Investments and Notes Receivable

12 Months Ended

Dec. 31, 2024

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


	As of December 31, 2024						As of December 31, 2023
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value		Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Investments (at fair value):





Available-for-sale asset-backed securities
Non-Nelnet Bank:
FFELP loan	$	188,386	5,804	(896)	193,294		271,479	4,883	(5,393)	270,969
FFELP loan and other debt securities - restricted (a)	98,914		3,151	(78)	101,987		16,993	1,069	(93)	17,969
Private education loan (b)	237,288		—	(18,118)	219,170		281,791	—	(28,874)	252,917
Other debt securities	32,552		2,500	—	35,052		41,693	2,020	(1,275)	42,438
Total Non-Nelnet Bank	557,140		11,455	(19,092)	549,503		611,956	7,972	(35,635)	584,293
Nelnet Bank:
FFELP loan (c)	231,543		6,060	(270)	237,333		304,555	4,488	(2,286)	306,757
Private education loan	1,596		—	—	1,596		17,083	20	(10)	17,093
Other debt securities	296,944		1,775	(1,325)	297,394		49,284	117	(1,641)	47,760
Total Nelnet Bank	530,083		7,835	(1,595)	536,323		370,922	4,625	(3,937)	371,610
Total available-for-sale asset-backed securities	$	1,087,223	19,290	(20,687)	1,085,826		982,878	12,597	(39,572)	955,903
Equity securities					74,494					50,907
Total investments at fair value					1,160,320					1,006,810
Other investments and notes receivable (not measured at fair value):
Held-to-maturity investments
Non-Nelnet Bank:
Debt securities					—					4,700
Nelnet Bank:
FFELP loan asset-backed securities (c)					203,439					149,938
Private education loan asset-backed securities					7,335					8,100
Total Nelnet Bank					210,774					158,038
Total held-to-maturity investments					210,774					162,738
Venture capital, funds, and other:
Measurement alternative (d)					200,782					194,084
Equity method					170,258					91,464
Total venture capital and funds					371,040					285,548
Real estate:
Equity method					131,745					103,811
Investment in ALLO:
Voting interest/equity method (e)					—					10,693
Preferred membership interest (f)					225,614					155,047
Total investment in ALLO					225,614					165,740
Beneficial interest in loan securitizations (g):
Consumer loans, net of allowance for credit losses of $38,590 as of December 31, 2024					142,764					134,113
Private education loans, net of allowance for credit losses of $901 as of December 31, 2024					52,824					68,372
Federally insured student loans					18,221					22,594
Total beneficial interest in loan securitizations, net of allowance					213,809					225,079
Solar (h)					(155,048)					(146,040)
Notes receivable					32,258					53,747
Tax liens, affordable housing, and other					10,184					7,243
Total other investments and notes receivable (not measured at fair value)					1,040,376					857,866
Total investments and notes receivable					$	2,200,696				$	1,864,676

(a) Represent investments held in third-party trusts as collateral for the Company’s reinsurance business.

(b) In December 2020, Wells Fargo announced the sale of its approximately $10 billion portfolio of private education loans. The Company entered into a joint venture with other investors to acquire the loans. Under the terms of the joint venture agreements, the Company serves as the sponsor and administrator for the loan securitizations completed by the joint venture to permanently finance the loans acquired. As sponsor of the loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement.

The bonds purchased to satisfy the risk retention requirement are included in the above table and as of December 31, 2024, the par value and fair value of these securities was $237.3 million and $219.2 million, respectively. The Company must retain these investment securities until the latest of (i) the date the aggregate outstanding principal balance of the loans in the securitization is 33% or less of the initial loan balance, and (ii) the date the aggregate outstanding principal balance of the bonds is 33% or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party.

(c) On May 22, 2024, securities at Nelnet Bank with a fair value of $70.6 million were transferred from available-for-sale to held-to-maturity. The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction. Accumulated other comprehensive income as of May 22, 2024 included pre-tax unrealized gains of $3.4 million related to the transfer. These unrealized gains are being amortized, consistent with the amortization of any premiums on such securities, over the remaining lives of the respective securities as an adjustment of yield.

(d) The Company has an investment in Agile Sports Technologies, Inc. (doing business as “Hudl”). During the fourth quarter of 2024, the Company acquired additional ownership interests in Hudl for $3.3 million from existing Hudl investors. This transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities. Accordingly, the Company did not adjust its carrying value of its Hudl investment to the transaction value. As of December 31, 2024, the carrying amount of the Company's investment in Hudl is $168.7 million. David S. Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl.

The Company's equity ownership interests in Hudl consist of preferred stock with certain liquidation preferences that are considered substantive. Accordingly, for accounting purposes, the Company'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.

(e) The Company recognized losses under the HLBV method of accounting on its ALLO voting membership interests investment of $10.7 million, $65.3 million, and $68.0 million during the years ended December 31, 2024, 2023, and 2022, respectively. Losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income. Absent additional equity contributions with respect to ALLO's voting membership interests, the Company will not recognize additional losses for its voting membership interests in ALLO.

(f) As of December 31, 2024, the outstanding preferred membership interests of ALLO held by the Company was $225.6 million. The Company earns a preferred return on these interests. The accrued preferred return capitalizes to preferred membership interests annually on each December 31. The Company historically earned a preferred annual return of 6.25% that increased to 10.00% on April 1, 2024 for $155.0 million of preferred membership interests of ALLO held by the Company. On December 31, 2024, $14.1 million of accrued preferred return was capitalized to preferred membership interests. The preferred annual return on the updated balance of $169.1 million preferred membership interests increased to 13.50% on January 1, 2025. During 2024, the Company purchased an additional $53.1 million of preferred membership interests of ALLO, which earn a preferred annual return of 20.00%. Including the accrued preferred return of $3.4 million that was capitalized on December 31, 2024, the updated balance of preferred membership interests that earns at 20.00% was $56.5 million as of December 31, 2024.

The Company recognized income on its ALLO preferred membership interests of $17.5 million, $9.1 million, and $8.6 million during the years ended December 31, 2024, 2023, and 2022, respectively. This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.

(g) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations, which are accounted for as held-to-maturity beneficial interest investments. As of the latest remittance reports filed by the various trusts prior to or as of December 31, 2024, the Company's ownership correlates to approximately $1.19 billion, $465 million, and $315 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

During 2024, an increase in cumulative loss expectations on certain securitizations and loan vintages caused a change in estimate of future cash flows related to certain of the Company's beneficial interest securitization investments. As a result, the Company recorded a $39.5 million allowance for credit losses (and related provision expense) related to these investments.

(h) The Company invests in solar tax equity investments. Due to the management and control of each of these investment partnerships, such partnerships that invest in solar tax equity investments are consolidated on the Company’s consolidated financial statements, with the co-investor’s (syndication partner's) portion being presented as noncontrolling interests. As of December 31, 2024, the Company has invested a total of $314.8 million and its third-party investors have invested $271.4 million in tax equity investments that remain outstanding in renewable energy solar partnerships that support the development and operations of solar projects throughout the country. The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed in service. As of December 31, 2024, the Company has earned $585.9 million of tax credits on those projects that remain outstanding, which includes $260.9 million earned by syndication partners. The solar investment negative carrying value on the consolidated balance sheet of $155.0 million as of December 31, 2024 represents the sum of total tax credits earned on solar projects placed in service through December 31, 2024 and the calculated HLBV cumulative net losses being larger than the total investment contributions made by the Company and its syndication partners on such projects. The solar investment negative carrying value as of December 31, 2024, excluding the portion owned by syndication partners that is reflected as "noncontrolling interests" on the consolidated balance sheet, was $87.9 million.

The Company accounts for its solar investments using the HLBV method of accounting. For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment. The following table presents (i) the Company's recognized net losses, which include net losses attributable to third-party noncontrolling interest investors (syndication partners), included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses attributed to noncontrolling interest investors included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the Company's recognized net losses excluding net losses attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company).


	Year ended December 31,
	2024		2023	2022
Net losses	$	(6,477)	(59,645)	(16,708)
Less: net losses attributed to noncontrolling interest investors (syndication partners)	4,599		37,875	17,680
Net (losses) gains, excluding activity attributed to noncontrolling interest investors	$	(1,878)	(21,770)	972

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of December 31, 2024:


	As of December 31, 2024
	1 year or less		After 1 year through 5 years	After 5 years through 10 years	After 10 years	Total
Available-for-sale asset-backed securities



Non-Nelnet Bank:
FFELP loan	$	—	13,743	5,332	169,311	188,386
FFELP loan and other debt securities - restricted	—		10,253	17,863	70,798	98,914
Private education loan	—		—	—	237,288	237,288
Other debt securities	—		100	9,481	22,971	32,552
Total Non-Nelnet Bank	—		24,096	32,676	500,368	557,140
Fair value	—		24,397	32,924	492,182	549,503
Nelnet Bank:
FFELP loan	47,419		22,157	27,490	134,477	231,543
Private education loan	—		—	—	1,596	1,596
Other debt securities	—		40,361	58,826	197,757	296,944
Total Nelnet Bank	47,419		62,518	86,316	333,830	530,083
Fair value	47,815		62,703	86,556	339,249	536,323
Total available-for-sale asset-backed securities at amortized cost	$	47,419	86,614	118,992	834,198	1,087,223
Total available-for-sale asset-backed securities at fair value	$	47,815	87,100	119,480	831,431	1,085,826
Held-to-maturity investments



Nelnet Bank:
FFELP loan asset-backed securities	$	—	2,759	1,136	199,544	203,439
Private education loan asset-backed securities	—		—	—	7,335	7,335


Total held-to-maturity investments at amortized cost	$	—	2,759	1,136	206,879	210,774
Total held-to-maturity investments at fair value	$	—	2,827	1,160	212,177	216,164
Beneficial interest in loan securitizations (a):
Amortized cost	$	—	—	—	—	213,809
Fair value	$	—	—	—	—	229,510

(a) The Company's beneficial interest in loan securitizations is not due at a single maturity date.

The following table summarizes the unrealized positions for held-to-maturity asset-backed securities investments and the beneficial interest in loan securitizations as of December 31, 2024:


	Carrying value		Gross unrealized gains	Gross unrealized losses	Fair value
Asset-backed and other securities	$	210,774	5,432	(42)	216,164
Beneficial interest in loan securitizations	213,809		17,004	(1,303)	229,510

The following table presents securities classified as available-for-sale that have gross unrealized losses on December 31, 2024 and the fair value of such securities as of December 31, 2024. These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis. All securities in the table below have been evaluated to determine if a credit loss exists. As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.


	As of December 31, 2024
	Unrealized loss position less than 12 months			Unrealized loss position 12 months or more		Total
	Unrealized loss		Fair value	Unrealized loss	Fair value	Unrealized loss	Fair value
Available-for-sale asset-backed securities


Non-Nelnet Bank:
FFELP loan	$	(2)	4,065	(894)	60,500	(896)	64,565
FFELP loan and other debt securities - restricted	(24)		7,843	(54)	2,463	(78)	10,306
Private education loan	—		—	(18,118)	219,170	(18,118)	219,170

Total Non-Nelnet Bank	(26)		11,908	(19,066)	282,133	(19,092)	294,041
Nelnet Bank:
FFELP loan	(69)		30,297	(201)	16,586	(270)	46,883

Other debt securities	(46)		15,029	(1,279)	14,058	(1,325)	29,087
Total Nelnet Bank	(115)		45,326	(1,480)	30,644	(1,595)	75,970
Total available-for-sale asset-backed securities	$	(141)	57,234	(20,546)	312,777	(20,687)	370,011

The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.


	Year ended December 31,
	2024		2023	2022
Gross proceeds from sales	$	445,946	963,117	511,124

Gross realized gains	$	5,775	4,517	6,702
Gross realized losses	(1,241)		(8,021)	(800)
Net gains (losses)	$	4,534	(3,504)	5,902