Document and Entity Information Document - USD ($)	12 Months Ended
Document and Entity Information Document - USD ($)	Dec. 31, 2018	Jan. 31, 2019	Jun. 29, 2018
Document Information [Line Items]
Entity Registrant Name	NELNET INC
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Public Float			$ 1,224,618,686
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, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		28,732,998
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		11,459,641

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Assets:
Loans receivable (net of allowance for loan losses of $60,388 and $54,590 respectively)	$ 22,377,142	$ 21,814,507
Cash and cash equivalents:
Cash and cash equivalents - not held at a related party	9,472	6,982
Cash and cash equivalents - held at a related party	111,875	59,770
Total cash and cash equivalents	121,347	66,752
Total investments and notes receivable	249,370	240,538
Restricted cash	701,366	688,193
Restricted cash - due to customers	369,678	187,121
Loan accrued interest receivable	679,197	430,385
Accounts receivable (net of allowance for doubtful accounts of $3,271 and $1,436, respectively)	59,531	37,863
Goodwill	156,912	138,759
Intangible assets, net	114,290	38,427
Property and equipment, net	344,784	248,051
Other assets	45,533	73,021
Fair value of derivative instruments	1,818	818
Total assets	25,220,968	23,964,435
Liabilities:
Bonds and notes payable	22,218,740	21,356,573
Accrued interest payable	61,679	50,039
Other liabilities	256,092	198,252
Due to customers	369,678	187,121
Fair value of derivative instruments	0	7,063
Total liabilities	22,906,189	21,799,048
Commitments and contingencies
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	622	521
Retained earnings	2,299,556	2,143,983
Accumulated other comprehensive earnings	3,883	4,617
Noncontrolling interests	10,315	15,858
Total equity	2,314,779	2,165,387
Total liabilities and equity	25,220,968	23,964,435
Class A
Common stock:
Common stock	288	293
Class B
Common stock:
Common stock	115	115
Variable Interest Entity, Primary Beneficiary
Assets:
Loans receivable (net of allowance for loan losses of $60,388 and $54,590 respectively)	22,359,655	21,909,476
Cash and cash equivalents:
Restricted cash	677,611	641,994
Other assets	679,735	431,934
Liabilities:
Bonds and notes payable	22,146,374	21,702,298
Other liabilities	163,327	168,637
Common stock:
Net assets of consolidated education lending variable interest entities	$ 1,407,300	$ 1,112,469

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Allowance for loan losses	$ 60,388	$ 54,590
Allowance for doubtful accounts	$ 3,271	$ 1,436
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized shares (in shares)	50,000,000	50,000,000
Preferred stock, issued shares (in shares)	0	0
Preferred stock, outstanding shares (in shares)	0	0
Class A
Par value (in dollars per share)	$ 0.01	$ 0.01
Shares authorized (in shares)	600,000,000	600,000,000
Shares issued (in shares)	28,798,464	29,341,517
Shares outstanding (in shares)	28,798,464	29,341,517
Class B
Par value (in dollars per share)	$ 0.01	$ 0.01
Shares authorized (in shares)	60,000,000	60,000,000
Shares issued (in shares)	11,459,641	11,468,587
Shares outstanding (in shares)	11,459,641	11,468,587

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest income:
Loan interest	$ 897,666	$ 757,731	$ 751,280
Investment interest	26,600	12,695	9,466
Total interest income	924,266	770,426	760,746
Interest expense:
Interest on bonds and notes payable	669,906	465,188	388,183
Net interest income	254,360	305,238	372,563
Less provision for loan losses	23,000	14,450	13,500
Net interest income after provision for loan losses	231,360	290,788	359,063
Other income:
Other income	54,446	52,826	58,255
Gain from debt repurchases	359	2,902	7,981
Derivative market value and foreign currency transaction adjustments and derivative settlements, net	71,085	(18,554)	49,795
Total other income	832,532	479,062	524,218
Cost of services:
Cost of services	76,492	58,628	51,182
Operating expenses:
Salaries and benefits	436,179	301,885	255,924
Depreciation and amortization	86,896	39,541	33,933
Loan servicing fees to third parties	12,059	22,734	25,750
Other expenses	165,972	120,378	117,678
Total operating expenses	701,106	484,538	433,285
Income before income taxes	286,294	226,684	398,814
Income tax expense	58,770	64,863	141,313
Net income	227,524	161,821	257,501
Net loss (income) attributable to noncontrolling interests	389	11,345	(750)
Net income attributable to Nelnet, Inc.	$ 227,913	$ 173,166	$ 256,751
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted (in dollars per share)	$ 5.57	$ 4.14	$ 6.02
Weighted average common shares outstanding - basic and diluted (in shares)	40,909,022	41,791,941	42,669,070
Loan servicing and systems revenue
Other income:
Revenue	$ 440,027	$ 223,000	$ 214,846
Education technology services and payment processing services
Other income:
Revenue	221,962	193,188	175,682
Cost of services:
Cost of services	59,566	48,678	44,316
Communications revenue
Other income:
Revenue	44,653	25,700	17,659
Cost of services:
Cost of services	16,926	9,950	6,866
Enrollment services revenue
Other income:
Revenue	$ 0	$ 0	$ 4,326

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 21,674	$ 43,126	$ 49,539	$ 113,185	$ 45,714	$ 43,535	$ 24,651	$ 47,920	$ 227,524	$ 161,821	$ 257,501
Available-for-sale securities:
Unrealized holding gains arising during period, net of losses									1,056	2,349	5,789
Reclassification adjustment for gains recognized in net income, net of losses									(978)	(2,528)	(1,907)
Income tax effect									(69)	66	(1,436)
Total other comprehensive income (loss)									9	(113)	2,446
Comprehensive income									227,533	161,708	259,947
Comprehensive loss (income) attributable to noncontrolling interests									389	11,345	(750)
Comprehensive income attributable to Nelnet, Inc.									$ 227,922	$ 173,053	$ 259,197

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Preferred stock shares	Common stock shares Class A	Common stock shares Class B	Additional paid-in capital	Retained earnings	Accumulated other comprehensive earnings	Noncontrolling interests
Beginning balance (in shares) at Dec. 31, 2015		0	32,476,528	11,476,932
Beginning balance at Dec. 31, 2015	$ 1,892,158	$ 0	$ 325	$ 115	$ 0	$ 1,881,708	$ 2,284	$ 7,726
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of noncontrolling interests	1,366							1,366
Net income	257,501					256,751		750
Other comprehensive income (loss)	2,446						2,446
Distribution to noncontrolling interests	(572)							(572)
Cash dividends on Class A and Class B common stock	(21,188)					(21,188)
Issuance of common stock, net of forfeitures (in shares)			189,952
Issuance of common stock, net of forfeitures	4,219		$ 1		4,218
Compensation expense for stock based awards	4,086				4,086
Repurchase of common stock (in shares)			(2,038,368)
Repurchase of common stock	(69,091)		$ (20)		(7,884)	(61,187)
Ending balance at Dec. 31, 2016	2,070,925	$ 0	$ 306	$ 115	420	2,056,084	4,730	9,270
Ending balance (in shares) at Dec. 31, 2016		0	30,628,112	11,476,932
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of noncontrolling interests	19,578							19,578
Net income	161,821					173,166		(11,345)
Other comprehensive income (loss)	(113)						(113)
Distribution to noncontrolling interests	(1,645)							(1,645)
Cash dividends on Class A and Class B common stock	(24,097)					(24,097)
Issuance of common stock, net of forfeitures (in shares)			178,114
Issuance of common stock, net of forfeitures	3,621		$ 2		3,619
Compensation expense for stock based awards	4,193				4,193
Repurchase of common stock (in shares)			(1,473,054)
Repurchase of common stock	(68,896)		$ (15)		(7,711)	(61,170)
Conversion of of common stock (in shares)			8,345	(8,345)
Ending balance at Dec. 31, 2017	2,165,387	$ 0	$ 293	$ 115	521	2,143,983	4,617	15,858
Ending balance (in shares) at Dec. 31, 2017		0	29,341,517	11,468,587
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Impact of adoption of new accounting standards	1,264					2,007	(743)
Issuance of noncontrolling interests	1,023							1,023
Net income	227,524					227,913		(389)
Other comprehensive income (loss)	9						9
Distribution to noncontrolling interests	(525)							(525)
Cash dividends on Class A and Class B common stock	(26,839)					(26,839)
Issuance of common stock, net of forfeitures (in shares)			316,148
Issuance of common stock, net of forfeitures	5,174		$ 3		5,171
Compensation expense for stock based awards	6,194				6,194
Repurchase of common stock (in shares)			(868,147)
Repurchase of common stock	(45,331)		$ (8)		(11,264)	(34,059)
Acquisition of noncontrolling interest	(19,101)					(13,449)		(5,652)
Conversion of of common stock (in shares)			8,946	(8,946)
Ending balance at Dec. 31, 2018	$ 2,314,779	$ 0	$ 288	$ 115	$ 622	$ 2,299,556	$ 3,883	$ 10,315
Ending balance (in shares) at Dec. 31, 2018		0	28,798,464	11,459,641

Consolidated Statements of Shareholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Class B
Cash dividend on Class A and Class B common stock (in dollars per share)	$ 0.66	$ 0.58	$ 0.50
Class A
Cash dividend on Class A and Class B common stock (in dollars per share)	$ 0.66	$ 0.58	$ 0.50

Consolidated Statements of Cash Flows - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Statement of Cash Flows [Abstract]

Net income attributable to Nelnet, Inc.

$ 227,913

$ 173,166

$ 256,751

Net (loss) income attributable to noncontrolling interests

389

11,345

(750)

Net income

227,524

161,821

257,501

Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition:

Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs

184,682

137,823

122,547

Loan discount accretion

(40,800)

(44,812)

(40,617)

Provision for loan losses

23,000

14,450

13,500

Derivative market value adjustment

(1,014)

(26,379)

(59,895)

Unrealized foreign currency transaction adjustment

0

45,600

(11,849)

Payments to terminate and/or amend derivative instruments, net of proceeds

10,283

(30,382)

3,999

Payments to enter into derivative instruments

(4,770)

(929)

0

Proceeds from clearinghouse - initial and variation margin, net

40,382

76,325

0

Gain from debt repurchases

(359)

(2,902)

(7,981)

(Gain) loss from investments and notes receivable, net

(8,139)

2,108

979

Deferred income tax expense (benefit)

10,981

(1,544)

27,005

Non-cash compensation expense

6,539

4,416

4,348

Impairment expense

11,721

3,626

0

Other

2,219

(687)

1,329

Increase in loan accrued interest receivable

(248,869)

(39,203)

(7,439)

Decrease (increase) in accounts receivable

3,059

(4,234)

10,667

Increase in other assets

(4,069)

(42,270)

(5,416)

Increase in accrued interest payable

11,640

4,362

14,170

(Decrease) increase in other liabilities

(12,506)

(2,341)

2,409

Increase (decrease) in due to customers

59,388

67,419

(25,069)

Net cash provided by operating activities

270,892

322,267

300,188

Cash flows from investing activities, net of acquisitions:

Purchases of loans

(3,847,553)

(312,293)

(319,511)

Purchase of loans from related party

(74,698)

(13,183)

(29,633)

Net proceeds from loan repayments, claims, capitalized interest, and other

3,322,783

3,363,526

3,735,772

Proceeds from sale of loans

23,712

53,203

44,760

Purchases of available-for-sale securities

(46,424)

(128,523)

(94,673)

Proceeds from sales of available-for-sale securities

71,415

156,540

144,252

Purchases of investments and issuance of notes receivable

(67,040)

(29,339)

(21,511)

Proceeds from investments and notes receivable

23,039

11,545

15,898

Purchases of property and equipment

(125,023)

(156,005)

(67,602)

Business acquisition, net of cash and restricted cash acquired

(12,562)

0

Proceeds from sale of business, net

0

4,511

0

Net cash (used in) provided by investing activities

(732,351)

2,949,982

3,407,752

Cash flows from financing activities:

Payments on bonds and notes payable

(3,113,503)

(5,403,224)

(4,134,890)

Proceeds from issuance of bonds and notes payable

3,922,962

1,984,558

650,909

Payments of debt issuance costs

(13,808)

(6,497)

(5,845)

Payment of contingent consideration

0

(850)

0

Dividends paid

(26,839)

(24,097)

(21,188)

Repurchases of common stock

(45,331)

(68,896)

(69,091)

Proceeds from issuance of common stock

1,359

678

889

Acquisition of noncontrolling interest

(13,449)

0

Issuance of noncontrolling interests

918

19,473

1,241

Distribution to noncontrolling interests

(525)

(1,645)

(572)

Net cash provided by (used in) financing activities

711,784

(3,500,500)

(3,578,547)

Net increase (decrease) in cash, cash equivalents and restricted cash

250,325

(228,251)

129,393

Cash, cash equivalents, and restricted cash, beginning of year

942,066

1,170,317

1,040,924

Cash, cash equivalents, and restricted cash, end of year

1,192,391

942,066

1,170,317

Supplemental disclosures of cash flow information:

Cash disbursements made for interest

591,394

390,278

301,118

Cash disbursements made for income taxes, net of refunds and credits (a)

473

^[1]

96,721

115,415

Cash and cash equivalents:

Cash, cash equivalents, and restricted cash

$ 1,192,391

$ 1,170,317

[1]	For 2018, the Company utilized $14.7 million of federal and state tax credits, related primarily to renewable energy.

Description of Business	12 Months Ended
Description of Business	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	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 loan asset management. The largest operating businesses engage in loan servicing; education technology, services, and payment processing; and communications. 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 early-stage and emerging growth companies. 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”). The Health Care and Education Reconciliation Act of 2010 (the "Reconciliation Act of 2010”) discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires that all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program. This law does not alter or affect the terms and conditions of existing FFELP loans. As a result of this law, the Company no longer originates new FFELP loans. 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. The Company has four reportable operating segments. The Company's reportable operating segments include: • Loan Servicing and Systems ("LSS") • Education Technology, Services, and Payment Processing ("ETS&PP") • Communications • Asset Generation and Management ("AGM") During the first quarter of 2018, the Company changed the name of the Tuition Payment Processing and Campus Commerce operating segment to Education Technology, Services, and Payment Processing to better describe the evolution of services this operating segment provides. In addition, the Loan Systems and Servicing segment was retitled as Loan Servicing and Systems. As a result, the line items "tuition payment processing, school information, and campus commerce revenue" and "loan systems and servicing revenue" on the consolidated statements of income were changed to "education technology, services, and payment processing revenue" and "loan servicing and systems revenue," respectively. A description of each reportable operating segment is included below. See note 14 for additional information on the Company's segment reporting. Loan Servicing and Systems The primary service offerings of the Loan Servicing and Systems operating segment include: •Servicing federally-owned student loans for the Department of Education •Servicing FFELP loans •Originating and servicing private education and consumer loans •Providing student loan servicing software and other information technology products and services •Providing outsourced services including call center, processing, and marketing services LSS 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. On February 7, 2018, the Company acquired Great Lakes Educational Loan Services, Inc. ("Great Lakes"). See note 7 for additional information related to this acquisition. Nelnet Servicing, LLC, ("Nelnet Servicing"), a subsidiary of the Company, and Great Lakes are two of four private sector companies (referred to as Title IV Additional Servicers, or "TIVAS") 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 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. This segment also 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. Education Technology, Services, and Payment Processing ETS&PP 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 automate administrative processes and collect and process commerce data. In the K-12 market, the Company (known as FACTS Management) offers (i) actively managed tuition payment plans and billing services; (ii) assistance with financial needs assessment and donor management; (iii) school information system software that helps schools automate administrative processes such as admissions, enrollment, scheduling, student billing, attendance, and grade book management; (iv) professional development and educational instruction services; and (v) innovative technology products that aid in teacher and student evaluations. In the higher education market (known as Nelnet Campus Commerce) the Company offers two principal products: actively managed tuition payment plans, and education technologies and payment processing. Outside of the education market, the Company also offers technology and payments services including electronic transfer and credit card processing, reporting, billing and invoicing, mobile and virtual terminal solutions, and specialized integrations to business software. In addition, this operating segment offers mobile first technology focused on increasing engagement, online giving, and communication for church and not-for-profit customers. Communications ALLO Communications LLC (“ALLO”) provides pure fiber optic service to homes and businesses for internet, television, and telephone services. The acquisition of ALLO in 2015 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. ALLO derives its revenue primarily from the sale of communication services to residential and business customers in Nebraska and Colorado. Internet and television services include revenue from residential and business customers for subscriptions to ALLO's data and video products. ALLO data services provide high-speed internet access over ALLO's all-fiber network at various symmetrical speeds of up to 1 gigabit per second for residential customers and is capable of providing symmetrical speeds of over 1 gigabit per second for business customers. Telephone services include local and long distance telephone service, hostedPBX services, and other basic services. Asset Generation and Management The Company's Asset Generation and Management operating segment includes the acquisition, management, and ownership of the Company's loan assets. Substantially all loan assets included in this segment are student 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” loans). The Company also acquires private education and consumer loans. The Company generates a substantial portion of its earnings from the spread, referred to as the Company's loan spread, between the yield it receives on its 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 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. 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 advisor subsidiary •Income earned on certain investment activities, including real estate •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, internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services.

Summary of Significant Accounting Policies and Practices

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Practices

Consolidation

The consolidated financial statements include the accounts of Nelnet, Inc. and its consolidated subsidiaries. In addition, the accounts of all variable interest entities (“VIEs”) of which the Company has determined that it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

The following entities are VIEs of which the Company has determined that it is the primary beneficiary. 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's education lending subsidiaries 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 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 securitization 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.

As of December 31, 2018, the Company owned 98.8 percent of the economic rights of ALLO Communications LLC and has a disproportional 80 percent of the voting rights related to all operating decisions for ALLO's business. See note 1, “Description of Business,” for a description of ALLO, including the primary services offered. In addition to the Company’s original equity investment, Nelnet, Inc. (the parent) issued a line of credit to ALLO. On January 1, 2018, Nelnet, Inc. contributed more equity with an associated guaranteed payment and ALLO used the proceeds to retire the outstanding balance on the line of credit. On October 1, 2018, the guaranteed payment accrual was replaced with a yield-based preferred return of future earnings due on the newly contributed equity. The Company will continue to increase its ownership interests as it makes cash contributions to fund ALLO's operating losses and capital expenditures. In addition, ALLO's management, as current minority members, has the opportunity to earn ownership interests based on the financial performance of ALLO. Nelnet, Inc.’s maximum exposure to loss as a result of its involvement with ALLO is equal to its ownership interests investment. All of ALLO’s financial activities and related assets and liabilities are reflected in the Company’s consolidated financial statements. See note 14, “Segment Reporting,” for disclosure of ALLO’s total assets and results of operations (included in the "Communications" operating segment), note 9, "Goodwill," for disclosure of ALLO's goodwill, and note 10, “Property and Equipment,” for disclosure of ALLO’s fixed assets. ALLO's goodwill and property and equipment comprise the majority of its assets. The assets recognized as a result of consolidating ALLO are the property of ALLO and are not available for any other purpose.

Reclassifications

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

•Reclassifying certain non-customer receivables, which were previously included in "accounts receivable," to "other assets," and reclassifying non-customer receivables activity on the consolidated statements of cash flows as appropriate. This did not result in a change in the Company's previously reported net cash provided by operating activities.

•Reclassifying direct costs to provide services for education technology, services, and payment processing, which were previously included in "other expenses," to "cost to provide education technology, services, and payment processing services."

•Reclassifying the line item "cost to provide communications services" on the consolidated statements of income from part of "operating expenses" and presenting such costs as part of "cost of services."

•Reclassifying "enrollment services revenue" and "cost to provide enrollment services" in 2016 to "other income" and "other expenses," respectively.

Accounting Standards Adopted in 2018

In the first quarter of 2018, the Company adopted the following new accounting standards and other guidance:

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The Company adopted the standard effective January 1, 2018, using the full retrospective method, which required it to restate each prior reporting period presented. As a result, the Company changed its accounting policy for revenue recognition as detailed in the "Revenue Recognition" section of this note.

The most significant impact of the standard relates to identifying the Company's fee-based Education Technology, Services, and Payment Processing operating segment as the principal in its payment services transactions. As a result of this change, the Company presents the payment services revenue gross, with the direct costs to provide these services presented separately. The Company’s other fee-based operating segments will recognize revenue consistent with historical revenue recognition patterns. The majority of the Company's revenue earned in its non-fee-based Asset Generation and Management operating segment, including loan interest and derivative activity, is explicitly excluded from the scope of the new standard.

Impacts to Previously Reported Results

Adoption of the revenue recognition standard impacted the Company’s previously reported results on the consolidated statements of income as follows:


	Year ended December 31, 2017
	As previously reported		Impact of adoption	As restated
Education technology, services, and payment processing revenue	$	145,751	47,437	193,188
Cost to provide education technology, services, and payment processing services	—		47,437	47,437	(a)


	Year ended December 31, 2016
	As previously reported		Impact of adoption	As restated
Education technology, services, and payment processing revenue	$	132,730	42,952	175,682
Cost to provide education technology, services, and payment processing services	—		42,952	42,952	(a)

(a) In addition to the impact of adopting the new revenue recognition standard, as discussed above, the Company reclassified other direct costs to provide education technology, services, and payment processing services which were previously reported as part of "other expenses" to "cost to provide education technology, services, and payment processing services."

Adoption of the new revenue recognition standard had no impact to the consolidated balance sheets or cash provided by or used in operating, investing, or financing activities on the consolidated statements of cash flows.

Equity Investments

In January 2016, the FASB issued new accounting guidance related to the recognition and measurement of financial assets and financial liabilities. The guidance, including a related clarifying update, requires equity investments with readily determinable fair values to be measured at fair value, with changes in the fair value recognized through net income. An entity may choose to measure equity investments without readily determinable fair values at fair value or use the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption to reclassify the cumulative change in fair value of equity securities with readily determinable fair values previously recognized in accumulated other comprehensive income, and was adopted by the Company as of January 1, 2018. Upon adoption, the Company recorded an immaterial cumulative-effect adjustment to retained earnings, accumulated other comprehensive earnings, and investments and notes receivable. Subsequent to the adoption, the Company is accounting for all its equity investments without readily determinable fair values using the measurement alternative.

Other Comprehensive Income

In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive earnings to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act, which became effective on January 1, 2018. This guidance is effective for fiscal years beginning after December 15, 2018, but early adoption is permitted. The Company elected to early adopt this guidance as of January 1, 2018. Upon adoption, the Company recorded an immaterial reclassification between accumulated other comprehensive earnings and retained earnings.

Restricted Cash

In November 2016, the FASB issued accounting guidance related to restricted cash. The new guidance requires that the statement of cash flows present the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents, and a reconciliation of such total to amounts on the balance sheet. The Company adopted the standard effective January 1, 2018 using the retrospective transition method. Adoption of this standard impacted the Company's previously reported amounts on the consolidated statements of cash flows as follows:


	Year ended December 31, 2017
	As previously reported		Impact of adoption	As restated
Increase in due to customers	$	—	67,419	67,419
Proceeds from clearinghouse - initial and variation margin, net	48,985		27,340	76,325
Net cash provided by operating activities	227,508		94,759	322,267
Decrease in restricted cash, net	320,108		(320,108)	—
Net cash provided by investing activities	3,270,090		(320,108)	2,949,982

	Year ended December 31, 2016
	As previously reported		Impact of adoption	As restated
Decrease in due to customers	$	—	(25,069)	(25,069)
Net cash provided by operating activities	325,257		(25,069)	300,188
Increase in restricted cash, net	(147,487)		147,487	—
Purchases of investments and issuance of notes receivable	(22,361)		850	(21,511)
Net cash provided by investing activities	3,259,415		148,337	3,407,752

Noncontrolling Interests

Amounts for noncontrolling interests reflect 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 is the Company’s SEC-registered investment advisor 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 in ALLO. On January 1, 2016, the Company sold a 1.0 percent ownership interest in ALLO to a non-related third-party. During 2018, the Company contributed additional equity to increase its ownership interest in ALLO to 98.8 percent. Per ALLO's operating agreement, currently all operating results of ALLO are allocated to the Company.

•401 Building, LLC (“401 Building”) - 401 Building is an entity established in October 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”) and TDP Phase Three-NMTC ("TDP-NMTC") - TDP and TDP-NMTC are entities that were established in October 2015 for the sole purpose of developing and operating the new headquarters of Hudl, a related party. The Company owns 25 percent of each TDP and TDP-NMTC.

•330-333 Building, LLC ("330-333 Building") - 330-333 Building is an entity established in January 2016 for the sole purpose of acquiring, developing, and operating a commercial building. The Company owns 50 percent of 330-333 Building.

The Company is a tenant in the 401 Building, the headquarters of Hudl, and the 330-333 Building. Because the Company, as lessee, was involved in the asset construction, 401 Building, TDP, TDP-NMTC, and 330-333 Building are included in the Company's consolidated financial statements.

•GreatNet Solutions, LLC ("GreatNet") - GreatNet was a joint venture created in 2017 to respond to an initiative by the Department for the procurement of a contract for federal student loan servicing. Nelnet Servicing and Great Lakes each owned 50 percent of the ownership interests in GreatNet. For financial reporting purposes, the balance sheet and operating results of GreatNet were included in the Company's consolidated financial statements and presented in the Company's Loan Servicing and Systems operating segment. On February 7, 2018, the Company purchased 100 percent of the outstanding stock of Great Lakes. See note 7, “Business Combinations” for additional information on this business acquisition.

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.

Loans Receivable

Loans consist of federally insured student loans, private education loans, and consumer 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, 2018 and 2017.

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 program periods. In addition, eligible borrowers may qualify for income-driven repayment plans offered by the Department. These plans determine the borrower's payment amount based on their discretionary income and may extend their repayment period. Interest rates on federally insured student 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.

Loans also include private education and consumer loans. Private education loans are loans to students or their families that are non-federal loans and loans not insured or guaranteed under the FFEL Program. 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. Consumer loans are unsecured loans to an individual for personal, family, or household purposes. The terms of the consumer loans, which vary on an individual basis, generally provide for repayment in weekly or monthly installments of principal and interest over a period of up to 6 years.

Allowance for Loan Losses

The allowance for loan losses represents management's estimate of probable losses on 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 separately on each of its federally insured, private education, and consumer loan portfolios. 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 of the principal of and the interest on federally insured student loans disbursed on and after July 1, 2006 (and 98 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 and consumer 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 private education and consumer loans 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 or 180 days past due, depending on type of loan program. 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, private education loan portfolio, and consumer 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 loan portfolios into classes of financing receivables. The Company collectively evaluates loans for impairment and as of December 31, 2018 and 2017, the Company did not have any impaired loans as defined in the Receivables Topic of the 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 Statements of Cash Flows

For purposes of the consolidated statements of cash flows, the Company considers all investments with original maturities 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 loan accrued interest was $181.0 million in 2018. Net purchased loan accrued interest in 2017 and 2016 was insignificant.

Investments

The Company classifies its debt securities, primarily student loan and other asset-backed securities, as available-for-sale. 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 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. When an investment is sold, the cost basis is determined through specific identification of the security sold.

Equity investments with readily determinable fair values are measured at fair value, with changes in the fair value recognized through net income (other than those equity investments accounted for under the equity method of accounting or those that result in consolidation of the investee).

For equity investments without readily determinable fair value, the Company uses the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company uses qualitative factors to identify impairment on these investments.

The Company accounts for equity 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.

For periods prior to January 1, 2018, equity securities with readily determinable fair values were primarily classified as available-for-sale and stated at fair value with unrealized gains and losses reported as a separate component of accumulated other comprehensive income, net of tax. Equity securities without readily determinable fair values were recorded at cost less impairment, if any.

Restricted Cash

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 and third-party clearinghouses.

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 Education Technology, Services, and Payment Processing 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 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 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 quantitative impairment test on goodwill. In the quantitative test, 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 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, "Goodwill," for information regarding the Company's annual goodwill impairment review.

Intangible Assets

The Company uses estimates to determine the fair value of acquired assets to allocate the purchase price to acquired intangible 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 intangible 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.

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. 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. 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.

Assumptions and estimates about future cash flows generated by, remaining useful lives of, and fair values 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.

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

The Company applies the provisions of ASC Topic 606 to its fee-based operating segments. The majority of the Company’s revenue earned in its Asset Generation and Management operating segment, including loan interest and derivative activity, is explicitly excluded from the scope of ASC Topic 606. The Company recognizes revenue under the core principle of ASC Topic 606 to depict the transfer of control of products and services to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Additional information related to the Company's revenue recognition of specific items is provided below.

Loan interest income - Loan interest on federally insured student loans 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. Repayment of consumer loans typically starts upon origination of the loan.

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 special allowance index to one-month LIBOR effective April 1, 2012) relative to the yield of the student loan.

The Company recognizes loan interest income as earned, net of amortization of loan premiums and deferred origination costs and the accretion of loan discounts. Loan interest 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 loans, which includes an estimate of forecasted payments in excess of contractually required payments (the constant prepayment rate). The constant prepayment rate used by the Company to amortize/accrete loan premiums/discounts is 5 percent for Stafford loans and 3 percent for Consolidation loans. The Company periodically evaluates the assumptions used to estimate the life of the loans and prepayment rates. In instances where there are changes to the assumptions, amortization/accretion is adjusted on a cumulative basis to reflect the change since the acquisition of the loan.

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.

Loan servicing and systems revenue - Loan servicing and systems revenue consists of the following items:

•Loan servicing revenue - Loan servicing revenue consideration is determined from individual contracts with customers and is calculated monthly based on the dollar value of loans, number of loans, number of borrowers serviced for each customer, or number of transactions. Loan servicing requires a significant level of integration and the individual components are not considered distinct. The Company will perform various services, including, but not limited to, (i) application processing, (ii) monthly servicing, (iii) conversion processing, and (iv) fulfillment services, during each distinct service period. Even though the mix and quantity of activities that the Company performs each period may differ, the nature of the activities are substantially the same. Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits.

•Software services revenue - Software services revenue consideration is determined from individual contracts with customers and includes license and maintenance fees associated with loan software products, generally in a remote hosted environment, and computer and software consulting. Usage-based revenue from remote hosted licenses is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits. Revenue from any non-refundable up-front fee is recognized ratably over the contract period, as the fee relates to set-up activities that provide no incremental benefit to the customers. Computer and software consulting is also capable of being distinct and accounted for as a separate performance obligation. Revenue allocated to computer and software consulting is recognized as services are provided.

•Outsourced services revenue - Outsourced services revenue consideration is determined from individual contracts with customers and is calculated monthly based on the volume of services. Revenue is allocated to the distinct service period, typically a month, and recognized as control transfers as customers simultaneously receive and consume benefits.

The following table provides disaggregated revenue by service offering:


	Year ended December 31,
	2018		2017	2016
Government servicing - Nelnet	$	157,091	155,829	151,728
Government servicing - Great Lakes	168,298		—	—
FFELP servicing	31,542		15,542	15,948
Private education and consumer loan servicing	41,474		28,060	15,600
Software services	32,929		17,782	18,132
Outsourced services and other	8,693		5,787	3,878
FFELP guarantee collection and servicing (a)	—		—	9,560
Loan servicing and systems revenue	$	440,027	223,000	214,846

(a) Guarantee collection and servicing revenue in 2016 was earned from one customer that exited the FFELP guaranty business on June 30, 2016.

Education technology, services, and payment processing revenue - Education technology, services, and payment processing revenue consists of the following items:

•Tuition payment plan services - Tuition payment plan services consideration is determined from individual plan agreements, which are governed by plan service agreements, and includes access to a remote hosted environment and management of payment processing. The management of payment processing is considered a distinct performance obligation when sold with the remote hosted environment. Revenue for each performance obligation is allocated to the distinct service period, the academic school term, and recognized ratably over the service period as customers simultaneously receive and consume benefits.

•Payment processing - Payment processing consideration is determined from individual contracts with customers and includes electronic transfer and credit card processing, reporting, virtual terminal solutions, and specialized integrations to business software for education and non-education markets. Volume-based revenue from payment processing is allocated and recognized to the distinct service period, based on when each transaction is completed, and recognized as control transfers as customers simultaneously receive and consume benefits. The electronic transfer and credit card processing consideration is recognized as revenue on a gross basis as the Company is the principal in the delivery of the payment processing. The Company has concluded it is the principal as it controls the services before delivery to the educational institution or business, it is primarily responsible for the delivery of the services, and it has discretion in setting prices charged to its customers. In addition, the Company has the unilateral ability to accept or reject a transaction based on criteria established by the Company. The Company is liable for the costs of processing the transactions and records such costs within "cost to provide education technology, services, and payment processing services."

•Education technology and services - Education technology and services consideration is determined from individual contracts with customers and is based on the services selected by the customer. Services in K-12 private and faith based schools include (i) assistance with financial needs assessment, (ii) automating administrative processes such as admissions, online applications and enrollment services, scheduling, student billing, attendance, and grade book management, and (iii) professional development and educational instruction services. Revenue for these services is recognized for the consideration the Company has a right to invoice, the amount of which corresponds directly with the value provided to the customer based on the performance completed. Services provided to the higher education market include innovative education-focused technologies, services, and support solutions to help schools with the everyday challenges of collecting and processing commerce data. These services are considered distinct performance obligations. Revenue for each performance obligation is allocated to the distinct service period, typically a month or based on when each transaction is completed, and recognized as control transfers as customers simultaneously receive and consume benefits.

The following table provides disaggregated revenue by service offering:


	Year ended December 31,
	2018		2017	2016
Tuition payment plan services	$	85,381	76,753	72,405
Payment processing	84,289		71,652	64,100
Education technology and services	51,155		44,539	38,308
Other	1,137		244	869
Education technology, services, and payment processing revenue	$	221,962	193,188	175,682

Cost to provide education technology, services, and payment processing services is primarily associated with providing payment processing services. Interchange and payment network fees are charged by the card associations or payment networks. Depending upon the transaction type, the fees are a percentage of the transaction’s dollar value, a fixed amount, or a combination of the two methods. Other items included in cost to provide education technology, services, and payment processing services include salaries and benefits and third-party professional service costs directly related to providing professional development and educational instruction services to teachers, school leaders, and students.

Communications revenue - Communications revenue is derived principally from internet, television, and telephone services and is billed as a flat fee in advance of providing the service. Revenues for usage-based services, such as access charges billed to other telephone carriers for originating and terminating long-distance calls on the Company's network, are billed in arrears. These are each considered distinct performance obligations. Revenue is recognized monthly for the consideration the Company has a right to invoice, the amount of which corresponds directly with the value provided to the customer based on the performance completed. The Company recognizes revenue from these services in the period the services are rendered rather than billed. Revenue received or receivable in advance of the delivery of services is included in deferred revenue. Earned but unbilled usage-based services are recorded in accounts receivable.

The following table provides disaggregated revenue by service offering and customer type:


	Year ended December 31,
	2018		2017	2016
Internet	$	24,068	11,976	7,028
Television	12,949		8,018	5,774
Telephone	7,546		5,603	4,768
Other	89		103	88
Communications revenue	$	44,653	25,700	17,659

Residential revenue	$	33,434	17,696	11,088
Business revenue	10,976		7,744	6,235
Other	243		260	336
Communications revenue	$	44,653	25,700	17,659

Cost to provide communications services is primarily associated with television programming costs. The Company has various contracts to obtain television programming from programming vendors whose compensation is typically based on a flat fee per customer. The cost of the right to exhibit network programming under such arrangements is recorded in the month the

programming is available for exhibition. Programming costs are paid each month based on calculations performed by the Company and are subject to periodic audits performed by the programmers. Other items in cost to provide communications services include connectivity, franchise, and other regulatory costs directly related to providing internet and telephone services.

Other income - The following table provides the components of "other income" on the consolidated statements of income:


	Year ended December 31,
	2018		2017	2016
Borrower late fee income	$	12,302	11,604	12,838
Gain on investments and notes receivable, net of losses	9,579		939	4,549
Management fee revenue	6,497		—	—
Investment advisory fees	6,009		12,723	6,129
Peterson's revenue	—		12,572	14,254
Enrollment services revenue (a)	—		—	4,326
Other	20,059		14,988	16,159
Other income	$	54,446	52,826	58,255

(a) On February 1, 2016, the Company sold Sparkroom LLC. After this sale, the Company no longer earns enrollment services revenue.

•Borrower late fee income - Late fee income is earned by the education lending subsidiaries. Revenue is allocated to the distinct service period, based on when each transaction is completed.

•Management fee revenue - Management fee revenue is earned for technology and certain administrative support services provided to Great Lakes' former parent company. Revenue is allocated to the distinct service period, based on when each transaction is completed.

•Investment advisory fees - Investment advisory services are provided by WRCM, the Company's SEC-registered investment advisor subsidiary, under various arrangements. The Company earns monthly fees based on the monthly outstanding balance of investments and certain performance measures, which are recognized monthly as the uncertainty of the transaction price is resolved.

•Peterson's revenue - The Company earned revenue related to digital marketing and content solution products and services under the brand name Peterson's. These products and services included test preparation study guides, school directories and databases, career exploration guides, on-line courses and test preparation, scholarship search and selection data, career planning information and guides, and on-line information about colleges and universities. Several content solutions services included services to connect students to colleges and universities, and were sold based on subscriptions. Revenue from sales of subscription services was recognized ratably over the term of the contract as it was earned. Subscription revenue received or receivable in advance of the delivery of services was included in deferred revenue. Revenue from the sale of print products was generally earned and recognized, net of estimated returns, upon shipment or delivery. All other digital marketing and content solutions revenue was recognized over the period in which services were provided to customers. On December 31, 2017, the Company sold Peterson's. The Company applied a practical expedient for the retrospective comparative period which allowed the Company not to restate revenue from contracts that began and were completed within the same annual reporting period.

Contract Balances - The following table provides information about liabilities from contracts with customers:


	As of December 31,
	2018		2017
Deferred revenue, which is included in "other liabilities" on the consolidated balance sheets	$	39,122	32,276

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records deferred revenue when revenue is received or receivable in advance of the delivery of service. For multi-year contracts, the Company generally

invoices customers annually at the beginning of each annual coverage period. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component.

Activity in the deferred revenue balance is shown below:


	Year ended December 31,
	2018		2017	2016
Balance, beginning of period	$	32,276	33,141	31,068
Deferral of revenue	113,292		94,789	89,580
Recognition of revenue	(109,742)		(93,670)	(86,627)
Other	3,296		(1,984)	(880)
Balance, end of period	$	39,122	32,276	33,141

Assets Recognized from the Costs to Obtain a Contract with a Customer - The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in “other assets” on the consolidated balance sheets.

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

Effective June 10, 2013, all over-the-counter derivative contracts executed by the Company are cleared post-execution at the Chicago Mercantile Exchange (“CME”), a regulated clearinghouse. Clearing is a process by which a third-party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to-market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default.

Effective January 3, 2017, the CME amended its rulebooks to legally characterize variation margin payments for over-the-counter derivatives they clear as settlements of the derivatives’ exposure rather than collateral against the exposure. Based on these rulebook changes, for accounting and presentation purposes, the Company considers variation margin and the corresponding derivative instrument as a single unit of account. As such, effective January 3, 2017, the variation margin received or paid is no longer accounted for separately as a liability or asset ("collateralized-to-market"). Instead, these payments are considered in determining the fair value of the centrally cleared derivative portfolio ("settled-to-market"). The Company records settled-to-market derivative contracts on its balance sheet with a fair value of zero and no collateral posted due to the payment or receipt of variation margin between the Company and the CME settling the outstanding mark-to-market exposure on such derivatives to a balance of zero on a daily basis, and records the underlying daily changes in the market value of such derivative contracts that result in such receipts or payments on its income statement as realized derivative market value adjustments in "Derivative market value and foreign currency transaction adjustments and derivative settlements, net."

The Company records derivative instruments that are not required to be cleared at a clearinghouse (non-centrally cleared derivatives) in the consolidated balance sheets on a gross basis as either an asset or liability measured at its fair value. Certain

non-centrally cleared derivatives are subject to right of offset provisions with counterparties. For these derivatives, the Company does not offset fair value amounts executed with the same counterparty under a master netting arrangement. In addition, the Company does not offset fair value amounts recognized for derivative instruments with respect to the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable).

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 factors that impact the fair value of the Company's derivatives include interest rates, time value, forward interest rate curve, and volatility factors. Pricing models and their underlying assumptions impact the amount and timing of realized and 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 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 were 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 were included in “derivative market value and foreign currency adjustments and derivative settlements, net” on the consolidated statements of income. On October 25, 2017, the Company completed a remarketing of its Euro notes which reset the principal amount outstanding on the notes to U.S. dollars.

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. The Company uses the deferred method of accounting for its investment tax credits related to state tax incentives.

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.

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. Holders of restricted stock are entitled to receive dividends from the date of grant whether or not vested. The Company accounts for forfeitures as they occur.

The Company also has a directors stock compensation plan pursuant to which non-employee directors can elect to receive their annual retainer fees in the form of fully vested shares of Class A common stock, and also elect to defer receipt of such shares until the termination of their service on the board of directors. The fair value of grants under this plan is determined on the grant date based on the Company's stock price, and is expensed over the board member's annual service period.

Loans Receivable and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Loans Receivable and Allowance for Loan Losses

Loans receivable consisted of the following:


	As of December 31,
	2018		2017
Federally insured student loans:
Stafford and other	$	4,969,667	4,418,881
Consolidation	17,186,229		17,302,725
Total	22,155,896		21,721,606
Private education loans	225,975		212,160
Consumer loans	138,627		62,111
	22,520,498		21,995,877
Loan discount, net of unamortized loan premiums and deferred origination costs	(53,572)		(113,695)
Non-accretable discount (a)	(29,396)		(13,085)
Allowance for loan losses:
Federally insured loans	(42,310)		(38,706)
Private education loans	(10,838)		(12,629)
Consumer loans	(7,240)		(3,255)
	$	22,377,142	21,814,507

(a) At December 31, 2018 and 2017, the non-accretable discount related to purchased loan portfolios of $5.7 billion and $5.8 billion, respectively.

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 loans. Activity in the allowance for loan losses is shown below.


	Year ended December 31, 2018
	Balance at beginning of period		Provision for loan losses	Charge-offs	Recoveries	Other	Balance at end of period
Federally insured loans	$	38,706	14,000	(11,396)	—	1,000	42,310
Private education loans	12,629		—	(2,415)	624	—	10,838
Consumer loans	3,255		9,000	(5,056)	41	—	7,240
	$	54,590	23,000	(18,867)	665	1,000	60,388

	Year ended December 31, 2017
Federally insured loans	$	37,268	13,000	(11,562)	—	—	38,706
Private education loans	14,574		(2,000)	(1,313)	768	600	12,629
Consumer loans	—		3,450	(195)	—	—	3,255
	$	51,842	14,450	(13,070)	768	600	54,590

	Year ended December 31, 2016
Federally insured loans	$	35,490	14,000	(12,292)	—	70	37,268
Private education loans	15,008		(500)	(1,728)	954	840	14,574
Consumer loans	—		—	—	—	—	—
	$	50,498	13,500	(14,020)	954	910	51,842

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,
	2018						2017						2016
Federally insured loans:
Loans in-school/grace/deferment (a)	$	1,298,493			$	1,260,394			$	1,606,468
Loans in forbearance (b)	1,430,291				1,774,405				2,295,367
Loans in repayment status:
Loans current	16,882,252		86.9	%	16,477,004		88.2	%	18,125,768		86.6	%
Loans delinquent 31-60 days (c)	683,084		3.5		682,586		3.7		818,976		3.9
Loans delinquent 61-90 days (c)	427,764		2.2		374,534		2.0		487,647		2.3
Loans delinquent 91-120 days (c)	283,831		1.5		287,922		1.5		335,291		1.6
Loans delinquent 121-270 days (c)	806,692		4.2		629,480		3.4		854,432		4.1
Loans delinquent 271 days or greater (c)(d)	343,489		1.7		235,281		1.2		306,035		1.5
Total loans in repayment	19,427,112		100.0	%	18,686,807		100.0	%	20,928,149		100.0	%
Total federally insured loans	$	22,155,896			$	21,721,606			$	24,829,984
Private education loans:
Loans in-school/grace/deferment (a)	$	4,320			$	6,053			$	35,146
Loans in forbearance (b)	1,494				2,237				3,448
Loans in repayment status:
Loans current	208,977		95.0	%	196,720		96.5	%	228,612		97.2	%
Loans delinquent 31-60 days (c)	3,626		1.6		1,867		0.9		1,677		0.7
Loans delinquent 61-90 days (c)	1,560		0.7		1,052		0.5		1,110		0.5
Loans delinquent 91 days or greater (c)	5,998		2.7		4,231		2.1		3,666		1.6
Total loans in repayment	220,161		100.0	%	203,870		100.0	%	235,065		100.0	%
Total private education loans	$	225,975			$	212,160			$	273,659
Consumer loans:
Loans in repayment status:
Loans current	$	136,130	98.2	%	61,344		98.7	%
Loans delinquent 31-60 days (c)	1,012		0.7		289		0.5
Loans delinquent 61-90 days (c)	832		0.6		198		0.3
Loans delinquent 91 days or greater (c)	653		0.5		280		0.5
Total loans in repayment	138,627		100.0	%	62,111		100.0	%
Total consumer loans	$	138,627			$	62,111

(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

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Bonds and Notes Payable

4. Bonds and Notes Payable

The following tables summarize the Company’s outstanding debt obligations by type of instrument:


	As of December 31, 2018
	Carrying amount		Interest rate range	Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
Bonds and notes based on indices	$	20,192,123	2.59% - 4.52%	11/25/24 - 2/25/67
Bonds and notes based on auction	793,476		2.84% - 3.55%	3/22/32 - 11/26/46
Total FFELP variable-rate bonds and notes	20,985,599
FFELP warehouse facilities	986,886		2.65% / 2.71%	5/20/20 / 5/31/21
Variable-rate bonds and notes issued in private education loan asset-backed securitization	50,720		4.26%	12/26/40
Fixed-rate bonds and notes issued in private education loan asset-backed securitization	63,171		3.60% / 5.35%	12/26/40 / 12/28/43
Unsecured line of credit	310,000		3.92% - 4.01%	6/22/23
Unsecured debt - Junior Subordinated Hybrid Securities	20,381		6.17%	9/15/61
Other borrowings	120,342		3.05% - 5.22%	1/3/19 - 12/15/45
	22,537,099
Discount on bonds and notes payable and debt issuance costs	(318,359)
Total	$	22,218,740


	As of December 31, 2017
	Carrying amount		Interest rate range	Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
Bonds and notes based on indices	$	20,352,045	1.47% - 3.37%	8/25/21 - 2/25/66
Bonds and notes based on auction	780,829		2.09% - 2.69%	3/22/32 - 11/26/46
Total FFELP variable-rate bonds and notes	21,132,874
FFELP warehouse facilities	335,992		1.55% / 1.56%	11/19/19 / 5/31/20
Variable-rate bonds and notes issued in private education loan asset-backed securitization	74,717		3.30%	12/26/40
Fixed-rate bonds and notes issued in private education loan asset-backed securitization	82,647		3.60% / 5.35%	12/26/40 / 12/28/43
Unsecured line of credit	10,000		2.98%	12/12/21
Unsecured debt - Junior Subordinated Hybrid Securities	20,381		5.07%	9/15/61
Other borrowings	70,516		2.44% - 3.38%	1/12/18 - 12/15/45
	21,727,127
Discount on bonds and notes payable and debt issuance costs	(370,554)
Total	$	21,356,573

Secured Financing Transactions

The Company has historically relied upon secured financing vehicles as its most significant source of funding for loans. The net cash flow the Company receives from the securitized loans generally represents the excess amounts, if any, generated by the underlying 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 loans are subordinate to bondholder interests, and the securitized 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 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 the majority 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, 2018, the Company had two FFELP warehouse facilities as summarized below.


	NFSLW-I		NHELP-II	Total
Maximum financing amount	$	700,000	500,000	1,200,000
Amount outstanding	620,671		366,215	986,886
Amount available	$	79,329	133,785	213,114
Expiration of liquidity provisions	May 20, 2019		May 31, 2019
Final maturity date	May 20, 2020		May 31, 2021
Advanced as equity support	$	30,550	26,423	56,973

The FFELP warehouse facilities are supported by liquidity provisions, which are subject to the respective expiration date shown in the above 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 has a static advance rate until the expiration date of the liquidity provisions. In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor. The loans would then be funded at this new advance rate until the final maturity date of the facility. The NHELP-II warehouse facility has a static advance rate that requires initial equity for loan funding and does 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 2018 and 2017.


	Securitizations completed during the year ended December 31, 2018
	2018-1						2018-2	2018-3									2018-4	2018-5	Total
	Class A-1 Notes		Class A-2 Notes	2018-1 total		Class A-1 Notes	Class A-2 Notes	Class A-3 Notes	2018-3 total		Class A-1 Notes	Class A-2 Notes	2018-4 total
Date securities issued	3/29/18		3/29/18	3/29/18	6/7/18	7/26/18	7/26/18	7/26/18	7/26/18		8/30/18	8/30/18	8/30/18	12/13/18
Total original principal amount	$	98,000	375,750	473,750	509,800	220,000	546,900	220,000	1,001,900		30,500	451,900	495,700	511,500	$	2,992,650

Class A senior notes:
Total principal amount	$	98,000	375,750	473,750	509,800	220,000	546,900	220,000	986,900		30,500	451,900	482,400	498,000	2,950,850


Cost of funds (1-month LIBOR plus:)	0.32%		0.76%		0.65%	0.30%	0.44%	0.75%			0.26%	0.70%		0.68%
Final maturity date	5/25/66		5/25/66		7/26/66	9/27/66	9/27/66	9/27/66			10/25/66	10/25/66		2/25/67

Class B subordinated notes:
Total original principal amount									$	15,000			13,300	13,500	41,800
Bond discount									(229)				—	—	(229)
Issue price									$	14,771			13,300	13,500	41,571
Cost of funds (1-month LIBOR plus:)									1.20%				1.40%	1.45%
Final maturity date									9/27/66				10/25/66	2/25/67


	Securitizations completed during the year ended December 31, 2017
	2017-1		2017-2	2017-3	Total
Date securities issued	5/24/17		7/26/17	12/14/17
Total original principal amount	$	535,000	399,390	539,400	1,473,790
Bond discount	—		(2,002)	—	(2,002)
Issue price	$	535,000	397,388	539,400	1,471,788
Cost of funds (1-month LIBOR plus:)	0.78%		0.77%	0.85%
Final maturity date	6/25/65		9/25/65	2/25/66

Auction Rate Securities

The interest rates on certain of the Company's FFELP asset-backed securities are set and periodically reset via a "dutch auction" ("Auction Rate Securities"). As of December 31, 2018, the Company is currently the sponsor on $793.5 million of Auction Rate Securities. 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 financing documents.

Unsecured Line of Credit

The Company has an unsecured line of credit that has a maturity date of June 22, 2023. On December 14, 2018, the Company increased the aggregate amount it can borrow under this facility from $350.0 million to $382.5 million. As of December 31, 2018, $310.0 million was outstanding on the line of credit and $72.5 million was available for future use. Interest on amounts borrowed under the line of credit is payable, at the Company's election, at an alternate base rate or a Eurodollar rate, plus a variable rate (LIBOR), in each case as defined in the credit agreement. The initial margin applicable to Eurodollar borrowings is 150 basis points and may vary from 100 to 200 basis points depending on the Company's credit rating.

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 and consumer 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, 2018, 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 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 6.17% at December 31, 2018. 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.

Other Borrowings

During 2017, the Company entered into a repurchase agreement, the proceeds of which are collateralized by FFELP asset-backed security investments. Included in "other borrowings" as of December 31, 2018 and 2017, was $41.4 million and $50.4 million, respectively, subject to this repurchase agreement.

During 2018, the Company entered into a repurchase agreement, the proceeds of which are collateralized by private education loans. Included in "other borrowings" as of December 31, 2018 was $45.0 million subject to this repurchase agreement.

The Company has other notes payable included in its consolidated financial statements which were issued by partnerships in connection with the development of certain real estate projects in Lincoln, Nebraska, including a project involving Hudl, a related party. Although the Company's ownership of these partnerships are 50 percent or less, because the Company was the developer of and is a current tenant in these buildings, the operating results of these partnerships are included in the Company's consolidated financial statements. A summary of the notes outstanding related to these real estate entities as of December 31, 2018 is summarized below:

Issue

date

Issuer

Debt

outstanding

Amount recourse to the Company

Maturity

date

Interest

rate

December 30, 2015

TDP

$

12,000

$

3,000

March 31, 2023

3.38% - fixed

December 30, 2015

TDP

6,355

1,589

December 15, 2045

5.22% - fixed

October 1, 2017

TDP

1,685

421

March 31, 2023

5.22% - fixed

February 4, 2018

401 Building

504

March 7, 2019

1-month LIBOR plus 1.50%

February 7, 2018

401 Building

8,473

2,220

March 1, 2028

1-month LIBOR plus 1.50%

May 25, 2018

330-333 Building

2,804

—

May 25, 2033

3.99% - fixed

May 25, 2018

330-333 Building

2,113

—

March 25, 2034

3.99% - fixed

$

33,934

$

7,734

Debt Covenants

Certain bond resolutions and related credit agreements 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, 2018.

Maturity Schedule

Bonds and notes outstanding as of December 31, 2018 are due in varying amounts as shown below.


2019	$	86,408
2020	620,671
2021	366,215
2022	—
2023	323,685
2024 and thereafter	21,140,120
	$	22,537,099

Generally, the Company's secured financing instruments 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 (losses) recorded by the Company from the repurchase of debt are included in "gain from debt repurchases" on the Company’s consolidated statements of income.


	Par value		Purchase price	Gain (loss)	Par value	Purchase price	Gain (loss)	Par value	Purchase price	Gain (loss)
	Year ended December 31,
	2018						2017				2016
Unsecured debt - Hybrid Securities	$	—	—	—	29,803	25,357	4,446	7,000	4,865	2,135
Asset-backed securities	12,905		12,546	359	154,407	155,951	(1,544)	78,412	72,566	5,846
	$	12,905	12,546	359	184,210	181,308	2,902	85,412	77,431	7,981

Derivative Financial Instruments

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

The Company uses derivative financial instruments primarily to manage interest rate risk. In addition, the Company previously used derivative financial instruments to manage foreign currency exchange risk associated with student loan asset-backed notes that were denominated in Euros prior to a remarketing of such notes in October 2017.

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 periodically reviews 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

Interest earned on the majority of the Company's FFELP student loan assets is indexed to the one-month LIBOR rate. Meanwhile, the Company funds a portion of its FFELP loan assets with three-month LIBOR indexed floating rate securities. The differing interest rate characteristics of the Company's loan assets versus the liabilities funding these assets results in basis risk, which impacts the Company's excess spread earned on its loans.

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.

As of December 31, 2018, the Company had $20.6 billion, $1.0 billion, and $0.6 billion of FFELP loans indexed to the one-month LIBOR rate, three-month commercial paper rate, and the three-month treasury bill rate, respectively, the indices for which reset daily, and $9.9 billion of debt indexed to three-month LIBOR, the indices for which reset quarterly, and $10.3 billion of debt indexed to one-month LIBOR, the indices for which reset 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 December 31,
	2018		2017
Maturity	Notional amount		Notional amount
2018	$	—	4,250,000
2019	3,500,000		3,500,000
2020	1,000,000		—
2021	250,000		—
2022	2,000,000		1,000,000
2023	750,000		—
2024	250,000		250,000
2026	1,150,000		1,150,000
2027	375,000		375,000
2028	325,000		325,000
2029	100,000		100,000
2031	300,000		300,000
	$	10,000,000	11,250,000

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of December 31, 2018 and 2017, was one-month LIBOR plus 9.4 basis points and 12.5 basis points, respectively.

Interest rate swaps – floor income hedges

FFELP loans originated prior to April 1, 2006 generally earn interest at the higher of the borrower rate, which is fixed over a period of time, or a floating rate based on the Special Allowance Payments ("SAP") formula set by the Department. The SAP rate is based on an applicable index plus a fixed spread that depends on loan type, origination date, and repayment status. The Company generally finances its student loan portfolio with variable rate debt. In low and/or certain declining interest rate environments, when the fixed borrower rate is higher than the SAP rate, these student loans earn at a fixed rate while the interest on the variable rate debt typically continues to reflect the low and/or declining interest rates. 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. All FFELP loans first originated on or after April 1, 2006 effectively earn at the SAP rate, since lenders are required to rebate fixed rate floor income and variable rate floor income for these loans to the Department.

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 December 31, 2018 and 2017, the Company had $2.6 billion and $4.8 billion, respectively, of FFELP 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 4.24% and 3.17%, respectively.

The following table summarizes the outstanding derivative instruments used by the Company to economically hedge loans earning fixed rate floor income.


	As of December 31, 2018						As of December 31, 2017
Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)		Notional amount		Weighted average fixed rate paid by the Company (a)

2018	$	—	—	%	$	1,350,000	1.07	%
2019	3,250,000		0.97		3,250,000		0.97
2020	1,500,000		1.01		1,500,000		1.01
2021	100,000		2.95		—		—
2023	400,000		2.24		750,000		2.28
2024	300,000		2.28		300,000		2.28
2025	—		—		100,000		2.32
2027	25,000		2.35		50,000		2.32


	$	5,575,000	1.18	%	$	7,300,000	1.21	%

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

In addition, during 2014 and 2018, the Company paid $9.1 million and $4.6 million, respectively for interest rate swap options to economically hedge loans earning fixed rate floor income. The interest rate swap options give the Company the right, but not the obligation, to enter into interest rate swaps in which the Company would pay a fixed amount and receive discrete one-month LIBOR. The following table summarizes these derivative instruments as of December 31, 2018.


If exercised effective date	Notional amount		Weighted average fixed rate paid by the Company		If exercised maturity date

August 21, 2019	$	750,000	3.28	%	August 21, 2024
September 25, 2019	250,000		3.00		September 25, 2024
	$	1,000,000	3.21	%

Interest Rate Caps

In June 2015, in conjunction with the entry into a $275.0 million private education loan warehouse facility, the Company paid $2.9 million for two interest rate cap contracts with a total notional amount of $275.0 million. The first interest rate cap has a notional amount of $125.0 million and a one-month LIBOR strike rate of 2.50%, and the second interest rate cap has a notional amount of $150.0 million and a one-month LIBOR strike rate of 4.99%. In the event that the one-month LIBOR rate rises above the applicable strike rate, the Company would receive monthly payments related to the spread difference. Both interest rate cap contracts have a maturity date of July 15, 2020. The private education loan warehouse facility was terminated by the Company on December 21, 2016. During the first quarter of 2017, the Company received $913,000 to terminate the interest rate cap contracts that were held in the private education loan warehouse legal entity and paid $929,000 to enter into new interest rate cap contracts with identical terms at Nelnet, Inc. (the parent company). The Company currently intends to keep these derivatives outstanding to partially mitigate a rise in interest rates and its impact on earnings related to its student loan portfolio earning a fixed rate.

Interest rate swaps – unsecured debt hedges

As of both December 31, 2018 and 2017, the Company had $20.4 million of unsecured Hybrid Securities outstanding. The interest rate on the Hybrid Securities through September 29, 2036 is equal to three-month LIBOR plus 3.375%, payable quarterly. As of December 31, 2017, the Company had the following derivatives outstanding that were used to effectively convert the variable interest rate on a designated notional amount with respect to the Hybrid Securities to a fixed rate of 7.655%. These derivatives were terminated during the fourth quarter of 2018.


As of December 31, 2017
Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)
2036	$	25,000	4.28	%

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

Foreign Currency Exchange Risk

In 2006, the Company issued €352.7 million of student loan asset-backed Euro Notes (the "Euro Notes") with an interest rate based on a spread to the EURIBOR index. On October 25, 2017, the Company completed a remarketing of the Euro Notes which reset principal amount outstanding on the Euro Notes to $450.0 million U.S. dollars with an interest rate based on the three-month LIBOR index. As a result of the Euro Notes, the Company was 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 were re-measured at each reporting period and recorded in the Company’s consolidated 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 were included in the Company’s consolidated statements of income.

The Company entered into a cross-currency interest rate swap in connection with the issuance of the Euro Notes. On October 25, 2017, the Company terminated the cross-currency swap when the Euro Notes were remarketed. Under the terms of the cross-currency interest rate swap, the Company received from the counterparty a spread to the EURIBOR index based on a notional amount of €352.7 million and paid a spread to the LIBOR index based on a notional amount of $450.0 million.

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 instrument.



	2017		2016
Re-measurement of Euro Notes	$	(45,600)	11,849
Change in fair value of cross currency interest rate swap	34,208		(1,954)
Total impact to consolidated statements of income - (expense) income (a)	$	(11,392)	9,895

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

Management structured the cross-currency interest rate swap to economically hedge the Euro Notes to effectively convert the Euro Notes to U.S. dollars and pay a spread on these notes based on the LIBOR index. However, the cross-currency interest rate swap did not qualify for hedge accounting. The re-measurement of the Euro-denominated bonds generally correlated with the change in the fair value of the corresponding cross-currency interest rate swap. However, the Company experienced unrealized gains and losses between these financial instruments due to the principal and accrued interest on the Euro Notes being re-measured to U.S. dollars at each reporting date based on the foreign currency exchange rate on that date, while the cross-currency interest rate swap was measured at fair value at each reporting date with the change in fair value recognized in the current period earnings.

Consolidated Financial Statement Impact Related to Derivatives

Balance Sheet

The following table summarizes the fair value of the Company’s derivatives as reflected on the consolidated balance sheets.


	Fair value of asset derivatives				Fair value of liability derivatives
	As of		As of	As of	As of
	December 31, 2018		December 31, 2017	December 31, 2018	December 31, 2017


Interest rate swap options - floor income hedge	$	1,465	543	—	—
Interest rate caps	353		275	—	—
Interest rate swaps - hybrid debt hedges	—		—	—	7,063


Total	$	1,818	818	—	7,063

During the year ended December 31, 2018, the Company terminated certain derivatives for net proceeds of $10.3 million, including proceeds of $14.2 million on the termination of floor income hedges, and payments of $3.9 million on the termination of hybrid debt hedges. During the year ended December 31, 2017, the Company terminated certain derivatives for net payments of $30.4 million, including proceeds of $2.1 million and $0.9 million on the termination of 1:3 basis swaps and interest rate caps, respectively, and payments of $33.4 million on the termination of its cross-currency interest rate swap.

Offsetting of Derivative Assets/Liabilities

The following tables include the gross amounts related to the Company's derivative portfolio recognized in the consolidated balance sheets, reconciled to the net amount when excluding derivatives subject to enforceable master netting arrangements and cash collateral received/pledged:


			Gross amounts not offset in the consolidated balance sheets
Derivative assets	Gross amounts of recognized assets presented in the consolidated balance sheets		Derivatives subject to enforceable master netting arrangement	Cash collateral received	Net asset
Balance as of December 31, 2018	$	1,818	—	—	1,818
Balance as of December 31, 2017	818		—	—	818


			Gross amounts not offset in the consolidated balance sheets
Derivative liabilities	Gross amounts of recognized liabilities presented in the consolidated balance sheets		Derivatives subject to enforceable master netting arrangement	Cash collateral pledged	Net asset (liability)
Balance as of December 31, 2018	$	—	—	—	—
Balance as of December 31, 2017	(7,063)		—	8,520	1,457

Income Statement Impact

The following table summarizes the components of "derivative market value and foreign currency transaction adjustments and derivative settlements, net" included in the consolidated statements of income.


	Year ended December 31,
	2018		2017	2016
Settlements:
1:3 basis swaps	$	5,577	(3,069)	1,493
Interest rate swaps - floor income hedges	64,901		10,838	(17,643)
Interest rate swaps - hybrid debt hedges	(407)		(781)	(915)
Cross-currency interest rate swap	—		(6,321)	(4,884)
Total settlements - income (expense)	70,071		667	(21,949)
Change in fair value:
1:3 basis swaps	12,573		(8,224)	(2,938)
Interest rate swaps - floor income hedges	(10,962)		3,585	64,111
Interest rate swap options - floor income hedge	(3,848)		(2,433)	(281)
Interest rate caps	78		(893)	(419)
Interest rate swaps - hybrid debt hedges	3,173		279	304
Cross-currency interest rate swap	—		34,208	(1,954)
Other	—		(143)	1,072
Total change in fair value - income (expense)	1,014		26,379	59,895
Re-measurement of Euro Notes (foreign currency transaction adjustment) - (expense) income	—		(45,600)	11,849
Derivative market value and foreign currency transaction adjustments and derivative settlements, net - income (expense)	$	71,085	(18,554)	49,795

Derivative Instruments - Credit and Market Risk

New clearing requirements reduce counterparty risk associated with over-the-counter derivatives executed by the Company after June 10, 2013. For non-centrally cleared derivatives, the Company is exposed to credit risk.

When the fair value of a non-centrally cleared derivative is positive (an asset in the Company's consolidated 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 in the consolidated balance sheet.

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 for derivative instruments in the financial statements.

When the fair value of a non-centrally cleared derivative is negative (a liability in the Company's consolidated 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. The Company believes any downgrades from its current unsecured credit rating (Standard & Poor's: BBB- (stable outlook), Moody's: Ba1 (stable outlook), and DBRS: BBB (low) (stable outlook)), 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 ratings.

Interest rate movements have an impact on the amount of collateral the Company is required to deposit with its derivative instrument counterparties and variation margin payments to its third-party clearinghouse. The Company attempts to manage market risk associated with interest rates by establishing and monitoring limits as to the types and degree of risk that may be

undertaken. The Company's derivative portfolio and hedging strategy is reviewed periodically by its internal risk committee and board of directors' Risk and Finance Committee. With the Company's current derivative portfolio, the Company does not currently anticipate any movement in interest rates having a material impact on its liquidity or capital resources, nor expects future movements in interest rates to have a material impact on its ability to meet potential collateral deposits with its counterparties and variation margin payments to its third-party clearinghouse. 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 limits the Company's exposure to interest rate movements on the 1:3 Basis Swaps.

Investments and Notes Receivable

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Investments and Notes Receivable

6. Investments and Notes Receivable

A summary of the Company's investments and notes receivable follows:


	As of December 31, 2018
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value

Investments (at fair value):
Student loan asset-backed and other debt securities - available-for-sale (a)	$	47,931	5,109	—	53,040
Equity securities	12,909		5,145	(407)	17,647
Total investments (at fair value)	$	60,840	10,254	(407)	70,687

Other Investments and Notes Receivable (not measured at fair value):
Venture capital and funds:
Measurement alternative (b)					70,939
Equity method					19,230
Other					3,900
Total venture capital and funds					94,069
Real estate:
Equity method					29,168
Other					31,211
Total real estate					60,379

Notes receivable					16,373
Tax liens and affordable housing					7,862
Total investments and notes receivable (not measured at fair value)					178,683
Total investments and notes receivable					$	249,370


	As of December 31, 2017
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value

Investments (at fair value):
Available-for-sale investments:
Student loan asset-backed and other debt securities	$	71,943	5,056	(25)	76,974
Equity securities	1,630		2,298	—	3,928
Total available-for-sale investments	$	73,573	7,354	(25)	80,902
Other Investments and Notes Receivable (not measured at fair value):
Venture capital and funds					84,752
Real estate					49,464
Notes receivable					16,393
Tax liens and affordable housing					9,027
Total investments and notes receivable					$	240,538

(a) As of December 31, 2018, the stated maturities of substantially all of the Company's student loan asset-backed and other debt securities classified as available-for-sale were greater than 10 years.

(b) The Company accounts for all its equity securities without readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer (the measurement alternative method). During 2018, the Company recorded upward adjustments of $7.2 million on these investments which are included in "other income" in the consolidated statements of income. The upward adjustments were made as a result of observable price changes. The Company has also recorded $0.8 million in impairments in 2018 on these investments.

Business Combination

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Business Combination

Business Combinations

Great Lakes Educational Loan Services, Inc. ("Great Lakes")

On February 7, 2018, the Company acquired 100 percent of the outstanding stock of Great Lakes for total cash consideration of $150.0 million. Great Lakes provides servicing for federally-owned student loans for the Department of Education, FFELP loans, and private education loans. The acquisition of Great Lakes has expanded the Company's portfolio of loans it services. The operating results of Great Lakes are included in the Loan Servicing and Systems operating segment.

As part of the acquisition, the Company acquired the remaining 50 percent ownership in GreatNet, a joint venture formed prior to the acquisition between Nelnet Servicing, a subsidiary of the Company, and Great Lakes. Prior to the acquisition of the remaining 50 percent of GreatNet, the Company consolidated the operating results of GreatNet, as the Company was deemed to have control over the joint venture. The proportionate share of membership interest (equity) and net loss of GreatNet that was attributable to Great Lakes was reflected as a noncontrolling interest in the Company's consolidated financial statements. The Company recognized a $19.1 million reduction to consolidated shareholders' equity as a result of acquiring Great Lakes' 50 percent ownership in GreatNet. This transaction resulted in a $5.7 million decrease in noncontrolling interests and a $13.4 million decrease in retained earnings.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The fair value assigned to the acquisition of the noncontrolling interest in GreatNet reduced the total consideration allocated to the assets acquired and liabilities assumed of Great Lakes from $150.0 million to $136.6 million.


Cash and cash equivalents	$	27,399
Accounts receivable	23,708
Property and equipment	35,919
Other assets	14,018
Intangible assets	75,329
Excess cost over fair value of net assets acquired (goodwill)	15,043
Other liabilities	(54,865)
Net assets acquired	$	136,551

The $75.3 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 4 years. The intangible assets that made up this amount include customer relationships of $70.2 million (4-year average useful life) and a trade name of $5.1 million (7-year useful life).

The $15.0 million of goodwill was assigned to the Loan Servicing and Systems operating segment and is not expected to be deductible for tax purposes. The amount allocated to goodwill was primarily attributed to the deferred tax liability related to the difference between the carrying amount and tax bases of acquired identifiable intangible assets and the synergies and economies of scale expected from combining the operations of the Company and Great Lakes.

The Great Lakes assets acquired and liabilities assumed were recorded by the Company at their respective fair values at the date of acquisition, and Great Lakes' operating results from the date of acquisition forward are included in the Company's consolidated operating results. During 2018, the Company converted Great Lakes' FFELP and private education loan servicing volume to Nelnet Servicing's servicing platform. In addition, the Company began to combine certain shared services and overhead functions between Great Lakes and the Company. As a result of these operational changes, the results of operations for the year ended December 31, 2018 attributed to Great Lakes since the acquisition are not provided since the results of the Great Lakes legal entity are no longer reflective of the entity acquired.

The following unaudited pro forma information for the Company has been prepared as if the acquisition of Great Lakes had occurred on January 1, 2017. The information is based on the historical results of the separate companies and may not necessarily be indicative of the results that could have been achieved or of results that may occur in the future. The pro forma adjustments include the impact of depreciation and amortization of property and equipment and intangible assets acquired.


	Year ended December 31,
	2018		2017
Loan servicing and systems revenue	$	460,074	452,760

Net income attributable to Nelnet, Inc.	$	229,409	185,369

Net income per share - basic and diluted	$	5.61	4.44

Tuition Management Systems, LLC ("TMS")

On November 20, 2018, the Company acquired 100 percent of the membership interests of TMS for total cash consideration of $27.0 million. TMS provides tuition payment plans, billing services, payment technology solutions, and refund management to educational institutions. The TMS acquisition added both K-12 and higher education schools to the Company's existing customer base, further enhancing the Company's market share leading position with private faith based K-12 schools and advancing to a market leading position in higher education. The operating results of TMS are included in the Education Technology, Services, and Payment Processing operating segment from the date of acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.


Cash and cash equivalents	$	438
Restricted cash - due to customers	123,169
Accounts receivable	1,019
Other assets	381
Intangible assets	26,390
Excess cost over fair value of net assets acquired (goodwill)	3,110
Other liabilities	(4,321)
Due to customers	(123,169)
Net assets acquired	$	27,017

The $26.4 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 10 years. The intangible assets that made up this amount include customer relationships of $25.4 million (10-year useful life) and computer software of $1.0 million (2-year useful life).

The $3.1 million of goodwill was assigned to the Education Technology, Services, and Payment Processing operating segment and is expected to be deductible for tax purposes. The amount allocated to goodwill was primarily attributed to the synergies and economies of scale expected from combining the operations of the Company and TMS.

The pro forma impacts of the TMS acquisition on the Company's historical results prior to the acquisition were not material.

Intangible Assets

12 Months Ended

Dec. 31, 2018

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

8. Intangible Assets

Intangible assets consist of the following:


	Weighted average remaining useful life as of December 31, 2018 (months)	As of December 31,
				2018		2017
Amortizable intangible assets, net:
Customer relationships (net of accumulated amortization of $33,968 and $12,715, respectively)	84	$	98,484		24,168
Trade names (net of accumulated amortization of $5,825 and $2,498, respectively)	87	10,868			9,074
Computer software (net of accumulated amortization of $15,420 and $10,013, respectively)	22	4,938			4,958
Covenants not to compete (net of accumulated amortization of $127)	—	—			227
Total - amortizable intangible assets, net	81	$	114,290		38,427

The Company recorded amortization expense on its intangible assets of $30.2 million, $9.4 million, and $11.6 million during the years ended December 31, 2018, 2017, and 2016, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of December 31, 2018, the Company estimates it will record amortization expense as follows:


2019	$	32,757
2020	29,515
2021	18,761
2022	7,172
2023	6,925
2024 and thereafter	19,160
	$	114,290

Goodwill

12 Months Ended

Dec. 31, 2018

Goodwill [Abstract]

Goodwill

The change in the carrying amount of goodwill by reportable operating segment was as follows:


	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management (a)	Corporate and Other Activities	Total
Balance as of December 31, 2016	$	8,596	67,168	21,112	41,883	8,553	147,312
Impairment expense	—		—	—	—	(3,626)	(3,626)
Sale of Peterson's	—		—	—	—	(4,927)	(4,927)

Balance as of December 31, 2017	8,596		67,168	21,112	41,883	—	138,759
Goodwill acquired	15,043		3,110	—	—	—	18,153

Balance as of December 31, 2018	$	23,639	70,278	21,112	41,883	—	156,912

(a) As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans, and net interest income from the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down. As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio. Management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units.

The Company reviews goodwill for impairment annually. This annual review is completed by the Company as of November 30 of each year and whenever triggering events or changes in circumstances indicate its carrying value may not be recoverable. On November 30, 2017, due to the anticipated sale of Peterson's, the Company recognized an impairment expense of $3.6 million related to goodwill initially recorded upon the acquisition of Peterson's. On December 31, 2017, the Company sold Peterson's for $5.0 million in cash. The impairment expense recognized by the Company is included in "other expenses" in the consolidated statements of income.

For the 2018 annual review of goodwill, the Company assessed qualitative factors and concluded it was not more likely than not that the fair value of its reporting units were less than their carrying amount. As such, the Company was not required to perform further impairment testing and concluded there was no impairment of goodwill.

Property and Equipment

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consisted of the following:


		As of December 31,
	Useful life	2018		2017
Non-communications:
Computer equipment and software	1-5 years	$	137,705	124,708
Building and building improvements	5-48 years	50,138		24,003
Office furniture and equipment	1-10 years	22,796		15,210
Leasehold improvements	1-15 years	9,327		7,759
Transportation equipment	4-10 years	5,123		3,813
Land	—	3,328		2,628
Construction in progress	—	3,578		4,127
		231,995		182,248
Accumulated depreciation - non-communications		(123,003)		(105,017)
Non-communications, net property and equipment		108,992		77,231

Communications:
Network plant and fiber	5-15 years	215,787		138,122
Customer located property	5-10 years	21,234		13,767
Central office	5-15 years	15,688		10,754
Transportation equipment	4-10 years	6,580		5,759
Computer equipment and software	1-5 years	4,943		3,790
Other	1-39 years	3,219		2,516
Land	—	70		70
Construction in progress	—	6,344		11,620
		273,865		186,398
Accumulated depreciation - communications		(38,073)		(15,578)
Communications, net property and equipment		235,792		170,820
Total property and equipment, net		$	344,784	248,051

The Company recorded depreciation expense on its property and equipment of $56.7 million, $30.2 million, and $22.4 million during the years ended December 31, 2018, 2017, and 2016, respectively.

Impairment charges

As part of integrating technology and becoming more efficient and effective in meeting borrower needs, the Company continues to evaluate the best use of its servicing systems on a post-Great Lakes acquisition basis. As a result of this evaluation, in 2018, the Company recorded an impairment charge of $3.9 million within its Loan Servicing and Systems operating segment related to certain external software development costs that were previously capitalized.

On October 16, 2018, the Company terminated its investment in a proprietary payment processing platform. This decision was made as a result of decreases in price and advancements of technology by established processors in the industry. As a result of this decision, in 2018, the Company recorded an impairment charge of $7.8 million. The charge primarily represents computer equipment and external software development costs related to the payment processing platform. The decision does not impact the Company's existing payment processing revenue or customers.

The above impairment charges are included in "other expenses" in the consolidated statements of income.

Shareholders' Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Stockholders' Equity

Shareholders’ Equity

Classes of Common Stock

The Company's common stock is divided into two classes. The Class B common stock has ten votes per share and the Class A common stock has one vote per share on all matters to be voted on by the Company's shareholders. Each Class B share is convertible at any time at the holder's option into one Class A share. With the exception of the voting rights and the conversion feature, the Class A and Class B shares are identical in terms of other rights, including dividend and liquidation rights.

Stock Repurchases

The Company has a stock repurchase program that expires on May 25, 2019 in which it can repurchase up to five million shares of its Class A common stock on the open market, through private transactions, or otherwise. As of December 31, 2018, 2.3 million shares may still be purchased under the Company's stock repurchase program. Shares repurchased by the Company during 2018, 2017, and 2016 are shown in the table below. 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.


	Total shares repurchased	Purchase price (in thousands)		Average price of shares repurchased (per share)
Year ended December 31, 2018	868,147	$	45,331	$	52.22
Year ended December 31, 2017	1,473,054	68,896		46.77
Year ended December 31, 2016	2,038,368	69,091		33.90

Earnings per Common Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

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 in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock.


	Year ended December 31,
	2018						2017				2016
	Common shareholders		Unvested restricted stock shareholders	Total	Common shareholders	Unvested restricted stock shareholders	Total	Common shareholders	Unvested restricted stock shareholders	Total
Numerator:
Net income attributable to Nelnet, Inc.	$	225,170	2,743	227,913	171,442	1,724	173,166	254,063	2,688	256,751

Denominator:
Weighted-average common shares outstanding - basic and diluted	40,416,719		492,303	40,909,022	41,375,964	415,977	41,791,941	42,222,335	446,735	42,669,070
Earnings per share - basic and diluted	$	5.57	5.57	5.57	4.14	4.14	4.14	6.02	6.02	6.02

Unvested restricted stock awards are the Company's only potential common shares and, accordingly, there were no awards that were antidilutive and not included in average shares outstanding for the diluted earnings per share calculation.

As of December 31, 2018, a cumulative amount of 182,199 shares have been deferred by non-employee directors under the Directors Stock Compensation Plan and will become issuable upon the termination of service by the respective non-employee director on the board of directors. These shares are included in the Company's weighted average shares outstanding calculation.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The Company is subject to income taxes in the United States, Canada, and Australia. Significant judgment is required in evaluating the Company's tax positions and determining the provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.

As required by the Income Taxes Topic of the FASB Accounting Standards Codification ("ASC Topic 740"), the Company recognizes in the consolidated financial statements only those tax positions determined to be more likely than not of being sustained upon examination, based on the technical merits of the positions. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of such change.

As of December 31, 2018, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $23.4 million, which is included in “other liabilities” on the consolidated balance sheet. Of this total, $18.5 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. The Company currently anticipates uncertain tax positions will decrease by $5.2 million prior to December 31, 2019 as a result of a lapse of applicable statutes of limitations, settlements, correspondence with examining authorities, and recognition or measurement considerations with federal and state jurisdictions; however, actual developments in this area could differ from those currently expected. Of the anticipated $5.2 million decrease, $4.1 million, if recognized, would favorably affect the Company's effective tax rate. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows:


	Year ended December 31,
	2018		2017
Gross balance - beginning of year	$	28,421	28,004
Additions based on tax positions of prior years	1,405		145
Additions based on tax positions related to the current year	2,044		2,903
Settlements with taxing authorities	(915)		—
Reductions for tax positions of prior years	(5,109)		(356)

Reductions due to lapse of applicable statutes of limitations	(2,401)		(2,275)
Gross balance - end of year	$	23,445	28,421

All the reductions shown in the table above that are due to prior year tax positions, settlements, and the lapse of statutes of limitations impacted the effective tax rate.

The Company's policy is to recognize interest and penalties accrued on uncertain tax positions as part of interest expense and other expense, respectively. As of December 31, 2018 and 2017, $4.9 million and $4.5 million in accrued interest and penalties, respectively, were included in “other liabilities” on the consolidated balance sheets. The Company recognized interest expense of $0.4 million, $0.8 million, and $0.3 million related to uncertain tax positions for the years ended December 31, 2018, 2017, and 2016, respectively. The impact to the consolidated statements of income related to penalties for uncertain tax positions was not significant for the years 2018, 2017, and 2016. The impact of timing differences and tax attributes are considered when calculating interest and penalty accruals associated with the unrecognized tax benefits.

The Company and its subsidiaries file a consolidated federal income tax return in the U.S. and the Company or one of its subsidiaries files income tax returns in various state, local, and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2015. The Company is no longer subject to U.S. state and local income tax examinations by tax authorities prior to 2010. As of December 31, 2018, the Company has tax uncertainties that remain unsettled in the jurisdictions of California (2010 through 2015) and Maine (2011 through 2016).

The provision for income taxes consists of the following components:


	Year ended December 31,
	2018		2017	2016
Current:
Federal	$	45,822	65,196	111,302
State	1,969		1,246	3,019
Foreign	(2)		(35)	(13)
Total current provision	47,789		66,407	114,308

Deferred:
Federal	11,783		(8,270)	25,423
State	(883)		6,618	1,976
Foreign	81		108	(394)
Total deferred provision	10,981		(1,544)	27,005
Provision for income tax expense	$	58,770	64,863	141,313

The differences between the income tax provision computed at the statutory federal corporate tax rate and the financial statement provision for income taxes are shown below:


	Year ended December 31,
	2018		2017		2016
Tax expense at federal rate	21.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
State tax, net of federal income tax benefit	2.4		1.6		1.1
Tax credits	(1.9)		(1.3)		(0.6)
Provision for uncertain federal and state tax matters	(1.0)		—		—
Reduction of statutory federal rate (a)	—		(8.0)		—
Effective tax rate	20.5	%	27.3	%	35.5	%

(a) The Tax Cuts and Jobs Act (the “Tax Act”), signed into law on December 22, 2017, changes existing United States tax law and includes numerous provisions that affect businesses, including the Company. The Tax Act, for instance, introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits.

The Company accounted for the change in tax laws in accordance with ASC Topic 740 that provides guidance that a change in tax law or rates be recognized in the financial reporting period that includes the enactment date, which is the date the changes were signed into law. The income tax accounting effect of a change in tax laws or tax rates includes, for example, adjusting (or re-measuring) deferred tax liabilities and deferred tax assets, as well as evaluating whether a valuation allowance is needed for deferred tax assets. The Company re-measured its deferred tax liabilities and deferred tax assets as of December 22, 2017 resulting in a decrease to income tax expense of $19.3 million. The Company determined no valuation allowance was needed for any deferred tax assets as a result of the Act.

The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:


	As of December 31,
	2018		2017
Deferred tax assets:
Deferred revenue	$	16,633	3,246
Student loans	15,054		13,532
Accrued expenses	3,254		2,246
Stock compensation	2,041		1,744
Securitizations	2,014		2,970
Intangible assets	—		2,899
Total gross deferred tax assets	38,996		26,637
Less valuation allowance	(527)		(254)
Net deferred tax assets	38,469		26,383
Deferred tax liabilities:
Partnership basis	47,488		21,474
Basis in certain derivative contracts	22,042		23,051
Intangible assets	9,903		—
Depreciation	9,469		4,958
Loan origination services	6,243		8,001
Debt and equity investments	1,363		1,767
Debt repurchases	—		3,856
Other	644		823
Total gross deferred tax liabilities	97,152		63,930
Net deferred tax asset (liability)	$	(58,683)	(37,547)

The Company has performed an evaluation of the recoverability of deferred tax assets. In assessing the realizability of the Company's deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected taxable income, carry back opportunities, and tax planning strategies in making the assessment of the amount of the valuation allowance. With the exception of a portion of the Company's state net operating loss, it is management's opinion that it is more likely than not that the deferred tax assets will be realized and should not be reduced by a valuation allowance. The amount of deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

As of December 31, 2018 and 2017, the Company had a current income tax receivable of $6.4 million and $42.4 million, respectively, that is included in "other assets" on the consolidated balance sheets.

Segment Reporting

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Reporting

14. Segment Reporting

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

• Loan Servicing and Systems

• Education Technology, Services, and Payment Processing

• Communications

• Asset Generation and Management

The Company earns fee-based revenue through its Loan Servicing and Systems, Education Technology, Services, and Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its loan portfolio in its Asset Generation and Management operating segment.

The Company’s operating segments are defined by the products and services they offer and the types of customers they serve, and they reflect the manner in which financial information is currently evaluated by management. See note 1, "Description of Business," for a description of each operating segment, including the primary products and services offered.

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

The accounting policies of the Company’s operating segments are the same as those described in the summary of significant accounting policies. 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. As a result of the Tax Cuts and Jobs Act, beginning January 1, 2018, income taxes are allocated based on 24% of income before taxes for each individual operating segment. Prior to January 1, 2018, income taxes were allocated based on 38% of income before taxes for each individual operating segment. The difference between the consolidated income tax expense and the sum of taxes calculated for each operating segment is included in income taxes in Corporate and Other Activities.

Corporate and Other Activities

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

•Income earned on certain investment activities, including real estate

•Interest expense incurred on unsecured debt transactions

•Other product and service offerings that are not considered reportable operating segments including, but not limited to, WRCM, the SEC-registered investment advisor subsidiary

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

Segment Results

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


	Year ended December 31, 2018
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	1,351	4,453	4	911,502	19,944	(12,989)	924,266
Interest expense	—		9	9,987	662,360	10,540	(12,989)	669,906
Net interest income	1,351		4,444	(9,983)	249,142	9,404	—	254,360
Less provision for loan losses	—		—	—	23,000	—	—	23,000
Net interest income (loss) after provision for loan losses	1,351		4,444	(9,983)	226,142	9,404	—	231,360
Other income:
Loan servicing and systems revenue	440,027		—	—	—	—	—	440,027
Intersegment servicing revenue	47,082		—	—	—	—	(47,082)	—
Education technology, services, and payment processing revenue	—		221,962	—	—	—	—	221,962
Communications revenue	—		—	44,653	—	—	—	44,653
Other income	7,284		—	1,075	12,364	33,724	—	54,446
Gain from debt repurchases	—		—	—	359	—	—	359
Derivative settlements, net	—		—	—	70,478	(407)	—	70,071
Derivative market value and foreign currency transaction adjustments, net	—		—	—	(2,159)	3,173	—	1,014
Total other income	494,393		221,962	45,728	81,042	36,490	(47,082)	832,532
Cost of services:
Cost to provide education technology, services, and payment processing services	—		59,566	—	—	—	—	59,566
Cost to provide communications services	—		—	16,926	—	—	—	16,926
Total cost of services	—		59,566	16,926	—	—	—	76,492
Operating expenses:
Salaries and benefits	267,458		81,080	18,779	1,526	67,336	—	436,179
Depreciation and amortization	32,074		13,484	23,377	—	17,960	—	86,896
Loan servicing fees to third parties	—		—	—	12,059	—	—	12,059
Other expenses	67,336		28,137	11,900	3,902	54,697	—	165,972
Intersegment expenses, net	59,042		10,681	2,578	47,870	(73,088)	(47,082)	—
Total operating expenses	425,910		133,382	56,634	65,357	66,905	(47,082)	701,106
Income (loss) before income taxes	69,834		33,458	(37,815)	241,827	(21,011)	—	286,294
Income tax (expense) benefit	(16,954)		(8,030)	9,075	(58,038)	15,177	—	(58,770)
Net income (loss)	52,880		25,428	(28,740)	183,789	(5,834)	—	227,524
Net loss (income) attributable to noncontrolling interests	808		—	—	—	(419)	—	389
Net income (loss) attributable to Nelnet, Inc.	$	53,688	25,428	(28,740)	183,789	(6,253)	—	227,913

Total assets as of December 31, 2018	$	226,445	471,719	286,816	23,806,321	563,841	(134,174)	25,220,968


	Year ended December 31, 2017
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	513	17	3	764,225	13,643	(7,976)	770,426
Interest expense	3		—	5,427	464,256	3,477	(7,976)	465,188
Net interest income	510		17	(5,424)	299,969	10,166	—	305,238
Less provision for loan losses	—		—	—	14,450	—	—	14,450
Net interest income (loss) after provision for loan losses	510		17	(5,424)	285,519	10,166	—	290,788
Other income:
Loan servicing and systems revenue	223,000		—	—	—	—	—	223,000
Intersegment servicing revenue	41,674		—	—	—	—	(41,674)	—
Education technology, services, and payment processing revenue	—		193,188	—	—	—	—	193,188
Communications revenue	—		—	25,700	—	—	—	25,700
Other income	—		—	—	13,424	39,402	—	52,826
Gain (loss) from debt repurchases	—		—	—	(1,567)	4,469	—	2,902
Derivative settlements, net	—		—	—	1,448	(781)	—	667
Derivative market value and foreign currency transaction adjustments, net	—		—	—	(19,357)	136	—	(19,221)
Total other income	264,674		193,188	25,700	(6,052)	43,226	(41,674)	479,062
Cost of services:
Cost to provide education technology, services, and payment processing services	—		48,678	—	—	—	—	48,678
Cost to provide communications revenue	—		—	9,950	—	—	—	9,950
Total cost of services	—		48,678	9,950	—	—	—	58,628
Operating expenses:
Salaries and benefits	156,256		69,500	14,947	1,548	59,633	—	301,885
Depreciation and amortization	2,864		9,424	11,835	—	15,418	—	39,541
Loan servicing fees to third parties	—		—	—	22,734	—	—	22,734
Other expenses	39,126		17,897	8,074	3,900	51,381	—	120,378
Intersegment expenses, net	31,871		9,079	2,101	42,830	(44,208)	(41,674)	—
Total operating expenses	230,117		105,900	36,957	71,012	82,224	(41,674)	484,538
Income (loss) before income taxes	35,067		38,627	(26,631)	208,455	(28,832)	—	226,684
Income tax (expense) benefit	(18,128)		(14,678)	10,120	(79,213)	37,036	—	(64,863)
Net income (loss)	16,939		23,949	(16,511)	129,242	8,204	—	161,821
Net loss (income) attributable to noncontrolling interests	12,640		—	—	—	(1,295)	—	11,345
Net income (loss) attributable to Nelnet, Inc.	$	29,579	23,949	(16,511)	129,242	6,909	—	173,166

Total assets as of December 31, 2017	$	122,330	250,351	214,336	22,910,974	877,859	(411,415)	23,964,435


	Year ended December 31, 2016
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	111	9	1	754,788	10,913	(5,076)	760,746
Interest expense	—		—	1,271	385,913	6,076	(5,076)	388,183
Net interest income	111		9	(1,270)	368,875	4,837	—	372,563
Less provision for loan losses	—		—	—	13,500	—	—	13,500
Net interest income (loss) after provision for loan losses	111		9	(1,270)	355,375	4,837	—	359,063
Other income:
Loan servicing and systems revenue	214,846		—	—	—	—	—	214,846
Intersegment servicing revenue	45,381		—	—	—	—	(45,381)	—
Education technology, services, and payment processing revenue	—		175,682	—	—	—	—	175,682
Communications revenue	—		—	17,659	—	—	—	17,659

Other income	—		—	—	15,709	42,547	—	58,255
Gain from debt repurchases	—		—	—	5,846	2,135	—	7,981
Derivative settlements, net	—		—	—	(21,034)	(915)	—	(21,949)
Derivative market value and foreign currency transaction adjustments, net	—		—	—	70,368	1,376	—	71,744
Total other income	260,227		175,682	17,659	70,889	45,143	(45,381)	524,218
Cost of services:
Cost to provide education technology, services, and payment processing services	—		44,316	—	—	—	—	44,316
Cost to provide communications services	—		—	6,866	—	—	—	6,866

Total cost of services	—		44,316	6,866	—	—	—	51,182
Operating expenses:
Salaries and benefits	132,072		62,329	7,649	1,985	51,889	—	255,924
Depreciation and amortization	1,980		10,595	6,060	—	15,298	—	33,933
Loan servicing fees to third parties	—		—	—	25,750	—	—	25,750
Other expenses	40,715		17,122	4,370	6,005	49,466	—	117,678
Intersegment expenses, net	24,204		6,615	958	46,494	(32,889)	(45,381)	—
Total operating expenses	198,971		96,661	19,037	80,234	83,764	(45,381)	433,285
Income (loss) before income taxes	61,367		34,714	(9,514)	346,030	(33,784)	—	398,814
Income tax (expense) benefit	(23,319)		(13,191)	3,615	(131,492)	23,074	—	(141,313)
Net income (loss)	38,048		21,523	(5,899)	214,538	(10,710)	—	257,501
Net loss (income) attributable to noncontrolling interests	—		—	—	—	(750)	—	(750)
Net income (loss) attributable to Nelnet, Inc.	$	38,048	21,523	(5,899)	214,538	(11,460)	—	256,751

Total assets as of December 31, 2016	$	55,469	230,283	103,104	26,378,467	682,459	(256,687)	27,193,095

Major Customer	12 Months Ended
Major Customer	Dec. 31, 2018
Risks and Uncertainties [Abstract]
Major Customer	Major Customer Nelnet Servicing earns loan servicing revenue from a servicing contract with the Department that is currently scheduled to expire on June 16, 2019. Revenue earned by Nelnet Servicing related to this contract was $157.1 million, $155.8 million, and $151.7 million for the years ended December 31, 2018, 2017, and 2016, respectively. In addition, Great Lakes, which was acquired by the Company on February 7, 2018, also earns loan servicing revenue from a similar servicing contract with the Department that is currently scheduled to expire on June 16, 2019. Revenue earned by Great Lakes related to this contract was $168.3 million for the period from February 7, 2018 to December 31, 2018. On February 20, 2018, the Department’s Office of Federal Student Aid ("FSA") released information regarding a contract procurement process entitled Next Generation Financial Services Environment (“NextGen”) for the servicing of all student loans owned by the Department. On August 24, August 27, and September 24, 2018, FSA made announcements that included canceling certain components of the original NextGen process and issuing a solicitation for a separate new procurement process for certain of those NextGen components that were canceled. On January 15, 2019, FSA released an amendment canceling all components of NextGen except the Enterprise-Wide Digital and Customer Care Platforms and Services component and issued new solicitations for three new NextGen components: •NextGen Enhanced Processing Solution •NextGen Business Process Operations •NextGen Optimal Processing Solution On February 20, 2019, FSA awarded the Enterprise-Wide Digital and Customer Care Platforms and Services component to Accenture Federal Services. The Company is part of teams that currently intend to respond to the solicitations for each of the three ongoing NextGen components. The Company cannot predict the timing, nature, or outcome of these solicitations.

Leases

12 Months Ended

Dec. 31, 2018

Leases [Abstract]

Leases

The Company leases certain office space and equipment under operating leases. As operating leases expire, it is expected that they will be replaced with similar leases. Future minimum lease payments under these leases are shown below:


2019	$	9,181
2020	8,261
2021	5,776
2022	3,745
2023	2,904
2024 and thereafter	5,479
Total minimum lease payments	$	35,346

Total rental expense incurred by the Company for the years ended December 31, 2018, 2017, and 2016 was $8.4 million, $5.7 million, and $6.0 million, respectively.

Defined Contribution Benefit Plan	12 Months Ended
Defined Contribution Benefit Plan	Dec. 31, 2018
Retirement Benefits [Abstract]
Defined Contribution Benefit Plan	Defined Contribution Benefit PlanThe Company has a 401(k) savings plan that covers substantially all of its employees. Employees may contribute up to 100 of their pre-tax salary, subject to IRS limitations. The Company matches up to 100 percent on the first 3 percent of contributions and 50 percent on the next 2 percent. The Company made contributions to the plan of $9.8 million, $6.2 million, and $5.1 million during the years ended December 31, 2018, 2017, and 2016, respectively.

Stock Based Compensation Plans

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation Plan

Stock Based Compensation Plans

Restricted Stock Plan

The following table summarizes restricted stock activity:


	Year ended December 31,
	2018	2017	2016
Non-vested shares at beginning of year	398,210	447,380	471,597
Granted	279,441	107,237	123,181
Vested	(100,035)	(131,988)	(113,507)
Canceled	(45,280)	(24,419)	(33,891)
Non-vested shares at end of year	532,336	398,210	447,380

As of December 31, 2018, there was $15.7 million of unrecognized compensation cost included in equity on the consolidated balance sheet related to restricted stock, which is expected to be recognized as compensation expense in future periods as shown in the table below.


2019	$	5,749
2020	3,418
2021	2,282
2022	1,539
2023	1,040
2024 and thereafter	1,710
	$	15,738

For the years ended December 31, 2018, 2017, and 2016, the Company recognized compensation expense of $6.2 million, $4.2 million, and $4.1 million, respectively, related to shares issued under the restricted stock plan, which is included in "salaries and benefits" on the consolidated statements of income.

Employee Share Purchase Plan

The Company has an employee share purchase plan pursuant to which employees are entitled to purchase Class A common stock from payroll deductions at a 15 percent discount from market value. During the years ended December 31, 2018, 2017, and 2016, the Company recognized compensation expense of $0.3 million, $0.2 million, and $0.3 million respectively, in connection with issuing 28,744 shares, 16,989 shares, and 25,551 shares, respectively, under this plan, which is included in "salaries and benefits" on the consolidated statements of income.

Non-employee Directors Compensation Plan

The Company has a compensation plan for non-employee directors pursuant to which non-employee directors can elect to receive their annual retainer fees in the form of cash or Class A common stock. If a non-employee director elects to receive Class A common stock, the number of shares of Class A common stock that are awarded is equal to the amount of the annual retainer fee otherwise payable in cash divided by 85 percent of the fair market value of a share of Class A common stock on the date the fee is payable. Non-employee directors who choose to receive Class A common stock may also elect to defer receipt of the Class A common stock until termination of their service on the board of directors.

For the years ended December 31, 2018, 2017, and 2016, the Company recognized $1.0 million, $0.9 million, and $0.9 million, respectively, of expense related to this plan, which is included in "other expenses" on the consolidated statements of income. The following table provides the number of shares awarded under this plan for the years ended December 31, 2018, 2017, and 2016.


	Shares issued - not deferred	Shares- deferred	Total
Year ended December 31, 2018	8,029	10,680	18,709
Year ended December 31, 2017	6,855	10,974	17,829
Year ended December 31, 2016	10,799	13,644	24,443

As of December 31, 2018, a cumulative amount of 182,199 shares have been deferred by directors and will be issued upon the termination of their service on the board of directors. These shares are included in the Company's weighted average shares outstanding calculation.

Related Parties	12 Months Ended
Related Parties	Dec. 31, 2018
Related Party Transactions [Abstract]
Related Parties	Related Parties (dollar amounts in this note are not in thousands) Transactions with Union Bank and Trust Company Union Bank and Trust Company ("Union Bank") is controlled by Farmers & Merchants Investment Inc. (“F&M”), which owns a majority of Union Bank's common stock and a minority share of Union Bank's non-voting preferred stock. Michael S. Dunlap, Executive Chairman and a member of the board of directors and a significant shareholder of the Company, along with his spouse and children, owns or controls a significant portion of the stock of F&M, and Mr. Dunlap's sister, Angela L. Muhleisen, along with her spouse and children, also owns or controls a significant portion of F&M stock. Mr. Dunlap serves as a Director and Chairman of F&M. Ms. Muhleisen serves as a Director and Chief Executive Officer of F&M and as a Director, Chairperson, President, and Chief Executive Officer of Union Bank. Union Bank is deemed to have beneficial ownership of a significant number of shares of the Company because it serves in a capacity of trustee or account manager for various trusts and accounts holding shares of the Company, and may share voting and/or investment power with respect to such shares. Mr. Dunlap and Ms. Muhleisen beneficially own a significant percent of the voting rights of the Company's outstanding common stock. The Company has entered into certain contractual arrangements with Union Bank. These transactions are summarized below. Loan Purchases The Company purchased $74.7 million (par value), $13.2 million (par value), and $29.6 million (par value) of private education and consumer loans from Union Bank in 2018, 2017, and 2016, respectively. On August 22, 2018, the Company entered into agreements with Union Bank in which the Company will provide marketing, origination, and loan servicing services to Union Bank related to private education loans. The Company has committed to purchase, or arrange for a designee to purchase, a 95% participation interest in private education loans originated by Union Bank under these agreements upon a request for purchase by Union Bank. In addition, Union Bank has agreed to sell a 95% participation interest in private education loans originated by Union Bank under these agreements to the Company or its designee upon a request for sale by the Company. As of December 31, 2018, $1.5 million (par value) of private education loans has been originated by the Company under these agreements and are currently owned by Union Bank. Union Bank paid approximately $26,000 in marketing and origination fees to the Company in 2018 under these agreements. Loan Servicing The Company serviced $405.5 million, $462.3 million, and $483.8 million of FFELP and private education loans for Union Bank as of December 31, 2018, 2017, and 2016, respectively. Servicing revenue earned by the Company from servicing loans for Union Bank was $0.5 million, $0.5 million, and $0.6 million for the years ended December 31, 2018, 2017, and 2016, respectively. Funding - Participation Agreement The Company maintains an agreement with Union Bank, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans (the “FFELP Participation Agreement”). The Company uses this facility as a source to fund FFELP student loans. As of December 31, 2018 and 2017, $664.3 million and $552.6 million, respectively, of loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. The agreement automatically renews annually and is terminable by either party upon five business days' notice. This agreement provides beneficiaries of Union Bank's grantor trusts with access to investments in interests in student loans, while providing liquidity to the Company on a short-term basis. The Company can participate loans to Union Bank to the extent of availability under the grantor trusts, up to $750 million or an amount in excess of $750 million if mutually agreed to by both parties. Loans participated under this agreement 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. Operating Cash Accounts The majority of the Company's cash operating accounts are maintained at Union Bank. The Company also invests amounts in the Short term Federal Investment Trust (“STFIT”) of the Student Loan Trust Division of Union Bank, which are included in “cash and cash equivalents - held at a related party” and “restricted cash - due to customers” on the accompanying consolidated balance sheets. As of December 31, 2018 and 2017, the Company had $147.2 million and $115.8 million, respectively, invested in the STFIT or deposited at Union Bank in operating accounts, of which $35.3 million and $56.0 million as of December 31, 2018 and 2017, respectively, represented cash collected for customers. Interest income earned by the Company on the amounts invested in the STFIT and in cash operating accounts for the years ended December 31, 2018, 2017, and 2016, was $1.0 million, $0.9 million, and $0.4 million, respectively. 529 Plan Administration Services The Company provides certain 529 Plan administration services to certain college savings plans (the “College Savings Plans”) through a contract with Union Bank, as the program manager. Union Bank is entitled to a fee as program manager pursuant to its program management agreement with the College Savings Plans. For the years ended December 31, 2018, 2017, and 2016, the Company has received fees of $3.2 million, $2.0 million, and $1.6 million, respectively, from Union Bank related to the administration services provided to the College Savings Plans. Lease Arrangements Union Bank leases approximately 4,000 square feet in the Company's corporate headquarters building. Union Bank paid the Company approximately $76,000, $74,000, and $73,000 for commercial rent and storage income during 2018, 2017, and 2016, respectively. The lease agreement expires on June 30, 2023. Trustee Services On December 21, 2018, the Company entered into an agreement with Union Bank in which Union Bank will serve as trustee for the Company's private education loan repurchase agreement. The Company paid no fees to Union Bank in 2018 under this agreement. Other Fees Paid to Union Bank During the years ended December 31, 2018, 2017, and 2016, the Company paid Union Bank approximately $128,000, $127,000, and $126,000, respectively, in cash management fees. During the year ended December 31, 2016, the Company paid Union Bank approximately $13,000 in commissions. Other Fees Received from Union Bank During the years ended December 31, 2018, 2017, and 2016, Union Bank paid the Company approximately $219,000, $219,000, and $209,000, respectively, under an employee sharing arrangement. During the year ended December 31, 2018 and 2017, Union Bank paid the Company approximately $4,000 and $11,000 in payment processing fees (net of merchant fees of approximately $13,000 and $1,000), respectively. In addition, during the year ended December 31, 2016, Union Bank paid the Company approximately $10,000 for health and productivity services. 401(k) Plan Administration Union Bank administers the Company's 401(k) defined contribution plan. Fees paid to Union Bank to administer the plan are paid by the plan participants and were approximately $313,000, $241,000, and $280,000 during the years ended December 31, 2018, 2017, and 2016, respectively. Investment Services Union Bank 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 December 31, 2018, the outstanding balance of investments in the trusts was $699.7 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 or securities being called prior to the full contractual maturity. For the years ended December 31, 2018, 2017, and 2016, the Company earned $4.5 million, $9.2 million, and $4.5 million, respectively, of fees under this agreement. In January 2012 and October 2015, WRCM entered into management agreements with Union Bank under which it was designated to serve as investment advisor with respect to the assets within several trusts established by Mr. Dunlap and his spouse. In January 2016, WRCM entered into a similar management agreement with Union Bank with respect to several trusts established in December 2015 by Stephen F. Butterfield, former Vice Chairman and former member of the board of directors of the Company, and his spouse. Union Bank serves as trustee for the trusts. Per the terms of the agreements, 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 and his spouse contributed a total of 3,375,000 and 3,000,000 shares of the Company's Class B common stock to the trusts upon the establishment of the trusts in 2011 and 2015, respectively, and Mr. Butterfield and his spouse contributed a total of 1,200,000 shares of the Company's Class B common stock upon the establishment of the trusts in 2016. For the years ended December 31, 2018, 2017, and 2016, the Company earned approximately $172,000, $161,000, and $142,000, respectively, of fees under these agreements. WRCM has established private investment funds 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. Mr. Dunlap, Jeffrey R. Noordhoek (an executive officer of the Company), Ms. Muhleisen and her spouse, and WRCM have invested in certain of these funds. Based upon the current level of holdings by non-affiliated limited partners, the management agreements provide non-affiliated limited partners the ability to remove WRCM as manager without cause. WRCM earns 50 basis points (annually) on the outstanding balance of the investments in these funds, of which WRCM pays approximately 50 percent of such amount to Union Bank as custodian. As of December 31, 2018, the outstanding balance of investments in these funds was $153.1 million. For the years ended December 31, 2018, 2017, and 2016, the Company paid Union Bank $0.3 million, $0.3 million, and $0.4 million, respectively, as custodian. Transactions with Union Financial Services Union Financial Services, Inc. (“UFS”) is a corporation which is owned 50 percent by Michael S. Dunlap, a significant shareholder, Executive Chairman, and a member of the Board of Directors of the Company, and 50 percent by the estate of Stephen F. Butterfield, former significant shareholder, Vice Chairman, and member of the Board of Directors of the Company. Historically, the Company owned a 65 percent 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 owned the remaining interest in the same aircraft. On December 31, 2018, UFS sold 17.5 percent of its interest in such aircraft to the Company for $717,500. As a result of this transaction, the Company's ownership in the aircraft increased to 82.5 percent. Transactions with Agile Sports Technologies, Inc. (doing business as "Hudl") David Graff, who has served on the Company's Board of Directors since 2014, is CEO, co-founder, and a director of Hudl. On July 7, 2017, the Company made a $10.4 million preferred stock investment in Hudl. Prior to this investment, the Company and Mr. Dunlap made separate equity investments in Hudl. The Company and Mr. Dunlap, along with his children, currently hold combined direct and indirect equity ownership interests in Hudl of 19.7% and 3.5%, respectively. The Company's and Mr. Dunlap's direct and indirect equity ownership interests in Hudl consist of preferred stock with certain liquidation preferences that are considered substantive. Accordingly, for accounting purposes, the Company's and Mr. Dunlap's equity ownership interests are not considered in-substance common stock and the Company is accounting for its equity investment in Hudl using the measurement alternative method. The Company's investment in Hudl is included in "investments and notes receivable" in the Company's consolidated balance sheet. The Company makes investments to further diversify the Company both within and outside of its historical core education-related businesses, including investments in real estate. Recent real estate investments have been focused on the development of commercial properties in the Midwest, and particularly in Lincoln, Nebraska, where the Company's headquarters are located. One investment includes the development of a building in Lincoln's Haymarket District that is the new headquarters of Hudl, in which Hudl is the primary tenant in this building. Transaction with Assurity Life Insurance Company ("Assurity") Thomas Henning, who has served on the Company's Board of Directors since 2003, is the President and Chief Executive Officer of Assurity. During the years ended December 31, 2018 and 2017, Nelnet Business Solutions, a subsidiary of the Company, paid $1.7 million and $1.5 million, respectively, to Assurity for insurance premiums for insurance on certain tuition payment plans. As part of providing the tuition payment plan insurance to Nelnet Business Solutions, Assurity entered into a reinsurance agreement with the Company's insurance subsidiary, under which Assurity paid the Company's insurance subsidiary reinsurance premiums of $1.3 million and $1.4 million in 2018 and 2017, respectively, and the Company's insurance subsidiary paid claims on such reinsurance to Assurity of $0.9 million and $0.7 million in 2018 and 2017, respectively. In addition, Assurity pays Nelnet Business Solutions a partial refund annually based on claim experience, which was approximately $84,000 and $10,000 for the years ended December 31, 2018 and 2017, respectively.

Fair Value

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value

The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis. There were no transfers into or out of level 1, level 2, or level 3 for the year ended December 31, 2018.


	As of December 31, 2018
	Level 1		Level 2	Total
Assets:
Investments (a):
Student loan asset-backed securities - available-for-sale	$	—	52,936	52,936
Equity securities	2,722		—	2,722
Equity securities measured at net asset value (b)				14,925
Debt securities - available-for-sale	104		—	104
Total investments	2,826		52,936	70,687
Derivative instruments (c)	—		1,818	1,818
Total assets	$	2,826	54,754	72,505


	As of December 31, 2017
	Level 1		Level 2	Total
Assets:
Investments (available-for-sale) (a):
Student loan asset-backed securities	$	—	76,866	76,866
Equity securities	3,928		—	3,928
Debt securities	108		—	108
Total investments (available-for-sale)	4,036		76,866	80,902
Derivative instruments (c)	—		818	818
Total assets	$	4,036	77,684	81,720
Liabilities:
Derivative instruments (c):	$	—	7,063	7,063
Total liabilities	$	—	7,063	7,063

(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) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

(c) All derivatives are accounted for at fair value on a recurring basis. The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts, observable yield curves, 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.

The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:


	As of December 31, 2018
	Fair value		Carrying value	Level 1	Level 2	Level 3
Financial assets:
Loans receivable	$	23,521,171	22,377,142	—	—	23,521,171
Cash and cash equivalents	121,347		121,347	121,347	—	—
Investments (at fair value)	70,687		70,687	2,826	52,936	—
Notes receivable	16,373		16,373	—	16,373	—
Restricted cash	701,366		701,366	701,366	—	—
Restricted cash – due to customers	369,678		369,678	369,678	—	—
Loan accrued interest receivable	679,197		679,197	—	679,197	—
Derivative instruments	1,818		1,818	—	1,818	—
Financial liabilities:
Bonds and notes payable	22,270,462		22,218,740	—	22,270,462	—
Accrued interest payable	61,679		61,679	—	61,679	—
Due to customers	369,678		369,678	369,678	—	—


	As of December 31, 2017
	Fair value		Carrying value	Level 1	Level 2	Level 3
Financial assets:
Loans receivable	$	23,106,440	21,814,507	—	—	23,106,440
Cash and cash equivalents	66,752		66,752	66,752	—	—
Investments (available-for-sale)	80,902		80,902	4,036	76,866	—
Notes receivable	16,393		16,393	—	16,393	—
Restricted cash	688,193		688,193	688,193	—	—
Restricted cash – due to customers	187,121		187,121	187,121	—	—
Loan accrued interest receivable	430,385		430,385	—	430,385	—
Derivative instruments	818		818	—	818	—
Financial liabilities:
Bonds and notes payable	21,521,463		21,356,573	—	21,521,463	—
Accrued interest payable	50,039		50,039	—	50,039	—
Due to customers	187,121		187,121	187,121	—	—
Derivative instruments	7,063		7,063	—	7,063	—

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

Loans Receivable

Fair values for loans receivable 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 index relationships. A number of significant inputs into the models are internally derived and not observable to market participants.

Notes Receivable

Fair values for notes receivable were determined by using model-derived valuations with observable inputs, including current market rates.

Cash and Cash Equivalents, Restricted Cash, Restricted Cash – Due to Customers, Loan Accrued Interest Receivable, Accrued Interest 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

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, market credit spreads, and weighted average life of underlying collateral. 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Legal Proceedings Legal Proceedings	12 Months Ended
Legal Proceedings Legal Proceedings	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Legal Proceedings	Legal ProceedingsThe Company is subject to various claims, lawsuits, and proceedings that arise in the normal course of business. These matters frequently involve claims by student loan borrowers disputing the manner in which their student loans have been serviced or the accuracy of reports to credit bureaus, claims by student loan borrowers or other consumers alleging that state or Federal consumer protection laws have been violated in the process of collecting loans or conducting other business activities, and disputes with other business entities. In addition, from time to time the Company receives information and document requests from state or federal regulators concerning its business practices. The Company cooperates with these inquiries and responds to the requests. While the Company cannot predict the ultimate outcome of any regulatory examination, inquiry, or investigation, the Company believes its activities have materially complied with applicable law, including the Higher Education Act, the rules and regulations adopted by the Department thereunder, and the Department's guidance regarding those rules and regulations. 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.

Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (Unaudited)


	2018
	First quarter		Second quarter	Third quarter	Fourth quarter
Net interest income	$	67,307	57,739	59,773	69,539
Less provision for loan losses	4,000		3,500	10,500	5,000
Net interest income after provision for loan losses	63,307		54,239	49,273	64,539
Loan servicing and systems revenue	100,141		114,545	112,579	112,761
Education technology, services, and payment processing revenue	60,221		48,742	58,409	54,589
Communications revenue	9,189		10,320	11,818	13,326
Other income	18,198		9,580	16,673	9,998
Gain from debt repurchases	359		—	—	—
Derivative market value and foreign currency transaction adjustments and derivative settlements, net	66,799		17,031	17,098	(29,843)
Cost to provide education technology, services, and payment processing services	(13,683)		(11,317)	(19,087)	(15,479)
Cost to provide communications services	(3,717)		(3,865)	(4,310)	(5,033)
Salaries and benefits	(96,643)		(111,118)	(114,172)	(114,247)
Depreciation and amortization	(18,457)		(21,494)	(22,992)	(23,953)
Loan servicing fees to third parties	(3,136)		(3,204)	(3,087)	(2,631)
Other operating expenses	(33,417)		(40,409)	(45,194)	(46,952)
Income tax (expense) benefit	(35,976)		(13,511)	(13,882)	4,599
Net income	113,185		49,539	43,126	21,674
Net loss (income) attributable to noncontrolling interests	740		(104)	(199)	(48)
Net income attributable to Nelnet, Inc.	$	113,925	49,435	42,927	21,626
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	2.78	1.21	1.05	0.53


	2017
	First quarter		Second quarter	Third quarter	Fourth quarter
Net interest income	$	76,925	79,842	75,237	73,235
Less provision for loan losses	1,000		3,000	6,700	3,750
Net interest income after provision for loan losses	75,925		76,842	68,537	69,485
Loan servicing and systems revenue	54,229		56,899	55,950	55,921
Education technology, services, and payment processing revenue	56,024		43,480	50,358	43,326
Communications revenue	5,106		5,719	6,751	8,122
Other income	12,632		12,485	19,756	7,952
Gain (loss) from debt repurchases	4,980		442	116	(2,635)
Derivative market value and foreign currency transaction adjustments and derivative settlements, net	(4,830)		(27,910)	7,173	7,014
Cost to provide education technology, services, and payment processing services	(12,790)		(9,515)	(15,151)	(11,223)
Cost to provide communications services	(1,954)		(2,203)	(2,632)	(3,160)
Salaries and benefits	(71,863)		(74,628)	(74,193)	(81,201)
Depreciation and amortization	(8,598)		(9,038)	(10,051)	(11,854)
Loan servicing fees to third parties	(6,025)		(5,628)	(8,017)	(3,064)
Other operating expenses	(26,161)		(26,262)	(29,500)	(38,455)
Income tax (expense) benefit	(28,755)		(16,032)	(25,562)	5,486
Net income	47,920		24,651	43,535	45,714
Net loss attributable to noncontrolling interests	2,106		4,086	2,768	2,386
Net income attributable to Nelnet, Inc.	$	50,026	28,737	46,303	48,100
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	1.18	0.68	1.11	1.17

Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Parent Company Financial Statements

The following represents the condensed balance sheets as of December 31, 2018 and 2017 and condensed statements of income, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2018 for Nelnet, Inc.

The Company is limited in the amount of funds that can be transferred to it by its subsidiaries through intercompany loans, advances, or cash dividends. These limitations relate to the restrictions by trust indentures under the education lending subsidiaries debt financing arrangements. The amounts of cash and investments restricted in the respective reserve accounts of the education lending subsidiaries are shown on the consolidated balance sheets as restricted cash.


Balance Sheets
(Parent Company Only)
As of December 31, 2018 and 2017
	2018		2017
Assets:
Cash and cash equivalents	$	36,890	21,001
Investments and notes receivable	140,582		149,236
Investment in subsidiary debt	13,818		75,659
Restricted cash	16,217		44,149
Investment in subsidiaries	2,448,540		1,681,690
Notes receivable from subsidiaries	56,973		212,077
Other assets	57,555		131,790
Fair value of derivative instruments	1,818		818
Total assets	$	2,772,393	2,316,420
Liabilities:
Notes payable	$	369,725	79,120
Other liabilities	94,016		76,638
Fair value of derivative instruments	—		7,063
Total liabilities	463,741		162,821
Equity:
Nelnet, Inc. shareholders' equity:
Common stock	403		408
Additional paid-in capital	622		521
Retained earnings	2,299,556		2,143,983
Accumulated other comprehensive earnings	3,883		4,617
Total Nelnet, Inc. shareholders' equity	2,304,464		2,149,529
Noncontrolling interest	4,188		4,070
Total equity	2,308,652		2,153,599
Total liabilities and shareholders' equity	$	2,772,393	2,316,420


Statements of Income
(Parent Company Only)
Years ended December 31, 2018, 2017, and 2016
	2018		2017	2016
Investment interest income	$	17,707	13,060	9,794
Interest expense on bonds and notes payable	9,270		3,315	6,049
Net interest income	8,437		9,745	3,745
Other income:
Other income	13,944		3,483	7,037
Gain from debt repurchases	359		2,964	8,083
Equity in subsidiaries income	158,364		170,897	239,405
Derivative market value adjustments and derivative settlements, net	71,085		(603)	45,203
Total other income	243,752		176,741	299,728
Operating expenses	4,795		6,117	8,183
Income before income taxes	247,394		180,369	295,290
Income tax expense	19,481		7,491	38,642
Net income	227,913		172,878	256,648
Net loss attributable to noncontrolling interest	—		288	103
Net income attributable to Nelnet, Inc.	$	227,913	173,166	256,751


Statements of Comprehensive Income
(Parent Company Only)
Years ended December 31, 2018, 2017, and 2016
	2018		2017	2016
Net income	$	227,913	172,878	256,648
Other comprehensive income (loss):
Available-for-sale securities:
Unrealized holding gains arising during period, net of losses	1,056		2,349	5,789
Reclassification adjustment for gains recognized in net income, net of losses	(978)		(2,528)	(1,907)
Income tax effect	(69)		66	(1,436)
Total other comprehensive income (loss)	9		(113)	2,446
Comprehensive income	227,922		172,765	259,094
Comprehensive loss attributable to noncontrolling interest	—		288	103
Comprehensive income attributable to Nelnet, Inc.	$	227,922	173,053	259,197


Statements of Cash Flows
(Parent Company Only)
Years ended December 31, 2018, 2017, and 2016
	2018		2017	2016
Net income attributable to Nelnet, Inc.	$	227,913	173,166	256,751
Net loss attributable to noncontrolling interest	—		(288)	(103)
Net income	227,913		172,878	256,648
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	442		420	391
Derivative market value adjustment	(1,014)		7,591	(62,268)
Proceeds from termination of derivative instruments, net of payments	10,283		2,100	3,999
Payments to enter into derivative instruments	(4,770)		(929)	—
Proceeds from clearinghouse - initial and variation margin, net	40,382		76,325	—
Equity in earnings of subsidiaries	(158,364)		(170,897)	(239,405)

Gain from debt repurchases	(359)		(2,964)	(8,083)
Gain from investments and notes receivable, net of losses	(11,177)		(294)	(1,522)

Deferred income tax expense (benefit)	21,814		(8,056)	20,071
Non-cash compensation expense	6,539		4,416	4,348
Other	—		733	732
Decrease in other assets	25,252		4,171	32,262
(Decrease) increase in other liabilities	(9,621)		10,104	(594)
Net cash provided by operating activities	147,320		95,598	6,579
Cash flows from investing activities:

Purchases of available-for-sale securities	(46,382)		(127,567)	(94,920)
Proceeds from sales of available-for-sale securities	75,605		156,727	139,427
Capital contributions/distributions to/from subsidiaries, net	(334,280)		29,426	223,386
(Increase) decrease in notes receivable from subsidiaries	(31,325)		(50,793)	8,561
Increase in guaranteed payment from subsidiary	(70,270)		—	—
Proceeds from investments and notes receivable	7,783		4,823	9,952
Proceeds from (purchases of) subsidiary debt, net	61,841		(3,844)	(13,800)
Purchases of investments and issuances of notes receivable	(28,610)		(18,023)	(4,365)

Net cash (used in) provided by investing activities	(365,638)		(9,251)	268,241
Cash flows from financing activities:
Payments on notes payable	(8,651)		(27,480)	(412,000)
Proceeds from issuance of notes payable	300,000		61,059	230,000
Payments of debt issuance costs	(827)		—	(613)
Dividends paid	(26,839)		(24,097)	(21,188)
Repurchases of common stock	(45,331)		(68,896)	(69,091)
Proceeds from issuance of common stock	1,359		678	889
Acquisition of noncontrolling interest	(13,449)		—	—
Issuance of noncontrolling interest	13		—	501

Net cash provided by (used in) financing activities	206,275		(58,736)	(271,502)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(12,043)		27,611	3,318
Cash, cash equivalents, and restricted cash, beginning of period	65,150		37,539	34,221
Cash, cash equivalents, and restricted cash, end of period	$	53,107	65,150	37,539

Cash disbursements made for:
Interest	$	8,628	2,882	5,533
Income taxes, net of refunds and credits	$	473	96,721	115,415

Noncash investing and financing activities:

Recapitalization of accrued interest payable to accrued guaranteed payment	$	6,674	—	—
Recapitalization of note payable to guaranteed payment	$	186,429	—	—
Recapitalization of guaranteed payment to investment in subsidiary	$	273,360	—	—
Contributions to subsidiaries	$	—	2,092	1,884

Summary of Significant Accounting Policies and Practices Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Consolidation

ConsolidationThe consolidated financial statements include the accounts of Nelnet, Inc. and its consolidated subsidiaries. In addition, the accounts of all variable interest entities (“VIEs”) of which the Company has determined that it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

The following entities are VIEs of which the Company has determined that it is the primary beneficiary. 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's education lending subsidiaries 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 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 securitization 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.

As of December 31, 2018, the Company owned 98.8 percent of the economic rights of ALLO Communications LLC and has a disproportional 80 percent of the voting rights related to all operating decisions for ALLO's business. See note 1, “Description of Business,” for a description of ALLO, including the primary services offered. In addition to the Company’s original equity investment, Nelnet, Inc. (the parent) issued a line of credit to ALLO. On January 1, 2018, Nelnet, Inc. contributed more equity with an associated guaranteed payment and ALLO used the proceeds to retire the outstanding balance on the line of credit. On October 1, 2018, the guaranteed payment accrual was replaced with a yield-based preferred return of future earnings due on the newly contributed equity. The Company will continue to increase its ownership interests as it makes cash contributions to fund ALLO's operating losses and capital expenditures. In addition, ALLO's management, as current minority members, has the opportunity to earn ownership interests based on the financial performance of ALLO. Nelnet, Inc.’s maximum exposure to loss as a result of its involvement with ALLO is equal to its ownership interests investment. All of ALLO’s financial activities and related assets and liabilities are reflected in the Company’s consolidated financial statements. See note 14, “Segment Reporting,” for disclosure of ALLO’s total assets and results of operations (included in the "Communications" operating segment), note 9, "Goodwill," for disclosure of ALLO's goodwill, and note 10, “Property and Equipment,” for disclosure of ALLO’s fixed assets. ALLO's goodwill and property and equipment comprise the majority of its assets. The assets recognized as a result of consolidating ALLO are the property of ALLO and are not available for any other purpose.

Accounting Standards Adopted in 2018

In the first quarter of 2018, the Company adopted the following new accounting standards and other guidance:

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The Company adopted the standard effective January 1, 2018, using the full retrospective method, which required it to restate each prior reporting period presented. As a result, the Company changed its accounting policy for revenue recognition as detailed in the "Revenue Recognition" section of this note.

The most significant impact of the standard relates to identifying the Company's fee-based Education Technology, Services, and Payment Processing operating segment as the principal in its payment services transactions. As a result of this change, the Company presents the payment services revenue gross, with the direct costs to provide these services presented separately. The Company’s other fee-based operating segments will recognize revenue consistent with historical revenue recognition patterns. The majority of the Company's revenue earned in its non-fee-based Asset Generation and Management operating segment, including loan interest and derivative activity, is explicitly excluded from the scope of the new standard.

Impacts to Previously Reported Results

Adoption of the revenue recognition standard impacted the Company’s previously reported results on the consolidated statements of income as follows:


	Year ended December 31, 2017
	As previously reported		Impact of adoption	As restated
Education technology, services, and payment processing revenue	$	145,751	47,437	193,188
Cost to provide education technology, services, and payment processing services	—		47,437	47,437	(a)


	Year ended December 31, 2016
	As previously reported		Impact of adoption	As restated
Education technology, services, and payment processing revenue	$	132,730	42,952	175,682
Cost to provide education technology, services, and payment processing services	—		42,952	42,952	(a)

(a) In addition to the impact of adopting the new revenue recognition standard, as discussed above, the Company reclassified other direct costs to provide education technology, services, and payment processing services which were previously reported as part of "other expenses" to "cost to provide education technology, services, and payment processing services."

Adoption of the new revenue recognition standard had no impact to the consolidated balance sheets or cash provided by or used in operating, investing, or financing activities on the consolidated statements of cash flows.

Equity Investments

In January 2016, the FASB issued new accounting guidance related to the recognition and measurement of financial assets and financial liabilities. The guidance, including a related clarifying update, requires equity investments with readily determinable fair values to be measured at fair value, with changes in the fair value recognized through net income. An entity may choose to measure equity investments without readily determinable fair values at fair value or use the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The guidance requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption to reclassify the cumulative change in fair value of equity securities with readily determinable fair values previously recognized in accumulated other comprehensive income, and was adopted by the Company as of January 1, 2018. Upon adoption, the Company recorded an immaterial cumulative-effect adjustment to retained earnings, accumulated other comprehensive earnings, and investments and notes receivable. Subsequent to the adoption, the Company is accounting for all its equity investments without readily determinable fair values using the measurement alternative.

Other Comprehensive Income

In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive earnings to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act, which became effective on January 1, 2018. This guidance is effective for fiscal years beginning after December 15, 2018, but early adoption is permitted. The Company elected to early adopt this guidance as of January 1, 2018. Upon adoption, the Company recorded an immaterial reclassification between accumulated other comprehensive earnings and retained earnings.

Restricted Cash

In November 2016, the FASB issued accounting guidance related to restricted cash. The new guidance requires that the statement of cash flows present the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents, and a reconciliation of such total to amounts on the balance sheet. The Company adopted the standard effective January 1, 2018 using the retrospective transition method. Adoption of this standard impacted the Company's previously reported amounts on the consolidated statements of cash flows as follows:


	Year ended December 31, 2017
	As previously reported		Impact of adoption	As restated
Increase in due to customers	$	—	67,419	67,419
Proceeds from clearinghouse - initial and variation margin, net	48,985		27,340	76,325
Net cash provided by operating activities	227,508		94,759	322,267
Decrease in restricted cash, net	320,108		(320,108)	—
Net cash provided by investing activities	3,270,090		(320,108)	2,949,982

	Year ended December 31, 2016
	As previously reported		Impact of adoption	As restated
Decrease in due to customers	$	—	(25,069)	(25,069)
Net cash provided by operating activities	325,257		(25,069)	300,188
Increase in restricted cash, net	(147,487)		147,487	—
Purchases of investments and issuance of notes receivable	(22,361)		850	(21,511)
Net cash provided by investing activities	3,259,415		148,337	3,407,752