Nelnet, Inc. (NNI) is one of the leading education finance companies in the U.S., with more than $26 billion in student loans outstanding at September 30, 2007. NNI offers a broad range of student loan and financial services, along with technology-based products designed to simplify the student loan process by automating financial aid delivery, loan processing, and funds disbursement. Student loans are originated and acquired through a variety of methods, including the direct channel and the branding partner / forward flow channels (in which NNI acquires student loans from other lenders), as well as through spot purchases and whole-company acquisitions and other channels. Direct-channel loans are typically the most profitable due to lower acquisition costs and generally longer retention periods.

Ninety-nine percent of NNI's portfolio is made up of federally insured loans, which are in large part guaranteed by the U.S. government. As NNI currently earlier operated under the Department of Education s (DOE) "Exceptional Performer" designation, the guarantee is typically 99%, depending on several factors. It is also worth noting that all provisions relating to Exceptional Performer status, and the monetary benefit associated with it have been eliminated effective October 1, 2007, per new legislation. Less than 1% of loans are private loans, where NNI assumes the credit risk. The majority of revenues traditionally have been generated as spread income on student loans and investments, with the minority coming from loan and guarantee servicing, software and other fee-based sources. Management has clearly been pushing to grow this latter group rapidly, however, and fee-based revenue accounted for 50% of total revenue in 2006 and 54% in the third quarter of 2007.

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