Businessweek

Nelnet, Inc., an education services company, provides fee-based processing services and education-related products and services. The company’s products and services help students and families plan, prepare, and pay for their education and make the administrative and financial processes more efficient for schools and financial organizations. Segments The company operates four segments with different brands: Student Loan and Guaranty Servicing, Tuition Payment Processing and Campus Commerce, Enrollment Services, and Asset Generation and Management. Student Loan and Guaranty Servicing The Student Loan and Guaranty Servicing segment offerings include originating and servicing the Federal Family Education Loan (FFEL) Program loans, servicing federally-owned student loans for the Department of Education, originating and servicing non-federally insured student loans, servicing and outsourcing services for guaranty agencies, and student loan servicing software and other information technology products and services. In addition, the company offers a hosted servicing software solution that can be used by third-parties to service various types of student loans, including Federal Direct Loan Program and FFEL Program loans. This segment is referred to as Nelnet Diversified Solutions (NDS). It includes the brands, such as Nelnet Loan Servicing, Firstmark Services, Nelnet Guarantor Solutions, and 5280 Solutions. Servicing FFEL Program loans: The Student Loan and Guaranty Servicing segment provides for the servicing of the company's student loan portfolio and the portfolios of third parties. The loan servicing activities include loan conversion activities, application processing, borrower updates, payment processing, due diligence procedures, funds management reconciliations, and claim processing. The company's student loan servicing division uses proprietary systems to manage the servicing process. These systems provide for automated compliance with most of the federal student loan regulations adopted under Title IV of the Higher Education Act of 1965, as amended (the ‘Higher Education Act’). Servicing federally-owned student loans for the Department of Education: The company offers Federal Direct Loan Program loans originated directly by the Department and FFEL Program loans purchased by the Department. Originating and servicing non-federally insured student loans: The Student Loan and Guaranty Servicing segment provides origination and servicing activities for non-federally insured loans. The company serviced non-federally insured loans on behalf of approximately 20 third-party servicing customers, as of December 31, 2011. Servicing and outsourcing services for guaranty agencies: The Student Loan and Guaranty Servicing segment provides servicing support for guaranty agencies, which are the organizations that serve as the intermediary between the U.S. federal government and lenders, and are responsible for paying the claims made on defaulted loans. The company's three guaranty servicing customers include Tennessee Student Assistance Corporation, College Assist (which is the Colorado state-designated guarantor of FFEL Program student loans), and the National Student Loan Program. Providing student loan servicing software and other information technology products and services: This segment provides student loan servicing software, which is used internally by the company and licensed to third-party student loan holders and servicers. As of December 31, 2011, 9.6 million borrowers were hosted on the company's hosted servicing software solution platforms. The company's clients within the education loan marketplace include large and small financial institutions, secondary markets, loan originators, and loan servicers. Competition: The principal competitor for existing and prospective FFEL and non-federally insured student loan servicing business is SLM Corporation, the parent company of Sallie Mae. It also competes with Great Lakes Educational Loan Services Inc., Pennsylvania Higher Education Assistance Agency, and Sallie Mae. Tuition Payment Processing and Campus Commerce The Tuition Payment Processing