NELNET INC, 10-K filed on 2/25/2016
Annual Report
Document and Entity Information Document (USD $)
12 Months Ended
Dec. 31, 2015
Jun. 30, 2015
Jan. 31, 2016
Common Class A [Member]
Jan. 31, 2016
Common Class B [Member]
Document Information [Line Items]
 
 
 
 
Entity Registrant Name
NELNET INC 
 
 
 
Document Type
10-K 
 
 
 
Current Fiscal Year End Date
--12-31 
 
 
 
Entity Common Stock, Shares Outstanding
 
 
31,729,166 
11,476,932 
Entity Public Float
 
$ 1,092,135,927 
 
 
Amendment Flag
false 
 
 
 
Entity Central Index Key
0001258602 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
 
Document Period End Date
Dec. 31, 2015 
 
 
 
Document Fiscal Year Focus
2015 
 
 
 
Document Fiscal Period Focus
Q4 
 
 
 
Consolidated Balance Sheets (USD $)
Dec. 31, 2015
Dec. 31, 2014
Assets:
 
 
Student loans receivable, net
$ 28,324,552,000 
$ 28,005,195,000 
Cash and cash equivalents:
 
 
Cash and cash equivalents - not held at a related party
11,379,000 
37,781,000 
Cash and cash equivalents - held at a related party
52,150,000 
92,700,000 
Total cash and cash equivalents
63,529,000 
130,481,000 
Investments and notes receivable
303,681,000 
235,709,000 
Restricted cash and investments
832,624,000 
850,440,000 
Restricted cash - due to customers
144,771,000 
118,488,000 
Accrued interest receivable
383,825,000 
351,588,000 
Accounts receivable (net of allowance for doubtful accounts of $2,003 and $1,656, respectively)
51,345,000 
50,552,000 
Goodwill
146,000,000 
126,200,000 
Intangible assets, net
51,062,000 
42,582,000 
Property and equipment, net
80,482,000 
45,894,000 
Other assets
75,344,000 
76,622,000 
Fair value of derivative instruments
28,690,000 
64,392,000 
Fair value of derivative instrument, net
28,690,000 
64,392,000 
Total assets
30,485,905,000 
30,098,143,000 
Liabilities:
 
 
Bonds and notes payable
28,172,682,000 
28,027,350,000 
Accrued interest payable
31,507,000 
25,904,000 
Other liabilities
169,906,000 
167,881,000 
Due to customers
144,771,000 
118,488,000 
Fair value of derivative instruments
74,881,000 
32,842,000 
Total liabilities
28,593,747,000 
28,372,465,000 
Nelnet, Inc. shareholders' equity:
 
 
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding
Common stock:
 
 
Additional paid-in capital
17,290,000 
Retained earnings
1,881,708,000 
1,702,560,000 
Accumulated other comprehensive earnings
2,284,000 
5,135,000 
Total Nelnet, Inc. shareholders' equity
1,884,432,000 
1,725,448,000 
Noncontrolling interest
7,726,000 
230,000 
Total equity
1,892,158,000 
1,725,678,000 
Total liabilities and equity
30,485,905,000 
30,098,143,000 
Common Class A [Member]
 
 
Common stock:
 
 
Common stock
325,000 
348,000 
Common Class B [Member]
 
 
Common stock:
 
 
Common stock
115,000 
115,000 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
Assets:
 
 
Student loans receivable, net
28,499,180,000 
28,181,244,000 
Cash and cash equivalents:
 
 
Restricted cash and investments
814,294,000 
846,199,000 
Other assets
384,230,000 
351,934,000 
Fair value of derivative instrument, net
(64,080,000)
(20,455,000)
Liabilities:
 
 
Bonds and notes payable
28,405,133,000 
28,391,530,000 
Other liabilities
353,607,000 
280,233,000 
Common stock:
 
 
Net assets of consolidated variable interest entities
$ 874,884,000 
$ 687,159,000 
Consolidated Balance Sheets (unaudited) (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2015
Dec. 31, 2014
Allowance for loan losses
$ 50,498 
$ 48,900 
Allowance for doubtful accounts (in Dollars)
$ 2,003 
$ 1,656 
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
Preferred stock, outstanding shares
Common Class A [Member]
 
 
Par value (in Dollars per share)
$ 0.01 
$ 0.01 
Shares authorized
600,000,000 
600,000,000 
Shares issued
32,476,528 
34,756,384 
Shares outstanding
32,476,528 
34,756,384 
Common Class B [Member]
 
 
Par value (in Dollars per share)
$ 0.01 
$ 0.01 
Shares authorized
60,000,000 
60,000,000 
Shares issued
11,476,932 
11,486,932 
Shares outstanding
11,476,932 
11,486,932 
Consolidated Statements of Income (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Interest income:
 
 
 
Loan interest
$ 726,258 
$ 703,007 
$ 638,142 
Investment interest
7,851 
6,793 
6,668 
Total interest income
734,109 
709,800 
644,810 
Interest expense:
 
 
 
Interest on bonds and notes payable
302,210 
273,237 
230,935 
Net interest income
431,899 
436,563 
413,875 
Less provision for loan losses
10,150 
9,500 
18,500 
Net interest income after provision for loan losses
421,749 
427,063 
395,375 
Other income (expense):
 
 
 
Loan and guaranty servicing revenue
239,858 
240,414 
243,428 
Tuition payment processing, school information, and campus commerce revenue
120,365 
98,156 
80,682 
Enrollment services revenue
70,705 
82,883 
98,078 
Other income, net
27,630 
54,002 
46,298 
Gain on sale of loans and debt repurchases, net
5,153 
3,651 
11,699 
Derivative market value and foreign currency adjustments and derivative settlements, net
4,401 
15,860 
18,957 
Total other income
468,112 
494,966 
499,142 
Operating expenses:
 
 
 
Salaries and benefits
247,914 
228,079 
196,169 
Cost to provide enrollment services
45,535 
53,307 
64,961 
Loan servicing fees
30,213 
27,009 
23,881 
Depreciation and amortization
26,343 
21,134 
18,311 
Other
119,212 
122,981 
125,661 
Total operating expenses
469,217 
452,510 
428,983 
Income before income taxes
420,644 
469,519 
465,534 
Income tax expense
152,380 
160,238 
161,193 
Net income
268,264 
309,281 
304,341 
Net income attributable to noncontrolling interest
285 
1,671 
1,669 
Net income attributable to Nelnet, Inc.
$ 267,979 
$ 307,610 
$ 302,672 
Earnings per common share:
 
 
 
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
$ 5.89 
$ 6.62 
$ 6.50 
Weighted average common shares outstanding - basic and diluted
45,529,340 
46,469,615 
46,570,314 
Consolidated Statements of Comprehensive Income (unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Net income
$ 83,518 
$ 48,977 
$ 70,963 
$ 64,806 
$ 73,919 
$ 85,376 
$ 75,687 
$ 74,299 
$ 268,264 
$ 309,281 
$ 304,341 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
Unrealized holding (losses) gains arising during period, net
 
 
 
 
 
 
 
 
(1,570)
9,006 
9,134 
Less reclassification adjustment for gains recognized in net income, net of losses
 
 
 
 
 
 
 
 
(2,955)
(8,506)
(5,938)
Income tax effect
 
 
 
 
 
 
 
 
1,674 
(184)
(1,190)
Total other comprehensive (loss) income
 
 
 
 
 
 
 
 
(2,851)
316 
2,006 
Comprehensive income
 
 
 
 
 
 
 
 
265,413 
309,597 
306,347 
Comprehensive income attributable to noncontrolling interest
168 
22 
54 
41 
308 
157 
693 
513 
285 
1,671 
1,669 
Comprehensive income attributable to Nelnet, Inc.
 
 
 
 
 
 
 
 
$ 265,128 
$ 307,926 
$ 304,678 
Consolidated Statements of Shareholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Preferred Stock [Member]
Additional paid-in capital [Member]
Retained earnings [Member]
Accumulated other comprehensive earnings [Member]
Noncontrolling interest [Member]
Common Class A [Member]
Common Stock [Member]
Common Class B [Member]
Common Stock [Member]
Balance at Dec. 31, 2012
$ 1,165,213 
$ 0 
$ 32,540 
$ 1,129,389 
$ 2,813 
$ 5 
$ 351 
$ 115 
Balance (in Shares) at Dec. 31, 2012
 
 
 
 
 
35,116,913 
11,495,377 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Issuance of noncontrolling interest
 
 
 
 
 
 
Net income attributable to Nelnet, Inc.
302,672 
 
 
302,672 
 
 
 
 
Net income attributable to noncontrolling interest
1,669 
 
 
 
 
1,669 
 
 
Net income
304,341 
 
 
 
 
 
 
 
Other comprehensive income
2,006 
 
 
 
2,006 
 
 
 
Distribution to noncontrolling interest
(1,351)
 
 
 
 
(1,351)
 
 
Cash dividend on Class A and Class B common stock
(18,569)
 
 
(18,569)
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
 
 
 
 
157,684 
Issuance of common stock, net of forfeitures
2,379 
 
2,377 
 
 
 
Compensation expense for stock based awards
3,102 
 
3,102 
 
 
 
 
 
Repurchase of common stock (in Shares)
 
 
 
 
 
 
(393,259)
Repurchase of common stock
(13,136)
 
(13,132)
 
 
 
(4)
Balance at Dec. 31, 2013
1,443,990 
24,887 
1,413,492 
4,819 
328 
349 
115 
Balance (in Shares) at Dec. 31, 2013
 
 
 
 
 
34,881,338 
11,495,377 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Issuance of noncontrolling interest
201 
 
 
 
 
201 
 
 
Net income attributable to Nelnet, Inc.
307,610 
 
 
307,610 
 
 
 
 
Net income attributable to noncontrolling interest
1,671 
 
 
 
 
1,671 
 
 
Net income
309,281 
 
 
 
 
 
 
 
Other comprehensive income
316 
 
 
 
316 
 
 
 
Distribution to noncontrolling interest
(1,970)
 
 
 
 
(1,970)
 
 
Cash dividend on Class A and Class B common stock
(18,542)
 
 
(18,542)
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
 
 
 
 
248,290 
Issuance of common stock, net of forfeitures
3,554 
 
3,551 
 
 
 
Compensation expense for stock based awards
4,561 
 
4,561 
 
 
 
 
 
Repurchase of common stock (in Shares)
 
 
 
 
 
 
(381,689)
Repurchase of common stock
(15,713)
 
(15,709)
 
 
 
(4)
Conversion of Stock, Shares Converted
 
 
 
 
 
8,445 
(8,445)
Conversion of Stock, Amount Converted
 
 
 
 
 
 
Balance at Dec. 31, 2014
1,725,678 
17,290 
1,702,560 
5,135 
230 
348 
115 
Balance (in Shares) at Dec. 31, 2014
 
 
 
 
 
34,756,384 
11,486,932 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Issuance of noncontrolling interest
7,443 
 
 
 
 
7,443 
 
 
Net income attributable to Nelnet, Inc.
267,979 
 
 
267,979 
 
 
 
 
Net income attributable to noncontrolling interest
285 
 
 
 
 
285 
 
 
Net income
268,264 
 
 
 
 
 
 
 
Other comprehensive income
(2,851)
 
 
 
(2,851)
 
 
 
Distribution to noncontrolling interest
(232)
 
 
 
 
(232)
 
 
Cash dividend on Class A and Class B common stock
(19,025)
 
 
(19,025)
 
 
 
 
Issuance of common stock, net of forfeitures (in Shares)
 
 
 
 
 
 
159,303 
Issuance of common stock, net of forfeitures
3,862 
 
3,860 
 
 
 
Compensation expense for stock based awards
5,188 
 
5,188 
 
 
 
 
 
Repurchase of common stock (in Shares)
 
 
 
 
 
 
(2,449,159)
Repurchase of common stock
(96,169)
 
(26,338)
(69,806)
 
 
(25)
Conversion of Stock, Shares Converted
 
 
 
 
 
10,000 
(10,000)
Conversion of Stock, Amount Converted
 
 
 
 
 
 
Balance at Dec. 31, 2015
$ 1,892,158 
$ 0 
$ 0 
$ 1,881,708 
$ 2,284 
$ 7,726 
$ 325 
$ 115 
Balance (in Shares) at Dec. 31, 2015
 
 
 
 
 
32,476,528 
11,476,932 
Consolidated Statements of Shareholders' Equity (Parentheticals)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash dividend on Class A and Class B common stock - per share
$ 0.42 
$ 0.40 
$ 0.40 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Net income attributable to Nelnet, Inc.
$ 267,979 
$ 307,610 
$ 302,672 
Net income attributable to noncontrolling interest
285 
1,671 
1,669 
Net income
268,264 
309,281 
304,341 
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
 
 
 
Depreciation and amortization, including debt discounts and student loan premiums and deferred origination costs
123,736 
107,969 
79,484 
Student loan discount accretion
(43,766)
(43,479)
(36,258)
Provision for loan losses
10,150 
9,500 
18,500 
Derivative market value adjustment
15,150 
20,310 
(83,878)
Foreign currency transaction adjustment
(43,801)
(58,013)
35,285 
Payment to enter into derivative instruments
(2,936)
(9,087)
Proceeds to terminate and/or amend derivative instruments, net of payments
65,527 
1,765 
65,890 
(Gain) loss on sale of loans, net
(351)
2,964 
(33)
Gain from debt repurchases
(4,802)
(6,615)
(11,666)
Gain from sale of available-for-sale securities, net
(2,955)
(8,506)
(5,938)
(Purchases) proceeds related to trading securities, net
(3,120)
3,128 
Deferred income tax expense
7,049 
19,659 
2,539 
Non-cash compensation expense
5,347 
4,699 
3,329 
Other
3,875 
7,127 
112 
(Increase) decrease in accrued interest receivable
(3,819)
5,205 
8,341 
Decrease in accounts receivable
1,061 
6,690 
7,566 
Decrease (increase) in other assets
375 
2,372 
(4,783)
Increase (decrease) in accrued interest payable
5,117 
3,009 
(433)
(Decrease) increase in other liabilities
(8,736)
(20,529)
4,782 
Net cash provided by operating activities
391,365 
357,449 
387,180 
Cash flows from investing activities, net of acquisitions:
 
 
 
Purchases of student loans and student loan residual interests
(2,189,450)
(3,753,936)
(2,392,676)
Net proceeds from student loan repayments, claims, capitalized interest, and other
3,668,302 
3,700,005 
2,852,177 
Proceeds from sale of student loans
3,996 
50,190 
43,292 
Purchases of available-for-sale securities
(100,476)
(192,998)
(219,894)
Proceeds from sales of available-for-sale securities
95,758 
241,793 
103,250 
Purchases of investments and issuance of notes receivable
(93,948)
(45,925)
(20,302)
Proceeds from investments and notes receivable
29,799 
15,819 
Purchases of property and equipment, net
(16,761)
(26,488)
(17,010)
Decrease (increase) in restricted cash and investments, net
67,108 
(51,135)
147,743 
Business and asset acquisitions, net of cash acquired
(46,966)
(46,833)
Net cash provided by (used in) investing activities
1,417,362 
(109,508)
496,580 
Cash flows from financing activities, net of borrowings assumed:
 
 
 
Payments on bonds and notes payable
(4,368,180)
(3,632,741)
(5,153,057)
Proceeds from issuance of bonds and notes payable
2,614,595 
3,502,316 
4,312,720 
Payments of debt issuance costs
(11,162)
(14,934)
(13,697)
Dividends paid
(19,025)
(18,542)
(18,569)
Repurchases of common stock
(96,169)
(15,713)
(13,136)
Proceeds from issuance of common stock
801 
656 
561 
Issuance of noncontrolling interest
3,693 
201 
Distribution to noncontrolling interest
(232)
(1,970)
(1,351)
Net cash (used in) financing activities
(1,875,679)
(180,727)
(886,524)
Net (decrease) increase in cash and cash equivalents
(66,952)
67,214 
(2,764)
Cash and cash equivalents, beginning of year
130,481 
63,267 
66,031 
Cash and cash equivalents, end of year
63,529 
130,481 
63,267 
Cash disbursements made for:
 
 
 
Interest
228,248 
210,700 
190,998 
Income taxes, net of refunds
147,235 
155,828 
154,840 
Noncash investing and financing activities:
 
 
 
Student loans and other assets acquired
2,025,453 
2,571,997 
1,715,260 
Sale of education lending subsidiary, including student loans and other assets
246,376 
Note receivable obtained in connection with sale of education lending subsidiary
20,737 
Borrowings and other liabilities transferred in sale of education lending subsidiary
225,139 
Borrowings and other liabilities assumed in acquisition of student loans
1,885,453 
2,444,874 
1,676,761 
Issuance of minority interest
$ 3,750 
$ 0 
$ 0 
Description of Business
Description of Business [Text Block]
Description of Business

Nelnet, Inc. and its subsidiaries (“Nelnet” or the “Company”) is a diverse company with a focus on delivering education-related products and services and student loan asset management. The largest operating businesses engage in student loan servicing, tuition payment processing and school information systems, and telecommunications. A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans. The Company also makes investments to further diversify the Company both within and outside of its historical core education-related businesses, including, but not limited to, investments in real estate and start-up ventures. Substantially all revenue from external customers is earned, and all long-lived assets are located, in the United States.

The Company was formed as a Nebraska corporation in 1978 to service federal student loans for two local banks. The Company built on this initial foundation as a servicer to become a leading originator, holder, and servicer of federal student loans, principally consisting of loans originated under the Federal Family Education Loan Program (“FFELP” or “FFEL Program”) of the U.S. Department of Education (the “Department”).

Effective July 1, 2010, the Health Care and Education Reconciliation Act of 2010 (the "Reconciliation Act of 2010”) prohibits new loan originations under the FFEL Program and requires that all new federal student loan originations be made through the Federal Direct Loan Program. This law does not alter or affect the terms and conditions of existing FFELP loans. As a result of this law, the Company no longer originates new FFELP loans. However, the Company believes there may be continued opportunities to purchase FFELP loan portfolios from current FFELP loan holders as the program winds down. To reduce its reliance on interest income on student loans, the Company has expanded its services and products. This expansion has been accomplished through internal growth and innovation as well as business acquisitions.

On December 31, 2015, the Company purchased 92.5 percent of the ownership interests of Allo Communications LLC (“Allo”).  The remaining 7.5 percent of the ownership interests of Allo is owned by Allo management, who has the opportunity to earn an additional 11.5 percent (up to 19 percent), of the total ownership interests based on the financial performance of Allo.  Allo provides pure fiber optic service to homes and businesses for internet, television, and telephone services.  The acquisition of Allo provides additional diversification of the Company's revenues and cash flows outside of education.  In addition, the acquisition leverages the Company's existing infrastructure, customer service capabilities and call centers, and financial strength and liquidity for continued growth.  For financial reporting purposes, the Company will disclose the operating results of Allo as a separate reportable operating segment.  The Allo assets acquired and liabilities assumed were recorded by the Company at their respective estimated fair values at the date of acquisition.  As such, Allo’s assets and liabilities as of December 31, 2015 are included in the Company’s consolidated balance sheet.  However, Allo had no impact on the consolidated statement of income for 2015.  Beginning January 1, 2016, the Company will reflect the operations of Allo in the consolidated statements of income.  Revenue from telecommunications services will be recognized when the services are provided to customers.

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

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

A description of each reportable operating segment is included below. See note 14 for additional information on the Company's segment reporting.
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 operating segment:
 
Servicing federally-owned student loans for the Department
Servicing FFELP loans
Marketing, originating, and servicing private education loans
Servicing and outsourcing services for FFELP guaranty agencies, including FFELP guaranty collection services
Providing student loan servicing software and other information technology products and services
Providing outsourced services including call center, processing, and marketing services

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

The Company is one of four private sector companies awarded a student loan servicing contract by the Department to provide additional servicing capacity for loans owned by the Department.

This operating segment also provides servicing activities for guaranty agencies, which serve as intermediaries between the Department and FFELP lenders, and are responsible for paying the claims made on defaulted loans. The services provided by the Company include providing software and data center services, borrower and loan updates, default aversion tracking services, claim processing services, and post-default collection services.

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. These software systems have been adapted so that they can be offered as hosted servicing software solutions usable by third parties to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans.

In addition, this segment provides business process outsourcing specializing in contact center management. The contact center solutions and services include taking inbound calls, helping with outreach campaigns and sales, and interacting with customers through multi-channels.

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. In addition, this operating segment provides school information system software for private and faith-based schools that help schools automate administrative processes such as admissions, scheduling, student billing, attendance, and grade book management. This segment 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, the Company offers actively managed tuition payment plans and billing services, school information system software, and assistance with financial needs assessment and donor management. In the higher education market, the Company primarily offers actively managed tuition payment plans and campus commerce technologies and payment processing.
Asset Generation and Management

The Company's Asset Generation and Management operating segment includes the acquisition, management, and ownership of the Company's student loan assets. Nearly all student loan assets included in this segment are loans originated under the FFEL Program, including the Stafford Loan Program, the PLUS Loan program, and loans that reflect the consolidation into a single loan of certain previously separate borrower obligations (“Consolidation”). 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.

Telecommunications

As discussed previously, on December 31, 2015, the Company acquired 92.5 percent of the membership interests of Allo.  Allo derives its revenue primarily from the sale of advanced telecommunication services to residential and business customers in Nebraska, including internet, television, and telephone services.  Internet and television services include revenue from residential and business customers for subscriptions to Allo's video and data products.  Allo data services can provide high-speed internet access at various symmetrical speeds of up to 1 gigabit per second. Local calling services include fiber telephone service and other basic services.  Long-distance services include traditional domestic and international long distance which enables customers to make calls that terminate outside their local calling area. 

Corporate and Other Activities

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

The operating results of Whitetail Rock Capital Management, LLC ("WRCM"), the Company's SEC-registered investment advisory subsidiary
The operating results of the Enrollment Services business
Income earned on certain investment activities
Interest expense incurred on unsecured debt transactions
Other product and service offerings that are not considered reportable operating segments

Corporate and Other Activities also include 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.
Summary of Significant Accounting Policies and Practices
Significant Accounting Policies [Text Block]
Summary of Significant Accounting Policies and Practices

Consolidation

The consolidated financial statements include the accounts of Nelnet, Inc. and its consolidated subsidiaries, including its education lending subsidiaries for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company's education lending subsidiaries (or Variable Interest Entities ("VIEs")) are engaged in the securitization of education finance assets. These education lending subsidiaries hold beneficial interests in eligible loans, subject to creditors with specific interests. The liabilities of the Company's education lending subsidiaries are not the direct obligations of Nelnet, Inc. or any of its other subsidiaries. Each education lending subsidiary is structured to be bankruptcy remote, meaning that it should not be consolidated in the event of bankruptcy of the parent company or any other subsidiary. The Company has determined it is the primary beneficiary of its education lending subsidiaries (VIEs). The primary beneficiary is the entity which has both: (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and (2) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE. The Company is generally the administrator and master servicer of the securitized assets held in its education lending subsidiaries and owns the residual interest of the securitization trusts. As a result, for accounting purposes, the transfers of student loans to the eligible lender trusts do not qualify as sales. Accordingly, all the financial activities and related assets and liabilities, including debt, of the securitizations are reflected in the Company's consolidated financial statements and are summarized as supplemental information on the balance sheet.
Reclassifications

Certain amounts previously reported within the Company's consolidated balance sheet and statements of income have been reclassified to conform to the current period presentation. These reclassifications include:

Reclassifying certain investments and notes receivable, which were previously included in "other assets" to "investments and notes receivable."

Reclassifying third-party loan servicing fees, which were previously included in "other" operating expenses to "loan servicing fees."

The reclassifications had no effect on consolidated net income or consolidated assets and liabilities.

Noncontrolling Interest

Noncontrolling interest reflects the proportionate share of membership interest (equity) and net income attributable to the holders of minority membership interests in the following entities:
Whitetail Rock Capital Management, LLC (“WRCM”) - WRCM is the Company’s SEC-registered investment advisory subsidiary.  WRCM issued 10 percent minority membership interests on January 1, 2012.

Allo Communications LLC - On December 31, 2015, the Company purchased 92.5 percent of the ownership interests of Allo. The remaining 7.5 percent of the ownership interests of Allo is owned by Allo management, who has the opportunity to earn an additional 11.5 percent (up to 19 percent) of the total ownership interests based on the financial performance of Allo.

401 Building, LLC (“401 Building”) - 401 Building is an entity established on October 19, 2015 for the sole purpose of acquiring, developing, and operating a commercial building. The Company owns 50 percent of 401 Building.

TDP Phase Three, LLC (“TDP”) - TDP is an entity established on October 20, 2015 for the sole purpose of developing and operating a commercial building. The Company owns 25 percent of TDP.

The Company plans to be a tenant in the buildings being developed by 401 Building and TDP once development is complete. Because the Company, as lessee, is involved in the asset construction, 401 Building and TDP is included in the Company's consolidated financial statements.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities, reported amounts of revenues and expenses, and other disclosures. Actual results may differ from those estimates.

Student Loans Receivable

Student loans consist of federally insured student loans and private education loans. 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. Amortized cost includes the unamortized premium or discount and capitalized origination costs and fees, all of which are amortized to interest income. Loans which are held-for-investment also have an allowance for loan loss as needed. Any loans the Company has the ability and intent to sell are classified as held for sale and are carried at the lower of cost or fair value. Loans which are held for sale do not have the associated premium or discount and origination costs and fees amortized into interest income and there is also no related allowance for loan losses. There were no loans classified as held for sale as of December 31, 2015 and 2014.

Federally insured loans were originated under the FFEL Program by certain eligible lenders as defined by the Higher Education Act of 1965, as amended (the “Higher Education Act”). These loans, including related accrued interest, are guaranteed at their maximum level permitted under the Higher Education Act by an authorized guaranty agency, which has a contract of reinsurance with the Department. The terms of the loans, which vary on an individual basis, generally provide for repayment in monthly installments of principal and interest. Generally, Stafford and PLUS loans have repayment periods between five and ten years. Consolidation loans have repayment periods of twelve to thirty years. FFELP loans do not require repayment while the borrower is in-school, and during the grace period immediately upon leaving school. The borrower may also be granted a deferment or forbearance for a period of time based on need, during which time the borrower is not considered to be in repayment. Interest continues to accrue on loans in the in-school, deferment, and forbearance period. Interest rates on loans may be fixed or variable, dependent upon the type of loan, terms of the loan agreements, and date of origination.

Substantially all FFELP loan principal and related accrued interest is guaranteed as provided by the Higher Education Act. These guarantees are subject to the performance of certain loan servicing due diligence procedures stipulated by applicable Department regulations. If these due diligence requirements are not met, affected student loans may not be covered by the guarantees in the event of borrower default. Such student loans are subject to “cure” procedures and reinstatement of the guarantee under certain circumstances.

Student loans receivable also includes private education loans. Private education loans are loans to students or their families that are non-federal loans and loans not insured or guaranteed under the FFELP. These loans are used primarily to bridge the gap between the cost of higher education and the amount funded through financial aid, federal loans, or borrowers' personal resources. The terms of the private education loans, which vary on an individual basis, generally provide for repayment in monthly installments of principal and interest over a period of up to 30 years. The private education loans are not covered by a guarantee or collateral in the event of borrower default.

Allowance for Loan Losses

The allowance for loan losses represents management's estimate of probable losses on student loans. The provision for loan losses reflects the activity for the applicable period and provides an allowance at a level that the Company's management believes is appropriate to cover probable losses inherent in the loan portfolio. The Company evaluates the adequacy of the allowance for loan losses on its federally insured loan portfolio separately from its private education loan portfolio. These evaluation processes are subject to numerous judgments and uncertainties.

The allowance for the federally insured loan portfolio is based on periodic evaluations of the Company's loan portfolios considering loans in repayment versus those in a nonpaying status, delinquency status, trends in defaults in the portfolio based on Company and industry data, past experience, trends in student loan claims rejected for payment by guarantors, changes to federal student loan programs, current economic conditions, and other relevant factors. The federal government guarantees 97 percent of the principal of and the interest on federally insured student loans disbursed on and after July 1, 2006 (and 98 percent for those loans disbursed on and after October 1, 1993 and prior to July 1, 2006), which limits the Company's loss exposure on the outstanding balance of the Company's federally insured portfolio. Student loans disbursed prior to October 1, 1993 are fully insured.

In determining the appropriate allowance for loan losses on the private education loans, the Company considers several factors, including: loans in repayment versus those in a nonpaying status, delinquency status, type of program, trends in defaults in the portfolio based on Company and industry data, past experience, current economic conditions, and other relevant factors. The Company places a private education loan on nonaccrual status when the collection of principal and interest is 90 days past due, and charges off the loan when the collection of principal and interest is 120 days past due. Collections, if any, are reflected as a recovery through the allowance for loan losses.

Management has determined that each of the federally insured loan portfolio and the private education loan portfolio meets the definition of a portfolio segment, which is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses.  Accordingly, the portfolio segment disclosures are presented on this basis in note 3 for each of these portfolios.  The Company does not disaggregate its portfolio segment student loan portfolios into classes of financing receivables. The Company collectively evaluates loans for impairment and as of December 31, 2015 and 2014, the Company did not have any impaired loans as defined in the Receivables Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification.

For loans purchased where there is evidence of credit deterioration since the origination of the loan, the Company records a credit discount, separate from the allowance for loan losses, which is non-accretable to interest income. Remaining discounts and premiums for purchased loans are recognized in interest income over the remaining estimated lives of the loans. The Company continues to evaluate credit losses associated with purchased loans based on current information and changes in expectations to determine the need for any additional allowance for loan losses.

Cash and Cash Equivalents and Statement of Cash Flows

For purposes of the consolidated statements of cash flows, the Company considers all investments with maturities when purchased of three months or less to be cash equivalents.

Accrued interest on loans purchased and sold is included in cash flows from operating activities in the respective period. Net purchased accrued interest was $71.4 million, $55.0 million, and $29.0 million in 2015, 2014, and 2013, respectively.

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, net of taxes, carried as a separate component of shareholders’ equity. 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 issuer of the security (considering factors such as adverse conditions specific to the security and ratings agency actions), and the intent and ability of the Company to retain the investment to allow for any anticipated recovery in fair value. The entire fair value loss on a security that has experienced an 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" in 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.

When an investment is sold, the cost basis is determined through specific identification of the security sold.

The Company accounts for investments in which it does not have significant influence or a controlling financial interest using the cost method of accounting.  Cost method investments are recorded at cost.  Cost method investments are evaluated for other-than-temporary impairment in the same manner as described above for available-for-sale investments.

The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting.  Equity method investments are recorded at cost and subsequently increased or decreased by the amount of the Company’s proportionate share of the net earnings or losses and other comprehensive income of the investee.  Equity method investments are evaluated for other-than-temporary impairment using certain impairment indicators such as a series of operating losses of an investee or other factors.  These factors may indicate that a decrease in value of the investment has occurred that is other-than-temporary and shall be recognized.

Restricted Cash and Investments 

Restricted cash primarily includes amounts for student loan securitizations and other secured borrowings. This cash must be used to make payments related to trust obligations. Amounts on deposit in these accounts are primarily the result of timing differences between when principal and interest is collected on the student loans held as trust assets and when principal and interest is paid on the trust's asset-backed debt securities. Restricted cash also includes collateral deposits with derivative counterparties.
Cash balances that the Company's indentured trusts deposit in guaranteed investment contracts that are held for the related asset-backed note holders are classified as restricted investments. The Company has classified these investments as held-to-maturity and accounts for them at amortized cost, which approximates fair value.

Restricted Cash - Due to Customers

As a servicer of student loans, the Company collects student loan remittances and subsequently disburses these remittances to the appropriate lending entities. In addition, as part of the Company's Tuition Payment Processing and Campus Commerce operating segment, the Company collects tuition payments and subsequently remits these payments to the appropriate schools. Cash collected for customers and the related liability are included in the accompanying consolidated balance sheets.

Accounts Receivable

Accounts receivable are presented at their net realizable values, which include allowances for doubtful accounts. Allowance estimates are based upon individual customer experience, as well as the age of receivables and likelihood of collection.

Business Combinations

The Company uses the acquisition method in accounting for acquired businesses. Under the acquisition method, the financial statements reflect the operations of an acquired business starting from the completion of the acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. All contingent consideration is measured at fair value on the acquisition date and included in the consideration transferred in the acquisition. Contingent consideration classified as a liability is remeasured to fair value at each reporting date until the contingency is resolved, and changes in fair value are recognized in earnings.

Goodwill

The Company reviews goodwill for impairment annually (in the fourth quarter) and whenever triggering events or changes in circumstances indicate its carrying value may not be recoverable. Goodwill is tested for impairment using a fair value approach at the reporting unit level. A reporting unit is the operating segment, or a business one level below that operating segment if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics.
The Company tests goodwill for impairment in accordance with applicable accounting guidance. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform a two-step quantitative impairment test (described below), otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test.
If the Company elects to not perform a qualitative assessment or if the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying amount, then the Company performs a two-step impairment test on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is considered not impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then the Company would record an impairment loss equal to the difference.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. Actual future results may differ from those estimates.
See note 9 for information regarding the Company's annual goodwill impairment review.
Intangible Assets

Intangible assets with finite lives are amortized over their estimated lives. Such assets are amortized using a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, the Company uses a straight-line amortization method.

The Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization.

Property and Equipment

Property and equipment are carried at cost, net of accumulated depreciation. Equipment held under capital leases are stated at the lower of the fair value of the asset or the net present value of the minimum lease payments at the inception of the lease. Maintenance and repairs are charged to expense as incurred, and major improvements, including leasehold improvements, are capitalized. Gains and losses from the sale of property and equipment are included in determining net income. The Company uses the straight-line method for recording depreciation and amortization. Equipment held under capital leases and leasehold improvements are amortized straight-line over the shorter of the lease term or estimated useful life of the asset.

Impairment of Long‑Lived Assets

The Company reviews its long-lived assets, such as property and equipment and purchased intangibles subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company uses estimates to determine the fair value of long-lived assets. Such estimates are generally based on estimated future cash flows or cost savings associated with particular assets and are discounted to present value using an appropriate discount rate. The estimates of future cash flows associated with assets are generally prepared using a cost savings method, a lost income method, or an excess return method, as appropriate. In utilizing such methods, management must make certain assumptions about the amount and timing of estimated future cash flows and other economic benefits from the assets, the remaining economic useful life of the assets, and general economic factors concerning the selection of an appropriate discount rate. The Company may also use replacement cost or market comparison approaches to estimating fair value if such methods are determined to be more appropriate.

Assumptions and estimates about future values and remaining useful lives of the Company's intangible and other long-lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in the Company's business strategy and internal forecasts. Although the Company believes the historical assumptions and estimates used are reasonable and appropriate, different assumptions and estimates could materially impact the reported financial results.

Other Assets

Other assets are recorded at cost or amortized cost and consist primarily of debt issuance costs and prepaid expenses. Debt issuance costs are amortized using the effective interest method.

Fair Value Measurements

The Company uses estimates of fair value in applying various accounting standards for its financial statements.

Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company's policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value, such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates, and credit spreads, relying first on observable data from active markets. Depending on current market conditions, additional adjustments to fair value may be based on factors such as liquidity, credit, and bid/offer spreads. In some cases fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Transaction costs are not included in the determination of fair value. When possible, the Company seeks to validate the model's output to market transactions. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the estimates of current or future values.

The Company categorizes its fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring assets and liabilities at fair value. Classification is based on the lowest level of input that is significant to the fair value of the instrument. The three levels include:

Level 1: Quoted prices for identical instruments in active markets. The types of financial instruments included in Level 1 are highly liquid instruments with quoted prices.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose primary value drivers are observable.

Level 3: Instruments whose primary value drivers are unobservable. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs.

The Company's accounting policy is to recognize transfers between levels of the fair value hierarchy at the end of the reporting period.

Revenue Recognition

Loan interest income - Loan interest is paid by the Department or the borrower, depending on the status of the loan at the time of the accrual. In addition, the Department makes quarterly interest subsidy payments on certain qualified FFELP loans until the student is required under the provisions of the Higher Education Act to begin repayment. Borrower repayment of FFELP loans normally begins within six months after completion of the borrower's course of study, leaving school, or ceasing to carry at least one-half the normal full-time academic load, as determined by the educational institution. Borrower repayment of PLUS and Consolidation loans normally begins within 60 days from the date of loan disbursement. Borrower repayment of private education loans typically begins six months following the borrower's graduation from a qualified institution, and the interest is either paid by the borrower or capitalized annually or at repayment.

The Department provides a special allowance to lenders participating in the FFEL Program. The special allowance is accrued based upon the fiscal quarter average rate of 13-week Treasury Bill auctions (for loans originated prior to January 1, 2000), the fiscal quarter average rate of the daily three-month financial commercial paper rates (for loans originated on and after January 1, 2000) or the fiscal quarter average rate of daily one-month LIBOR rates (for loans originated on and after January 1, 2000, and for lenders which elected to change the SAP index to one-month LIBOR effective April 1, 2012) relative to the yield of the student loan.

The Company recognizes student loan income as earned, net of amortization of loan premiums and deferred origination costs and the accretion of loan discounts. Loan income is recognized based upon the expected yield of the loan after giving effect to interest rate reductions resulting from borrower utilization of incentives such as timely payments (“borrower benefits”) and other yield adjustments. Loan premiums or discounts, deferred origination costs, and borrower benefits are amortized/accreted over the estimated life of the loan, which includes an estimate of prepayment rates. The Company periodically evaluates the assumptions used to estimate the life of the loans and prepayment rates.
The Company also pays the Department an annual 105 basis point rebate fee on Consolidation loans. These rebate fees are netted against loan interest income.
Student loan and guaranty servicing revenue – Student loan and guaranty servicing revenue consists of the following items:

Loan and guaranty servicing fees – Loan servicing fees are determined according to individual agreements with customers and are calculated based on the dollar value of loans, number of loans, or number of borrowers serviced for each customer. Guaranty servicing fees are generally calculated based on the number of loans serviced, volume of loans serviced, or amounts collected. Revenue is recognized over the period in which services are provided to customers, and when ultimate collection is assured.

Guaranty collections revenue – Guaranty collections revenue is earned when collected. Collection costs paid to third parties associated with this revenue is expensed upon successful collection.

Software services revenue – Software services revenue is determined from individual agreements with customers and includes license and maintenance fees associated with student loan software products.  Computer and software consulting and remote hosting revenues are recognized over the period in which services are provided to customers.

Tuition payment processing, school information, and campus commerce revenue - Tuition payment processing, school information, and campus commerce revenue includes actively managed tuition payment solutions, remote hosted school information systems software, and online payment processing. Fees for these services are recognized over the period in which services are provided to customers. Cash received in advance of the delivery of services is included in deferred revenue.

Enrollment Services Revenue – Enrollment services revenue primarily consists of the following items:

Inquiry Generation and Management - This revenue is derived primarily from fees which are earned through the delivery of qualified inquiries or clicks. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. Delivery is deemed to have occurred at the time a qualified inquiry or click is delivered to the customer, provided that no significant obligations remain. From time to time, the Company may agree to credit certain inquiries or clicks if they fail to meet the contractual or other guidelines of a particular client. The Company has established a sales reserve based on historical experience. To date, such credits have been immaterial and within management’s expectations.

For a portion of this revenue, the Company has agreements with providers of online media or traffic (“inquiry generation vendors”) used in the generation of inquiries or clicks. The Company receives a fee from its customers and pays a fee to the inquiry generation vendors either on a cost per inquiry, cost per click, or cost per number of impressions basis. The Company is the primary obligor in the transaction. As a result, the fees paid by the Company’s customers are recognized as revenue and the fees paid to its inquiry generation vendors are included in “cost to provide enrollment services” in the Company’s consolidated statements of income.

Content Solutions - Several content solutions services, including services to connect students to colleges and universities, are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other revenue is recognized over the period in which services are provided to customers.

Other income - Other income includes realized and unrealized gains and losses on investments and borrower late fee income, which is earned by the education lending subsidiaries and is recognized when payments are collected from the borrower. Other income also includes investment advisory income. The Company provides investment advisory services through an SEC-registered investment advisor subsidiary under various arrangements and earns annual fees on the outstanding balance of investments and certain performance measures, which are recognized monthly as earned.

Interest Expense

Interest expense is based upon contractual interest rates, adjusted for the amortization of debt issuance costs and the accretion of discounts. The amortization of debt issuance costs and accretion of discounts are recognized using the effective interest method.

Transfer of Financial Assets and Extinguishments of Liabilities

The Company accounts for loan sales and debt repurchases in accordance with applicable accounting guidance. If a transfer of loans qualifies as a sale, the Company derecognizes the loan and recognizes a gain or loss as the difference between the carrying basis of the loan sold and the consideration received. The Company from time to time repurchases its outstanding debt and records a gain or loss on the early extinguishment of debt based upon the difference between the carrying amount of the debt and the amount paid to the third party. The Company recognizes the results of a transfer of loans and the extinguishment of debt based upon the settlement date of the transaction.

Derivative Accounting

The Company records derivative instruments on the consolidated balance sheets as either an asset or liability measured at its fair value. The Company determines the fair value for its derivative instruments using either (i) pricing models that consider current market conditions and the contractual terms of the derivative instrument or (ii) counterparty valuations. The Company does not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) arising from derivative instruments that are recognized at fair value and executed with the same counterparty under a master netting arrangement. The factors that impact the fair value of the Company's derivatives include interest rates, time value, forward interest rate curve, and volatility factors, as well as foreign exchange rates. Pricing models and their underlying assumptions impact the amount and timing of unrealized gains and losses recognized, and the use of different pricing models or assumptions could produce different financial results. Management has structured all 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 derivative instruments is reported in current period earnings. Changes or shifts in the forward yield curve and fluctuations in currency rates can significantly impact the valuation of the Company’s derivatives, and therefore 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 changes in fair value of derivative instruments, as well as the settlement payments made on such derivatives, are included in “derivative market value and foreign currency adjustments and derivative settlements, net” on the consolidated statements of income.

Foreign Currency

During 2006, the Company issued Euro-denominated bonds, which are included in “bonds and notes payable” on the consolidated balance sheets. Transaction gains and losses resulting from exchange rate changes when re-measuring these bonds to U.S. dollars at the balance sheet date are included in “derivative market value and foreign currency adjustments and derivative settlements, net” on the consolidated statements of income.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
Income tax expense includes deferred tax expense, which represents the net change in the deferred tax asset or liability balance during the year, plus any change made in the valuation allowance, and current tax expense, which represents the amount of tax currently payable to or receivable from a tax authority plus amounts for expected tax deficiencies (including both tax and interest).

Compensation Expense for Stock Based Awards

The Company has a restricted stock plan that is intended to provide incentives to attract, retain, and motivate employees in order to achieve long term growth and profitability objectives. The restricted stock plan provides for the grant to eligible employees of awards of restricted shares of Class A common stock. The fair value of restricted stock awards is determined on the grant date based on the Company's stock price and is amortized to compensation cost over the related vesting periods, which range up to ten years. For those awards with only service conditions that have graded vesting schedules, the Company recognizes compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award, as if the award was, in substance, multiple awards.

Stock Repurchases

In accordance with the corporate laws of the state in which the Company is incorporated, all shares repurchased by the Company are legally retired upon acquisition by the Company.
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 December 31,
 
2015
 
2014
Federally insured loans
 
 
 
Stafford and other
$
6,202,064

 
6,030,825

Consolidation
22,086,043

 
22,165,605

Total
28,288,107

 
28,196,430

Private education loans
267,642

 
27,478

 
28,555,749

 
28,223,908

Loan discount, net of unamortized loan premiums and deferred origination costs (a)
(180,699
)
 
(169,813
)
Allowance for loan losses – federally insured loans
(35,490
)
 
(39,170
)
Allowance for loan losses – private education loans
(15,008
)
 
(9,730
)
 
$
28,324,552

 
28,005,195


(a) At December 31, 2015 and 2014, "loan discount, net of unamortized loan premiums and deferred origination costs" included $33.0 million and $28.8 million, respectively, of non-accretable discount associated with purchased loan portfolios of $10.8 billion and $8.5 billion, respectively.

Acquisition of Student Loan Residual Interests

On October 31, 2013, the Company acquired the ownership interest in a federally insured student loan securitization trust giving the Company rights to the residual interest in $1.6 billion of securitized federally insured consolidation loans. The trust includes loans funded to term with $1.6 billion (par value) of notes payable that carry interest rates on a spread to LIBOR or are set and periodically reset via a "dutch auction."

On April 25, 2014, the Company acquired the ownership interest in three FFELP student loan securitization trusts giving the Company rights to the residual interest in a total of $2.6 billion of securitized federally insured loans and related assets. These trusts include loans funded to term with $2.6 billion (par value) of notes payable that carry interest rates on a spread to LIBOR or are set and periodically reset via a "dutch auction."

On May 26, 2015, the Company acquired the ownership interest in a federally insured student loan securitization trust, giving the Company rights to the residual interest in $504.2 million of securitized federally insured loans. The trust includes loans funded to term with $448.9 million (par value) of bonds and notes payable.

On August 3, 2015, the Company acquired the ownership interest in two federally insured student loan securitization trusts, giving the Company rights to the residual interest in $1.5 billion of securitized federally insured loans. The two trusts include loans funded to term with $1.5 billion (par value) of bonds and notes payable.

The Company has consolidated the previously disclosed trusts on its consolidated balance sheet because management has determined the Company is the primary beneficiary of the trusts. Upon acquisition, the Company recorded all assets and liabilities of the trusts at fair value, resulting in the Company recognizing a student loan fair value discount of $52.9 million, $68.7 million, and $40.9 million, during the years 2013, 2014, and 2015, respectively. Additionally, a bonds and notes payable net fair value discount of $91.8 million, $163.7 million, and $84.5 million, was recorded by the Company in 2013, 2014, and 2015, respectively. These discounts will be accreted using the effective interest method over the lives of the underlying assets and liabilities. All other assets acquired and liabilities assumed (restricted cash, accrued interest receivable/payable, and other assets/liabilities) were recorded at cost, which approximates fair value.
Private Education Loans

During 2015, the Company entered into an agreement with CommonBond, Inc. ("CommonBond"), a student lending company that provides private education loans to graduate students, under which the Company committed to purchase private education loans for a period of 18 months, with the total purchase obligation limited to $200.0 million. As of December 31, 2015, the Company had purchased $160.1 million in private education loans from CommonBond pursuant to this agreement.

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.
 
Year ended December 31,
 
2015
 
2014
 
2013
Balance at beginning of period
$
48,900

 
55,122

 
51,902

Provision for loan losses:
 
 
 
 
 
Federally insured loans
8,000

 
11,000

 
20,000

Private education loans
2,150

 
(1,500
)
 
(1,500
)
Total provision for loan losses
10,150

 
9,500

 
18,500

Charge-offs:
 

 
 

 
 
Federally insured loans
(11,730
)
 
(15,260
)
 
(15,588
)
Private education loans
(2,414
)
 
(2,332
)
 
(3,683
)
Total charge-offs
(14,144
)
 
(17,592
)
 
(19,271
)
Recoveries - private education loans
1,050

 
1,315

 
1,577

Purchase (sale) of federally insured loans, net
50

 
(10
)
 
(1,093
)
Sale of private education loans, net
(140
)
 
(1,620
)
 

Transfer from repurchase obligation related to private education loans repurchased, net
4,632

 
2,185

 
3,507

Balance at end of period
$
50,498

 
48,900

 
55,122

 
 
 
 
 
 
Allocation of the allowance for loan losses:
 

 
 

 
 
Federally insured loans
$
35,490

 
39,170

 
43,440

Private education loans
15,008

 
9,730

 
11,682

Total allowance for loan losses
$
50,498

 
48,900

 
55,122



Repurchase Obligation

The Company has sold various portfolios of private education loans to third-parties. Per the terms of the servicing agreements, the Company’s servicing operations are obligated to repurchase loans subject to the sale agreements in the event such loans become 60 or 90 days delinquent. As of December 31, 2015 and 2014, the balance of loans subject to these repurchase obligations was $46.8 million and $155.3 million, respectively. The Company repurchased $98.6 million of private education loans during 2015 as a result of terminating such agreements. The Company's estimate related to its obligation to repurchase these loans is included in "other liabilities" in the Company's consolidated balance sheets and was $2.7 million and $11.8 million, as of December 31, 2015 and 2014, respectively.

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 loan delinquency amounts.
 
As of December 31,
 
2015
 
2014
 
2013
Federally insured loans:
 
 
 
 
 
 
 
 
 
 
 
Loans in-school/grace/deferment (a)
$
2,292,941

 
 
 
$
2,805,228

 
 
 
$
2,872,505

 
 
Loans in forbearance (b)
2,979,357

 
 
 
3,288,412

 
 
 
3,370,025

 
 
Loans in repayment status:
 
 
 
 
 
 
 
 
 
 
 
Loans current
19,447,541

 
84.4
%
 
18,460,279

 
83.5
%
 
16,337,922

 
82.4
%
Loans delinquent 31-60 days (c)
1,028,396

 
4.5

 
1,043,119

 
4.8

 
967,318

 
4.9

Loans delinquent 61-90 days (c)
566,953

 
2.5

 
588,777

 
2.7

 
550,333

 
2.9

Loans delinquent 91-120 days (c)
415,747

 
1.8

 
404,905

 
1.8

 
390,791

 
2.0

Loans delinquent 121-270 days (c)
1,166,940

 
5.1

 
1,204,405

 
5.4

 
1,117,936

 
5.6

Loans delinquent 271 days or greater (c)(d)
390,232

 
1.7

 
401,305

 
1.8

 
443,373

 
2.2

Total loans in repayment
23,015,809

 
100.0
%
 
22,102,790

 
100.0
%
 
19,807,673

 
100.0
%
Total federally insured loans
$
28,288,107

 
 

 
$
28,196,430

 
 

 
$
26,050,203

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private education loans:
 
 
 
 
 
 
 
 
 
 
 
Loans in-school/grace/deferment (a)
$
30,795

 
 
 
$
905

 
 
 
$
2,700

 
 
Loans in forbearance (b)
350

 
 
 

 
 
 
366

 
 
Loans in repayment status:
 
 
 
 
 
 
 
 
 
 
 
Loans current
228,464

 
96.7
%
 
18,390

 
69.2
%
 
59,001

 
86.7
%
Loans delinquent 31-60 days (c)
1,771

 
0.7

 
1,078

 
4.1

 
1,672

 
2.5

Loans delinquent 61-90 days (c)
1,283

 
0.5

 
1,035

 
3.9

 
1,718

 
2.5

Loans delinquent 91 days or greater (c)
4,979

 
2.1

 
6,070

 
22.8

 
5,646

 
8.3

Total loans in repayment
236,497

 
100.0
%
 
26,573

 
100.0
%
 
68,037

 
100.0
%
Total private education loans
$
267,642

 
 

 
$
27,478

 
 

 
$
71,103

 
 

(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 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 December 31, 2015
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes issued in asset-backed securitizations:
 
 
 
 
 
Bonds and notes based on indices
$
25,155,336

 
0.05% - 6.90%
 
8/26/19 - 8/26/52
Bonds and notes based on auction
1,160,365

 
0.88% - 2.17%
 
3/22/32 - 11/26/46
Total variable-rate bonds and notes
26,315,701

 
 
 
 
FFELP warehouse facilities
1,855,907

 
0.27% - 0.56%
 
4/29/18 - 12/14/18
Private education loan warehouse facility
181,184

 
0.57%
 
12/26/16
Unsecured line of credit
100,000

 
1.79% - 1.92%
 
10/30/20
Unsecured debt - Junior Subordinated Hybrid Securities
57,184

 
3.99%
 
9/15/61
Other borrowings
93,355

 
1.93% - 3.38%
 
10/31/16 - 12/15/45
 
28,603,331

 
 
 
 
Discount on bonds and notes payable
(430,649
)
 
 
 
 
Total
$
28,172,682

 
 
 
 
 
 
As of December 31, 2014
 
Carrying
amount
 
Interest rate
range
 
Final maturity
Variable-rate bonds and notes issued in asset-backed securitizations:
 
 
 
 
 
Bonds and notes based on indices
$
25,713,431

 
0.19% - 6.90%
 
5/25/18 - 8/26/52
Bonds and notes based on auction
1,311,669

 
0.47% - 2.17%
 
3/22/32 - 11/26/46
Total variable-rate bonds and notes
27,025,100

 
 
 
 
FFELP warehouse facilities
1,241,665

 
0.16% - 0.26%
 
1/17/16 - 6/11/17
Unsecured line of credit

 
 
6/30/19
Unsecured debt - Junior Subordinated Hybrid Securities
71,688

 
3.63%
 
9/15/61
Other borrowings
81,969

 
1.67% - 5.10%
 
11/11/15 - 12/31/18
 
28,420,422

 
 
 
 
Discount on bonds and notes payable
(393,072
)
 
 
 
 
Total
$
28,027,350

 
 
 
 


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 the securitized student loans may fail to generate any cash flow beyond what is due to bondholders. The Company’s secured financing vehicles during the periods presented include loan warehouse facilities and asset-backed securitizations.

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.
FFELP warehouse facilities

The Company funds a portion of its 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 December 31, 2015, the Company had three FFELP warehouse facilities as summarized below.
 
NHELP-III
 
NFSLW-I
 
NHELP-II
 
Total
Maximum financing amount
$
750,000

 
875,000

 
500,000

 
2,125,000

Amount outstanding
738,034

 
686,764

 
431,109

 
1,855,907

Amount available
$
11,966

 
188,236

 
68,891

 
269,093

Expiration of liquidity provisions
April 29, 2016

 
July 8, 2016

 
December 16, 2016

 
 
Final maturity date
April 29, 2018

 
July 9, 2018

 
December 14, 2018

 
 
Maximum advance rates
92.2 - 95.0%

 
92.0 - 98.0%

 
85.0 - 95.0%

 
 
Minimum advance rates
92.2 - 95.0%

 
84.0 - 90.0%

 
85.0 - 95.0%

 
 
Advanced as equity support
$
45,301

 
32,757

 
36,089

 
114,147


Each FFELP warehouse facility is supported by 364-day liquidity provisions, which are subject to the respective expiration date shown in the previous table. 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 NFSLW-I warehouse facility provides 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 NHELP-III and NHELP-II warehouse facilities have static advance rates that require initial equity for loan funding, but do not require increased equity based on market movements.

The FFELP warehouse facilities contain financial covenants relating to levels of the Company’s consolidated net worth, ratio of recourse indebtedness to adjusted EBITDA, 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

The following tables summarize the asset-backed securitization transactions completed in 2015 and 2014.
 
 
Securitizations completed during the year ended December 31, 2015
 
 
2015-1
 
2015-2
 
2015-3
 
Total
 
 
 
 
Class A-1 notes
 
Class A-2 notes
 
2015-2 total
 
Class A-1 notes
 
Class A-2 notes
 
Class A-3 notes
 
2015-3 total
 
 
Date securities issued
 
2/27/15
 
3/26/15
 
3/26/15
 
3/26/15
 
5/21/15
 
5/21/15
 
5/21/15
 
5/21/15
 
 
Total original principal amount
 
$
566,346

 
122,500

 
584,500

 
722,000

 
82,500

 
270,000

 
41,400

 
401,400

 
$
1,689,746

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class A senior notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total original principal amount
 
$
553,232

 
122,500

 
584,500

 
707,000

 
82,500

 
270,000

 
41,400

 
393,900

 
1,654,132

Bond discount
 

 

 

 

 

 
(380
)
 
(1,095
)
 
(1,475
)
 
(1,475
)
Issue price
 
$
553,232

 
122,500

 
584,500

 
707,000

 
82,500

 
269,620

 
40,305

 
392,425

 
1,652,657

Cost of funds (1-month LIBOR plus:)
 
0.59
%
 
0.27
%
 
0.60
%
 
 
 
0.30
%
 
0.60
%
 
0.90
%
 
 
 
 
Final maturity date
 
4/25/41

 
3/25/20

 
9/25/42

 
 
 
1/27/25

 
2/26/46

 
6/25/49

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class B subordinated notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total original principal amount
 
$
13,114

 
 
 
 
 
15,000

 
 
 
 
 
 
 
7,500

 
35,614

Bond discount
 
(1,157
)
 
 
 
 
 
(1,793
)
 
 
 
 
 
 
 
(968
)
 
(3,918
)
Issue price
 
$
11,957

 
 
 
 
 
13,207

 
 
 
 
 
 
 
6,532

 
31,696

Cost of funds (1-month LIBOR plus:)
 
1.50
%
 
 
 
 
 
1.50
%
 
 
 
 
 
 
 
1.50
%
 
 
Final maturity date
 
6/25/46

 
 
 
 
 
5/25/49

 
 
 
 
 
 
 
6/27/50

 
 

 
 
Securitizations completed during the year ended December 31, 2014
 
 
2014-1
 
2014-2
 
2014-3
 
2014-4
 
2014-5
 
2014-6
 
Total
 
 
 
 
Class A-1 notes
 
Class A-2 notes
 
Class A-3 notes
 
2014-2 total
 
 
 
Class A-1 notes
 
Class A-2 notes
 
2014-4 total
 
 
 
 
 
 
Date securities issued
 
2/6/14
 
3/12/14
 
3/12/14
 
3/12/14
 
3/12/14
 
4/30/14
 
5/23/14
 
5/23/14
 
5/23/14
 
6/18/14
 
7/31/14
 
 
Total original principal amount
 
$
458,500

 
191,000

 
222,000

 
84,000

 
509,000

 
719,800

 
267,500

 
107,500

 
384,500

 
603,000

 
565,000

 
$
3,239,800

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class A senior notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total original principal amount
 
$
445,000

 
191,000

 
222,000

 
84,000

 
497,000

 
700,700

 
267,500

 
107,500

 
375,000

 
587,000

 
565,000

 
3,169,700

Bond discount
 

 

 

 
(535
)
 
(535
)
 

 

 

 

 

 
(3,124
)
 
(3,659
)
Issue price
 
$
445,000

 
191,000

 
222,000

 
83,465

 
496,465

 
700,700

 
267,500

 
107,500

 
375,000

 
587,000

 
561,876

 
3,166,041

Cost of funds (1-month LIBOR plus:)
 
0.57
%
 
0.28
%
 
0.60
%
 
0.85
%
 
 
 
0.58
%
 
0.54
%
 
0.95
%
 
 
 
0.55
%
 
0.65
%
 
 
Final maturity date
 
9/25/41

 
6/25/21

 
3/25/30

 
7/27/37

 
 
 
6/25/41

 
11/27/34

 
11/25/43

 
 
 
7/25/41

 
11/25/47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class B subordinated notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total original principal amount
 
$
13,500

 
 
 
 
 
 
 
12,000

 
19,100

 
 
 
 
 
9,500

 
16,000

 
 
 
70,100

Bond discount
 
(1,132
)
 
 
 
 
 
 
 
(1,046
)
 
(1,467
)
 
 
 
 
 
(1,138
)
 
(1,232
)
 
 
 
(6,015
)
Issue price
 
$
12,368

 
 
 
 
 
 
 
10,954

 
17,633

 
 
 
 
 
8,362

 
14,768

 
 
 
64,085

Cost of funds (1-month LIBOR plus:)
 
1.50
%
 
 
 
 
 
 
 
1.50
%
 
1.50
%
 
 
 
 
 
1.50
%
 
1.50
%
 
 
 
 
Final maturity date
 
10/25/47

 
 
 
 
 
 
 
6/25/41

 
10/25/50

 
 
 
 
 
9/25/51

 
5/25/49

 
 
 
 


Auction Rate Securities

The interest rates on certain of the Company's asset-backed securities are set and periodically reset via a "dutch auction" ("Auction Rate Securities"). As of December 31, 2015, the Company is currently the sponsor on $1.2 billion of Auction Rate Securities.

Since February 2008, problems in the auction rate securities market as a whole have led to failures of the auctions pursuant to which the Company's Auction Rate Securities' interest rates are set. As a result, the Auction Rate Securities generally pay interest to the holder at a maximum rate as defined by the indenture. While these rates will vary, they will generally be based on a spread to LIBOR or Treasury Securities, or the Net Loan Rate as defined in the indenture. Based on the relative levels of these indices as of December 31, 2015, the rates expected to be paid by the Company range from 91-day T-Bill plus 125 basis points, on the low end, to LIBOR plus 250 basis points, on the high end. These maximum rates are subject to increase if the credit ratings on the bonds are downgraded.

Private Education Loan Warehouse Facility
On June 26, 2015, the Company entered into a $275.0 million private education loan warehouse facility. As of December 31, 2015, there was $181.2 million outstanding on the facility and $93.8 million was available for future use. The facility has a static advance rate that requires initial equity for loan funding, but does not require increased equity based on market movements. The maximum advance rate on the entire facility is 88 percent and minimum advance rates, depending on loan characteristics and program type, range from 64 percent to 99 percent. As of December 31, 2015, $25.2 million was advanced on the facility as equity support. The facility is supported by liquidity provisions, which have a defined expiration date of June 24, 2016. 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 of December 26, 2016.

Unsecured Line of Credit

The Company has a $350.0 million unsecured line of credit that has a maturity date of October 30, 2020. As of December 31, 2015, the unsecured line of credit had $100.0 million outstanding and $250.0 million was available for future use.

The 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 recourse indebtedness
A limitation on the amount of unsecuritized private education loans in the Company’s portfolio
A limitation on permitted investments, including business acquisitions that are not in one of the Company's existing lines of business

As of December 31, 2015, 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 warehouse facilities.

The Company's 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 funds

A default on the Company's 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.

Junior Subordinated Hybrid Securities

On September 27, 2006, the Company issued $200.0 million aggregate principal amount of Junior Subordinated Hybrid Securities ("Hybrid Securities"). The Hybrid Securities are unsecured obligations of the Company. The interest rate on the Hybrid Securities through September 29, 2036 ("the scheduled maturity date") is equal to three-month LIBOR plus 3.375%, payable quarterly, which was 3.99% at December 31, 2015. The principal amount of the Hybrid Securities will become due on the scheduled maturity date only to the extent that prior to such date the Company has received proceeds from the sale of certain qualifying capital securities (as defined in the Hybrid Securities' indenture). If any amount is not paid on the scheduled maturity date, it will remain outstanding and bear interest at a floating rate as defined in the indenture, payable monthly. On September 15, 2061, the Company must pay any remaining principal and interest on the Hybrid Securities in full whether or not the Company has sold qualifying capital securities. At the Company's option, the Hybrid Securities are redeemable in whole or in part at their principal amount plus accrued and unpaid interest, provided in the case of a redemption in part that the principal amount outstanding after such redemption is at least $50.0 million. As of December 31, 2015, the outstanding balance on the Hybrid Securities was $57.2 million.

Other Borrowings

The Company has a $75.0 million line of credit, which is collateralized by asset-backed security investments, with a maturity date of October 31, 2016. The line of credit has covenants and cross default provisions similar to those under the Company's unsecured line of credit. As of December 31, 2015, $75.0 million was outstanding on this line of credit.

The Company also has two notes payable, which were each issued by TDP on December 30, 2015 in connection with the development of a commercial building. As of December 31, 2015, one note has $12.0 million outstanding with a maturity date of March 31, 2023; the other note has $6.4 million outstanding with a maturity date of December 15, 2045. Both of these notes have a fixed interest rate of 3.38%.

Debt Covenants

Certain bond resolutions contain, among other requirements, covenants relating to restrictions on additional indebtedness, limits as to direct and indirect administrative expenses, and maintaining certain financial ratios. Management believes the Company is in compliance with all covenants of the bond indentures and related credit agreements as of December 31, 2015.

Maturity Schedule

Bonds and notes outstanding as of December 31, 2015 are due in varying amounts as shown below.
2016
 
$
256,184

2017
 

2018
 
1,855,907

2019
 
173,755

2020
 
194,648

2021 and thereafter
 
26,122,837

 
 
$
28,603,331


Generally, the Company's secured financing instruments bearing interest at variable rates can be redeemed on any interest payment date at par plus accrued interest. Subject to certain provisions, all bonds and notes are subject to redemption prior to maturity at the option of certain education lending subsidiaries.

Debt Repurchases

The following table summarizes the Company's repurchases of its own debt. Gains recorded by the Company from the repurchase of debt are included in "gain on sale of loans and debt repurchases, net" on the Company’s consolidated statements of income.

 
Par value
 
Purchase price
 
Gain
 
Par value
 
Purchase price
 
Gain
 
Par value
 
Purchase price
 
Gain