Nelnet, Inc.

What they do

Nelnet earns a significant portion of revenue from net interest income on a portfolio of federally insured student loans, most of which it also services. It reports four segments: Loan Servicing and Systems (Nelnet Diversified Services), Education Technology Services and Payments (Nelnet Business Services, including FACTS and Nelnet Campus Commerce), Asset Generation and Management, and Nelnet Bank, an internet Utah-chartered industrial bank. It has also expanded into banking, asset management, real estate, reinsurance, renewable energy, and early-stage strategic interests.

Revenue drivers

• Loan Servicing and Systems (NDS) — Fee-based revenue from student and consumer loan servicing, servicing technology, and outsourcing; generated $260.1 million in the first six months of 2026, including $132.2 million in Q2 2026.
• Education Technology Services and Payments (NBS) — Fee-based education and payment technology for K-12 schools, higher education institutions, and businesses; $273.3 million in the first six months of 2026, including $118.9 million in Q2 2026.
• Asset Generation and Management (AGM) — Net interest income from a $7.83 billion loan portfolio as of June 30, 2026, primarily FFELP loans, plus growing private education and consumer loans; segment loan and investment net interest income was $63.2 million in Q2 2026.
• Nelnet Bank — Internet industrial bank funding private education and unsecured consumer lending; bank deposits grew to $2.22 billion at June 30, 2026 from $1.67 billion at December 31, 2025.

Recent performance

For Q2 2026 Nelnet reported GAAP net income of $66.7 million, or $1.85 per share, versus $181.5 million, or $4.97 per share, in Q2 2025. The prior-year quarter included a $175.0 million ($133.0 million after tax, or $3.65 per share) gain on partial redemption of the ALLO investment; excluding that gain, Q2 2025 GAAP net income was $48.5 million, or $1.32 per share. Non-GAAP net income excluding derivative market value adjustments was $63.9 million, or $1.77 per share, in Q2 2026 versus $184.4 million, or $5.05 per share, a year earlier. Q2 2026 net interest income rose to $96.0 million from $79.4 million, but provision for loan losses rose to $41.1 million from $17.9 million, driven by initial CECL allowances on acquired consumer loans rather than credit deterioration. Full-year 2025 GAAP net income was $428.5 million, or $11.79 per diluted share, compared with $184.0 million, or $5.02, in 2024.

Strategy

Management is reducing reliance on the run-off FFELP portfolio by expanding private education, consumer, and other loan portfolios, including through Nelnet Bank. In Q2 2026 AGM acquired $3.07 billion of consumer loans, including $2.86 billion of short-duration Pay Later receivables and $205.5 million of other consumer loans; the consumer loan portfolio reached $1.21 billion at June 30, 2026, up from $411.5 million a year earlier. It continues to add servicing scale, with Q2 2026 the first full quarter of contributions from its Canada servicing acquisition. Management also says it is investing in artificial intelligence and product development across the organization.

Risks

• Credit risk on unsecured lending — Private education and consumer loans are unsecured and expose Nelnet to full loss on default, and many consumer loans, including Pay Later receivables, are underwritten, serviced, and collected by third parties Nelnet does not control.
• FFELP portfolio run-off — Nelnet no longer originates FFELP loans and interest income on the existing portfolio declines as it pays down, with the average FFELP balance falling from $8.7 billion in Q2 2025 to $6.7 billion in Q2 2026.
• Rising loan loss provisions — Q2 2026 provision for loan losses rose to $41.1 million from $17.9 million a year earlier, primarily from CECL allowances on acquired loans as the consumer portfolio grows.
• Interest rate and derivatives exposure — The company states its loan portfolios and residual interests are subject to interest rate risk and to risks related to the derivatives it uses to manage that exposure, which can produce market value adjustments in earnings.

Outlook

Management describes the Q2 2026 results as solid and points to the diversified mix across consumer lending, servicing, payments, and technology, with a continued focus on education. It says it remains focused on investing in core businesses, pursuing growth opportunities, and creating long-term value. No specific numerical guidance is given, but the company expects continued FFELP run-off offset by consumer loan growth and servicing expansion.