8,596 
Tuition Payment Processing and Campus Commerce [Member]
 
 
Goodwill
 
 
Goodwill
58,086 
58,086 
Enrollment Services [Member]
 
 
Goodwill
 
 
Goodwill
8,553 
8,553 
Asset Generation and Management [Member]
 
 
Goodwill
 
 
Goodwill
$ 41,883 
$ 41,883 
Income taxes (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2012
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
 
Change in unrecognized tax benefit due to change in tax law
$ 4.6 
Earnings per Common Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Net income attributable to Nelnet, Inc.
$ 41,394 
$ 37,125 
$ 84,535 
$ 92,005 
Undistributed Earnings Allocated to Participating Securities
336 
226 
619 
570 
Net Income (Loss) Available to Common Stockholders, Basic
$ 41,058 
$ 36,899 
$ 83,916 
$ 91,435 
Weighted average common shares outstanding - basic
47,049,055 
48,302,779 
47,020,811 
48,237,411 
Dilutive effect of the assumed vesting of restricted stock awards
243,092 
185,267 
219,848 
188,475 
Weighted average common shares outstanding - diluted
47,292,147 
48,488,046 
47,240,659 
48,425,886 
Earnings per common share:
 
 
 
 
Net income attributable to Nelnet, Inc. shareholders - basic
$ 0.87 
$ 0.76 
$ 1.78 
$ 1.90 
Net income attributable to Nelnet, Inc. shareholders - diluted
$ 0.87 
$ 0.76 
$ 1.78 
$ 1.89 
Antidilutive securities excluded from computation of earnings per share
0 
0 
0 
0 
Segment Reporting (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
$ 152,043 
$ 139,790 
$ 306,196 
$ 277,874 
Interest expense
67,476 
51,054 
136,773 
103,361 
Net interest income
84,567 
88,736 
169,423 
174,513 
Less provision for loan losses
7,000 
5,250 
13,000 
9,000 
Net interest income (loss) after provision for loan losses
77,567 
83,486 
156,423 
165,513 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
52,391 
41,735 
101,879 
82,148 
Intersegment servicing revenue
0 
0 
0 
0 
Tuition payment processing and campus commerce revenue
16,834 
14,761 
38,747 
34,130 
Enrollment services revenue
29,710 
32,315 
61,374 
66,183 
Other income
8,800 
6,826 
19,754 
13,318 
Gain on sale of loans and debt repurchases
935 
0 
935 
8,307 
Derivative market value and foreign currency adjustments, net
(19,532)
(16,813)
(34,939)
(15,697)
Derivative settlements, net
(2,086)
(3,522)
(1,859)
(7,674)
Total other income (expense)
87,052 
75,302 
185,891 
180,715 
Operating expenses:
 
 
 
 
Salaries and benefits
48,703 
42,881 
97,798 
86,793 
Cost to provide enrollment services
20,374 
22,140 
42,052 
44,979 
Depreciation and amortization
8,226 
6,769 
16,362 
13,545 
Other
30,908 
28,767 
63,171 
54,872 
Intersegment expenses, net
0 
0 
0 
0 
Total operating expenses
108,211 
100,557 
219,383 
200,189 
Income (loss) before income taxes and corporate overhead allocation
56,408 
58,231 
122,931 
146,039 
Corporate overhead allocation
0 
0 
0 
0 
Income (loss) before income taxes
56,408 
58,231 
122,931 
146,039 
Income tax (expense) benefit
(14,878)
(21,106)
(38,108)
(54,034)
Net income (loss)
41,530 
37,125 
84,823 
92,005 
Net income attributable to noncontrolling interest
136 
0 
288 
0 
Net income (loss) attributable to Nelnet, Inc.
41,394 
37,125 
84,535 
92,005 
Student Loan and Guaranty Servicing [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
12 
12 
32 
27 
Interest expense
0 
0 
0 
0 
Net interest income
12 
12 
32 
27 
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
12 
12 
32 
27 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
52,391 
41,735 
101,879 
82,148 
Intersegment servicing revenue
16,401 
16,793 
33,355 
34,650 
Tuition payment processing and campus commerce revenue
0 
0 
0 
0 
Enrollment services revenue
0 
0 
0 
0 
Other income
0 
0 
0 
0 
Gain on sale of loans and debt repurchases
0 
0 
0 
0 
Derivative market value and foreign currency adjustments, net
0 
0 
0 
0 
Derivative settlements, net
0 
0 
0 
0 
Total other income (expense)
68,792 
58,528 
135,234 
116,798 
Operating expenses:
 
 
 
 
Salaries and benefits
28,905 
24,731 
57,947 
50,119 
Cost to provide enrollment services
0 
0 
0 
0 
Depreciation and amortization
4,525 
3,436 
8,938 
6,842 
Other
17,539 
14,605 
36,205 
29,184 
Intersegment expenses, net
1,185 
1,060 
2,570 
2,429 
Total operating expenses
52,154 
43,832 
105,660 
88,574 
Income (loss) before income taxes and corporate overhead allocation
16,650 
14,708 
29,606 
28,251 
Corporate overhead allocation
(1,275)
(1,233)
(2,778)
(1,986)
Income (loss) before income taxes
15,375 
13,475 
26,828 
26,265 
Income tax (expense) benefit
(5,843)
(5,119)
(10,195)
(9,979)
Net income (loss)
9,532 
8,356 
16,633 
16,286 
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
9,532 
8,356 
16,633 
16,286 
Tuition Payment Processing and Campus Commerce [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
1 
2 
5 
8 
Interest expense
0 
0 
0 
0 
Net interest income
1 
2 
5 
8 
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
1 
2 
5 
8 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
0 
0 
0 
0 
Intersegment servicing revenue
0 
0 
0 
0 
Tuition payment processing and campus commerce revenue
16,834 
14,761 
38,747 
34,130 
Enrollment services revenue
0 
0 
0 
0 
Other income
0 
0 
0 
0 
Gain on sale of loans and debt repurchases
0 
0 
0 
0 
Derivative market value and foreign currency adjustments, net
0 
0 
0 
0 
Derivative settlements, net
0 
0 
0 
0 
Total other income (expense)
16,834 
14,761 
38,747 
34,130 
Operating expenses:
 
 
 
 
Salaries and benefits
8,575 
7,249 
17,193 
14,401 
Cost to provide enrollment services
0 
0 
0 
0 
Depreciation and amortization
1,731 
1,326 
3,471 
2,660 
Other
2,456 
2,327 
5,272 
4,961 
Intersegment expenses, net
1,330 
1,118 
2,663 
2,211 
Total operating expenses
14,092 
12,020 
28,599 
24,233 
Income (loss) before income taxes and corporate overhead allocation
2,743 
2,743 
10,153 
9,905 
Corporate overhead allocation
(425)
(411)
(926)
(662)
Income (loss) before income taxes
2,318 
2,332 
9,227 
9,243 
Income tax (expense) benefit
(881)
(886)
(3,506)
(3,512)
Net income (loss)
1,437 
1,446 
5,721 
5,731 
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
1,437 
1,446 
5,721 
5,731 
Enrollment Services [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
0 
0 
0 
0 
Interest expense
0 
0 
0 
0 
Net interest income
0 
0 
0 
0 
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
0 
0 
0 
0 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
0 
0 
0 
0 
Intersegment servicing revenue
0 
0 
0 
0 
Tuition payment processing and campus commerce revenue
0 
0 
0 
0 
Enrollment services revenue
29,710 
32,315 
61,374 
66,183 
Other income
0 
0 
0 
0 
Gain on sale of loans and debt repurchases
0 
0 
0 
0 
Derivative market value and foreign currency adjustments, net
0 
0 
0 
0 
Derivative settlements, net
0 
0 
0 
0 
Total other income (expense)
29,710 
32,315 
61,374 
66,183 
Operating expenses:
 
 
 
 
Salaries and benefits
6,161 
5,931 
12,440 
12,188 
Cost to provide enrollment services
20,374 
22,140 
42,052 
44,979 
Depreciation and amortization
1,617 
1,658 
3,234 
3,349 
Other
1,745 
2,442 
3,701 
4,760 
Intersegment expenses, net
976 
959 
1,824 
1,777 
Total operating expenses
30,873 
33,130 
63,251 
67,053 
Income (loss) before income taxes and corporate overhead allocation
(1,163)
(815)
(1,877)
(870)
Corporate overhead allocation
(425)
(411)
(926)
(662)
Income (loss) before income taxes
(1,588)
(1,226)
(2,803)
(1,532)
Income tax (expense) benefit
603 
466 
1,065 
583 
Net income (loss)
(985)
(760)
(1,738)
(949)
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
(985)
(760)
(1,738)
(949)
Total Fee-Based [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
13 
14 
37 
35 
Interest expense
0 
0 
0 
0 
Net interest income
13 
14 
37 
35 
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
13 
14 
37 
35 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
52,391 
41,735 
101,879 
82,148 
Intersegment servicing revenue
16,401 
16,793 
33,355 
34,650 
Tuition payment processing and campus commerce revenue
16,834 
14,761 
38,747 
34,130 
Enrollment services revenue
29,710 
32,315 
61,374 
66,183 
Other income
0 
0 
0 
0 
Gain on sale of loans and debt repurchases
0 
0 
0 
0 
Derivative market value and foreign currency adjustments, net
0 
0 
0 
0 
Derivative settlements, net
0 
0 
0 
0 
Total other income (expense)
115,336 
105,604 
235,355 
217,111 
Operating expenses:
 
 
 
 
Salaries and benefits
43,641 
37,911 
87,580 
76,708 
Cost to provide enrollment services
20,374 
22,140 
42,052 
44,979 
Depreciation and amortization
7,873 
6,420 
15,643 
12,851 
Other
21,740 
19,374 
45,178 
38,905 
Intersegment expenses, net
3,491 
3,137 
7,057 
6,417 
Total operating expenses
97,119 
88,982 
197,510 
179,860 
Income (loss) before income taxes and corporate overhead allocation
18,230 
16,636 
37,882 
37,286 
Corporate overhead allocation
(2,125)
(2,055)
(4,630)
(3,310)
Income (loss) before income taxes
16,105 
14,581 
33,252 
33,976 
Income tax (expense) benefit
(6,121)
(5,539)
(12,636)
(12,908)
Net income (loss)
9,984 
9,042 
20,616 
21,068 
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
9,984 
9,042 
20,616 
21,068 
Asset Generation and Management [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
151,240 
139,284 
304,752 
276,923 
Interest expense
66,017 
49,269 
134,846 
98,985 
Net interest income
85,223 
90,015 
169,906 
177,938 
Less provision for loan losses
7,000 
5,250 
13,000 
9,000 
Net interest income (loss) after provision for loan losses
78,223 
84,765 
156,906 
168,938 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
0 
0 
0 
0 
Intersegment servicing revenue
0 
0 
0 
0 
Tuition payment processing and campus commerce revenue
0 
0 
0 
0 
Enrollment services revenue
0 
0 
0 
0 
Other income
3,581 
3,997 
8,581 
8,133 
Gain on sale of loans and debt repurchases
935 
0 
935 
1,400 
Derivative market value and foreign currency adjustments, net
(10,053)
(12,531)
(31,657)
(13,120)
Derivative settlements, net
(1,339)
(3,274)
(1,112)
(7,312)
Total other income (expense)
(6,876)
(11,808)
(23,253)
(10,899)
Operating expenses:
 
 
 
 
Salaries and benefits
542 
709 
1,261 
1,487 
Cost to provide enrollment services
0 
0 
0 
0 
Depreciation and amortization
0 
0 
0 
0 
Other
3,120 
5,139 
6,752 
6,677 
Intersegment expenses, net
16,635 
17,047 
33,778 
35,194 
Total operating expenses
20,297 
22,895 
41,791 
43,358 
Income (loss) before income taxes and corporate overhead allocation
51,050 
50,062 
91,862 
114,681 
Corporate overhead allocation
(1,400)
(2,054)
(2,792)
(3,309)
Income (loss) before income taxes
49,650 
48,008 
89,070 
111,372 
Income tax (expense) benefit
(18,866)
(18,650)
(33,845)
(42,728)
Net income (loss)
30,784 
29,358 
55,225 
68,644 
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
30,784 
29,358 
55,225 
68,644 
Corporate Activity and Overhead [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
1,747 
1,147 
3,335 
2,293 
Interest expense
2,416 
2,440 
3,855 
5,753 
Net interest income
(669)
(1,293)
(520)
(3,460)
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
(669)
(1,293)
(520)
(3,460)
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
0 
0 
0 
0 
Intersegment servicing revenue
0 
0 
0 
0 
Tuition payment processing and campus commerce revenue
0 
0 
0 
0 
Enrollment services revenue
0 
0 
0 
0 
Other income
5,219 
2,829 
11,173 
5,185 
Gain on sale of loans and debt repurchases
0 
0 
0 
6,907 
Derivative market value and foreign currency adjustments, net
(9,479)
(4,282)
(3,282)
(2,577)
Derivative settlements, net
(747)
(248)
(747)
(362)
Total other income (expense)
(5,007)
(1,701)
7,144 
9,153 
Operating expenses:
 
 
 
 
Salaries and benefits
4,520 
4,261 
8,957 
8,598 
Cost to provide enrollment services
0 
0 
0 
0 
Depreciation and amortization
353 
349 
719 
694 
Other
6,048 
4,254 
11,241 
9,290 
Intersegment expenses, net
(3,725)
(3,391)
(7,480)
(6,961)
Total operating expenses
7,196 
5,473 
13,437 
11,621 
Income (loss) before income taxes and corporate overhead allocation
(12,872)
(8,467)
(6,813)
(5,928)
Corporate overhead allocation
3,525 
4,109 
7,422 
6,619 
Income (loss) before income taxes
(9,347)
(4,358)
609 
691 
Income tax (expense) benefit
10,109 
3,083 
8,373 
1,602 
Net income (loss)
762 
(1,275)
8,982 
2,293 
Net income attributable to noncontrolling interest
136 
0 
288 
0 
Net income (loss) attributable to Nelnet, Inc.
626 
(1,275)
8,694 
2,293 
Eliminations [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total interest income
(957)
(655)
(1,928)
(1,377)
Interest expense
(957)
(655)
(1,928)
(1,377)
Net interest income
0 
0 
0 
0 
Less provision for loan losses
0 
0 
0 
0 
Net interest income (loss) after provision for loan losses
0 
0 
0 
0 
Other income (expense):
 
 
 
 
Loan and guaranty servicing revenue
0 
0 
0 
0 
Intersegment servicing revenue
(16,401)
(16,793)
(33,355)
(34,650)
Tuition payment processing and campus commerce revenue
0 
0 
0 
0 
Enrollment services revenue
0 
0 
0 
0 
Other income
0 
0 
0 
0 
Gain on sale of loans and debt repurchases
0 
0 
0 
0 
Derivative market value and foreign currency adjustments, net
0 
0 
0 
0 
Derivative settlements, net
0 
0 
0 
0 
Total other income (expense)
(16,401)
(16,793)
(33,355)
(34,650)
Operating expenses:
 
 
 
 
Salaries and benefits
0 
0 
0 
0 
Cost to provide enrollment services
0 
0 
0 
0 
Depreciation and amortization
0 
0 
0 
0 
Other
0 
0 
0 
0 
Intersegment expenses, net
(16,401)
(16,793)
(33,355)
(34,650)
Total operating expenses
(16,401)
(16,793)
(33,355)
(34,650)
Income (loss) before income taxes and corporate overhead allocation
0 
0 
0 
0 
Corporate overhead allocation
0 
0 
0 
0 
Income (loss) before income taxes
0 
0 
0 
0 
Income tax (expense) benefit
0 
0 
0 
0 
Net income (loss)
0 
0 
0 
0 
Net income attributable to noncontrolling interest
0 
0 
0 
0 
Net income (loss) attributable to Nelnet, Inc.
$ 0 
$ 0 
$ 0 
$ 0 
Related Party Transactions (Details)
Jun. 30, 2012
Farmers & Merchants Investment Inc. [Member]
 
Related Party Transaction [Line Items]
 
Percent ownership of Union Bank and Trust Company
81.40% 
Michael S. Dunlap, a significant shareholder, Chief Executive Officer, Chairman, and a member of the Board of Directors of the Company
 
Related Party Transaction [Line Items]
 
Percent ownership of Union Financial Services Inc.
50.00% 
Percent ownership of Farmers & Merchants Investment Inc
40.30% 
Stephen F. Butterfield, Vice Chairman and a member of the Board of Directors of the Company
 
Related Party Transaction [Line Items]
 
Percent ownership of Union Financial Services Inc.
50.00% 
Angela L. Muhleisen (who is Mr. Dunlap's sister, as well as Director, Chairperson, President, and Chief Executive Officer of Union Bank) [Member]
 
Related Party Transaction [Line Items]
 
Percent ownership of Farmers & Merchants Investment Inc
38.60% 
Related Party Transactions Details 2 (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Nelnet, Inc. [Member]
 
Related Party Transaction [Line Items]
 
Percent of aircraft sold
9.753% 
Proceeds from sale of percentage of aircraft
$ 156,000 
Percent of aircraft owned after the transaction
65.00% 
Union Financial Services Inc. [Member]
 
Related Party Transaction [Line Items]
 
Percent of aircraft owned after the transaction
35.00% 
Related Party Transactions Details 3 (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Related Party Transaction [Line Items]
 
 
 
 
Fee revenue related to investment services
$ 2,200,000 
$ 1,200,000 
$ 5,100,000 
$ 1,200,000 
Union Bank and Whitetail Rock Capital Management management agreement dated May 9, 2011, effective as of May 1, 2011 [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Basis points Whitetail Rock Capital Management earns from Union Bank on outstanding balance
25 
 
25 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
506,800,000 
 
506,800,000 
 
Maximum percent of gains from the sale of securities managed by Whitetail Rock Capital Management paid to Whitetail Rock Capital Management as additional fees
50.00% 
 
50.00% 
 
Union Bank and Whitetail Rock Capital Management management agreement dated January 20, 2012 [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Basis points Whitetail Rock Capital Management earns from Union Bank on outstanding balance
5 
 
5 
 
Union Bank and Whitetail Rock Capital Management management agreement dated January 20, 2012 [Member] |
Chief Executive Officer [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Shares contributed to the trusts
3,375,000 
 
3,375,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Basis points Whitetail Rock Capital Management earns from Union Bank on outstanding balance
50 
 
50 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
51,500,000 
 
51,500,000 
 
Maximum percent of gains from the sale of securities managed by Whitetail Rock Capital Management paid to Whitetail Rock Capital Management as additional fees
50.00% 
 
50.00% 
 
Percent of basis points earned on outstanding balance paid to custodian
50.00% 
 
50.00% 
 
Amount invested in funds under Whitetail Rock Capital Management management as of the date the fund was established (February 9, 2012)
48,900,000 
 
48,900,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Chief Executive Officer [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
2,500,000 
 
2,500,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Union Financial Services Inc. [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
1,000,000 
 
1,000,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Jeffrey R. Noordhoek (an executive officer of the Company) [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
1,000,000 
 
1,000,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Farmers & Merchants Investment Inc. [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
2,000,000 
 
2,000,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Angela L. Muhleisen (who is Mr. Dunlap's sister, as well as Director, Chairperson, President, and Chief Executive Officer of Union Bank) [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
2,600,000 
 
2,600,000 
 
Whitetail Rock Capital Management established a private investment fund on February 9, 2012 [Member] |
Whitetail Rock Capital Management [Member]
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
Amount invested in funds under Whitetail Rock Capital Management management agreement
$ 100,000 
 
$ 100,000 
 
Fair Value (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
$ 60,526 
 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
5,436 
8,368 
Fair value of derivative instruments
0 
0 
Total assets
5,436 
8,368 
Liabilities, Fair Value Disclosure [Abstract]
 
 
Fair value of derivative instruments
0 
0 
Total liabilities
0 
0 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Student loan asset-backed securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
0 
0 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Equity securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
4,586 
6,847 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Debt securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
850 
1,521 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
68,619 
42,412 
Fair value of derivative instruments
48,665 
92,219 
Total assets
117,284 
134,631 
Liabilities, Fair Value Disclosure [Abstract]
 
 
Fair value of derivative instruments
62,209 
43,840 
Total liabilities
62,209 
43,840 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Student loan asset-backed securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
68,619 
42,412 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Equity securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
0 
0 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Debt securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
0 
0 
Fair Value, Measurements, Recurring [Member] |
Fair value [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
74,055 
50,780 
Fair value of derivative instruments
48,665 
92,219 
Total assets
122,720 
142,999 
Liabilities, Fair Value Disclosure [Abstract]
 
 
Fair value of derivative instruments
62,209 
43,840 
Total liabilities
62,209 
43,840 
Fair Value, Measurements, Recurring [Member] |
Fair value [Member] |
Student loan asset-backed securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
68,619 
42,412 
Fair Value, Measurements, Recurring [Member] |
Fair value [Member] |
Equity securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
4,586 
6,847 
Fair Value, Measurements, Recurring [Member] |
Fair value [Member] |
Debt securities [Member]
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
Investments
$ 850 
$ 1,521 
Fair Value Fair Value (Details 2) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair Value, Level 1 to level 2 Transfers, Amount
$ 0 
$ 0 
Fair Value, Level 2 to level 1 Transfers, Amount
0 
0 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3
0 
0 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
0 
0 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3
0 
0 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3
$ 0 
$ 0 
Fair Value (Details 3) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Jun. 30, 2011
Dec. 31, 2010
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
$ 23,501,382 
$ 24,297,876 
 
 
Cash and cash equivalents
56,255 
42,570 
116,341 
283,801 
Investments
74,055 
50,780 
 
 
Restricted cash - due to customers
63,753 
109,809 
 
 
Accrued interest receivable
286,133 
308,401 
 
 
Derivative instruments
48,665 
92,219 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
23,836,250 
24,434,540 
 
 
Accrued interest payable
18,187 
19,634 
 
 
Due to customers
63,753 
109,809 
 
 
Derivative instruments
62,209 
43,840 
 
 
Level 1 [Member]
 
 
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
0 
0 
 
 
Cash and cash equivalents
56,255 
42,570 
 
 
Investments
5,436 
8,368 
 
 
Restricted cash
898,881 
377,423 
 
 
Restricted cash - due to customers
63,753 
109,809 
 
 
Restricted investments
14,074 
236,899 
 
 
Accrued interest receivable
286,133 
308,401 
 
 
Derivative instruments
0 
0 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
0 
0 
 
 
Accrued interest payable
18,187 
19,634 
 
 
Due to customers
63,753 
109,809 
 
 
Derivative instruments
0 
0 
 
 
Level 2 [Member]
 
 
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
0 
0 
 
 
Cash and cash equivalents
0 
0 
 
 
Investments
68,619 
42,412 
 
 
Restricted cash
0 
0 
 
 
Restricted cash - due to customers
0 
0 
 
 
Restricted investments
0 
0 
 
 
Accrued interest receivable
0 
0 
 
 
Derivative instruments
48,665 
92,219 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
22,872,568 
23,003,453 
 
 
Accrued interest payable
0 
0 
 
 
Due to customers
0 
0 
 
 
Derivative instruments
62,209 
43,840 
 
 
Level 3 [Member]
 
 
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
23,526,456 
23,894,005 
 
 
Cash and cash equivalents
0 
0 
 
 
Investments
0 
0 
 
 
Restricted cash
0 
0 
 
 
Restricted cash - due to customers
0 
0 
 
 
Restricted investments
0 
0 
 
 
Accrued interest receivable
0 
0 
 
 
Derivative instruments
0 
0 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
0 
0 
 
 
Accrued interest payable
0 
0 
 
 
Due to customers
0 
0 
 
 
Derivative instruments
0 
0 
 
 
Fair value [Member]
 
 
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
23,526,456 
23,894,005 
 
 
Cash and cash equivalents
56,255 
42,570 
 
 
Investments
74,055 
50,780 
 
 
Restricted cash
898,881 
377,423 
 
 
Restricted cash - due to customers
63,753 
109,809 
 
 
Restricted investments
14,074 
236,899 
 
 
Accrued interest receivable
286,133 
308,401 
 
 
Derivative instruments
48,665 
92,219 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
22,872,568 
23,003,453 
 
 
Accrued interest payable
18,187 
19,634 
 
 
Due to customers
63,753 
109,809 
 
 
Derivative instruments
62,209 
43,840 
 
 
Carrying value [Member]
 
 
 
 
Assets, Fair Value Disclosure [Abstract]
 
 
 
 
Student loans receivable
23,501,382 
24,297,876 
 
 
Cash and cash equivalents
56,255 
42,570 
 
 
Investments
74,055 
50,780 
 
 
Restricted cash
898,881 
377,423 
 
 
Restricted cash - due to customers
63,753 
109,809 
 
 
Restricted investments
14,074 
236,899 
 
 
Accrued interest receivable
286,133 
308,401 
 
 
Derivative instruments
48,665 
92,219 
 
 
Liabilities, Fair Value Disclosure [Abstract]
 
 
 
 
Bonds and notes payable
23,836,250 
24,434,540 
 
 
Accrued interest payable
18,187 
19,634 
 
 
Due to customers
63,753 
109,809 
 
 
Derivative instruments
$ 62,209 
$ 43,840 
 
 
Legal Proceedings (Details) (Pending or Threatened Litigation [Member], USD $)
6 Months Ended
Jun. 30, 2012
Loss Contingencies [Line Items]
 
Loss contingency, inestimable loss
Due to the preliminary stage of this matter and the uncertainty and risks inherent in class determination and the overall litigation process, the Company believes that a meaningful estimate of a reasonably possible loss, if any, or range of reasonably possible losses, if any, cannot currently be made. 
Named plaintiff [Member]
 
Loss Contingencies [Line Items]
 
Advertising faxes
6 
Loss Contingency, Damages Sought, Value, Per Violation
$ 500 
Class action members [Member]
 
Loss Contingencies [Line Items]
 
Advertising faxes
10,000 
Loss contingency, damages sought, value
5,000,000 
Loss contingency, damages sought, value if trebled
$ 15,000,000 
Loss contingency, actions taken by court, arbitrator or mediator
As of the filing date of this report, the District Court has not established or recognized any class.