UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-31924

NELNET, INC.

(Exact name of registrant as specified in its charter)

Nebraska		84-0748903
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
121 South 13th Street, Suite 100
Lincoln,	Nebraska	68508
(Address of principal executive offices)		(Zip Code)

(402) 458-2370

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 per Share	NNI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, there were 25,586,934 and 10,663,088 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).

NELNET, INC.

FORM 10-Q

INDEX

June 30, 2024

PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	2
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	70
	Item 4.	Controls and Procedures	75
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	76
	Item 1A.	Risk Factors	76
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
	Item 5.	Other Information	77
	Item 6.	Exhibits	77
Signatures			78

ITEM 1. FINANCIAL STATEMENTS

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(unaudited)
	As of		As of
	June 30, 2024		December 31, 2023
Assets:
Loans and accrued interest receivable (net of allowance for loan losses of $96,764 and $104,643, respectively)	$	10,939,519	13,108,204
Cash and cash equivalents:
Cash and cash equivalents - not held at a related party	33,000		34,912
Cash and cash equivalents - held at a related party	112,478		133,200
Total cash and cash equivalents	145,478		168,112
Investments and notes receivable (including investments at fair value of $948,792 and $988,841, respectively)	1,896,433		1,846,707
Restricted cash	538,446		488,723
Restricted cash - due to customers	259,479		368,656
Restricted investments	50,358		17,969
Accounts receivable (net of allowance for doubtful accounts of $4,272 and $4,304, respectively)	159,836		196,200
Goodwill	158,029		158,029
Intangible assets, net	40,521		44,819
Property and equipment, net	131,666		127,008
Other assets	181,428		187,957
Total assets	$	14,501,193	16,712,384
Liabilities:
Bonds and notes payable	$	9,567,708	11,828,393
Accrued interest payable	27,141		35,391
Bank deposits	890,472		743,599
Other liabilities	406,974		479,387
Due to customers	388,876		425,507
Total liabilities	11,281,171		13,512,277
Commitments and contingencies
Equity:
Nelnet, Inc. shareholders' equity:
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding	—		—
Common stock:
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 25,585,840<br><br>shares and 26,400,630 shares, respectively	256		264
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding<br><br>10,663,088 shares	107		107
Additional paid-in capital	657		3,096
Retained earnings	3,295,301		3,270,403
Accumulated other comprehensive loss, net	(2,260)		(20,119)
Total Nelnet, Inc. shareholders' equity	3,294,061		3,253,751
Noncontrolling interests	(74,039)		(53,644)
Total equity	3,220,022		3,200,107
Total liabilities and equity	$	14,501,193	16,712,384
Supplemental information - assets and liabilities of consolidated education and other lending<br> variable interest entities:
Loans and accrued interest receivable	$	10,276,743	12,676,932
Restricted cash	515,844		451,932
Bonds and notes payable	(9,822,767)		(12,006,170)
Accrued interest payable and other liabilities	(102,370)		(135,748)
Net assets of consolidated education and other lending variable interest entities	$	867,450	986,946

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
(unaudited)
	Three months ended			Six months ended
	June 30,			June 30,
	2024		2023	2024	2023
Interest income:
Loan interest	$	202,129	243,045	418,853	468,288
Investment interest	40,737		40,982	92,814	81,707
Total interest income	242,866		284,027	511,667	549,995
Interest expense on bonds and notes payable and bank deposits	176,459		233,148	371,039	432,597
Net interest income	66,407		50,879	140,628	117,398
Less provision (negative provision) for loan losses	3,611		(11,380)	14,440	791
Net interest income after provision for loan losses	62,796		62,259	126,188	116,607
Other income (expense):
Loan servicing and systems revenue	109,052		122,020	236,252	261,247
Education technology services and payments revenue	116,909		109,858	260,449	243,462
Solar construction revenue	9,694		4,735	23,420	13,386
Other, net	28,871		(9,167)	45,734	(24,235)
Loss on sale of loans	(1,438)		(5,461)	(1,579)	(15,753)
Impairment expense and provision for beneficial interests	(7,776)		—	(7,813)	—
Derivative market value adjustments and derivative settlements, net	3,182		2,070	12,903	(12,005)
Total other income (expense), net	258,494		224,055	569,366	466,102
Cost of services:
Cost to provide education technology services and payments	40,222		40,407	88,832	88,110
Cost to provide solar construction services	8,072		9,122	22,300	17,422
Total cost of services	48,294		49,529	111,132	105,532
Operating expenses:
Salaries and benefits	139,634		144,706	283,509	297,416
Depreciation and amortization	15,142		18,652	31,911	35,279
Other expenses	59,792		45,997	116,637	86,781
Total operating expenses	214,568		209,355	432,057	419,476
Income before income taxes	58,428		27,430	152,365	57,701
Income tax expense	14,753		10,187	37,936	18,273
Net income	43,675		17,243	114,429	39,428
Net loss attributable to noncontrolling interests	1,416		10,183	4,069	13,957
Net income attributable to Nelnet, Inc.	$	45,091	27,426	118,498	53,385
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	1.23	0.73	3.22	1.43
Weighted average common shares outstanding - basic and diluted	36,525,482		37,468,397	36,841,227	37,406,843

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(unaudited)
	Three months ended June 30,					Six months ended June 30,
	2024			2023		2024		2023
Net income		$	43,675		17,243		114,429		39,428
Other comprehensive income:
Net changes related to foreign currency translation adjustments	$	(21)			—		(16)		(3)
Net changes related to available-for-sale debt securities:
Unrealized holding gains arising during period, net of losses	8,874			8,649		25,635		17,300
Reclassification of (gains) losses recognized in net income, net	(1,053)			(918)		(1,605)		4,064
Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity	51			70		122		70
Income tax effect	(1,890)	5,982		(1,872)	5,929	(5,797)	18,355	(5,144)	16,290
Net changes related to equity method investee's other comprehensive income:
Gain (loss) on cash flow hedge	335			(501)		(632)		(499)
Income tax effect	(80)	255		120	(381)	152	(480)	120	(379)
Other comprehensive income		6,216			5,548		17,859		15,908
Comprehensive income		49,891			22,791		132,288		55,336
Comprehensive loss attributable to noncontrolling interests		1,416			10,183		4,069		13,957
Comprehensive income attributable to Nelnet, Inc.		$	51,307		32,974		136,357		69,293

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
(unaudited)
	Nelnet, Inc. Shareholders
	Preferred stock shares		Common stock shares			Preferred stock		Class A common stock	Class B common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Noncontrolling interests	Total equity
		Class A		Class B
Balance as of March 31, 2023	—		26,623,662		10,668,460	$	—	266	107	4,639	3,243,985	(27,006)	(16,197)	3,205,794
Issuance of noncontrolling interests	—		—		—	—		—	—	—	—	—	11,703	11,703
Net income (loss)	—		—		—	—		—	—	—	27,426	—	(10,183)	17,243
Other comprehensive income	—		—		—	—		—	—	—	—	5,548	—	5,548
Distribution to noncontrolling interests	—		—		—	—		—	—	—	—	—	(7,942)	(7,942)
Cash dividends on Class A and Class B common stock - $0.26 per share	—		—		—	—		—	—	—	(9,694)	—	—	(9,694)
Issuance of common stock, net of forfeitures	—		27,562		—	—		—	—	2,056	—	—	—	2,056
Compensation expense for stock based awards	—		—		—	—		—	—	3,884	—	—	—	3,884
Repurchase of common stock	—		(4,734)		—	—		—	—	(465)	—	—	—	(465)
Balance as of June 30, 2023	—		26,646,490		10,668,460	$	—	266	107	10,114	3,261,717	(21,458)	(22,619)	3,228,127
Balance as of March 31, 2024	—		26,055,314		10,663,088	$	—	261	107	1,101	3,304,197	(8,476)	(61,470)	3,235,720
Issuance of noncontrolling interests	—		—		—	—		—	—	—	—	—	6,618	6,618
Net income (loss)	—		—		—	—		—	—	—	45,091	—	(1,416)	43,675
Other comprehensive income	—		—		—	—		—	—	—	—	6,216	—	6,216
Distribution to noncontrolling interests	—		—		—	—		—	—	—	—	—	(19,864)	(19,864)
Cash dividends on Class A and Class B common stock - $0.28 per share	—		—		—	—		—	—	—	(10,158)	—	—	(10,158)
Issuance of common stock, net of forfeitures	—		18,506		—	—		—	—	2,171	—	—	—	2,171
Compensation expense for stock based awards	—		—		—	—		—	—	2,733	—	—	—	2,733
Repurchase of common stock	—		(487,980)		—	—		(5)	—	(5,348)	(41,489)	—	—	(46,842)
Acquisition of remaining 20% of GRNE Solar, net of tax	—		—		—	—		—	—	—	(2,340)	—	2,093	(247)
Balance as of June 30, 2024	—		25,585,840		10,663,088	$	—	256	107	657	3,295,301	(2,260)	(74,039)	3,220,022

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
(unaudited)
	Nelnet, Inc. Shareholders
	Preferred stock shares		Common stock shares			Preferred stock		Class A common stock	Class B common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Noncontrolling interests	Total equity
		Class A		Class B
Balance as of December 31, 2022	—		26,461,651		10,668,460	$	—	265	107	1,109	3,227,680	(37,366)	(8,596)	3,183,199
Issuance of noncontrolling interests	—		—		—	—		—	—	—	—	—	12,904	12,904
Net income (loss)	—		—		—	—		—	—	—	53,385	—	(13,957)	39,428
Other comprehensive income	—		—		—	—		—	—	—	—	15,908	—	15,908
Distribution to noncontrolling interests	—		—		—	—		—	—	—	—	—	(12,970)	(12,970)
Cash dividends on Class A and Class B common stock - $0.52 per share	—		—		—	—		—	—	—	(19,348)	—	—	(19,348)
Issuance of common stock, net of forfeitures	—		226,086		—	—		1	—	5,119	—	—	—	5,120
Compensation expense for stock based awards	—		—		—	—		—	—	7,653	—	—	—	7,653
Repurchase of common stock	—		(41,247)		—	—		—	—	(3,767)	—	—	—	(3,767)
Balance as of June 30, 2023	—		26,646,490		10,668,460	$	—	266	107	10,114	3,261,717	(21,458)	(22,619)	3,228,127
Balance as of December 31, 2023	—		26,400,630		10,663,088	$	—	264	107	3,096	3,270,403	(20,119)	(53,644)	3,200,107
Issuance of noncontrolling interests	—		—		—	—		—	—	—	—	—	8,151	8,151
Net income (loss)	—		—		—	—		—	—	—	118,498	—	(4,069)	114,429
Other comprehensive income	—		—		—	—		—	—	—	—	17,859	—	17,859
Distribution to noncontrolling interests	—		—		—	—		—	—	—	—	—	(26,570)	(26,570)
Cash dividends on Class A and Class B common stock - $0.56 per share	—		—		—	—		—	—	—	(20,528)	—	—	(20,528)
Issuance of common stock, net of forfeitures	—		69,914		—	—		1	—	3,297	—	—	—	3,298
Compensation expense for stock based awards	—		—		—	—		—	—	5,834	—	—	—	5,834
Repurchase of common stock	—		(884,704)		—	—		(9)	—	(11,570)	(70,732)	—	—	(82,311)
Acquisition of remaining 20% of GRNE Solar, net of tax	—		—		—	—		—	—	—	(2,340)	—	2,093	(247)
Balance as of June 30, 2024	—		25,585,840		10,663,088	$	—	256	107	657	3,295,301	(2,260)	(74,039)	3,220,022

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
	Six months ended
	June 30,
	2024		2023
Net income attributable to Nelnet, Inc.	$	118,498	53,385
Net loss attributable to noncontrolling interests	(4,069)		(13,957)
Net income	114,429		39,428
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs	69,623		93,573
Loan discount and deferred lender fees accretion	(22,538)		(15,412)
Provision for loan losses	14,440		791
Derivative market value adjustments	(9,497)		35,407
Proceeds from termination of derivative instruments	—		164,079
Proceeds from (payments to) clearinghouse - initial and variation margin, net	5,716		(209,886)
Loss on sale of loans	1,579		15,753
Loss on investments, net	6,985		49,834
Deferred income tax benefit	(4,814)		(16,613)
Non-cash compensation expense	6,004		7,810
Impairment expense and provision for beneficial interests	7,813		—
Decrease (increase) in loan and investment accrued interest receivable	150,907		(4,884)
Decrease in accounts receivable	36,329		59,142
Decrease (increase) in other assets, net	39,667		(11,480)
Decrease in the carrying amount of ROU asset, net	1,911		2,390
Decrease in accrued interest payable	(8,250)		(123)
Decrease in other liabilities	(62,638)		(8,916)
Decrease in the carrying amount of lease liability	(1,982)		(2,568)
Other	(365)		75
Net cash provided by operating activities	345,319		198,400
Cash flows from investing activities:
Purchases and originations of loans	(430,575)		(411,868)
Purchases of loans from a related party	—		(467,519)
Net proceeds from loan repayments, claims, and capitalized interest	2,125,052		1,348,827
Proceeds from sale of loans	311,010		290,957
Purchases of available-for-sale securities	(272,031)		(296,468)
Purchases of restricted available-for-sale securities	(23,288)		—
Proceeds from sales of available-for-sale securities	265,887		577,548
Proceeds from sales of restricted available-for-sale securities	660		—
Proceeds from beneficial interest in loan securitizations	19,513		13,237
Purchases of other investments and issuance of notes receivable	(197,440)		(140,129)
Proceeds from other investments and repayments of notes receivable	53,635		14,982
Purchases of held-to-maturity debt securities	—		(2,889)
Redemption of held-to-maturity debt securities	5,041		1,487
Purchases of property and equipment	(33,842)		(37,253)
Net cash provided by investing activities	$	1,823,622	890,912
NELNET, INC. AND SUBSIDIARIES
---	---	---	---
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
	Six months ended
	June 30,
	2024		2023
Cash flows from financing activities:
Payments on bonds and notes payable	$	(2,283,381)	(2,417,622)
Proceeds from issuance of bonds and notes payable	37		806,148
Payments of debt issuance costs	(693)		(2,214)
Increase in bank deposits, net	146,873		39,724
Decrease in due to customers	(36,642)		(48,728)
Dividends paid	(20,528)		(19,348)
Repurchases of common stock	(82,311)		(3,767)
Proceeds from issuance of common stock	967		890
Acquisition of noncontrolling interest	(325)		—
Issuance of noncontrolling interests	27,396		14,018
Distribution to noncontrolling interests	(2,335)		(1,920)
Net cash used in financing activities	(2,250,942)		(1,632,819)
Effect of exchange rate changes on cash and restricted cash	(87)		(84)
Net decrease in cash, cash equivalents, and restricted cash	(82,088)		(543,591)
Cash, cash equivalents, and restricted cash, beginning of period	1,025,491		1,357,616
Cash, cash equivalents, and restricted cash, end of period	$	943,403	814,025	Supplemental disclosures of cash flow information:
---	---	---	---
Cash disbursements made for interest	$	355,943	386,686
Cash disbursements made for income taxes, net of refunds and credits received (a)	$	11,932	43,510
Cash disbursements made for operating leases	$	2,451	3,476
Non-cash operating, investing, and financing activity:
ROU assets obtained in exchange for lease obligations	$	49	18,485
Receipt of beneficial interest in consumer loan securitizations as consideration from sale of loans	$	13,693	53,896
Receipt of asset-backed investment securities as consideration from sale of loans	$	—	58,182
Transfer of available-for-sale securities to restricted	$	8,262	—
Distribution to noncontrolling interests	$	24,235	11,050
Issuance of noncontrolling interests	$	19,245	1,114

(a) The Company utilized $20.3 million and $13.9 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2024 and 2023, respectively.

The following table presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.

	As of		As of	As of	As of
	June 30, 2024		December 31, 2023	June 30, 2023	December 31, 2022
Total cash and cash equivalents	$	145,478	168,112	121,769	118,146
Restricted cash	538,446		488,723	484,223	945,159
Restricted cash - due to customers	259,479		368,656	208,033	294,311
Cash, cash equivalents, and restricted cash	$	943,403	1,025,491	814,025	1,357,616

See accompanying notes to consolidated financial statements.

NELNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts, unless otherwise noted)

(unaudited)

1. Basis of Financial Reporting

The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company”) as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2023 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report").

2. Reclassifications and Immaterial Error Corrections

During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the June 30, 2024 presentation.

Loan Sales

The Company determined the reversal of provision for loan losses resulting from the sale of loans should be presented as a reduction to the provision for loan losses rather than the historical presentation as a gain/(loss) on sale of loans included in "other income (expense)" on the consolidated statements of income. Prior period amounts have been corrected to conform to the current period presentation resulting in a reclassification of $21.0 million and $43.1 million for the three and six months ended June 30, 2023, respectively. This correction had no impact on previously reported consolidated assets, liabilities, total equity, net income, and cash flows from operating activities.

Solar Tax Equity Investments

The Company relies on audited financial statements provided by third parties to record its share of earnings or losses on its solar tax equity investments. The Company determined that the Hypothetical Liquidation at Book Value (HLBV) method of accounting was not consistently adopted by all third parties in such audited financial statements for those solar tax equity investments made under a lease pass-through structure. The adoption of the HLBV method of accounting accelerates accounting losses in the initial years of the investment but has no impact on the overall economics of the transaction. During the second quarter of 2024, the Company fully adopted HLBV accounting for these investments and prior period amounts have been corrected, resulting in an increase in solar investment losses included in "other, net" in "other income (expense)" on the consolidated statements of income of $2.2 million and $3.2 million for the three and six months ended June 30, 2023, respectively, partially offset by an increase in "net loss attributed to noncontrolling interests" of $1.0 million and $1.3 million for the three and six months ended June 30, 2023, respectively. The after-tax net income impact to Nelnet, Inc. was a reduction of $0.8 million and $1.4 million for the three and six months ended June 30, 2023, respectively. Consolidated "total equity" on the consolidated balance sheet was reduced $21.8 million as of December 31, 2023 and $16.7 million as of December 31, 2022, with the 2022 impact reflecting the cumulative impact of this correction through such date.

3. Loans and Accrued Interest Receivable and Allowance for Loan Losses

Loans and accrued interest receivable consisted of the following:

	As of		As of
	June 30, 2024		December 31, 2023
Non-Nelnet Bank:
Federally insured loans:
Stafford and other	$	2,308,561	2,936,174
Consolidation	7,175,172		8,750,033
Total	9,483,733		11,686,207
Private education loans	247,437		277,320
Consumer and other loans	179,447		85,935
Non-Nelnet Bank loans	9,910,617		12,049,462
Nelnet Bank:
Private education loans	354,412		360,520
Consumer and other loans	187,939		72,352
Nelnet Bank loans	542,351		432,872
Accrued interest receivable	619,472		764,385
Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs	(36,157)		(33,872)
Allowance for loan losses:
Non-Nelnet Bank:
Federally insured loans	(54,180)		(68,453)
Private education loans	(13,065)		(15,750)
Consumer and other loans	(14,135)		(11,742)
Non-Nelnet Bank allowance for loan losses	(81,380)		(95,945)
Nelnet Bank:
Private education loans	(3,559)		(3,347)
Consumer and other loans	(11,825)		(5,351)
Nelnet Bank allowance for loan losses	(15,384)		(8,698)
	$	10,939,519	13,108,204

The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.

	As of		As of
	June 30, 2024		December 31, 2023
Non-Nelnet Bank:
Federally insured loans (a)	0.57	%	0.59	%
Private education loans	5.28	%	5.68	%
Consumer and other loans (b)	7.88	%	13.66	%
Nelnet Bank:
Private education loans	1.00	%	0.93	%
Consumer and other loans	6.29	%	7.40	%

(a) As of June 30, 2024 and December 31, 2023, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty was 20.9% and 21.8%, respectively.

(b) Decrease as of June 30, 2024 compared with December 31, 2023 is due to the change in the mix of loans outstanding at the end of each period reported.

Loan Sales

During the three months ended June 30, 2024 and 2023, the Company sold $133.8 million and $158.3 million, respectively, of consumer loans, and recognized losses from such sales of $1.4 million and $5.5 million, respectively. During the six months ended June 30, 2024 and 2023, the Company sold $333.9 million and $420.2 million, respectively, of FFELP and consumer loans, and recognized losses from such sales of $1.6 million and $15.8 million, respectively. For certain of these loan sales, the Company has sold portfolios of loans to unrelated third parties who securitized such loans. As partial consideration received for the loans sold, the Company received residual interest in the loan securitizations and asset-backed investment securities that are included in "investments and notes receivable" on the Company's consolidated balance sheets.

Activity in the Allowance for Loan Losses

The following table presents the activity in the allowance for loan losses by portfolio segment.

	Balance at beginning of period		Provision (negative provision) for loan losses (a)	Charge-offs	Recoveries	Balance at end of period
	Three months ended June 30, 2024
Non-Nelnet Bank:
Federally insured loans	$	61,723	(1,970)	(5,573)	—	54,180
Private education loans	14,736		—	(1,827)	156	13,065
Consumer and other loans	18,761		(2,255)	(2,634)	263	14,135
Nelnet Bank:
Private education loans	3,660		255	(460)	104	3,559
Consumer and other loans	7,128		7,519	(2,837)	15	11,825
	$	106,008	3,549	(13,331)	538	96,764
	Three months ended June 30, 2023
Non-Nelnet Bank:
Federally insured loans	$	79,331	—	(5,270)	—	74,061
Private education loans	15,175		—	(1,069)	216	14,322
Consumer and other loans	35,317		(12,873)	(2,880)	441	20,005
Nelnet Bank:
Federally insured loans	160		(4)	(2)	—	154
Private education loans	2,894		517	(506)	—	2,905
Consumer and other loans	1,827		989	—	—	2,816
	$	134,704	(11,371)	(9,727)	657	114,263
	Six months ended June 30, 2024
Non-Nelnet Bank:
Federally insured loans	$	68,453	(3,840)	(10,433)	—	54,180
Private education loans	15,750		(265)	(2,840)	420	13,065
Consumer and other loans	11,742		6,335	(4,586)	644	14,135
Nelnet Bank:
Private education loans	3,347		1,012	(906)	106	3,559
Consumer and other loans	5,351		11,236	(4,804)	42	11,825
	$	104,643	14,478	(23,569)	1,212	96,764
	Six months ended June 30, 2023
Non-Nelnet Bank:
Federally insured loans	$	83,593	2,411	(11,943)	—	74,061
Private education loans	15,411		240	(1,709)	380	14,322
Consumer and other loans	30,263		(5,770)	(5,149)	661	20,005
Nelnet Bank:
Federally insured loans	170		(12)	(4)	—	154
Private education loans	2,390		1,129	(614)	—	2,905
Consumer and other loans	—		2,816	—	—	2,816
	$	131,827	814	(19,419)	1,041	114,263

(a) The following table presents the reduction to provision for loan losses as a result of the loan sales described under "Loan Sales" above.

	Provision for current period		Loan sale reduction to provision	Provision<br>(negative provision) for loan losses
	Three months ended June 30, 2024
Non-Nelnet Bank
Consumer and other loans	$	10,340	(12,595)	(2,255)
	Three months ended June 30, 2023
Non-Nelnet Bank
Consumer and other loans	$	8,098	(20,971)	(12,873)
	Six months ended June 30, 2024
Non-Nelnet Bank
Consumer and other loans	$	19,030	(12,695)	6,335
	Six months ended June 30, 2023
Non-Nelnet Bank
Consumer and other loans	$	37,307	(43,077)	(5,770)

The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios.

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Non-Nelnet Bank:
Federally insured loans	0.22	%	0.16	%	0.19	%	0.18	%
Private education loans	2.64	%	1.45	%	1.85	%	1.11	%
Consumer and other loans	4.62	%	4.07	%	4.98	%	3.22	%
Nelnet Bank:
Federally insured loans	—		0.01	%	—		0.01	%
Private education loans	0.40	%	0.57	%	0.44	%	0.35	%
Consumer and other loans	7.44	%	—		7.66	%	—

The primary items impacting provision for loan losses during the periods presented above were the establishment of an initial allowance for consumer and other loans originated and acquired and the reversal of provision for consumer and other loans sold.

The Company recorded a negative provision for loan losses for its federally insured loan portfolio in 2024 due to the amortization of this portfolio and an increase in prepayment assumptions.

Unfunded Loan Commitments

As of June 30, 2024 and December 31, 2023, Nelnet Bank had a liability of approximately $119,000 and $158,000, respectively, related to $11.5 million and $12.3 million, respectively, of unfunded private education, consumer, and other loan commitments. When a new loan commitment is made, the Company records an allowance that is included in "other liabilities" on the consolidated balance sheet by recording a provision for loan losses. When the loan is funded, the Company transfers the liability to the allowance for loan losses. Below is a reconciliation of the provision for loan losses reported in the consolidated statements of income.

	Three months ended			Six months ended
	June 30,			June 30,
	2024		2023	2024	2023
Provision for loan losses from allowance activity table above	$	3,549	(11,371)	14,478	814
Provision (negative provision) for unfunded loan commitments	62		(9)	(38)	(23)
Provision (negative provision) for loan losses reported in consolidated statements of income	$	3,611	(11,380)	14,440	791

Key Credit Quality Indicators

Loan Status and Delinquencies

Key credit quality indicators for the Company’s federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. The following table presents the Company’s loan status and delinquency amounts.

	As of June 30, 2024						As of December 31, 2023						As of June 30, 2023
Federally insured loans - Non-Nelnet Bank:
Loans in-school/grace/deferment	$	440,891	4.6	%			$	522,304	4.5	%			$	612,357	4.8	%
Loans in forbearance	702,539		7.4				979,588		8.4				930,629		7.3
Loans in repayment status:
Loans current	7,012,655				84.1	%	8,416,624				82.6	%	9,609,634				85.2	%
Loans delinquent 31-60 days	339,262				4.1		377,108				3.7		496,953				4.4
Loans delinquent 61-90 days	234,746				2.8		254,553				2.5		360,728				3.2
Loans delinquent 91-120 days	151,447				1.8		187,145				1.9		157,685				1.4
Loans delinquent 121-270 days	377,660				4.5		685,829				6.7		457,100				4.1
Loans delinquent 271 days or greater	224,533				2.7		263,056				2.6		194,656				1.7
Total loans in repayment	8,340,303		88.0		100.0	%	10,184,315		87.1		100.0	%	11,276,756		87.9		100.0	%
Total federally insured loans	9,483,733		100.0	%			11,686,207		100.0	%			12,819,742		100.0	%
Accrued interest receivable	612,374						757,713						810,489
Loan discount, net of unamortized premiums and deferred origination costs	(24,222)						(28,963)						(33,764)
Allowance for loan losses	(54,180)						(68,453)						(74,061)
Total federally insured loans and accrued interest receivable, net of allowance for loan losses	$	10,017,705					$	12,346,504					$	13,522,406
Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment	$	7,906	3.2	%			$	9,475	3.4	%			$	10,440	4.6	%
Loans in forbearance	2,248		0.9				2,529		0.9				1,874		0.8
Loans in repayment status:
Loans current	230,512				97.1	%	257,639				97.1	%	212,522				97.6	%
Loans delinquent 31-60 days	2,814				1.2		3,395				1.3		1,643				0.7
Loans delinquent 61-90 days	1,395				0.6		1,855				0.7		1,253				0.6
Loans delinquent 91 days or greater	2,562				1.1		2,427				0.9		2,324				1.1
Total loans in repayment	237,283		95.9		100.0	%	265,316		95.7		100.0	%	217,742		94.6		100.0	%
Total private education loans	247,437		100.0	%			277,320		100.0	%			230,056		100.0	%
Accrued interest receivable	2,407						2,653						2,196
Loan discount, net of unamortized premiums	(7,194)						(8,037)						183
Allowance for loan losses	(13,065)						(15,750)						(14,322)
Total private education loans and accrued interest receivable, net of allowance for loan losses	$	229,585					$	256,186					$	218,113
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment	$	122	0.1	%			$	146	0.2	%			$	102	0.1	%
Loans in repayment status:
Loans current	174,295				97.2	%	81,195				94.6	%	181,864				96.1	%
Loans delinquent 31-60 days	2,100				1.2		2,035				2.4		2,794				1.5
Loans delinquent 61-90 days	1,857				1.0		1,189				1.4		2,533				1.3
Loans delinquent 91 days or greater	1,073				0.6		1,370				1.6		2,034				1.1
Total loans in repayment	179,325		99.9		100.0	%	85,789		99.8		100.0	%	189,225		99.9		100.0	%
Total consumer and other loans	179,447		100.0	%			85,935		100.0	%			189,327		100.0	%
Accrued interest receivable	763						861						2,246
Loan discount and deferred lender fees, net of unamortized premiums	(9,205)						(2,474)						750
Allowance for loan losses	(14,135)						(11,742)						(20,005)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	$	156,870					$	72,580					$	172,318
	As of June 30, 2024						As of December 31, 2023						As of June 30, 2023
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment	$	41,394	11.7	%			$	25,957	7.2	%			$	16,996	4.8	%
Loans in forbearance	1,985		0.6				1,285		0.4				1,797		0.5
Loans in repayment status:
Loans current	308,591				99.2	%	331,580				99.4	%	332,205				99.6	%
Loans delinquent 30-59 days	934				0.3		839				0.3		691				0.2
Loans delinquent 60-89 days	444				0.2		253				0.1		241				0.1
Loans delinquent 90 days or greater	1,064				0.3		606				0.2		389				0.1
Total loans in repayment	311,033		87.7		100.0	%	333,278		92.4		100.0	%	333,526		94.7		100.0	%
Total private education loans	354,412		100.0	%			360,520		100.0	%			352,319		100.0	%
Accrued interest receivable	2,709						2,023						1,591
Deferred origination costs, net of unaccreted discount	5,501						5,608						5,366
Allowance for loan losses	(3,559)						(3,347)						(2,905)
Total private education loans and accrued interest receivable, net of allowance for loan losses	$	359,063					$	364,804					$	356,371
Consumer and other loans - Nelnet Bank (a):
Loans in deferment	$	1,414	0.8	%			$	103	0.1	%			$	6	0.0	%
Loans in repayment status:
Loans current	181,558				97.3	%	69,584				96.3	%	30,120				98.2	%
Loans delinquent 30-59 days	1,516				0.8		1,075				1.5		277				0.9
Loans delinquent 60-89 days	1,814				1.0		941				1.3		205				0.7
Loans delinquent 90 days or greater	1,637				0.9		649				0.9		60				0.2
Total loans in repayment	186,525		99.2		100.0	%	72,249		99.9		100.0	%	30,662		100.0		100.0	%
Total consumer and other loans	187,939		100.0	%			72,352		100.0	%			30,668		100.0	%
Accrued interest receivable	1,219						575						214
Loan discount, net of unamortized premiums	(1,037)						(6)						—
Allowance for loan losses	(11,825)						(5,351)						(2,816)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses	$	176,296					$	67,570					$	28,066

(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.

FICO Scores

An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination. The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination.

Nelnet Bank Private Education Loans

	Loan balance as of June 30, 2024
	Six months ended June 30, 2024		2023	2022	2021	2020	Total
FICO at origination:
Less than 705	$	451	3,957	5,200	4,413	374	14,395
705 - 734	950		9,658	20,984	8,167	513	40,272
735 - 764	1,149		9,307	31,511	13,673	1,318	56,958
765 - 794	860		6,543	49,268	25,720	1,286	83,677
Greater than 794	1,760		17,464	72,638	53,755	4,801	150,418
No FICO score available or required (a)	2,610		6,082	—	—	—	8,692
	$	7,780	53,011	179,601	105,728	8,292	354,412
	Loan balance as of December 31, 2023
---	---	---	---	---	---	---
	2023		2022	2021	2020	Total
FICO at origination:
Less than 705	$	3,840	5,495	4,647	386	14,368
705 - 734	9,534		21,961	8,805	525	40,825
735 - 764	8,648		32,969	14,910	1,358	57,885
765 - 794	5,776		52,045	27,221	1,374	86,416
Greater than 794	15,057		77,996	58,695	5,226	156,974
No FICO score available or required (a)	4,052		—	—	—	4,052
	$	46,907	190,466	114,278	8,869	360,520

Nelnet Bank Consumer and Other Loans

	Loan balance as of June 30, 2024
	Six months ended June 30, 2024		2023	2022	2021	2020	Prior years	Total
FICO at origination:
Less than 720	$	13,041	17,016	—	1,360	1,625	1,800	34,842
720 - 769	41,116		30,354	25	6,888	5,793	3,464	87,640
Greater than 769	35,957		19,243	106	4,899	2,262	1,062	63,529
No FICO score available or required (a)	1,153		440	281	54	—	—	1,928
	$	91,267	67,053	412	13,201	9,680	6,326	187,939	Loan balance as of December 31, 2023
---	---	---	---	---	---	---	---
	2023		2022	2021	2020	Prior years	Total
FICO at origination:
Less than 720	$	21,412	—	—	—	—	21,412
720 - 769	33,571		51	—	—	—	33,622
Greater than 769	16,484		109	—	—	—	16,593
No FICO score available or required (a)	386		284	55	—	—	725
	$	71,853	444	55	—	—	72,352

(a) Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.

Nonaccrual Status

The Company does not place federally insured loans on nonaccrual status due to the government guaranty. The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of June 30, 2024 and December 31, 2023, was not material.

Amortized Cost Basis by Origination Year

The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of June 30, 2024 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the FFEL Program and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all the Company’s federally insured loans were originated prior to July 1, 2010.

	Six months ended June 30, 2024		2023	2022	2021	2020	Prior years	Total
Private education loans - Non-Nelnet Bank:
Loans in-school/grace/deferment	$	—	—	657	3,325	713	3,211	7,906
Loans in forbearance	—		—	356	140	429	1,323	2,248
Loans in repayment status:
Loans current	—		207	4,053	5,141	42,508	178,603	230,512
Loans delinquent 31-60 days	—		—	13	45	380	2,376	2,814
Loans delinquent 61-90 days	—		—	7	8	167	1,213	1,395
Loans delinquent 91 days or greater	—		—	—	7	115	2,440	2,562
Total loans in repayment	—		207	4,073	5,201	43,170	184,632	237,283
Total private education loans	$	—	207	5,086	8,666	44,312	189,166	247,437
Accrued interest receivable								2,407
Loan discount, net of unamortized premiums								(7,194)
Allowance for loan losses								(13,065)
Total private education loans and accrued interest receivable, net of allowance for loan losses								$	229,585
Gross charge-offs - six months ended June 30, 2024	$	—	—	—	76	36	2,728	2,840
Consumer and other loans - Non-Nelnet Bank:
Loans in deferment	$	—	122	—	—	—	—	122
Loans in repayment status:
Loans current	131,766		37,985	3,624	526	283	111	174,295
Loans delinquent 31-60 days	160		1,394	433	103	7	3	2,100
Loans delinquent 61-90 days	42		1,158	649	8	—	—	1,857
Loans delinquent 91 days or greater	14		852	176	14	17	—	1,073
Total loans in repayment	131,982		41,389	4,882	651	307	114	179,325
Total consumer and other loans	$	131,982	41,511	4,882	651	307	114	179,447
Accrued interest receivable								763
Loan discount and deferred lender fees, net of unamortized premiums								(9,205)
Allowance for loan losses								(14,135)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses								$	156,870
Gross charge-offs - six months ended June 30, 2024	$	—	2,611	1,678	213	23	61	4,586
Private education loans - Nelnet Bank (a):
Loans in-school/grace/deferment	$	5,107	25,688	8,993	674	932	—	41,394
Loans in forbearance	24		149	1,274	430	108	—	1,985
Loans in repayment status:
Loans current	2,629		26,518	168,736	103,612	7,096	—	308,591
Loans delinquent 30-59 days	17		292	96	420	109	—	934
Loans delinquent 60-89 days	3		159	217	65	—	—	444
Loans delinquent 90 days or greater	—		205	285	527	47	—	1,064
Total loans in repayment	2,649		27,174	169,334	104,624	7,252	—	311,033
Total private education loans	$	7,780	53,011	179,601	105,728	8,292	—	354,412
Accrued interest receivable								2,709
Deferred origination costs, net of unaccreted discount								5,501
Allowance for loan losses								(3,559)
Total private education loans and accrued interest receivable, net of allowance for loan losses								$	359,063
Gross charge-offs - six months ended June 30, 2024	$	—	324	348	234	—	—	906
	Six months ended June 30, 2024		2023	2022	2021	2020	Prior years	Total
---	---	---	---	---	---	---	---	---	---
Consumer and other loans - Nelnet Bank (a):
Loans in deferment	$	1,308	106	—	—	—	—	1,414
Loans in repayment status:
Loans current	89,467		62,838	412	12,980	9,656	6,205	181,558
Loans delinquent 30-59 days	146		1,247	—	57	6	60	1,516
Loans delinquent 60-89 days	223		1,459	—	92	—	40	1,814
Loans delinquent 90 days or greater	123		1,403	—	72	18	21	1,637
Total loans in repayment	89,959		66,947	412	13,201	9,680	6,326	186,525
Total consumer and other loans	$	91,267	67,053	412	13,201	9,680	6,326	187,939
Accrued interest receivable								1,219
Loan discount, net of unamortized premiums								(1,037)
Allowance for loan losses								(11,825)
Total consumer and other loans and accrued interest receivable, net of allowance for loan losses								$	176,296
Gross charge-offs - six months ended June 30, 2024	$	73	4,724	—	—	—	7	4,804

4. Bonds and Notes Payable

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

	As of June 30, 2024
	Carrying<br><br>amount		Interest rate<br><br>range	Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
Bonds and notes based on indices	$	7,945,989	5.46% - 7.46%	8/26/30 - 9/25/69
Bonds and notes based on auction	75,735		0.00% - 6.45%	3/22/32 - 11/26/46
Total FFELP variable-rate bonds and notes	8,021,724
Fixed-rate bonds and notes issued in FFELP loan asset-backed<br> securitizations	389,462		1.42% - 3.45%	10/25/67 - 8/27/68
FFELP loan warehouse facilities	964,196		5.41% - 5.53%	7/15/25 / 4/1/26
Consumer loan warehouse facility	6,760		5.54%	11/14/25
Variable-rate bonds and notes issued in private education loan asset-backed securitizations	65,683		6.90% / 7.59%	6/25/49 / 11/25/53
Fixed-rate bonds and notes issued in private education loan asset-backed securitizations	63,203		5.35% / 7.15%	12/28/43 / 11/25/53
Unsecured line of credit	—		—	9/22/26
Participation agreements	7,728		5.58% - 6.08%	5/4/25 / 1/30/33
Repurchase agreement	111,189		6.44% - 6.75%	11/27/24 / 12/20/24
Other - due to related party	4,856		5.00%	11/15/28 - 11/15/30
	9,634,801
Discount on bonds and notes payable and debt issuance costs	(67,093)
Total	$	9,567,708			As of December 31, 2023
---	---	---	---	---
	Carrying<br><br>amount		Interest rate<br><br>range	Final maturity
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
Bonds and notes based on indices	$	9,552,667	5.45% - 7.47%	8/26/30 - 9/25/69
Bonds and notes based on auction	87,360		0.00% - 6.45%	3/22/32 - 11/26/46
Total FFELP variable-rate bonds and notes	9,640,027
Fixed-rate bonds and notes issued in FFELP loan asset-backed<br>securitizations	471,427		1.42% - 3.45%	10/25/67 - 8/27/68
FFELP loan warehouse facilities	1,398,485		5.41% - 5.70%	4/2/25 / 5/22/25
Consumer loan warehouse facility	23,691		5.70%	11/14/25
Variable-rate bonds and notes issued in private education loan asset-backed securitizations	80,393		6.90% / 7.57%	6/25/49 / 11/25/53
Fixed-rate bonds and notes issued in private education loan asset-backed securitizations	80,130		5.35% / 7.15%	12/28/43 / 11/25/53
Unsecured line of credit	—		—	9/22/26
Participation agreements	10,063		5.58% - 6.08%	3/12/24 / 5/4/24
Repurchase agreement	208,164		6.35% - 6.81%	1/22/24 - 12/20/24
Other - due to related party	5,778		5.00% - 6.05%	3/1/24 - 11/15/30
	11,918,158
Discount on bonds and notes payable and debt issuance costs	(89,765)
Total	$	11,828,393

Warehouse Facilities

The Company funds a portion of its loan acquisitions using warehouse facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. The following table summarizes the Company's warehouse facilities as of June 30, 2024.

Type of loans	Maximum financing amount		Amount outstanding	Amount available	Expiration of liquidity provisions	Final maturity date	Advance rate		Advanced as equity support
FFELP (a)	$	875,000	643,034	231,966	7/15/2024	7/15/2025	note (b)		$	45,502
FFELP (c)	375,000		321,162	53,838	4/1/2025	4/1/2026	92	%	26,539
	$	1,250,000	964,196	285,804					$	72,041
Consumer (d)	$	150,000	6,760	143,240	11/14/2024	11/14/2025	70	%	$	1,781

(a) Effective March 6, 2024, the maximum financing amount on this facility was reduced from $1.25 billion to $950 million. On May 17, 2024, this facility was amended to reduce the maximum financing amount from $950 million to $875 million, and to extend the expiration of liquidity provisions and final maturity date to July 15, 2024 and July 15, 2025, respectively. On July 15, 2024, this facility was amended to reduce the maximum financing amount from $875 million to $800 million, and to extend the expiration of liquidity provisions and final maturity date to January 31, 2025 and January 31, 2026, respectively.

(b) This facility has a static advance rate until the expiration date of the liquidity provisions. The maximum advance rates for this facility are 90% to 96%, and the minimum advance rates are 84% to 90%. 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.

(c) On April 2, 2024, this facility was amended to reduce the maximum financing amount from $432 million to $375 million, and to extend the expiration of liquidity provisions and final maturity date to April 1, 2025 and April 1, 2026, respectively.

(d) On March 11, 2024, this facility was amended to reduce the maximum financing amount from $200 million to $150 million.

Unsecured Line of Credit

The Company has a $495.0 million unsecured line of credit that has a maturity date of September 22, 2026. As of June 30, 2024, no amount was outstanding on the line of credit and $495.0 million was available for future use.

Repurchase Agreement

The Company has a repurchase agreement with a non-affiliated third party, the proceeds of which are collateralized by certain private education loan asset-backed securities (bond investments). The outstanding balance under this agreement as of June 30, 2024 was $111.2 million. The agreement has various maturity dates through December 20, 2024 or earlier if either party provides 180 days’ prior written notice, and the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date. See note 6 for additional information about the private education loan asset-backed securities investments serving as collateral for this repurchase agreement.

Debt Repurchases

The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. As of June 30, 2024, the Company holds $311.7 million (par value) of its own FFELP asset-backed securities.

In April 2023, the Company redeemed $188.6 million of FFELP loan asset-backed debt securities (bonds and notes payable) prior to their maturity. The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $25.9 million non-cash expense recognized in April 2023. This expense is included in "interest expense on bonds and notes payable and bank deposits" on the consolidated statements of income.

5. Derivative Financial Instruments

Non-Nelnet Bank Derivatives

The Company uses settled-to-market derivative financial instruments to manage interest rate risk. Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 5 of the notes to consolidated financial statements included in the 2023 Annual Report. A tabular presentation of such derivatives outstanding as of June 30, 2024 and December 31, 2023 is presented below.

Basis Swaps

The following table summarizes the Company’s outstanding basis swaps, in which the Company receives and pays the term adjusted Secured Overnight Financing Rate (SOFR) plus the tenor spread adjustment to LIBOR. Prior to the discontinuation of LIBOR on June 30, 2023, the Company received three-month LIBOR set discretely in advance and paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").

Maturity	Notional amount
	As of		As of
	June 30, 2024		December 31, 2023
2024	$	—	1,750,000
2026	1,150,000		1,150,000
2027	250,000		250,000
	$	1,400,000	3,150,000

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2024 and December 31, 2023 was the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.4 basis points and 10.1 basis points, respectively.

Interest Rate Swaps – Floor Income Hedges

The following table summarizes the outstanding derivative instruments used by the Company as of June 30, 2024 and December 31, 2023 to economically hedge loans earning fixed rate floor income.

Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)
2026	$	200,000	3.92	%
2028	50,000		3.56
2029 (b)	50,000		3.17
2030 (c)	100,000		3.63
	$	400,000	3.71	%

(a) For all interest rate derivatives, the Company receives payments based on SOFR, the majority of which reset quarterly.

(b) This $50 million notional amount derivative has a forward effective start date in January 2026.

During the first quarter of 2023, the Company received $183.2 million, which included $19.1 million related to 2023 settlements, to terminate $2.8 billion in notional amount of floor income interest rate swaps prior to their final maturity.

Nelnet Bank Derivatives

Interest Rate Swaps

The following table summarizes the outstanding non-centrally cleared derivative instruments used by Nelnet Bank as of June 30, 2024 and December 31, 2023 to hedge exposure to variability in cash flows related to variable rate intercompany deposits.

Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)
2028	$	40,000	3.33	%
2030 (b)	50,000		3.06
2032 (c)	25,000		4.03
2033 (d)	25,000		3.90
	$	140,000	3.46	%

(a) For all interest rate derivatives, the Company receives payments based on SOFR that reset monthly or quarterly.

(b) These $25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.

(d) This $25 million notional amount derivative has a forward effective start date in November 2025.

Consolidated Financial Statement Impact Related to Derivatives

Balance Sheets

Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse. As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset (included in "other assets") or liability (included in "other liabilities") measured at fair value. The following table summarizes the fair value of the Company's Nelnet Bank derivatives as reflected in the consolidated balance sheets.

	Fair value of asset derivatives			Fair value of liability derivatives
	As of June 30, 2024		As of December 31, 2023	As of June 30, 2024	As of December 31, 2023
Interest rate swaps - Nelnet Bank	$	2,112	452	780	1,976

Statements of Income

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

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Settlements:
1:3 basis swaps	$	249	(65)	614	794
Interest rate swaps - floor income hedges	1,193		47	2,383	22,525
Interest rate swaps - Nelnet Bank	207		83	409	83
Total settlements - income	1,649		65	3,406	23,402
Change in fair value:
1:3 basis swaps	(232)		235	(586)	211
Interest rate swaps - floor income hedges	1,168		662	7,228	(36,726)
Interest rate swaps - Nelnet Bank	597		1,108	2,855	1,108
Total change in fair value - income (expense)	1,533		2,005	9,497	(35,407)
Derivative market value adjustments and derivative settlements, net - income (expense)	$	3,182	2,070	12,903	(12,005)

6. Investments and Notes Receivable

"Restricted investments" and “investments and notes receivable” consisted of the following:

						As of December 31, 2023
		Gross unrealized gains	Gross unrealized losses	Fair value		Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Restricted available-for-sale investments (at fair value):
FFELP loan and other debt securities	47,968	2,473	(83)	50,358		16,993	1,069	(93)	17,969
Non-restricted available-for-sale investments (at fair value):
Non-Nelnet Bank:
FFELP loan	220,076	6,910	(1,450)	225,536		271,479	4,883	(5,393)	270,969
Private education loan (a)		—	(22,442)	235,948		281,791	—	(28,874)	252,917
Other debt securities		2,042	—	35,715		41,693	2,020	(1,275)	42,438
Total Non-Nelnet Bank		8,952	(23,892)	497,199		594,963	6,903	(35,542)	566,324
Nelnet Bank:
FFELP loan (b)		8,090	(1,350)	233,864		304,555	4,488	(2,286)	306,757
Private education loan		—	—	—		17,083	20	(10)	17,093
Other debt securities		917	(1,418)	158,108		49,284	117	(1,641)	47,760
Total Nelnet Bank		9,007	(2,768)	391,972		370,922	4,625	(3,937)	371,610
Total available-for-sale asset-backed securities	897,872	17,959	(26,660)	889,171		965,885	11,528	(39,479)	937,934
Equity securities				59,621					50,907
Total investments at fair value				948,792					988,841
Other Investments and Notes Receivable (not measured at fair value):
Held-to-maturity investments
Non-Nelnet Bank:
Debt securities				3,500					4,700
Nelnet Bank:
FFELP loan asset-backed securities (b)				217,283					149,938
Private education loan asset-backed securities				8,100					8,100
Total Nelnet Bank				225,383					158,038
Total held-to-maturity investments				228,883					162,738
Venture capital and funds:
Measurement alternative				196,803					194,084
Equity method				114,800					91,464
Total venture capital and funds				311,603					285,548
Real estate:
Equity method				125,989					103,811
Investment in ALLO:
Voting interest/equity method (c)				—					10,693
Preferred membership interest and accrued and unpaid preferred return (d)				176,092					155,047
Total investment in ALLO				176,092					165,740
Beneficial interest in loan securitizations (e):
Consumer loans, net of allowance for credit losses of 5,911 as of June 30, 2024				163,853					134,113
Private education loans				59,326					68,372
Federally insured student loans				20,790					22,594
Total beneficial interest in loan securitizations				243,969					225,079
Solar (f)				(176,105)					(146,040)
Notes receivable				28,565					53,747
Tax liens, affordable housing, and other				8,645					7,243
Total investments (not measured at fair value)				947,641					857,866
Total investments and notes receivable				$	1,896,433				$	1,846,707

All values are in US Dollars.

(a) A portion of the private education loan asset-backed securities were subject to a repurchase agreement with a third party, as discussed in note 4 under "Repurchase Agreement." As of June 30, 2024, the par value and fair value of these securities was $148.1 million and $130.7 million, respectively.

(b) 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 will be amortized, consistent with the amortization of any premiums on such securities, over the remaining lives of the respective securities as an adjustment of yield.

(c) The Company accounts for its voting membership interests in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting. Under the HLBV method of accounting on its ALLO voting membership interests investment, the Company recognized no losses and $12.2 million of losses during the three months ended June 30, 2024 and 2023, respectively, and losses of $10.7 million and $32.4 million during the six months ended June 30, 2024 and 2023, 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.

(d) As of June 30, 2024, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $169.5 million and $6.6 million, respectively. 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. During the second quarter of 2024, the Company purchased an additional $14.5 million of preferred membership interests of ALLO, which earn a preferred annual return of 20.0%. The Company recognized income on its ALLO preferred membership interests of $4.2 million and $2.3 million during the three months ended June 30, 2024 and 2023, respectively, and $6.6 million and $4.5 million during the six months ended June 30, 2024 and 2023, respectively. This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.

(e) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2024, the Company's ownership correlates to approximately $1.12 billion, $500 million, and $315 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

During the three months ended June 30, 2024, the Company recorded a $5.9 million allowance for credit losses (and related provision expense) related to certain of the Company's beneficial interest in consumer loan securitizations. As of June 30, 2024, the Company's estimate of future cash flows from the beneficial interest in certain consumer loan securitizations was lower than previously anticipated due to increased consumer loan defaults within such securitizations.

(f) As of June 30, 2024, the Company has funded a total of $502.8 million in solar investments that remain outstanding, which includes $219.8 million funded by syndication partners. 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 June 30, 2024, the Company has earned a total of $474.4 million of tax credits on those projects that remain outstanding, which includes $218.4 million earned by syndication partners. The solar investment negative carrying value on the consolidated balance sheet of $176.1 million as of June 30, 2024 represents the sum of total tax credits earned on solar projects placed-in-service through June 30, 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 June 30, 2024 excluding the portion owned by syndication partners, which is reflected as "noncontrolling interests" on the consolidated balance sheet, was $84.0 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) gains, 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 gains (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) gains excluding net gains (losses) attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company).

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Net (losses) gains	$	(2,610)	(10,086)	170	(13,030)
Less: net gains (losses) attributed to noncontrolling interest investors (syndication partners)	8		(8,430)	(1,633)	(11,428)
Net (losses) gains, excluding activity attributed to noncontrolling interest investors	$	(2,618)	(1,656)	1,803	(1,602)

As of June 30, 2024, the Company is committed to fund an additional $125.7 million on solar investments, of which $83.0 million is expected to be provided by syndication partners.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of June 30, 2024:

	As of June 30, 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
Restricted Investments:
FFELP loan and other debt securities	$	—	9,263	4,015	34,690	47,968
Fair value	—		9,295	4,049	37,014	50,358
Non-Nelnet Bank:
FFELP loan	—		4,285	13,866	201,925	220,076
Private education loan	—		—	—	258,390	258,390
Other debt securities	—		100	4,000	29,573	33,673
Total Non-Nelnet Bank	—		4,385	17,866	489,888	512,139
Fair value	—		4,428	17,748	475,023	497,199
Nelnet Bank:
FFELP loan	53,474		21,141	23,908	128,601	227,124
Other debt securities	—		33,107	16,374	109,128	158,609
Total Nelnet Bank	53,474		54,248	40,282	237,729	385,733
Fair value	54,336		54,254	40,457	242,925	391,972
Total available-for-sale asset-backed securities at amortized cost	$	53,474	67,896	62,163	762,307	945,840
Total available-for-sale asset-backed securities at fair value	$	54,336	67,977	62,254	754,962	939,529
Held-to-maturity investments
Non-Nelnet Bank:
Debt securities	$	3,500	—	—	—	3,500
Fair value	3,500		—	—	—	3,500
Nelnet Bank:
FFELP loan asset-backed securities	—		3,041	1,278	212,964	217,283
Private education loan asset-backed securities	—		—	—	8,100	8,100
Total Nelnet Bank	—		3,041	1,278	221,064	225,383
Fair value	—		3,129	1,304	226,330	230,763
Total held-to-maturity investments at amortized cost	$	3,500	3,041	1,278	221,064	228,883
Total held-to-maturity investments at fair value	$	3,500	3,129	1,304	226,330	234,263
Beneficial interest in loan securitizations (a):
Amortized cost	$	—	—	—	—	243,969
Fair value	$	—	—	—	—	261,850

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

The following table summarizes the unrealized positions for held-to-maturity investments and the beneficial interest in loan securitizations as of June 30, 2024:

	Carrying value		Gross unrealized gains	Gross unrealized losses (a)	Fair value
Asset-backed and other securities	$	228,883	5,380	—	234,263
Beneficial interest in loan securitizations	243,969		20,512	(2,631)	261,850

(a) None of the unrealized losses presented in the above table at June 30, 2024 were due to credit losses.

The following table presents securities classified as available-for-sale that have gross unrealized losses at June 30, 2024 and the fair value of such securities as of June 30, 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 June 30, 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
Restricted Investments:
FFELP loan and other debt securities	$	(83)	8,167	—	—	(83)	8,167
Non-Nelnet Bank:
FFELP loan	(7)		3,494	(1,443)	79,320	(1,450)	82,814
Private education loan	—		—	(22,442)	235,948	(22,442)	235,948
Total Non-Nelnet Bank	(7)		3,494	(23,885)	315,268	(23,892)	318,762
Nelnet Bank:
FFELP loan	(35)		9,694	(1,315)	34,871	(1,350)	44,565
Other debt securities	(42)		13,098	(1,376)	16,598	(1,418)	29,696
Total Nelnet Bank	(77)		22,792	(2,691)	51,469	(2,768)	74,261
Total available-for-sale asset-backed securities	$	(167)	34,453	(26,576)	366,737	(26,743)	401,190

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

	Three months ended			Six months ended
	June 30,			June 30,
	2024		2023	2024	2023
Gross proceeds from sales	$	113,173	85,375	266,547	577,548
Gross realized gains	$	1,516	920	2,571	2,194
Gross realized losses	(463)		(2)	(966)	(6,258)
Net gains (losses)	$	1,053	918	1,605	(4,064)

Intangible Assets

Intangible assets consisted of the following:

	Weighted average remaining useful life as of<br><br>June 30, 2024 (months)
		As of		As of
			June 30, 2024				December 31, 2023
Amortizable intangible assets, net:
Customer relationships (net of accumulated amortization of $50,661 and $46,573, respectively)	100				$	38,943		43,031
Trade names (net of accumulated amortization of $167 and $8,268, respectively)	94				603			642
Computer software (net of accumulated amortization of $745 and $574, respectively)	34				975			1,146
Total amortizable intangible assets, net	98				$	40,521		44,819

The Company recorded amortization expense on its intangible assets of $2.1 million and $3.5 million for the three months ended June 30, 2024 and 2023, respectively, and $4.3 million and $6.2 million during the six months ended June 30, 2024 and 2023, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of June 30, 2024, the Company estimates it will record amortization expense as follows:

2024 (July 1 - December 31)	$	4,193
2025	6,099
2026	6,012
2027	5,714
2028	5,354
2029 and thereafter	13,149
	$	40,521

Goodwill

The following table presents the carrying amount of goodwill as of June 30, 2024 and December 31, 2023 by reportable operating segment:

				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Total
Total goodwill	$	23,639	92,507	41,883	—	—	—	158,029

9. Impairment Expense, Provision for Beneficial Interests, and Restructure Charges

Impairment Expense and Provision for Beneficial Interests

The following table presents the non-cash impairment charges by asset and reportable operating segment recognized by the Company during 2024. No impairment charges were recognized during the first six months of 2023. The Company’s impairment charges are included in “impairment expense and provision for beneficial interests” in the consolidated statements of income.

				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Total
	Three months ended June 30, 2024
Investments - beneficial interest in consumer loan securitizations (a)	$	—	—	5,911	—	—	—	5,911
Property and equipment - solar facilities (b)	—		—	—	—	—	1,170	1,170
Other assets - solar inventory (b)	—		—	—	—	—	695	695
	$	—	—	5,911	—	—	1,865	7,776
	Six months ended June 30, 2024
Investments - beneficial interest in consumer loan securitizations (a)	$	—	—	5,911	—	—	—	5,911
Investments - venture capital	—		—	—	—	—	37	37
Property and equipment - solar facilities (b)	—		—	—	—	—	1,170	1,170
Other assets - solar inventory (b)	—		—	—	—	—	695	695
	$	—	—	5,911	—	—	1,902	7,813

(a) During the three months ended June 30, 2024, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in consumer loan securitizations. See note 6 for additional information.

(b) On April 12, 2024, the Company announced a change in its solar engineering, procurement, and construction (EPC) operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, during the three months ended June 30, 2024, the Company recognized non-cash impairment charges on certain solar facilities and inventory related to the residential solar operations.

Restructure Charges

GRNE Solar

On April 12, 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. The restructuring plan included a reduction in headcount of approximately 40 associates. The Company incurred a restructure charge of $1.6 million related to these staff reductions and commissions paid for canceled contracts, which is included in "salaries and benefits" in the consolidated statements of income.

Loan Servicing and Systems (LSS)

In June 2024, the Company announced a reduction in headcount after the completion of the transfer of direct loan servicing volume to one platform and the required servicing platform enhancements for the Company's new student loan servicing contract with the Department of Education. Approximately 220 associates who work in LSS, including some in related shared services that support LSS, were notified their positions were being eliminated. The Company estimates incurring a charge of $7.1 million related to these staff reductions, of which $2.1 million was recognized in the second quarter of 2024, which is included in "salaries and benefits" in the consolidated statements of income. The remaining expense will be recognized during the third and fourth quarters of 2024.

10. Bank Deposits

The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:

	As of		As of
	June 30, 2024		December 31, 2023
Retail and other savings	$	622,080	520,017
Brokered CDs, net of brokered deposit fees	246,156		203,522
Retail and other CDs, net of issuance fees	22,236		20,060
Total interest-bearing deposits	$	890,472	743,599

As of June 30, 2024 and December 31, 2023, Nelnet Bank had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $143.0 million and $104.0 million, respectively, including a $40.0 million pledged deposit from Nelnet, Inc. as required under a Capital and Liquidity Maintenance Agreement with the FDIC. All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.

The following table presents certificates of deposit remaining maturities as of June 30, 2024:

One year or less	$	982
After one year to two years	149,045
After two years to three years	75,172
After three years to four years	348
After four years to five years	42,845
After five years	—
Total	$	268,392

Retail and other savings deposits include deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trust (STFIT), and consumer savings. These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. The deposits exceeding the FDIC insurance limits as of June 30, 2024, was $44.9 million, which includes a portion of the pledged deposit from Nelnet, Inc., and an earmarked deposit required for intercompany transactions.

11. Earnings per Common Share

The following table presents 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.

	Three months ended June 30,
	2024				2023
	Common shareholders		Unvested restricted stock shareholders	Total	Common shareholders	Unvested restricted stock shareholders	Total
Numerator:
Net income attributable to Nelnet, Inc.	$	44,239	852	45,091	26,842	584	27,426
Denominator:
Weighted-average common shares outstanding - basic and diluted	35,835,387		690,095	36,525,482	36,670,933	797,464	37,468,397
Earnings per share - basic and diluted	$	1.23	1.23	1.23	0.73	0.73	0.73
	Six months ended June 30,
	2024				2023
	Common shareholders		Unvested restricted stock shareholders	Total	Common shareholders	Unvested restricted stock shareholders	Total
Numerator:
Net income attributable to Nelnet, Inc.	$	116,178	2,320	118,498	52,270	1,115	53,385
Denominator:
Weighted-average common shares outstanding - basic and diluted	36,119,876		721,351	36,841,227	36,625,819	781,024	37,406,843
Earnings per share - basic and diluted	$	3.22	3.22	3.22	1.43	1.43	1.43

12. Segment Reporting

See note 16 of the notes to consolidated financial statements included in the 2023 Annual Report for a description of the Company's operating segments. The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.

	Three months ended June 30, 2024
				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Interest income:
Loan interest	$	—	—	193,707	8,422	—	—	—	202,129
Investment interest	1,258		5,715	13,709	10,811	15,880	2,646	(9,282)	40,737
Total interest income	1,258		5,715	207,416	19,233	15,880	2,646	(9,282)	242,866
Interest expense	—		—	171,632	10,769	2,606	733	(9,282)	176,459
Net interest income	1,258		5,715	35,784	8,464	13,274	1,913	—	66,407
Less provision (negative provision) for loan losses	—		—	(4,225)	7,836	—	—	—	3,611
Net interest income after provision for loan losses	1,258		5,715	40,009	628	13,274	1,913	—	62,796
Other income (expense):
Loan servicing and systems revenue	109,052		—	—	—	—	—	—	109,052
Intersegment revenue	6,106		56	—	—	—	—	(6,162)	—
Education technology services and payments revenue	—		116,909	—	—	—	—	—	116,909
Solar construction revenue	—		—	—	—	—	9,694	—	9,694
Other, net	685		—	1,337	775	15,702	10,372	—	28,871
Loss on sale of loans	—		—	(1,438)	—	—	—	—	(1,438)
Impairment expense and provision for beneficial interests	—		—	(5,911)	—	—	(1,865)	—	(7,776)
Derivative settlements, net	—		—	1,442	207	—	—	—	1,649
Derivative market value adjustments, net	—		—	936	597	—	—	—	1,533
Total other income (expense), net	115,843		116,965	(3,634)	1,579	15,702	18,201	(6,162)	258,494
Cost of services:
Cost to provide education technology services and payments	—		40,222	—	—	—	—	—	40,222
Cost to provide solar construction services	—		—	—	—	—	8,072	—	8,072
Total cost of services	—		40,222	—	—	—	8,072	—	48,294
Operating expenses:
Salaries and benefits	70,631		40,736	1,113	2,798	374	24,786	(804)	139,634
Depreciation and amortization	5,342		2,712	—	341	—	6,748	—	15,142
Other expenses	20,661		8,600	3,793	2,067	11,829	12,842	—	59,792
Intersegment expenses, net	18,224		4,811	7,159	719	248	(25,803)	(5,358)	—
Total operating expenses	114,858		56,859	12,065	5,925	12,451	18,573	(6,162)	214,568
Income (loss) before income taxes	2,243		25,599	24,310	(3,718)	16,525	(6,531)	—	58,428
Income tax (expense) benefit	(538)		(6,150)	(5,835)	916	(3,935)	788	—	(14,753)
Net income (loss)	1,705		19,449	18,475	(2,802)	12,590	(5,743)	—	43,675
Net loss (income) attributable to noncontrolling interests	—		29	—	—	(129)	1,516	—	1,416
Net income (loss) attributable to Nelnet, Inc.	$	1,705	19,478	18,475	(2,802)	12,461	(4,227)	—	45,091
Total assets as of June 30, 2024	$	264,381	478,077	11,315,210	1,185,302	1,038,068	778,549	(558,394)	14,501,193
	Three months ended June 30, 2023
---	---	---	---	---	---	---	---	---	---
				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Interest income:
Loan interest	$	—	—	237,906	5,139	—	—	—	243,045
Investment interest	1,058		5,268	15,857	8,522	22,800	3,055	(15,578)	40,982
Total interest income	1,058		5,268	253,763	13,661	22,800	3,055	(15,578)	284,027
Interest expense	—		—	232,313	8,171	7,371	871	(15,578)	233,148
Net interest income	1,058		5,268	21,450	5,490	15,429	2,184	—	50,879
Less provision (negative provision) for loan losses	—		—	(12,873)	1,493	—	—	—	(11,380)
Net interest income after provision for loan losses	1,058		5,268	34,323	3,997	15,429	2,184	—	62,259
Other income (expense):
Loan servicing and systems revenue	122,020		—	—	—	—	—	—	122,020
Intersegment revenue	7,246		65	—	—	—	—	(7,311)	—
Education technology services and payments revenue	—		109,858	—	—	—	—	—	109,858
Solar construction revenue	—		—	—	—	—	4,735	—	4,735
Other, net	605		—	1,319	620	5,967	(17,677)	—	(9,167)
Loss on sale of loans	—		—	(5,461)	—	—	—	—	(5,461)
Impairment expense and provision for beneficial interests	—		—	—	—	—	—	—	—
Derivative settlements, net	—		—	(18)	83	—	—	—	65
Derivative market value adjustments, net	—		—	897	1,108	—	—	—	2,005
Total other income (expense), net	129,871		109,923	(3,263)	1,811	5,967	(12,942)	(7,311)	224,055
Cost of services:
Cost to provide education technology services and payments	—		40,407	—	—	—	—	—	40,407
Cost to provide solar construction services	—		—	—	—	—	9,122	—	9,122
Total cost of services	—		40,407	—	—	—	9,122	—	49,529
Operating expenses:
Salaries and benefits	76,141		38,351	1,096	2,297	210	26,756	(145)	144,706
Depreciation and amortization	4,863		2,815	—	51	—	10,923	—	18,652
Other expenses	13,818		9,692	4,115	1,624	4,134	12,613	—	45,997
Intersegment expenses, net	19,079		5,884	8,145	92	127	(26,161)	(7,166)	—
Total operating expenses	113,901		56,742	13,356	4,064	4,471	24,131	(7,311)	209,355
Income (loss) before income taxes	17,028		18,042	17,704	1,744	16,925	(44,011)	—	27,430
Income tax (expense) benefit	(4,086)		(4,327)	(4,249)	(396)	(4,031)	6,902	—	(10,187)
Net income (loss)	12,942		13,715	13,455	1,348	12,894	(37,109)	—	17,243
Net loss (income) attributable to noncontrolling interests	—		(19)	—	—	(128)	10,330	—	10,183
Net income (loss) attributable to Nelnet, Inc.	$	12,942	13,696	13,455	1,348	12,766	(26,779)	—	27,426
Total assets as of June 30, 2023	$	173,926	482,922	14,667,357	1,005,043	1,099,212	970,987	(613,757)	17,785,690
	Six months ended June 30, 2024
---	---	---	---	---	---	---	---	---	---
				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Interest income:
Loan interest	$	—	—	403,335	15,518	—	—	—	418,853
Investment interest	3,152		13,580	35,544	20,779	31,495	6,461	(18,197)	92,814
Total interest income	3,152		13,580	438,879	36,297	31,495	6,461	(18,197)	511,667
Interest expense	—		—	362,537	20,266	5,024	1,409	(18,197)	371,039
Net interest income	3,152		13,580	76,342	16,031	26,471	5,052	—	140,628
Less provision (negative provision) for loan losses	—		—	2,230	12,210	—	—	—	14,440
Net interest income after provision for loan losses	3,152		13,580	74,112	3,821	26,471	5,052	—	126,188
Other income (expense):
Loan servicing and systems revenue	236,252		—	—	—	—	—	—	236,252
Intersegment revenue	12,991		106	—	—	—	—	(13,097)	—
Education technology services and payments revenue	—		260,449	—	—	—	—	—	260,449
Solar construction revenue	—		—	—	—	—	23,420	—	23,420
Other, net	1,395		—	6,321	1,150	28,644	8,224	—	45,734
Loss on sale of loans	—		—	(1,579)	—	—	—	—	(1,579)
Impairment expense and provision for beneficial interests	—		—	(5,911)	—	—	(1,902)	—	(7,813)
Derivative settlements, net	—		—	2,997	409	—	—	—	3,406
Derivative market value adjustments, net	—		—	6,642	2,855	—	—	—	9,497
Total other income (expense), net	250,638		260,555	8,470	4,414	28,644	29,742	(13,097)	569,366
Cost of services:
Cost to provide education technology services and payments	—		88,832	—	—	—	—	—	88,832
Cost to provide solar construction services	—		—	—	—	—	22,300	—	22,300
Total cost of services	—		88,832	—	—	—	22,300	—	111,132
Operating expenses:
Salaries and benefits	147,353		80,903	2,308	5,518	732	48,307	(1,611)	283,509
Depreciation and amortization	10,450		5,395	—	601	—	15,464	—	31,911
Other expenses	40,198		16,158	7,210	3,194	23,632	26,243	—	116,637
Intersegment expenses, net	37,555		9,612	15,009	1,493	465	(52,648)	(11,486)	—
Total operating expenses	235,556		112,068	24,527	10,806	24,829	37,366	(13,097)	432,057
Income (loss) before income taxes	18,234		73,235	58,055	(2,571)	30,286	(24,872)	—	152,365
Income tax (expense) benefit	(4,376)		(17,585)	(13,933)	657	(7,209)	4,511	—	(37,936)
Net income (loss)	13,858		55,650	44,122	(1,914)	23,077	(20,361)	—	114,429
Net loss (income) attributable to noncontrolling interests	—		46	—	—	(249)	4,272	—	4,069
Net income (loss) attributable to Nelnet, Inc.	$	13,858	55,696	44,122	(1,914)	22,828	(16,089)	—	118,498
Total assets as of June 30, 2024	$	264,381	478,077	11,315,210	1,185,302	1,038,068	778,549	(558,394)	14,501,193
	Six months ended June 30, 2023
---	---	---	---	---	---	---	---	---	---
				Nelnet Financial Services
	Loan Servicing and Systems		Education Technology Services and Payments	Asset<br>Generation and<br>Management	Nelnet Bank	NFS Other Operating Segments	Corporate and Other Activities	Eliminations	Total
Interest income:
Loan interest	$	—	—	458,818	9,471	—	—	—	468,288
Investment interest	2,095		11,304	29,664	16,449	41,460	5,594	(24,860)	81,707
Total interest income	2,095		11,304	488,482	25,920	41,460	5,594	(24,860)	549,995
Interest expense	—		—	421,511	15,385	19,198	1,362	(24,860)	432,597
Net interest income	2,095		11,304	66,971	10,535	22,262	4,232	—	117,398
Less provision (negative provision) for loan losses	—		—	(3,119)	3,910	—	—	—	791
Net interest income after provision for loan losses	2,095		11,304	70,090	6,625	22,262	4,232	—	116,607
Other income (expense):
Loan servicing and systems revenue	261,247		—	—	—	—	—	—	261,247
Intersegment revenue	15,036		121	—	—	—	—	(15,157)	—
Education technology services and payments revenue	—		243,462	—	—	—	—	—	243,462
Solar construction revenue	—		—	—	—	—	13,386	—	13,386
Other, net	1,213		—	4,164	830	5,226	(35,667)	—	(24,235)
Loss on sale of loans	—		—	(15,753)	—	—	—	—	(15,753)
Impairment expense and provision for beneficial interests	—		—	—	—	—	—	—	—
Derivative settlements, net	—		—	23,319	83	—	—	—	23,402
Derivative market value adjustments, net	—		—	(36,515)	1,108	—	—	—	(35,407)
Total other income (expense), net	277,496		243,583	(24,785)	2,021	5,226	(22,281)	(15,157)	466,102
Cost of services:
Cost to provide education technology services and payments	—		88,110	—	—	—	—	—	88,110
Cost to provide solar construction services	—		—	—	—	—	17,422	—	17,422
Total cost of services	—		88,110	—	—	—	17,422	—	105,532
Operating expenses:
Salaries and benefits	160,701		76,264	1,851	4,361	429	53,955	(145)	297,416
Depreciation and amortization	9,377		5,393	—	56	—	20,454	—	35,279
Other expenses	27,131		17,755	9,131	2,406	4,701	25,657	—	86,781
Intersegment expenses, net	40,136		11,684	16,841	173	256	(54,078)	(15,012)	—
Total operating expenses	237,345		111,096	27,823	6,996	5,386	45,988	(15,157)	419,476
Income (loss) before income taxes	42,246		55,681	17,482	1,650	22,102	(81,459)	—	57,701
Income tax (expense) benefit	(10,139)		(13,393)	(4,196)	(362)	(5,240)	15,056	—	(18,273)
Net income (loss)	32,107		42,288	13,286	1,288	16,862	(66,403)	—	39,428
Net loss (income) attributable to noncontrolling interests	—		119	—	—	(269)	14,107	—	13,957
Net income (loss) attributable to Nelnet, Inc.	$	32,107	42,407	13,286	1,288	16,593	(52,296)	—	53,385
Total assets as of June 30, 2023	$	173,926	482,922	14,667,357	1,005,043	1,099,212	970,987	(613,757)	17,785,690

Disaggregated Revenue

The following tables present disaggregated revenue by service offering or customer type for the Company's fee-based operating segments.

Loan Servicing and Systems

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Government loan servicing	$	87,014	95,736	192,490	204,618
Private education and consumer loan servicing	12,959		12,063	25,577	24,225
FFELP loan servicing	3,245		3,554	6,624	6,921
Software services	4,879		5,962	9,420	15,660
Outsourced services	955		4,705	2,141	9,823
Loan servicing and systems revenue	$	109,052	122,020	236,252	261,247

Education Technology Services and Payments

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Tuition payment plan services	$	34,164	30,825	73,043	65,012
Payment processing	34,326		31,827	82,113	75,868
Education technology services	47,205		46,216	103,227	101,004
Other	1,214		990	2,066	1,578
Education technology services and payments revenue	$	116,909	109,858	260,449	243,462

Solar Construction

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Commercial revenue	$	8,777	2,329	20,355	8,205
Residential revenue (a)	917		2,406	3,065	5,181
Solar construction revenue	$	9,694	4,735	23,420	13,386

(a) On April 12, 2024, the Company announced a change in its solar engineering, procurement, and construction operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will continue to decline from recent historical amounts as existing customer contracts are completed.

Other Income (Expense)

The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Reinsurance premiums	$	14,851	3,816	27,631	4,351
ALLO preferred return	4,160		2,274	6,569	4,523
Borrower late fee income	2,584		2,168	5,718	4,414
Investment advisory services (WRCM)	1,524		1,639	3,033	3,251
Administration/sponsor fee income	1,482		1,697	3,028	3,468
Investment activity, net	217		(3,574)	(1,082)	(7,154)
Loss from ALLO voting membership interest investment	—		(12,169)	(10,693)	(32,382)
(Loss) gain from solar investments, net	(2,610)		(10,086)	170	(13,030)
Other	6,663		5,068	11,360	8,324
Other, net	$	28,871	(9,167)	45,734	(24,235)

14. Major Customer

Government Loan Servicing

Nelnet Servicing, a subsidiary of the Company, earns loan servicing revenue from a servicing contract with the Department of Education (the "Department"). Revenue earned by the Company related to this contract was $87.0 million and $95.7 million for the three months ended June 30, 2024 and 2023, respectively, and $192.5 million and $204.6 million for the six months ended June 30, 2024 and 2023, respectively.

The Company's legacy student loan servicing contract with the Department was scheduled to expire on December 14, 2023. In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which replaced the legacy Department student loan servicing contract.

The New Government Servicing Contract became effective April 24, 2023 and has a five year base period, with 2 two-year and 1 one-year possible extensions. The Department's total loan servicing volume of existing borrowers was allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract. Under the New Government Servicing Contract, Nelnet Servicing immediately began to make required servicing platform enhancements, for which it will be compensated from the Department on certain of these investments. Servicing under the New Government Servicing Contract went live on April 1, 2024 and the Company recognized revenue in accordance with this new contract beginning in the second quarter of 2024. The Company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024.

The New Government Servicing Contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contract was primarily based on borrower status. Assuming borrower volume remains consistent under the New Government Servicing Contract, the Company expects revenue earned on a per borrower blended basis will decrease under the New Government Servicing Contract versus the legacy contract. However, consistent with the legacy contract, the Company expects to earn additional revenue from the Department under the New Government Servicing Contract for change requests and other support services. In addition, the Company has executed an agreement with a third-party servicer awarded a USDS contract to license its servicing software to such entity. The Company began earning remote hosted servicing revenue from this new customer during the second quarter of 2024. The amount of revenue earned by the Company from this new customer will depend on the number of servicing borrowers allocated by the Department to this servicer.

15. Fair Value

The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.

	As of June 30, 2024			As of December 31, 2023
	Level 1		Level 2	Total	Level 1	Level 2	Total
Assets:
Investments:
Asset-backed debt securities - available-for-sale	$	100	939,429	939,529	99	955,804	955,903
Equity securities	187		—	187	73	—	73
Equity securities measured at net asset value (a)				59,434			50,834
Total investments	287		939,429	999,150	172	955,804	1,006,810
Derivative instruments	—		2,112	2,112	—	452	452
Total assets	$	287	941,541	1,001,262	172	956,256	1,007,262
Liabilities:
Derivative instruments	$	—	780	780	—	1,976	1,976
Total liabilities	$	—	780	780	—	1,976	1,976

(a) 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.

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

	As of June 30, 2024
	Fair value		Carrying value	Level 1	Level 2	Level 3
Financial assets:
Loans receivable	$	10,902,478	10,320,047	—	—	10,902,478
Accrued loan interest receivable	619,472		619,472	—	619,472	—
Cash and cash equivalents	145,478		145,478	145,478	—	—
Investments (at fair value)	999,150		999,150	287	939,429	—
Investments - held-to-maturity	234,263		228,883	—	234,263	—
Notes receivable	28,565		28,565	—	28,565	—
Beneficial interest in loan securitizations	261,850		243,969	—	—	261,850
Restricted cash	538,446		538,446	538,446	—	—
Restricted cash – due to customers	259,479		259,479	259,479	—	—
Derivative instruments	2,112		2,112	—	2,112	—
Financial liabilities:
Bonds and notes payable	9,560,951		9,567,708	—	9,560,951	—
Accrued interest payable	27,141		27,141	—	27,141	—
Bank deposits	869,437		890,472	575,265	294,172	—
Due to customers	388,876		388,876	388,876	—	—
Derivative instruments	780		780	—	780	—	As of December 31, 2023
---	---	---	---	---	---	---
	Fair value		Carrying value	Level 1	Level 2	Level 3
Financial assets:
Loans receivable	$	12,800,638	12,343,819	—	—	12,800,638
Accrued loan interest receivable	764,385		764,385	—	764,385	—
Cash and cash equivalents	168,112		168,112	168,112	—	—
Investments (at fair value)	1,006,810		1,006,810	172	955,804	—
Investments - held-to-maturity	163,622		162,738	—	163,622	—
Notes receivable	53,747		53,747	—	53,747	—
Beneficial interest in loan securitizations	262,093		225,079	—	—	262,093
Restricted cash	488,723		488,723	488,723	—	—
Restricted cash – due to customers	368,656		368,656	368,656	—	—
Derivative instruments	452		452	—	452	—
Financial liabilities:
Bonds and notes payable	11,629,359		11,828,393	—	11,629,359	—
Accrued interest payable	35,391		35,391	—	35,391	—
Bank deposits	722,973		743,599	467,420	255,553	—
Due to customers	425,507		425,507	425,507	—	—
Derivative instruments	1,976		1,976	—	1,976	—

The methodologies for estimating the fair value of financial assets and liabilities are described in note 23 of the notes to consolidated financial statements included in the 2023 Annual Report.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and six months ended June 30, 2024 and 2023. All dollars are in thousands, except per share amounts, unless otherwise noted.)

The following discussion and analysis provides information that the Company’s management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. The discussion should be read in conjunction with the Company’s consolidated financial statements included in the 2023 Annual Report.

Forward-looking and cautionary statements

This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document. Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “scheduled,” “should,” “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements.

The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” section of the 2023 Annual Report and include such risks and uncertainties as:

•risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, Federal Family Education Loan Program (the "FFEL Program" or FFELP), private education, and consumer loans;

•loan portfolio risks such as prepayment risk, credit risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans;

•financing and liquidity risks, including risks of changes in the interest rate environment;

•risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets;

•risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches;

•risks related to use of artificial intelligence;

•uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations;

•risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration;

•risks related to the expected benefits to the Company from its continuing investment in ALLO Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO"), and risks related to investments in solar projects, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and rising construction costs;

•risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;

•risks and uncertainties associated with climate change; and

•risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company’s consolidated financial statements.

All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this document. Although the Company may from time to time voluntarily update or revise its prior forward-looking statements to reflect actual results or changes in the Company's expectations, the Company disclaims any commitment to do so except as required by law.

OVERVIEW

The Company is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology - all with a large customer emphasis in the education space. The largest operating businesses engage in loan servicing and education technology services and payments. 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 both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). The Company is also actively expanding its private education, consumer, and other loan portfolios, and in November 2020 launched Nelnet Bank.

Reclassifications and Immaterial Error Corrections

The accompanying Management's Discussion and Analysis of Financial Condition and Results of Operations gives effect to the immaterial error corrections made to the previously reported consolidated financial statements for the three and six months ended June 30, 2023. For additional information, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments

The Company prepares its financial statements and presents its financial results in accordance with GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. A reconciliation of the Company's GAAP net income to Non-GAAP net income, excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, is provided below.

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
GAAP net income attributable to Nelnet, Inc.	$	45,091	27,426	118,498	53,385
Realized and unrealized derivative market value adjustments (a)	(1,533)		(2,005)	(9,497)	35,407
Tax effect (b)	368		481	2,279	(8,498)
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments	$	43,926	25,902	111,280	80,294
Earnings per share:
GAAP net income attributable to Nelnet, Inc.	$	1.23	0.73	3.22	1.43
Realized and unrealized derivative market value adjustments (a)	(0.04)		(0.05)	(0.26)	0.95
Tax effect (b)	0.01		0.01	0.06	(0.23)
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments	$	1.20	0.69	3.02	2.15

(a) "Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms.

The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria is met. 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 in the consolidated financial statements. As a result, the change in fair value of derivative instruments is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period.

The Company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the Company’s management utilizes operating results excluding these items for comparability purposes when making decisions regarding the Company’s performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.

(b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate.

Operating Segments

The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2023 Annual Report. They include:

•Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS)

•Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS)

•Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division

•Nelnet Bank, part of the NFS division

The Company earns fee-based revenue through its NDS and NBS reportable operating segments. The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, through its AGM reportable operating segment. This segment is expected to generate significant amounts of cash as the FFELP portfolio amortizes. The Company actively works to maximize the amount and timing of cash flows generated from its FFELP portfolio and seeks to acquire additional loan assets to leverage its servicing scale and expertise to generate incremental earnings and cash flow. Nelnet Bank operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah. Other operating segments included in the NFS division include the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary, property and casualty reinsurance activities, investment activities in real estate, and investment debt securities (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments.

Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured and secured corporate related debt transactions, certain investment activities including its investment in ALLO and early-stage and emerging growth companies (venture capital investments), and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services. In addition, Corporate includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs.

The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three and six months ended June 30, 2024 and 2023. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.

	Three months ended June 30,			Six months ended June 30,		Certain Items Impacting Comparability<br>(All dollar amounts below are pre-tax)
	2024		2023	2024	2023
NDS	$	2,243	17,028	18,234	42,246	•A decrease in before tax operating margin due primarily to a decrease in revenue while operating expenses remained relatively consistent period over period. The Company expects before tax operating margin to continue to be lower than historical prior year results for the remainder of 2024.
NBS	25,599		18,042	73,235	55,681	•An increase in before tax operating margin, excluding net interest income, due to increased revenue while maintaining a consistent cost structure.
Nelnet Financial Services division:
AGM	24,310		17,704	58,055	17,482	•The recognition of a $25.9 million non-cash expense in the second quarter of 2023 as the result of redeeming certain asset-backed debt securities prior to their maturity and writing off the remaining unamortized debt discount at the time of redemption.<br><br>•A decrease of $14.4 million and $49.5 million for the second quarter and first half of 2024, respectively, in net interest income due to a decrease in core loan spread and the average balance of loans compared with the same periods in 2023.<br><br>•A net gain of $6.6 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting in the first half of 2024 compared with a net loss of $36.5 million for the same period in 2023.<br><br>•The recognition of $1.6 million in losses from the sale of loans for the first half of 2024 compared with $15.8 million in the same period of 2023.<br><br>•The recognition of $5.9 million in provision for beneficial interest in consumer loan securitization investments in the second quarter of 2024.
Nelnet Bank	(3,718)		1,744	(2,571)	1,650	•The recognition of provision for loan losses of $7.8 million and $1.5 million for the three months ended June 30, 2024 and 2023, respectively, and $12.2 million and $3.9 million for the six months ended June 30, 2024 and 2023, respectively. The primary item impacting provision for loan losses was the establishment of an initial allowance for loans originated and acquired during the periods presented.
NFS other operating segments	16,525		16,925	30,286	22,102
Corporate:
Unallocated corporate costs	(9,056)		(14,084)	(19,101)	(27,072)
ALLO investment	3,940		(11,086)	(4,653)	(28,968)	•The recognition of no loss in the second quarter of 2024 compared with a loss of $12.2 million in the same period in 2023 and a loss of $10.7 million in the first half of 2024 compared with $32.4 million in the same period in 2023 from the ALLO voting membership interest investment. 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.
Nelnet Renewable Energy	(7,332)		(19,111)	(9,054)	(26,808)	•The recognition of a loss in the solar construction business for the three months ended June 30, 2024 and 2023 of $4.8 million and $8.2 million, respectively, and $8.8 million and $11.3 million for the six months ended June 30, 2024 and 2023, respectively. In April 2024, the Company announced a change in its solar construction operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. During the second quarter of 2024, the Company recognized non-cash impairment charges of $1.9 million on certain assets related to the residential operations and $1.6 million in severance costs and commissions paid for cancelled contracts.<br><br>•The recognition of net losses from tax solar investments of $2.6 million in the second quarter of 2024 compared with $10.1 million for the same period in 2023 and a net gain of $0.2 million in the first half of 2024 compared with a net loss of $13.0 million for the same period in 2023.
Other corporate activities	5,917		270	7,936	1,389
Net income before taxes	58,428		27,430	152,365	57,701
Income tax expense	(14,753)		(10,187)	(37,936)	(18,273)
Net loss attributable to noncontrolling interests	1,416		10,183	4,069	13,957	•The majority of noncontrolling interests represents losses attributed to noncontrolling membership interests in the Company’s Nelnet Renewable Energy operating segment.
Net income	$	45,091	27,426	118,498	53,385

CONSOLIDATED RESULTS OF OPERATIONS

An analysis of the Company's consolidated operating results for the three and six months ended June 30, 2024 compared with the same periods in 2023 is provided below.

The Company operates as distinct reportable operating segments as described above. For a reconciliation of the reportable segment operating results to the consolidated results of operations, see note 12 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Since the Company monitors and assesses its operations and results based on these segments, the discussion following the consolidated results of operations is presented on a reportable segment basis.

	Three months ended			Six months ended
	June 30,			June 30,
	2024		2023	2024	2023	Additional information
Loan interest	$	202,129	243,045	418,853	468,288	Decrease was due to decreases in the average balance of loans partially offset by an increase in the gross yield earned on loans.
Investment interest	40,737		40,982	92,814	81,707	Includes income from unrestricted interest-earning deposits and investments, and restricted cash in asset-backed securitizations. Increase was due to an increase in the average balances and interest rates and, for the first half of 2024, an increase in interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments.
Total interest income	242,866		284,027	511,667	549,995
Interest expense	176,459		233,148	371,039	432,597	Decrease was due to a decrease in the average balance of debt outstanding partially offset by an increase in cost of funds. In addition, during the second quarter of 2023, the Company recognized a $25.9 million non-cash expense as the result of redeeming certain asset-backed debt securities prior to their maturity and writing off the remaining unamortized debt discount at the time of redemption.
Net interest income	66,407		50,879	140,628	117,398
Less provision (negative provision) for loan losses	3,611		(11,380)	14,440	791	Represents the current period provision (negative provision) to reflect the lifetime expected credit losses related to the Company's loan portfolio. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for the factors impacting provision for loan losses for the periods presented.
Net interest income after provision for loan losses	62,796		62,259	126,188	116,607
Other income (expense):
LSS revenue	109,052		122,020	236,252	261,247	See LSS operating segment - results of operations.
ETSP revenue	116,909		109,858	260,449	243,462	See ETSP operating segment - results of operations.
Solar construction revenue	9,694		4,735	23,420	13,386	Represents revenue earned from GRNE Solar providing solar construction services, including design and installations of residential and commercial solar systems. On April 12, 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will continue to decline in future periods as existing customer contracts are completed.
Other, net	28,871		(9,167)	45,734	(24,235)	See table below for the components of "other, net."
Loss on sale of loans	(1,438)		(5,461)	(1,579)	(15,753)	The Company recognized losses from selling portfolios of loans. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Impairment expense and provision for beneficial interests	(7,776)		—	(7,813)	—	Represents a provision of $5.9 million for beneficial interest in consumer loan securitization investments and a non-cash impairment charge of $1.9 million on certain solar facilities and inventory related to the discontinuation of residential solar operations. See note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Derivative settlements, net	1,649		65	3,406	23,402	The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income. The majority of derivative settlements received in the periods presented was from the Company's derivatives used to hedge loans earning fixed rate floor income. To minimize the Company's exposure to market volatility and increase liquidity, the Company terminated this derivative portfolio ($2.8 billion notional amount) on March 15, 2023. Subsequent to terminating these derivatives, during the second and fourth quarters of 2023, the Company entered into a total of $400 million notional amount of derivatives to hedge loans earning fixed rate floor income and other loans and investments in which the Company receives a fixed rate. See AGM operating segment - results of operations for additional information.
Derivative market value adjustments, net	1,533		2,005	9,497	(35,407)	Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of the Company's floor income interest rate swaps. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. To minimize the Company's exposure to market volatility and increase liquidity, the Company terminated this derivative portfolio ($2.8 billion notional amount) on March 15, 2023. As such, the Company expects the derivative market value adjustments in future periods will be less substantial.
Total other income (expense), net	258,494		224,055	569,366	466,102
Cost of services:
---	---	---	---	---	---	---
Cost to provide education technology services and payments	40,222		40,407	88,832	88,110	Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations.
Cost to provide solar construction services	8,072		9,122	22,300	17,422	Represents direct costs to provide solar construction services. Since the acquisition of GRNE Solar in July 2022, it has incurred low and, in some cases, negative margins on certain projects.
Total cost of services	48,294		49,529	111,132	105,532
Operating expenses:
Salaries and benefits	139,634		144,706	283,509	297,416	Decrease was primarily due to staff reductions in LSS to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. This was partially offset by an increase in ETSP due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	15,142		18,652	31,911	35,279	Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions.
Other expenses	59,792		45,997	116,637	86,781	Represents expenses necessary for operations, such as postage and distribution, consulting and professional fees, occupancy, communications, reinsurance loss reserve and acquisitions costs, and certain information technology-related costs. Increase was driven by an increase in NFS due to reinsurance loss reserve and acquisition costs as a result of growth in reinsurance policies and in LSS due to additional postage and communication costs as a result of borrowers returning to repayment on September 1, 2023.
Total operating expenses	214,568		209,355	432,057	419,476
Income before income taxes	58,428		27,430	152,365	57,701
Income tax expense	14,753		10,187	37,936	18,273	The effective tax rate was 24.7% in the second quarter of 2024 compared with 27.1% for the same period in 2023 and 24.3% in the first half of 2024 compared with 25.5% for the same period in 2023.
Net income	43,675		17,243	114,429	39,428
Net loss attributable to noncontrolling interests	1,416		10,183	4,069	13,957	Represents the net income/loss attributable to the holders of noncontrolling membership interests. The majority is attributed to noncontrolling membership interests in the Company's Nelnet Renewable Energy operating segment.
Net income attributable to Nelnet, Inc.	$	45,091	27,426	118,498	53,385
Additional information:						See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments.
Net income attributable to Nelnet, Inc.	$	45,091	27,426	118,498	53,385
Derivative market value adjustments, net	(1,533)		(2,005)	(9,497)	35,407
Tax effect	368		481	2,279	(8,498)
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments	$	43,926	25,902	111,280	80,294

The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income.

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Reinsurance premiums	$	14,851	3,816	27,631	4,351	See NFS division - results of operations - NFS other operating segments.
ALLO preferred return	4,160		2,274	6,569	4,523	See Corporate - results of operations.
Borrower late fee income	2,584		2,168	5,718	4,414	See NFS division - results of operations - AGM operating segment.
Investment advisory services (WRCM)	1,524		1,639	3,033	3,251	See NFS division - results of operations - NFS other operating segments.
Administration/sponsor fee income	1,482		1,697	3,028	3,468	See NFS division - results of operations - AGM operating segment.
Investment activity, net	217		(3,574)	(1,082)	(7,154)	See note (a) below for additional information.
Loss from ALLO voting membership interest investment	—		(12,169)	(10,693)	(32,382)	See Corporate - results of operations.
(Loss) gain from solar investments, net	(2,610)		(10,086)	170	(13,030)	See Corporate - results of operations.
Other	6,663		5,068	11,360	8,324
Other, net	$	28,871	(9,167)	45,734	(24,235)

(a) The Company anticipates fluctuations in future periodic earnings resulting from investment sales and valuation adjustments. Investment activity by operating segment and investment type follows:

	Real Estate		Venture Capital and Funds	Equity / Bonds	Total	Real Estate	Venture Capital and Funds	Equity / Bonds	Total
	Three months ended June 30,
	2024					2023
NFS - AGM	$	—	(2,700)	—	(2,700)	—	(2,545)	—	(2,545)
NFS - Nelnet Bank	—		(10)	756	746	—	(10)	621	611
NFS - Other Operating Segments	(1,842)		—	322	(1,520)	(720)	—	440	(280)
Corporate	—		3,691	—	3,691	—	(1,360)	—	(1,360)
	$	(1,842)	981	1,078	217	(720)	(3,915)	1,061	(3,574)
	Six months ended June 30,
	2024					2023
NFS - AGM	$	—	(2,378)	—	(2,378)	—	(2,649)	(476)	(3,125)
NFS - Nelnet Bank	—		(189)	1,285	1,096	—	(272)	1,085	813
NFS - Other Operating Segments	(3,636)		—	534	(3,102)	428	—	(3,618)	(3,190)
Corporate	—		3,302	—	3,302	—	(1,652)	—	(1,652)
	$	(3,636)	735	1,819	(1,082)	428	(4,573)	(3,009)	(7,154)

LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS

Loan Servicing Volumes

	As of
	June 30,<br>2024		March 31,<br>2024	December 31,<br>2023	September 30,<br>2023	June 30,<br>2023	March 31,<br>2023	December 31,<br>2022
Servicing volume (dollars in millions):
Government	$	489,298	495,409	494,691	500,554	519,308	537,291	545,373
FFELP	14,576		15,783	17,462	18,400	19,021	19,815	20,226
Private and consumer	19,876		21,015	20,493	20,394	20,805	21,484	21,866
Total	$	523,750	532,207	532,646	539,348	559,134	578,590	587,465
Number of servicing borrowers:
Government	14,096,152		14,328,013	14,503,057	14,543,382	14,898,901	15,518,751	15,777,328
FFELP	610,745		656,814	725,866	764,660	788,686	819,791	829,939
Private and consumer	829,072		882,256	894,703	896,613	899,095	925,861	951,866
Total	15,535,969		15,867,083	16,123,626	16,204,655	16,586,682	17,264,403	17,559,133
Number of remote hosted borrowers:	133,681		65,295	70,580	103,396	716,908	5,048,324	6,135,760

Government Loan Servicing

Nelnet Servicing earns loan servicing revenue from a servicing contract with the Department. The Company's legacy student loan servicing contract with the Department was scheduled to expire on December 14, 2023. In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which replaced the legacy Department student loan servicing contract.

Department of Education Debt Relief

however, publication and comment period for such regulations are expected in early 2025, depending on the results of the presidential election. The Company cannot predict the timing, nature, or ultimate outcome of any student debt relief program as a result of the negotiated rulemaking process. Revenue earned under the New Government Servicing Contract will decrease in future periods if the Department successfully implements its debt relief plan and/or if the Department initiates additional loan forgiveness or cancellation programs in the future.

Private Education Loan Servicing

On July 17, 2024, Discover Financial Services (Discover) announced the sale of its approximately $10 billion private education student loan portfolio, representing approximately 400,000 borrowers, to partnerships managed by two global investment firms, with Firstmark Services, a division of the Company, assuming responsibility for servicing the portfolio upon the sale. The conversion of these loans to the Company’s platform is anticipated to occur in the fourth quarter of 2024.

Summary and Comparison of Operating Results

	Three months ended June 30,					Six months ended June 30,
	2024			2023		2024		2023		Additional information
Net interest income	$	1,258		1,058		3,152		2,095		Increase was due to higher interest rates.
Loan servicing and systems revenue	109,052			122,020		236,252		261,247		See table below for additional information.
Intersegment servicing revenue	6,106			7,246		12,991		15,036		Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. FFELP intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off.
Other income	685			605		1,395		1,213		Represents revenue earned from providing administrative support services.
Total other income	115,843			129,871		250,638		277,496
Salaries and benefits	70,631			76,141		147,353		160,701		Decrease was due to the Company being fully staffed at the beginning of 2023 with contact center operations and support associates as the Company prepared for expiration of the federal student loan payment pause under the CARES Act. In the first half of 2023, the Company reduced staff to manage expenses due to delays in the government's student debt relief and return to repayment programs and lower pricing and reduced servicing volume for LSS's Department servicing contract. In June 2024, the Company announced a reduction in headcount after the completion of the transfer of direct loan servicing volume to one platform and the required servicing platform enhancements for the New Government Servicing Contract. Approximately 220 associates were notified their positions were being eliminated. The Company estimates incurring a charge of $7.1 million related to these staff reductions, of which $2.1 million was recognized in the second quarter of 2024. The remaining expense will be recognized during the third and fourth quarters of 2024.
Depreciation and amortization	5,342			4,863		10,450		9,377
Other expenses	20,661			13,818		40,198		27,131		Increase was due to additional postage and communication costs due to borrowers returning to repayment on September 1, 2023.
Intersegment expenses	18,224			19,079		37,555		40,136		Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	114,858			113,901		235,556		237,345
Income before income taxes	2,243			17,028		18,234		42,246
Income tax expense	(538)			(4,086)		(4,376)		(10,139)		Represents income tax expense at an effective tax rate of 24%.
Net income	$	1,705		12,942		13,858		32,107
Before tax operating margin	1.9		%	13.1	%	7.3	%	15.2	%	Before tax operating margin represents before tax operating profitability as a percentage of revenue, and for LSS is calculated as income before income taxes divided by the total of loan servicing and systems revenue, intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.<br><br>Before tax operating margin decreased due primarily to a decrease in loan servicing and systems revenue as described in the table below, while operating expenses remained relatively consistent period over period. Operating expenses have been elevated due to costs incurred for the completion of the transfer of direct loan servicing volume to one platform, making platform enhancements for the new student loan servicing contact with the Department, and preparation of the conversion of the Discover portfolio. The Company expects before tax operating margin to continue to be lower than historical prior year results for the remainder of 2024 until the full cost savings from the June 2024 staff reductions are realized and revenue is generated from servicing the Discover portfolio.

Loan servicing and systems revenue

The following table presents disaggregated revenue by service offering for each reporting period.

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Government loan servicing	$	87,014	95,736	192,490	204,618	Represents revenue from the Company's servicing contracts with the Department. The Company recognized revenue in accordance with the New Government Servicing Contract beginning April 1, 2024. Decrease in the second quarter of 2024 compared with the same period in 2023 was due to lower revenue earned on a per borrower blended basis under the new contract and a decrease in the number of borrowers serviced. Decrease for the first half of 2024 compared with the same period in 2023 was also due to the legacy servicing contract reduction of the monthly fee earned per borrower on certain borrower statuses by $0.19 effective April 1, 2023 and a decrease of borrowers serviced due to the Department transferring one million of the Company's existing borrowers to another third-party servicer during the second and third quarters of 2023. These decreases were partially offset by an increase in the average revenue earned on a per borrower blended basis as a result of borrowers moving to a repayment status on September 1, 2023.
Private education and consumer loan servicing	12,959		12,063	25,577	24,225	Increase was due to $0.5 million deconversion revenue recognized in the second quarter of 2024 and rate increases based on contractual consumer price index changes, partially offset by a decrease in the number of borrowers serviced.
FFELP loan servicing	3,245		3,554	6,624	6,921	Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off.
Software services	4,879		5,962	9,420	15,660	Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Decrease was primarily due to the transfer of all Department remote hosted borrowers to other third-party servicers throughout 2023 under the Department's legacy servicing contracts. This decrease was partially offset by the Company beginning to recognize revenue in the second quarter of 2024 from a new remote hosted servicing customer awarded a USDS contract.
Outsourced services	955		4,705	2,141	9,823	Represents revenue from providing contact center and back office operational outsourcing services. Decrease was due to the contracts for support provided to certain Department servicers expiring in July 2023.
Loan servicing and systems revenue	$	109,052	122,020	236,252	261,247

EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS

As discussed further in the Company's 2023 Annual Report, this segment of the Company’s business is subject to seasonal fluctuations which correspond, or are related to, the traditional school year. Based on the timing of revenue recognition and when expenses are incurred, revenue and before tax operating margin are higher in the first quarter compared with the remainder of the year.

Summary and Comparison of Operating Results

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Net interest income	$	5,715	5,268	13,580	11,304	Represents interest income on tuition funds held in custody for schools. Increase was due to higher balances and interest rates.
Education technology services and payments revenue	116,909		109,858	260,449	243,462	See table below for additional information.
Intersegment revenue	56		65	106	121
Total other income	116,965		109,923	260,555	243,583
Cost of services	40,222		40,407	88,832	88,110	See table below for additional information.
Salaries and benefits	40,736		38,351	80,903	76,264	Increase was due to annual merit pay increases and an increase in headcount to support the growth of the customer base and the investment in the development of new technologies.
Depreciation and amortization	2,712		2,815	5,395	5,393
Other expenses	8,600		9,692	16,158	17,755	Decrease was due to a decrease in consulting and professional services resulting from reduced outsourced work. Decrease was partially offset by an increase in technology services.
Intersegment expenses, net	4,811		5,884	9,612	11,684	Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	56,859		56,742	112,068	111,096
Income before income taxes	25,599		18,042	73,235	55,681
Income tax expense	(6,150)		(4,327)	(17,585)	(13,393)	Represents income tax expense at an effective tax rate of 24%.
Net income	19,449		13,715	55,650	42,288
Net loss (income) attributable to noncontrolling interests	29		(19)	46	119
Net income	$	19,478	13,696	55,696	42,407

Education technology services and payments revenue

The following table presents disaggregated revenue by service offering and before tax operating margin for each reporting period.

	Three months ended June 30,					Six months ended June 30,
	2024			2023		2024		2023		Additional information
Tuition payment plan services	$	34,164		30,825		73,043		65,012		Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers.
Payment processing	34,326			31,827		82,113		75,868		Increase was due to increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers.
Education technology services	47,205			46,216		103,227		101,004		Increase was due to an increase in revenue from the Company’s school information system software and application and enrollment services. This increase was partially offset by a decrease in FACTS learning management services revenue as a result of decrease in economic aid provided to private schools in response to the COVID 19 pandemic. Learning management instructional services revenue provided to private schools has been funded by the CARES Act and the Emergency Assistance to Non-Public Schools (EANS) programs. The EANS I program funding ended on September 30, 2023 and EANS II program funding ends on September 30, 2024. As economic aid provided to schools under the EANS programs stopped on September 30, 2023 (EANS I) and winds down (EANS II), future instructional services revenue will decrease from recent historical periods. Revenue earned under the EANS programs was $9.6 million and $20.2 million for the three and six month ended June 30, 2024 compared with $17.1 million and $33.5 million for the same periods in 2023, respectively. The decrease in FACTS learning management services revenue as a result of the decrease in EANS revenue was partially offset by an increase in non-EANS professional development and instructional services provided to both new and existing customers.
Other	1,214			990		2,066		1,578
Education technology services and payments revenue	116,909			109,858		260,449		243,462
Cost of services	40,222			40,407		88,832		88,110		Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues.
Net revenue	$	76,687		69,451		171,617		155,352
GAAP before tax operating margin	33.4		%	26.0	%	42.7	%	35.8	%	Before tax operating margin, excluding net interest income, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the ETSP segment is calculated as income before income taxes less net interest income divided by net revenue. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it facilitates an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.<br><br>Before tax operating margin, excluding net interest income, increased due to increased net revenue while maintaining a consistent cost structure.
Net interest income	(7.5)			(7.6)		(7.9)		(7.2)
Non-GAAP before tax operating margin, excluding net interest income	25.9		%	18.4	%	34.8	%	28.6	%

NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS

Asset Generation and Management Operating Segment

Loan Portfolio

As of June 30, 2024, the AGM operating segment had a $9.9 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of June 30, 2024 and December 31, 2023, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Activity

The following table sets forth the activity of loans in the AGM operating segment:

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Beginning balance	$	10,799,942	13,482,620	12,049,462	14,169,771
Loan acquisitions:
Federally insured student loans	—		512,611	—	515,591
Consumer and other loans	195,279		59,972	276,009	310,678
Total loan acquisitions	195,279		572,583	276,009	826,269
Repayments, claims, capitalized interest, participations, and other, net	(375,982)		(443,068)	(726,478)	(853,307)
Loans lost to external parties	(574,834)		(214,734)	(1,354,489)	(483,430)
Loans sold	(133,788)		(158,276)	(333,887)	(420,178)
Ending balance	$	9,910,617	13,239,125	9,910,617	13,239,125

The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "investments and notes receivable" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2024, the Company’s ownership correlates to approximately $1.94 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table. Interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment income" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.

Since late 2021, the Company has experienced accelerated run-off of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans as a result of the continued extension of the CARES Act payment pause on Department held loans and the initiatives offered by the Department for FFELP borrowers to consolidate their loans to qualify for loan forgiveness under the Public Service Loan Forgiveness and other programs. After multiple extensions of the student loans payment pause under the CARES Act, the payment and interest accrual suspension ended August 31, 2023, and Federal Direct Loan Program borrowers returned to repayment on September 1, 2023.

In August 2022, the Department announced a broad-based student debt relief plan that would have provided up to $20,000 in one-time debt relief to income-qualified recipients with Department held student loans. On June 30, 2023, the Supreme Court ruled that the Department was prohibited from implementing this plan. After the invalidation of this broad-based relief plan, the Department announced plans to enter into a negotiated rulemaking process to achieve debt relief for federal student loan borrowers using provisions of the Higher Education Act (HEA). The Department released proposed regulatory text prior to holding its statutorily-required negotiated rulemaking sessions. Notably, the Department proposed forgiveness for certain groups of borrowers with privately-held FFELP loans without consolidation into the Federal Direct Loan Program as a prerequisite requirement for such forgiveness. Publicly available negotiated rulemaking sessions occurred in the fourth quarter of 2023 and the first quarter of 2024. The Department published draft regulations for public comment in April 2024, including regulations that would grant automatic discharge for all federal student loans, including privately-held FFELP loans, older than 20 or 25 years. Final publication and effective date for all pending forgiveness regulations pursuant to the HEA are expected in Fall of 2024. The April 2024 draft publication did not include regulations to provide forgiveness for borrowers (including borrowers with privately-held FFELP loans) “experiencing financial hardship;” however, publication and comment period for such regulations are expected in early 2025, depending on the results of the presidential election.

In addition, during 2023, the Department issued final regulations on the Saving on a Valuable Education (SAVE) income-driven repayment (IDR) plan. The SAVE plan makes significant changes to IDR to lower monthly payment amounts, subsidize interest, and accelerate time to forgiveness for some borrowers. FFELP borrowers can access the new income-driven repayment

changes by consolidating their loans into the Federal Direct Loan Program. The benefits of the SAVE plan are conferred not exclusively on a go-forward basis, as has been the case with previous IDR rulemaking, meaning borrowers who consolidate into the Federal Direct Loan Program receive credit toward forgiveness for months in repayment prior to consolidation. The new income-driven repayment regulations were effective July 1, 2024; however, the Biden-Harris Administration announced implementation for some features starting July 30, 2023 and SAVE forgiveness starting February 2024. Two groups of states sued to block implementation of the SAVE program. As of the date of this filing, SAVE is not operational due to a nationwide injunction ordered by the 8th Circuit Court of Appeals. In response to the injunction, the Biden-Harris Administration placed approximately 8 million borrowers enrolled in the SAVE program into administrative forbearance. During the forbearance period, borrowers will not have to make student loan payments, and no interest will accrue.

The proposed forgiveness regulations and implementation of the SAVE IDR plan regulations have increased, and may continue to increase, consolidation and prepayment activity as FFELP borrowers (i) consolidate their loans into the Federal Direct Loan Program in order to be eligible for potential debt relief for Department borrowers and the SAVE plan and (ii) begin receiving automatic forgiveness for loans older than 20 or 25 years. Prepayments could significantly increase if the federal government and/or the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, or consolidation loan programs.

Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs

For a summary of the allowance as a percentage of the ending balance and loan status and delinquency amounts for each of AGM's loan portfolios as of June 30, 2024 and December 31, 2023; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2024 and 2023, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Spread Analysis

The following table analyzes the loan spread on AGM’s portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net loan interest income, including settlements on derivatives" below, divided by the average balance of loans or debt outstanding.

	Three months ended June 30,					Six months ended June 30,
	2024			2023		2024		2023
Variable loan yield, gross	8.16		%	7.73	%	8.07	%	7.42	%
Consolidation rebate fees	(0.81)			(0.80)		(0.80)		(0.81)
Discount accretion, net of premium and deferred origination costs amortization	0.07			0.06		0.07		0.05
Variable loan yield, net	7.42			6.99		7.34		6.66
Loan cost of funds - interest expense (a)	(6.50)			(5.94)		(6.50)		(5.73)
Loan cost of funds - derivative settlements (b) (c)	0.01			(0.00	)	0.01		0.01
Variable loan spread	0.93			1.05		0.85		0.94
Fixed rate floor income, gross	0.01			0.01		0.01		0.03
Fixed rate floor income - derivative settlements (b) (d)	0.04			0.00		0.04		0.34
Fixed rate floor income, net of settlements on derivatives	0.05			0.01		0.05		0.37
Core loan spread	0.98		%	1.06	%	0.90	%	1.31	%
Average balance of AGM's loans	$	10,484,458		13,616,889		11,022,981		13,804,065
Average balance of AGM's debt outstanding	10,168,761			13,011,224		10,778,080		13,187,073

(a) In the second quarter of 2023, the Company redeemed certain asset-backed debt securities prior to their maturity, resulting in the recognition of $25.9 million in interest expense from the write-off of the remaining unamortized debt discount associated with these bonds at the time of redemption. This non-cash expense was excluded from the table above.

(b) Derivative settlements represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements with respect to derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income (loan spread) as presented in this table. The Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information,

which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's Non-Nelnet Bank derivative instruments, including the net settlement activity recognized by the Company for each type of derivative for the 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 5 and in this table.

A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows.

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Core loan spread	0.98	%	1.06	%	0.90	%	1.31	%
Derivative settlements (1:3 basis swaps)	(0.01)		0.00		(0.01)		(0.01)
Derivative settlements (fixed rate floor income)	(0.04)		(0.00	)	(0.04)		(0.34)
Loan spread	0.93	%	1.06	%	0.85	%	0.96	%

(d) Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps.

The relationship between the indices in which AGM earns interest on its loans and funds such loans has a significant impact on loan spread. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM’s FFELP student loan assets and related funding for those assets. In an increasing interest rate environment, student loan spread on FFELP loans increases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly.

Variable loan spread was lower during the three and six months ended June 30, 2024 compared with the same periods in 2023 due to a significant increase in short-term rates during 2023 compared with an insignificant change in rates during 2024.

The difference between variable loan spread and core loan spread is fixed rate floor income earned on a portion of AGM's federally insured student loan portfolio. A summary of fixed rate floor income and its contribution to core loan spread follows:

	Three months ended June 30,					Six months ended June 30,
	2024			2023		2024		2023
Fixed rate floor income, gross	$	159		456		338		1,567
Derivative settlements (a)	1,193			47		2,383		22,525
Fixed rate floor income, net	$	1,352		503		2,721		24,092
Fixed rate floor income contribution to spread, net	0.05		%	0.01	%	0.05	%	0.37	%

(a) Derivative settlements consist of net settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

The decrease in gross fixed rate floor income for the three and six months ended June 30, 2024 compared with the same periods in 2023 was due to higher interest rates in 2024 compared with 2023.

The Company had a significant portfolio of derivative instruments in which the Company paid a fixed rate and received a floating rate to economically hedge loans earning fixed rate floor income. On March 15, 2023, to minimize the Company's exposure to market volatility and increase liquidity, the Company terminated its derivative portfolio hedging loans earning fixed rate floor income ($2.8 billion in notional amount of derivatives). Through March 15, 2023, the Company had received cash or had a receivable from its clearinghouse related to variation margin equal to the fair value of the $2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $183.2 million, which included $19.1 million related to current period settlements. Subsequent to terminating these derivatives, during the second and fourth quarters of 2023, the Company entered into a total of $400.0 million notional amount of derivatives to hedge loans earning fixed rate floor income and other loans and investments in which the Company receives a fixed rate.

The increase in net derivative settlements received by the Company during the three months ended June 30, 2024, compared with the same period in 2023, was due to an increase in the notional amount of derivatives outstanding. The decrease in net derivative settlements received by the Company during the six months ended June 30, 2024, compared with the same period in 2023, was due to a decrease in the notional amount of derivatives outstanding and less favorable terms on the $400.0 million of notional derivatives entered into in 2023 compared with the $2.8 billion notional derivatives that were terminated due to an increase in interest rates from when the terminated derivatives were initially executed.

Summary and Comparison of Operating Results

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Interest income:
Loan interest	$	193,707	237,906	403,335	458,818	See table below for additional analysis.
Investment interest	13,709		15,857	35,544	29,664	Decrease for the second quarter of 2024 compared with the same period in 2023 was due to a decrease of interest earned on the Company's partial ownership in loan securitizations that are accounted for as held-to-maturity beneficial interest investments, partially offset by an increase of interest earned on restricted cash due to higher balances and interest rates. Increase for the first half of 2024 compared with the same period in 2023 was due to an increase of interest earned on the Company's beneficial interest investments and an increase of interest earned on restricted cash due to higher balances and interest rates.
Total interest income	207,416		253,763	438,879	488,482
Loan interest expense	164,315		218,602	348,460	400,665	See table below for additional analysis.
Intercompany interest expense	7,317		13,711	14,077	20,846	Represents interest paid by AGM to Nelnet, Inc. (parent company) related to (i) internal borrowings to fund equity advances on certain AGM debt facilities; and (ii) AGM issued bonds held by Nelnet, Inc. Decrease was due to a decrease in balances outstanding. Intercompany interest is eliminated for consolidated financial reporting purposes.
Net interest income	35,784		21,450	76,342	66,971
Less (negative provision) provision for loan losses	(4,225)		(12,873)	2,230	(3,119)	See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting (negative provision) provision for loan losses for the periods presented.
Net interest income after provision for loan losses	40,009		34,323	74,112	70,090
Other income, net	1,337		1,319	6,321	4,164	Represents primarily borrower late fees, income from providing administration activities for third parties, and income/losses from AGM's investment in joint ventures.
Loss on sale of loans	(1,438)		(5,461)	(1,579)	(15,753)	The Company recognized losses from selling portfolios of loans. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about losses on the sale of loans for the periods presented.
Provision for beneficial interests	(5,911)		—	(5,911)	—	During the three months ended June 30, 2024, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in consumer loan securitizations. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Derivative settlements, net	1,442		(18)	2,997	23,319	The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income as reflected in the table below. The majority of derivative settlements received in the periods presented was from the Company's derivative portfolio used to hedge loans earning fixed rate floor income. The decrease in net derivative settlements received by the Company for the first half of 2024 compared with the same period in 2023 was due to the termination of the floor income interest rate swaps ($2.8 billion notional amount) in March 2023. See above under "Loan Spread Analysis" for further information.
Derivative market value adjustments, net	936		897	6,642	(36,515)	Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of the Company's floor income interest rate swaps. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. To minimize the Company's exposure to market volatility and increase liquidity, AGM terminated its portfolio of floor income interest rate swaps ($2.8 billion notional amount) in March 2023. As such, the Company expects the derivative market value adjustments in future periods will be less substantial. See above under "Loan Spread Analysis" for further information.
Total other income, net	(3,634)		(3,263)	8,470	(24,785)
Salaries and benefits	1,113		1,096	2,308	1,851	Increase was due to additional headcount as the Company actively expands into new asset loan classes.
Other expenses	3,793		4,115	7,210	9,131	Represents primarily servicing fees paid to third parties. Decrease in servicing fees was due to the amortization of the FFELP student loan portfolio.
Intersegment expenses	7,159		8,145	15,009	16,841	Represents fees paid to LSS for the servicing of the majority of AGM’s loans. These amounts exceed the actual cost of servicing the loans. Intersegment expenses also includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
Total operating expenses	12,065		13,356	24,527	27,823
Income before income taxes	24,310		17,704	58,055	17,482
---	---	---	---	---	---	---
Income tax expense	(5,835)		(4,249)	(13,933)	(4,196)	Represents income tax expense at an effective tax rate of 24%.
Net income	$	18,475	13,455	44,122	13,286
Additional information:
GAAP net income	$	18,475	13,455	44,122	13,286	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value adjustments.
Derivative market value adjustments, net	(936)		(897)	(6,642)	36,515
Tax effect	225		215	1,594	(8,764)
Non-GAAP net income, excluding derivative market value adjustments	$	17,764	12,773	39,074	41,037

Net loan interest income, including settlements on derivatives

The following table summarizes the components of "loan interest," "loan interest expense" and "derivative settlements, net."

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Variable interest income, gross	$	212,969	262,771	443,185	509,364	Decrease was due to a decrease in the average balance of loans partially offset by an increase in the gross yield earned on loans.
Consolidation rebate fees	(21,126)		(27,211)	(44,182)	(55,610)	Decrease was due to a decrease in the average consolidation loan balance.
Discount accretion, net of premium and deferred origination costs amortization	1,705		1,890	3,994	3,497	Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years.
Variable interest income, net	193,548		237,450	402,997	457,251
Interest on bonds and notes payable	(164,315)		(218,602)	(348,460)	(400,665)	Decrease was due to a decrease in the average balance of debt outstanding, partially offset by an increase in cost of funds. In addition, during the second quarter of 2023, the Company redeemed certain asset-backed debt securities prior to their maturity, resulting in the recognition of a $25.9 million non-cash expense from the write-off of the remaining debt discount associated with these bonds at the time of redemption.
Derivative settlements, net (a)	249		(65)	614	794	Represents net derivative settlements received (paid) related to the Company’s 1:3 basis swaps.
Variable loan interest margin, net of settlements on derivatives	29,482		18,783	55,151	57,380
Fixed rate floor income, gross	159		456	338	1,567	Decrease was due to higher interest rates.
Derivative settlements, net (a)	1,193		47	2,383	22,525	Represents net derivative settlements received related to the Company's floor income interest rate swaps. The decrease in net derivative settlements received by the Company for the first half of 2024 was due to the termination of the floor income interest rate swaps in March 2023. See above under "Loan Spread Analysis" for further information.
Fixed rate floor income, net of settlements on derivatives	1,352		503	2,721	24,092
Net loan interest income, including derivative settlements (core loan interest income) (a)	$	30,834	19,286	57,872	81,472

(a) Net loan interest income, including derivative settlements (core loan interest income) is a non-GAAP financial measure. For an explanation of GAAP accounting for derivative settlements and the reasons why the Company reports these non-GAAP measures (and the limitations thereof), see footnote (b) to the table immediately under the caption “Loan Spread Analysis” above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's derivative instruments, including the net settlement activity recognized by the Company for each type of derivative referred to in the "Additional information" column of this table, for the 2024 and 2023 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 5 and in this table.

Nelnet Bank Operating Segment

Loan Portfolio

As of June 30, 2024, Nelnet Bank had a $542.4 million loan portfolio, consisting of $354.4 million of private education loans and $187.9 million of consumer and other loans. For a summary of the Company’s loan portfolio as of June 30, 2024 and December 31, 2023, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Loan Activity

The following table sets forth the activity of loans in the Nelnet Bank operating segment:

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023
Beginning balance	$	483,723	439,007	432,872	419,795
Loan acquisitions and originations:
Private education loans	1,390		7,359	18,106	21,585
Consumer and other loans	82,998		13,168	139,843	32,800
Total loan acquisitions and originations	84,388		20,527	157,949	54,385
Repayments	(25,760)		(15,046)	(48,470)	(29,575)
Loans sold to AGM	—		—	—	(117)
Ending balance	$	542,351	444,488	542,351	444,488

In July 2024, Nelnet Bank executed an agreement to purchase a residual trust with approximately $140 million of private education loans and $60 million of debt that finances the assets. Nelnet Bank will use deposits to fund the approximately $80 million acquisition price. The trust will be consolidated as part of the bank's financial statements. The transaction is expected to close during the third quarter of 2024.

Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs

For a summary of the allowance as a percentage of the ending balance and loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of June 30, 2024 and December 31, 2023; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2024 and 2023, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Deposits

As of June 30, 2024, Nelnet Bank had $1.03 billion of deposits. All of Nelnet Bank’s deposits are interest-bearing and primarily consist of brokered certificates of deposit (CDs), retail and other savings deposits and CDs, and intercompany deposits. Retail and other savings deposits and CDs include deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trust (STFIT), consumer savings, and commercial, institutional, and consumer CDs. Union Bank, a related party, is the program manager for the Educational 529 College Savings plans and trustee for the STFIT.

As of June 30, 2024, Nelnet Bank’s deposits included $143.0 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. The intercompany deposits include a pledged deposit of $40.0 million from Nelnet, Inc. as required under the Capital and Liquidity Maintenance Agreement with the FDIC, deposits required for intercompany transactions, operating deposits, and NBS custodial deposits consisting of tuition payments collected which are subsequently remitted to the appropriate school.

Average Balance Sheet

The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities.

	Three months ended June 30, (a)								Six months ended June 30, (a)
	2024				2023				2024				2023
	Balance		Rate		Balance		Rate		Balance		Rate		Balance		Rate
Average assets
Federally insured student loans	$	—	—	%	$	62,476	6.38	%	$	—	—	%	$	63,559	6.15	%
Private education loans	359,486		4.35		354,124		3.75		363,172		4.31		354,907		3.68
Consumer and other loans	152,232		11.97		25,530		13.11		124,684		12.46		16,469		12.93
Cash and investments	625,123		6.96		541,618		6.31		601,535		6.95		541,069		6.13
Total interest-earning assets	1,136,841		6.80	%	983,748		5.57	%	1,089,391		6.70	%	976,004		5.36	%
Non-interest-earning assets	17,857				7,992				15,312				8,654
Total assets	$	1,154,698			$	991,740			$	1,104,703			$	984,658
Average liabilities and equity
Brokered deposits	$	236,517	1.82	%	$	204,158	1.37	%	$	220,584	1.62	%	$	204,781	1.38	%
Intercompany deposits	146,788		4.82		149,120		4.80		153,568		4.86		168,388		4.71
Retail and other deposits	621,241		5.01		507,701		4.43		582,688		4.96		480,009		4.19
Total interest-bearing liabilities	1,004,546		4.23	%	860,979		3.77	%	956,840		4.17	%	853,178		3.62	%
Non-interest-bearing liabilities	6,369				4,890				7,424				5,247
Equity	143,783				125,871				140,439				126,233
Total liabilities and equity	$	1,154,698			$	991,740			$	1,104,703			$	984,658

(a) Calculated using average daily balances.

Summary and Comparison of Operating Results

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024	2023	Additional information
Interest income:
Loan interest	$	8,422	5,139	15,518	9,471	Represents interest earned on loans. Increase was due to an increase in the balance of loans and interest rates.
Investment interest	10,811		8,522	20,779	16,449	Represents interest earned on cash and investments. Increase was due to an increase of these balances and interest rates.
Total interest income	19,233		13,661	36,297	25,920
Interest expense	10,769		8,171	20,266	15,385	Represents interest expense on deposits. Increase was due to an increase of deposits and interest rates.
Net interest income	8,464		5,490	16,031	10,535
Provision for loan losses	7,836		1,493	12,210	3,910	Increase in provision for loan losses was due to the mix of loans and an increase in the notional amount of loans acquired and originated in 2024 compared with 2023. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
Net interest income after provision for loan losses	628		3,997	3,821	6,625
Other income	775		620	1,150	830	Represents primarily net gains and income from investments.
Derivative settlements, net	207		83	409	83	During the second and third quarter of 2023, Nelnet Bank entered into derivatives to hedge its exposure related to variable rate intercompany deposits to minimize volatility from future changes in interest rates. Nelnet Bank has designated its derivative instruments as cash flow hedges; however, because the hedged items are intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements. Accordingly, all changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations. For additional information on Nelnet Bank's derivative portfolio, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Derivative market value adjustments, net	597		1,108	2,855	1,108
Total other income, net	1,579		1,811	4,414	2,021
Salaries and benefits	2,798		2,297	5,518	4,361	Represents salaries and benefits of Nelnet Bank associates and third-party contract labor. Increase was due to the overall growth of Nelnet Bank activities.
Depreciation	341		51	601	56
Other expenses	2,067		1,624	3,194	2,406	Represents various expenses such as consulting and professional fees, Nelnet Bank director fees, occupancy, certain technology-related costs, insurance, and marketing. Increase was due to the overall growth of Nelnet Bank activities.
Intersegment expenses	719		92	1,493	173	Represents fees paid to LSS for servicing certain of Nelnet Bank's loans. Intersegment expenses also include costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. The majority of shared service costs incurred by the Company to support Nelnet Bank were not allocated to Nelnet Bank through the bank’s de novo period which ended at the end of 2023. The shared service and support costs incurred by the Company related to Nelnet Bank and not allocated to Nelnet Bank were $1.8 million and $3.5 million for the second quarter and first half of 2023, respectively.
Total operating expenses	5,925		4,064	10,806	6,996
(Loss) income before income taxes	(3,718)		1,744	(2,571)	1,650
Income tax benefit (expense)	916		(396)	657	(362)	Represents income tax expense at an effective tax rate of 24.6% and 22.7% for the second quarter of 2024 and 2023, respectively, and 25.6% and 21.9% for the first half of 2024 and 2023, respectively.
Net (loss) income	$	(2,802)	1,348	(1,914)	1,288
Additional information:
Net (loss) income	$	(2,802)	1,348	(1,914)	1,288	See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP net income, excluding derivative market value adjustments.
Derivative market value adjustments, net	(597)		(1,108)	(2,855)	(1,108)
Tax effect	143		266	685	266
Net (loss) income, excluding derivative market value adjustments	$	(3,256)	506	(4,084)	446

NFS Other Operating Segments

The following table summarizes the operating results of other operating segments included in NFS that are not reportable. Income taxes are allocated based on 24% of income (loss) before taxes for each activity.

Summary and Comparison of Operating Results

	WRCM (a)		Nelnet Insurance Services (b)	Real estate investments (c)	Investment securities (d)	Total
	Three months ended June 30, 2024
Interest income	$	4	1,521	145	14,210	15,880
Interest expense	—		(589)	—	(2,017)	(2,606)
Net interest income	4		932	145	12,193	13,274
Other income, net	1,531		15,911	(1,832)	92	15,702
Salaries and benefits	(52)		(123)	(199)	—	(374)
Other expenses	(71)		(11,707)	(50)	(1)	(11,829)
Intersegment expenses, net	(4)		(99)	(110)	(35)	(248)
Income (loss) before income taxes	1,408		4,914	(2,046)	12,249	16,525
Income tax (expense) benefit	(304)		(1,179)	488	(2,940)	(3,935)
Net (income) loss attributable to noncontrolling interests	(141)		—	12	—	(129)
Net income (loss)	$	963	3,735	(1,546)	9,309	12,461
	Three months ended June 30, 2023
Interest income	$	3	363	141	22,293	22,800
Interest expense	—		—	—	(7,371)	(7,371)
Net interest income	3		363	141	14,922	15,429
Other income, net	1,645		4,621	(720)	421	5,967
Salaries and benefits	(53)		(90)	(67)	—	(210)
Other expenses	(82)		(4,019)	(31)	(2)	(4,134)
Intersegment expenses, net	(3)		(31)	(93)	—	(127)
Income (loss) before income taxes	1,510		844	(770)	15,341	16,925
Income tax (expense) benefit	(326)		(203)	179	(3,681)	(4,031)
Net (income) loss attributable to noncontrolling interests	(151)		—	23	—	(128)
Net income (loss)	$	1,033	641	(568)	11,660	12,766	Six months ended June 30, 2024
---	---	---	---	---	---	---
Interest income	$	7	2,339	286	28,863	31,495
Interest expense	—		(589)	—	(4,435)	(5,024)
Net interest income	7		1,750	286	24,428	26,471
Other income, net	3,009		28,977	(3,626)	284	28,644
Salaries and benefits	(107)		(237)	(388)	—	(732)
Other expenses	(145)		(23,364)	(120)	(3)	(23,632)
Intersegment expenses, net	(7)		(146)	(240)	(72)	(465)
Income (loss) before income taxes	2,757		6,980	(4,088)	24,637	30,286
Income tax (expense) benefit	(595)		(1,675)	975	(5,914)	(7,209)
Net (income) loss attributable to noncontrolling interests	(276)		—	27	—	(249)
Net income (loss)	$	1,886	5,305	(3,086)	18,723	22,828
	Six months ended June 30, 2023
Interest income	$	5	690	282	40,483	41,460
Interest expense	—		—	—	(19,198)	(19,198)
Net interest income	5		690	282	21,285	22,262
Other income, net	3,242		5,312	428	(3,756)	5,226
Salaries and benefits	(109)		(184)	(136)	—	(429)
Other expenses	(163)		(4,488)	(47)	(3)	(4,701)
Intersegment expenses, net	(6)		(62)	(188)	—	(256)
Income (loss) before income taxes	2,969		1,268	339	17,526	22,102
Income tax (expense) benefit	(641)		(304)	(88)	(4,207)	(5,240)
Net (income) loss attributable to noncontrolling interests	(297)		—	28	—	(269)
Net income (loss)	$	2,031	964	279	13,319	16,593

(a) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. WRCM earned management fees of $1.4 million and $1.6 million for the three months ended June 30, 2024 and 2023, respectively, and $2.8 million and $3.2 million for the six months ended June 30, 2024 and 2023, respectively. Fees earned by WRCM are included in "other income, net" in the table above.

(b) Represents the operating results of the Company’s reinsurance treaties on property and casualty policies and the Company’s Nebraska chartered life and health company, which is in run-off mode and reinsures a decreasing term life insurance product distributed to FACTS. The following table presents net premiums, which are included in "other income, net" in the table above, and net loss reserve, commissions, and broker fees, which are included in "other expenses" in the table above:

	Three months ended			Six months ended
	June 30,			June 30,
	2024		2023	2024	2023
Reinsurance assumed	$	29,890	7,922	55,394	9,029
Reinsurance ceded	(15,039)		(4,107)	(27,762)	(4,678)
Net premiums	$	14,851	3,815	27,632	4,351
Reinsurance assumed	$	21,675	6,603	44,517	7,528
Reinsurance ceded	(10,687)		(3,380)	(22,212)	(3,844)
Net loss reserve, commissions, and broker fees	$	10,988	3,223	22,305	3,684

(c) Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio. The Company recognized net losses from its real estate investments of $1.8 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively, and net losses of $3.6 million for the six months ended June 30, 2024 compared with a gain of $0.4 million for the same period in 2023, which are included in "other income, net" in the table above. The net results recognized relates primarily to the Company's proportionate share of certain real estate investments accounted for under the equity method.

(d) Represents interest income earned on investment debt securities (primarily student loan and other asset-backed securities, including Nelnet-owned asset-backed securities which it has repurchased and are eliminated in consolidation), unrealized gains/losses on marketable equity securities, realized gains/losses on marketable equity securities and investment debt securities, and other costs to manage these investments. Also includes interest expense incurred on debt used to finance such investments. The decrease in interest income and interest expense in 2024 compared with 2023 was due to a decrease in the average balance of investments and debt outstanding, respectively. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk - Interest Rate and Market Risk - Investments," which provides additional detail on the Company's investment portfolio and debt used to finance such investments. Included in first half of 2023 was $3.6 million of realized losses on sales of asset-backed and marketable securities, which are included in "other income, net" in the table above.

CORPORATE AND OTHER ACTIVITIES – RESULTS OF OPERATIONS

Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities (“Corporate”). The following table summarizes the operating results of these activities.

Income taxes are allocated based on 24% of income (loss) before taxes for each activity. The difference between the Corporate income tax expense and the sum of taxes calculated for each activity is included in income taxes in “other” in the table below.

Summary and Comparison of Operating Results

			Nelnet Renewable Energy (b)
	Shared services (a)		Tax equity investments / syndication / administration	GRNE Solar	ALLO investment (c)	Venture capital investments (d)	Other	Total
	Three months ended June 30, 2024
Net interest income (expense)	$	—	1	(365)	—	—	2,277	1,913
Solar construction revenue	—		—	9,694	—	—	—	9,694
Other income, net	750		(1,635)	51	4,193	3,691	3,322	10,372
Impairment expense	—		—	(1,865)	—	—	—	(1,865)
Cost to provide solar construction services	—		—	(8,072)	—	—	—	(8,072)
Salaries and benefits	(19,223)		(601)	(3,260)	—	(238)	(1,464)	(24,786)
Depreciation and amortization	(6,359)		—	(289)	—	(8)	(92)	(6,748)
Other expenses	(10,441)		(197)	(343)	(250)	(10)	(1,601)	(12,842)
Intersegment expenses, net	26,217		(148)	(303)	(3)	(18)	58	25,803
(Loss) income before income taxes	(9,056)		(2,580)	(4,752)	3,940	3,417	2,500	(6,531)
Income tax benefit (expense)	2,174		478	917	(946)	(820)	(1,015)	788
Net loss attributable to noncontrolling interests	—		590	926	—	—	—	1,516
Net (loss) income	$	(6,882)	(1,512)	(2,909)	2,994	2,597	1,485	(4,227)
	Three months ended June 30, 2023
Net interest income (expense)	$	—	—	(363)	—	—	2,547	2,184
Solar construction revenue	—		—	4,735	—	—	—	4,735
Other income, net	776		(10,086)	58	(9,711)	(1,361)	2,647	(17,677)
Impairment expense	—		—	—	—	—	—	—
Cost to provide solar construction services	—		—	(9,122)	—	—	—	(9,122)
Salaries and benefits	(23,003)		(800)	(1,471)	—	(215)	(1,267)	(26,756)
Depreciation and amortization	(9,218)		—	(1,581)	—	—	(124)	(10,923)
Other expenses	(9,609)		(75)	98	(1,375)	(20)	(1,632)	(12,613)
Intersegment expenses, net	26,970		47	(551)	—	(12)	(293)	26,161
(Loss) income before income taxes	(14,084)		(10,914)	(8,197)	(11,086)	(1,608)	1,878	(44,011)
Income tax benefit (expense)	3,380		520	1,587	2,661	386	(1,632)	6,902
Net loss attributable to noncontrolling interests	—		8,748	1,582	—	—	—	10,330
Net (loss) income	$	(10,704)	(1,646)	(5,028)	(8,425)	(1,222)	246	(26,779)
			Nelnet Renewable Energy (b)
---	---	---	---	---	---	---	---	---
	Shared services (a)		Tax equity investments / syndication / administration	GRNE Solar	ALLO investment (c)	Venture capital investments (d)	Other	Total
	Six months ended June 30, 2024
Net interest income (expense)	$	—	1	(677)	—	—	5,728	5,052
Solar construction revenue	—		—	23,420	—	—	—	23,420
Other income, net	1,456		1,242	93	(4,043)	3,302	6,174	8,224
Impairment expense	—		—	(1,865)	—	(37)	—	(1,902)
Cost to provide solar construction services	—		—	(22,300)	—	—	—	(22,300)
Salaries and benefits	(39,243)		(1,284)	(4,631)	—	(476)	(2,673)	(48,307)
Depreciation and amortization	(14,727)		—	(539)	—	(14)	(184)	(15,464)
Other expenses	(20,332)		(368)	(1,228)	(606)	(26)	(3,683)	(26,243)
Intersegment expenses, net	53,745		143	(1,061)	(4)	(38)	(137)	52,648
(Loss) income before income taxes	(19,101)		(266)	(8,788)	(4,653)	2,711	5,225	(24,872)
Income tax benefit (expense)	4,584		(564)	1,711	1,117	(651)	(1,686)	4,511
Net loss attributable to noncontrolling interests	—		2,617	1,655	—	—	—	4,272
Net (loss) income	$	(14,517)	1,787	(5,422)	(3,536)	2,060	3,539	(16,089)
	Six months ended June 30, 2023
Net interest income (expense)	$	—	—	(595)	—	—	4,827	4,232
Solar construction revenue	—		—	13,386	—	—	—	13,386
Other income, net	1,402		(13,030)	64	(27,575)	(1,650)	5,122	(35,667)
Impairment expense	—		—	—	—	—	—	—
Cost to provide solar construction services	—		—	(17,422)	—	—	—	(17,422)
Salaries and benefits	(46,387)		(1,670)	(2,667)	(30)	(403)	(2,798)	(53,955)
Depreciation and amortization	(18,048)		—	(2,198)	—	—	(208)	(20,454)
Other expenses	(19,848)		(840)	(787)	(1,363)	(185)	(2,634)	(25,657)
Intersegment expenses, net	55,809		39	(1,088)	—	(22)	(660)	54,078
(Loss) income before income taxes	(27,072)		(15,501)	(11,307)	(28,968)	(2,260)	3,649	(81,459)
Income tax benefit (expense)	6,497		851	2,197	6,953	543	(1,985)	15,056
Net loss attributable to noncontrolling interests	—		11,956	2,151	—	—	—	14,107
Net (loss) income	$	(20,575)	(2,694)	(6,959)	(22,015)	(1,717)	1,664	(52,296)

(a) Includes corporate activities related to 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. The amount allocated to operating segments is reflected as “intersegment expenses, net” in the table above. Also includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs.

(b) Nelnet Renewable Energy includes solar tax equity investments made by the Company, administrative and management services provided by the Company on tax equity investments made by third parties, and solar construction and development. As of June 30, 2024, the Company has invested a total of $502.8 million (which includes $219.8 million syndicated to third-party investors) in solar tax equity investments that remain outstanding. Due to the management and control of each of these investment partnerships, such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the co-investor’s portion being presented as noncontrolling interests.

Included in tax equity investments in the table above is the Company's share of income or loss from solar investments accounted for under the Hypothetical Liquidation at Book Value (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. Nelnet Renewable Energy recognized net losses on its tax equity investments of $2.6 million and $10.1 million for the three months ended June 30, 2024 and 2023, respectively, and net gains of $0.2 million in the first half of 2024 compared with net losses of $13.0 million for the same period in 2023. These income statement amounts, which include amounts attributable to third-party noncontrolling interest investors, are included in “other income, net” in the table above. There were minimal net losses attributable to third-party noncontrolling interest investors in the second quarter of 2024 compared with $8.4 million for the same period in 2023 and $1.6 million in the first half of 2024 compared with $11.4 million for the same period in 2023. Amounts applicable to noncontrolling interest investors are reflected in “net loss attributable to noncontrolling interests” in the table above.

Nelnet Renewable Energy syndicates tax equity investments to third parties and earns management and performance fees. Management fee income recognized by Nelnet Renewable Energy was $0.9 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively, and $1.6 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively, which is included in "other income, net" in the table above.

In addition to solar tax equity investments, the Company has a solar construction company (GRNE Solar) that provides full-service engineering, procurement, and construction (EPC) services to residential homes and commercial entities. Since the acquisition of 80% of GRNE Solar's ownership interests in 2022, it has incurred low and, in some cases, negative margins on certain projects. Due to the complexity and long-term nature of existing construction contracts, the Company may continue to incur low and/or negative margins to complete projects. In addition, higher interest rates reduced residential demand and made community solar projects more costly. On April 12, 2024, the Company announced a change in its solar EPC operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations. As a result, residential revenue will continue to decline from recent historical amounts as existing customer contracts are completed. Residential solar construction revenue was $0.9 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively, and $3.1 million and $5.2 million for the six months ended June 30, 2024 and 2023, respectively. In addition, during the second quarter of 2024, the Company recognized non-cash impairment charges of $1.9 million on certain solar facilities and inventory related to the residential solar operations, which is reflected in "impairment expense" in the table above, and $1.6 million in severance costs and commissions paid for cancelled projects, which is included in "salaries and benefits" in the table above. For additional information, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

On June 30, 2024, the Company acquired the remaining 20% of GRNE Solar for $0.3 million.

(c) Represents primarily the Company's share of loss on its voting membership interests and income on its preferred membership interest in ALLO.

The Company accounts for its approximately 45% voting membership interests in ALLO under the HLBV method of accounting. Under the HLBV method of accounting on its ALLO voting membership interests investment, the Company recognized no losses in the second quarter of 2024 compared with losses of $12.2 million for the same period in 2023 and losses of $10.7 million in the first half of 2024 compared with $32.4 million for the same period in 2023. These amounts are reflected in “other income, net” in the table above. 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.

As of June 30, 2024, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $169.5 million and $6.6 million, respectively. 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. During the second quarter of 2024, the Company purchased an additional $14.5 million of preferred membership interests of ALLO, which earn a preferred annual return of 20.0%. The Company recognized income on its ALLO preferred membership interests of $4.2 million and $2.3 million for the three months ended June 30, 2024 and 2023, respectively, and $6.6 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively. These amounts are reflected in “other income, net” in the table above.

As part of the ALLO recapitalization transaction completed in 2020, the Company and SDC (a third-party global digital infrastructure investor and member of ALLO) entered into an agreement, in which the Company has a contingent payment obligation to pay SDC a contingent payment amount of up to $35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels. The Company recognized an expense of $0.3 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively, and $0.6 million and $1.4 million for the six months ended June 30, 2024 and 2023, respectively, which is included in “other expenses” in the table above.

(d) Represents the operating results of the Company’s venture capital investments, including Hudl which the Company accounts for using the measurement alternative method, and the administrative costs to manage this portfolio.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s Loan Servicing and Systems, and Education Technology Services and Payments operating segments are non-capital intensive and both produce positive operating cash flows. As such, a minimal amount of debt and equity capital is allocated to these segments and any liquidity or capital needs are satisfied using cash flow from operations.

Nelnet Bank was funded by the Company with an initial capital contribution of $100.0 million in November 2020 and the Company has contributed an additional $40.0 million to Nelnet Bank since its inception. Based on Nelnet Bank's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to the bank in future periods. Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank. See “Liquidity Impact Related to Nelnet Bank” included below for additional information.

Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Asset Generation and Management operating segment and the Company's other initiatives to pursue additional strategic investments.

Sources of Liquidity

As of June 30, 2024, the Company's sources of liquidity included:

Cash and cash equivalents	$	145,478
Less: Cash and cash equivalents held at Nelnet Bank (a)	(12,784)
Net cash and cash equivalents	132,694
Available-for-sale (AFS) debt securities (investments) - at fair value	939,529
Less: AFS debt securities held at Nelnet Bank - at fair value (a)	(391,972)
AFS private education loan debt securities - held as risk retention - at fair value (b)	(235,948)
Restricted investments	(50,358)
Unencumbered AFS debt securities (investments) - at fair value	261,251
Unencumbered private, consumer, and other loans (Non-Nelnet Bank) - at par	194,095
Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (c)	311,739
Unused capacity on unsecured line of credit (d)	495,000
Sources of liquidity as of June 30, 2024	$	1,394,779

(a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank.

(b) The Company is sponsor for certain securitizations and as sponsor, is required to provide a certain level of risk retention. To satisfy this requirement, the Company has purchased bonds issued in the securitizations. The Company is required to retain these bonds as described under the caption “Repurchase Agreement” below.

(c) The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties, redeem the notes at par as cash is generated by the trust estate, or pledge the securities as collateral on repurchase agreements. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale.

(d) The Company has a $495.0 million unsecured line of credit that matures on September 22, 2026. As of June 30, 2024, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use.

The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or investment interests therein); strategic acquisitions and investments; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. The timing and size of these opportunities will vary and will have a direct impact on the Company's cash and investment balances.

Cash Flows

The Company has historically generated positive cash flow from operations. During the six months ended June 30, 2024 and 2023, the Company generated $345.3 million and $198.4 million, respectively, in cash from operating activities. The increase in 2024 compared with 2023 was due to:

•An increase in net income;

•Proceeds of $5.7 million from the Company's clearinghouse for margin payments on derivatives during the six months ended June 30, 2024 compared with payments of $209.9 million for the same period in 2023;

•Adjustments to net income for the impact of provision for loan losses and the non-cash change in deferred income taxes; and

•The impact of changes to accrued interest receivable and other assets during the six months ended June 30, 2024 compared with the same period in 2023.

These factors were partially offset by:

•Adjustments to net income for the non-cash change in depreciation and amortization, derivative market value adjustments, and gain/loss on investments;

•No proceeds from the termination of derivative instruments during the six months ended June 30, 2024 compared with $164.1 million for the same period in 2023; and

•The impact of changes to accounts receivable and other liabilities during the six months ended June 30, 2024 compared with the same period in 2023.

The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, and the purchase of other investments (primarily solar investments). The primary items included in financing activities are proceeds from the issuance of and payments on bonds and notes payable, the change in deposits at Nelnet Bank used to fund loans and investment activity, and repurchases of common stock. Cash provided by investing activities and used in financing activities for the six months ended June 30, 2024 was $1.8 billion and $2.3 billion, respectively. Cash provided by investing activities and used in financing activities for the six months ended June 30, 2023 was $0.9 billion and $1.6 billion, respectively. Investing and financing activities are further addressed in the discussion that follows.

Liquidity Needs and Sources of Liquidity Available to Satisfy Debt Obligations Secured by Loan Assets and Related Collateral

The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral.

	As of June 30, 2024
	Carrying amount		Final maturity
Bonds and notes issued in asset-backed securitizations	$	8,540,072	8/26/30 - 9/25/69
FFELP and consumer loan warehouse facilities	970,956		7/15/25 - 4/1/26
	$	9,511,028

Bonds and Notes Issued in Asset-backed Securitizations

The majority of AGM’s portfolio of student loans is funded in asset-backed securitizations that are structured to substantially match the maturity of the funded assets, thereby minimizing liquidity risk. Cash generated from student loans funded in asset-backed securitizations provide the sources of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations. In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees AGM earns from these transactions, AGM has created a portfolio that will generate earnings and significant cash flow over the life of these transactions.

As of June 30, 2024, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM currently expects future undiscounted cash flows from its portfolio to be approximately $1.25 billion as detailed below. The actual timing of cash flows released from the securitizations could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold.

The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of June 30, 2024, the majority of which are federally insured student loans. As of June 30, 2024, AGM had $8.7 billion of loans included in asset-

backed securitizations, which represented 88.1% of its total loan portfolio. The forecasted cash flow does not include cash flows that the Company expects to receive related to loans funded in its warehouse facilities, unencumbered private education, consumer, and other loans funded with operating cash, loans acquired subsequent to June 30, 2024, loans owned by Nelnet Bank, and cash flows relating to the Company's ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "investments and notes receivable" on the Company's consolidated balance sheets).

Asset-backed Securitization Cash Flow Forecast

$1.25 billion

(dollars in millions)

The forecasted future undiscounted cash flows of approximately $1.25 billion include approximately $0.75 billion (as of June 30, 2024) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.50 billion, or approximately $0.38 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2024 balance.

The Company uses various assumptions, including prepayments and future interest rates, when preparing its cash flow forecast. These assumptions are further discussed below.

Prepayments: The primary variable in establishing a life of loan estimate is the level and timing of prepayments. Prepayment rates equal the amount of loans that prepay annually as a percentage of the beginning of period balance, net of scheduled principal payments. A number of factors can affect estimated prepayment rates, including the level of consolidation activity, borrower default rates, and utilization of debt management options such as income-based repayment, deferments, and forbearance. Should any of these factors change, management may revise its assumptions, which in turn would impact the projected future cash flow. The Company’s cash flow forecast above assumes prepayment rates of 6% for both federally insured consolidation and Stafford loans. Prepayment rates for private education loans range from 11% to 20%.

Since late 2021, the Company has experienced accelerated run-off (prepayments) of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans to qualify for loan forgiveness under various

initiatives and programs offered by the federal government and the Department. See "Nelnet Financial Services Division - Results of Operations - Asset Generation and Management Operating Segment - Loan Activity" included in this report's Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information related to the federal government and the Department's initiatives for debt relief that has increased, and may continue to increase, prepayment activity. Prepayments could significantly increase if the federal government and the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, or consolidation loan programs. In addition, see Part I, Item 1A, "Risk Factors - Loan Portfolio - Prepayments risk" in the Company's 2023 Annual Report for additional information related to risks associated with loan prepayments.

The following table summarizes the estimated impact to the above forecasted cash flows if prepayments were greater than the prepayment rate assumptions used to calculate the forecasted cash flows.

Increase in prepayment rate	Reduction in forecasted cash flow from table above	Forecasted cash flow using increased prepayment rate
2x	$0.11 billion	$1.14 billion
4x	$0.29 billion	$0.96 billion
10x	$0.49 billion	$0.76 billion

If the entire AGM student loan portfolio prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.75 billion (as of June 30, 2024); however, the Company would not receive the $0.50 billion ($0.38 billion after tax) of estimated future earnings from the portfolio.

Interest rates: The Company funds a portion of its student loans with floating rate securities that are indexed to 90-day SOFR. Meanwhile, the interest earned on the Company’s student loan assets is indexed primarily to the 30-day average SOFR in effect for each day in a calendar quarter. The different interest rate characteristics of the Company’s loan assets and liabilities funding these assets result in basis risk. The Company’s cash flow forecast assumes, for the life of the portfolio, a relationship between the various SOFR indices that is implied by the current forward SOFR curves. If the forecast is computed assuming a spread of an additional 12 basis points between Term SOFR and 30-day average SOFR for the life of the portfolio, the cash flow forecast would be reduced by approximately $5 million to $25 million.

The Company uses the current forward interest rate yield curve to forecast cash flows. A change in the forward interest rate curve would impact the future cash flows generated from the portfolio. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment" for additional information about various interest rate risks which may impact future cash flows from AGM's loan assets.

Warehouse Facilities

Warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. For a summary of the Company's warehouse facilities outstanding as of June 30, 2024, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report. The Company has been reducing its warehouse capacity based on its estimated future loan purchases and to save on unused facility costs.

On July 1, 2024, the Company obtained a consumer loan warehouse facility that has an aggregate maximum financing amount available of $125 million, an advance rate of 80%, liquidity provisions to January 1, 2026, and a final maturity date of August 1, 2026. On July 5, 2024, the Company advanced $76 million of debt in this facility and has $49 million available for future fundings.

Upon termination or expiration of the warehouse facilities, the Company would expect to access the securitization market, obtain replacement warehouse facilities, use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations.

Asset-backed Securities Transactions

The Company, through its subsidiaries, has historically funded loans by completing asset-backed securitizations. Depending on market conditions, the Company anticipates continuing to access the asset-backed securitization market. Such asset-backed securitization transactions would be used to refinance loans included in its warehouse facilities and existing asset-backed securitizations and/or finance loans purchased from third parties and loans that are currently unencumbered.

There were no asset-backed securitization transactions completed during the six months ended June 30, 2024.

Other Uses of Liquidity

The Company no longer originates FFELP loans, but continues to acquire FFELP loan portfolios from third parties and believes additional loan purchase opportunities exist, including opportunities to purchase private education, consumer, and other loans (or investment interests therein).

The Company plans to fund additional loan acquisitions and related investments using current cash; cash provided by operating activities; proceeds from the sale of certain investments; its unsecured line of credit, its Union Bank student loan participation agreement, its Union Bank student loan asset-backed securities participation agreement, and its third-party repurchase agreement (each as described below), and/or establishing similar secured and unsecured borrowing facilities; using its existing warehouse facilities (as described above); increasing the capacity under existing and/or establishing new warehouse facilities; and continuing to access the asset-backed securities market.

Repurchase Agreement

In December 2020, Wells Fargo announced the sale of its approximately $10.0 billion portfolio of private education loans representing approximately 445,000 borrowers. The Company entered into a joint venture with other investors to acquire the loans, and under the joint venture, the Company had an approximately 8% interest in the loans and has a corresponding 8% interest in residual interests in the 2021 securitizations of the loans discussed below.

During 2021, the Company sponsored four asset-backed securitization transactions to permanently finance a total of $8.7 billion of private education loans sold by Wells Fargo (which represented the total remaining loans originally purchased from Wells Fargo, factoring in borrower payments from the date of purchase). As sponsor, 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 reflected on the Company's consolidated balance sheets as "investments and notes receivable" and as of June 30, 2024, the fair value of these bonds was $235.9 million. 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.

The Company entered into a repurchase agreement with a third party, of which a portion of the proceeds from such agreement was used to purchase the asset-backed investments, and such investments serve as collateral on the repurchase obligations. As of June 30, 2024, $111.2 million was outstanding on the Company's repurchase agreement. As of August 8, 2024, the maturity dates on this facility vary from November 27, 2024 through December 20, 2024, and the facility is subject to early termination upon 180 days' prior written notice provided by the Company or the counterparty prior to the maturity dates. The Company is subject to cash margin deficit payment requirements in the event the fair value of the securities subject to the repurchase agreement becomes less than the original purchase price of such securities.

Upon termination or maturity of the repurchase agreement, there can be no assurance that the Company will be able to maintain this or a similar agreement, or find alternative funding if necessary. If necessary, the Company would expect to use operating cash, consider the sale of unencumbered investments, or borrow on its unsecured line of credit to satisfy any remaining obligations.

Union Bank Participation Agreements

The Company maintains an agreement with Union Bank, a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans. As of June 30, 2024, $440.4 million 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. The Company can participate loans to Union Bank to the extent of availability under the grantor trusts, up to $900.0 million or an amount in excess of $900.0 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.

The Company also has an agreement with Union Bank under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (bond investments). The agreement automatically renews annually and is terminable by either party upon five business days' notice. On May 4, 2024, the agreement automatically renewed for another year through May 4, 2025. The Company can participate FFELP loan asset-backed securities to Union Bank to the extent of availability under the grantor trusts, up to $400.0 million or an amount in excess of $400.0 million if mutually agreed

to by both parties. The Company maintains legal ownership of the FFELP loan asset-backed securities and, in its discretion, approves and accomplishes any sale, assignment, transfer, encumbrance, or other disposition of the securities. As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheets as "investments and notes receivable" and the participation interests outstanding have been accounted for by the Company as a secured borrowing. As of June 30, 2024, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

Liquidity Impact Related to Beneficial Interest in Loan Securitizations

The Company has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "investments and notes receivable" on the Company's consolidated balance sheets. These residual interests were acquired by the Company or have been received by the Company as consideration from selling portfolios of loans to unrelated third parties who securitized such loans. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2024, the Company's ownership correlates to approximately $1.94 billion of loans included in these securitizations. Interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment income" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.

As of June 30, 2024, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $244.0 million. For a summary of this investment balance, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

The Company's partial ownership percentage in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. As of June 30, 2024, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $378.3 million. The vast majority of these cash flows are expected to be received over the next 5 years.

The difference between the total estimated future undiscounted cash flows from these residual interests ($378.3 million) and the investment carrying value ($244.0 million) of $134.3 million, or $102.1 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the June 30, 2024 balance.

The undiscounted future cash flows from the consumer and private education loan securitizations are highly subject to credit risk (defaults). If defaults are higher than management's current estimate, the forecasted cash flows and estimated future investment interest income (earnings) from these securitizations would be adversely impacted.

Liquidity Impact Related to Nelnet Bank

Nelnet Bank launched operations in November 2020. Nelnet Bank was funded by the Company with an initial capital contribution of $100.0 million. In addition, the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC discussed below.

Prior to Nelnet Bank’s launch of operations, Nelnet Bank, Nelnet, Inc. (the parent), and Michael S. Dunlap (Nelnet, Inc.’s controlling shareholder) entered into a Capital and Liquidity Maintenance Agreement and a Parent Company Agreement with the FDIC in connection with Nelnet, Inc.’s role as a source of financial strength for Nelnet Bank. As part of the Capital and Liquidity Maintenance Agreement, Nelnet, Inc. is obligated to (i) contribute capital to Nelnet Bank for it to maintain capital levels that meet FDIC requirements for a “well capitalized” bank, including a leverage ratio of capital to total assets of at least 12%; (ii) provide and maintain an irrevocable asset liquidity takeout commitment for the benefit of Nelnet Bank in an amount equal to the greater of either 10% of Nelnet Bank’s total assets or such additional amount as agreed to by Nelnet Bank and Nelnet, Inc.; (iii) provide additional liquidity to Nelnet Bank in such amount and duration as may be necessary for Nelnet Bank to meet its ongoing liquidity obligations; and (iv) establish and maintain a pledged deposit of $40.0 million with Nelnet Bank.

Under the regulatory framework for prompt corrective action, Nelnet Bank is subject to various regulatory capital requirements administered by the FDIC and the UDFI and must meet specific capital standards. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on Nelnet Bank’s business, results of operations, or financial condition. On January 1, 2020, the Community Bank Leverage Ratio (CBLR) framework, as issued jointly by the Office of the Comptroller of the Currency, the Federal Reserve Board, and the FDIC, became effective. Any banking organization with total consolidated assets of less than $10 billion, limited amounts of certain types of assets and off-balance sheet exposures, and a community bank leverage ratio greater than 9% may opt into the CBLR framework quarterly. The CBLR framework allows banks to satisfy capital standards and be considered "well capitalized" under the prompt corrective action framework if their leverage ratio is

greater than 9%, unless the banking organization's federal banking agency determines that the banking organization's risk profile warrants a more stringent leverage ratio. The FDIC has ordered Nelnet Bank to maintain at least a 12% leverage ratio. Nelnet Bank has opted into the CBLR framework for the quarter ended June 30, 2024 with a leverage ratio of 12.3%. Nelnet Bank intends to maintain at all times regulatory capital levels that meet both the minimum level necessary to be considered “well capitalized” under the FDIC’s prompt corrective action framework and the minimum level required by the FDIC.

Since inception, the Company has made additional contributions of $40 million to Nelnet Bank. Based on Nelnet Bank's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to the bank in future periods.

Liquidity Impact Related to Nelnet Renewable Energy

The Company’s Nelnet Renewable Energy business makes solar tax equity investments in renewable energy solar partnerships. Through June 30, 2024, the Company has invested a total of $502.8 million (which includes $219.8 million syndicated to third-party investors) in tax equity investments that remain outstanding. These investments provide a federal income tax credit under the Internal Revenue Code, equaling 30% to 40% of the eligible project cost, with the tax credit available when the project is placed-in-service. The Company is allowed to reduce its tax estimates paid to the U.S. Treasury based on the credits earned. Based on the timing of when the Company funds a project and decreases its tax estimate to the U.S. Treasury due to earning of the tax credit, the amount of capital funded to solar tax equity investments at any point in time is not significant and has a minimal impact on the Company’s liquidity. As of June 30, 2024, the Company is committed to fund an additional $125.7 million on tax equity investments, of which $83.0 million is expected to be provided by syndication partners.

In addition to solar tax equity investments, the Company has a strategy to own solar energy project assets. The Company plans to fund a portion of its current growth plans in owning solar energy projects using third-party debt and third-party tax equity. The collateral on any third-party debt would be limited to the assets of the specific solar projects. Any capital requirements for the origination or purchase of solar projects not funded by third-party debt and third-party tax equity would be provided by the Company using operating cash, borrowings on its unsecured line of credit, and/or the sale of investments.

Liquidity Impact Related to ALLO

Upon the deconsolidation of ALLO on December 21, 2020, the Company recorded its 45% voting membership interests in ALLO at fair value, and accounts for such investment under the HLBV method of accounting. In addition, the Company recorded its remaining non-voting preferred membership units of ALLO at fair value, and accounts for such investment as a separate equity investment. 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. On January 1, 2025, the preferred annual return on the $155.0 million of preferred membership interests of ALLO will increase to 13.5%, commencing July 1, 2025, the return will increase to 15.0%, commencing January 1, 2026, the preferred return will increase to 17.5%, and beginning on January 1, 2027 and on each January 1 of each calendar year thereafter, the annual return will increase by an additional 2.5%. During the second quarter of 2024, the Company purchased an additional $14.5 million of preferred membership interests in ALLO, which earn a preferred annual return of 20.0%. Accrued and unpaid preferred returns are converted to additional preferred membership interests each December 31. As of June 30, 2024, the accrued and unpaid preferred return was $6.6 million.

If ALLO needs additional capital to support its growth in existing or new markets, the Company has the option to contribute additional capital to maintain its voting equity interest and/or may purchase additional preferred membership interests that include a preferred return. Based on ALLO's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to ALLO in future periods.

In addition to equity contributions, ALLO has issued debt to fund its growth. As of June 30, 2024, ALLO has $912 million (par value) of debt outstanding.

As part of the ALLO recapitalization transaction in December 2020, the Company and SDC entered into an agreement, in which the Company has a contingent payment obligation to pay SDC a contingent payment amount of up to $35.0 million in the event the Company disposes of its voting membership interests of ALLO that it holds and realizes from such disposition certain targeted return levels. As of June 30, 2024, the estimated fair value of the contingent payment is $10.4 million.

Liquidity Impact Related to Hedging Activities

The Company utilizes derivative instruments to manage interest rate sensitivity. By using derivative instruments, the Company is exposed to market risk which could impact its liquidity.

All Non-Nelnet Bank over-the-counter derivative contracts executed by the Company are cleared post-execution at 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.

Based on the derivative portfolio outstanding as of June 30, 2024, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives.

Other Debt Facilities

As discussed above, the Company has a $495.0 million unsecured line of credit with a maturity date of September 22, 2026. As of June 30, 2024, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use. Upon the maturity date of this facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary.

On December 21, 2023, the Company entered into a $10.0 million participation agreement with a third-party, the proceeds of which are collateralized by consumer loans. The third-party participant does not have the right to pledge, transfer, or otherwise dispose of their participation interest in all or any portion of the loans subject to this agreement. As such, the consumer loans subject to this agreement are included on the Company's consolidated balance sheet and the participation interests outstanding have been accounted for by the Company as a secured borrowing. This participation agreement will amortize as the consumer loans subject to the participation pay down. As of June 30, 2024, the outstanding balance on this participation agreement was $7.6 million.

Stock Repurchases

The Board of Directors has authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2025. As of June 30, 2024, 3,341,735 shares remained authorized for repurchase under the Company's stock repurchase program. Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity.

Shares repurchased by the Company during the first half of 2024 are shown below. Certain of these repurchases were made pursuant to trading plans adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. For additional information on stock repurchases during the second quarter of 2024, see "Stock Repurchases" under Part II, Item 2 of this report.

	Total shares repurchased	Purchase price (in thousands)		Average price of shares repurchased (per share) (a)
Quarter ended March 31, 2024	396,724	$	35,469	89.41
Quarter ended June 30, 2024	487,980	46,842		95.99
Total	884,704	$	82,311	93.04

(a) The average price of shares repurchased for the three months ended June 30, 2024 includes excise taxes.

Dividends

On June 14, 2024, the Company paid a second quarter 2024 cash dividend on the Company's Class A and Class B common stock of $0.28 per share. In addition, the Company's Board of Directors has declared a third quarter 2024 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.28 per share. The third quarter cash dividend will be paid on September 13, 2024 to shareholders of record at the close of business on August 30, 2024.

The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other factors that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or

conditions. Note 2 of the notes to consolidated financial statements included in the Company’s 2023 Annual Report includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements.

On an on-going basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are most “critical” - that is, they are most important to the portrayal of the Company’s financial condition and results of operations and they require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the allowance for loan losses as a critical accounting policy and estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates – Allowance for Loan Losses” in the Company’s 2023 Annual Report. For additional information regarding changes in the Company’s allowance for loan losses for the three and six months ended June 30, 2024 and 2023, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. There have been no material changes to the Company’s critical accounting policy and estimate since December 31, 2023.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued accounting guidance which improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit (referred to as the “significant expense principle”). This guidance will be effective for the Company for the year ending December 31, 2024 annual financial statements, with early adoption permitted. The guidance will be applied retrospectively for all prior periods presented in the financial statements. The Company intends to adopt the standard when it becomes effective for the year ending December 31, 2024 annual financial statements. While the Company is continuing to evaluate the impact this pronouncement will have on its ongoing financial reporting, it currently believes there will be limited impacts to the disclosures included in the notes to consolidated financial statements due to the segment expense detail already disclosed for each reportable segment.

In December 2023, the FASB issued accounting guidance to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance will be effective for the Company for the year ending December 31, 2025 annual financial statements, with early adoption permitted. The guidance will be applied on a prospective basis. The Company intends to adopt the standard when it becomes effective for the year ending December 31, 2025. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

(All dollars are in thousands, except share amounts, unless otherwise noted)

Interest Rate Risk - AGM Operating Segment

AGM’s primary market risk exposure arises from fluctuations in its borrowing and lending rates, the spread between which could impact AGM due to shifts in market interest rates.

The following table sets forth AGM’s loan assets and debt instruments by rate characteristics:

	As of June 30, 2024				As of December 31, 2023
	Dollars		Percent		Dollars		Percent
Fixed-rate loan assets	$	532,794	5.4	%	$	510,666	4.2	%
Variable-rate loan assets	9,377,823		94.6		11,538,796		95.8
Total	$	9,910,617	100.0	%	$	12,049,462	100.0	%
Fixed-rate debt instruments	$	460,293	4.8	%	$	561,557	4.8	%
Variable-rate debt instruments	9,058,363		95.2		11,142,596		95.2
Total	$	9,518,656	100.0	%	$	11,704,153	100.0	%

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 payment (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 FFELP student loan portfolio with variable rate debt. In low and/or declining interest rate environments, when the fixed borrower rate is higher than the SAP rate, the Company’s FFELP 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 those loans to the Department.

Absent the use of derivative instruments, a rise in interest rates will reduce the amount of floor income received and has 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.

No variable-rate floor income was earned by the Company in 2024 or 2023.

A summary of fixed rate floor income earned by the AGM operating segment follows.

	Three months ended June 30,			Six months ended June 30,
	2024		2023	2024		2023
Fixed rate floor income, gross	$	159	456	$	338	1,567
Derivative settlements (a)	1,193		47	2,383		22,525
Fixed rate floor income, net	$	1,352	503	$	2,721	24,092

(a) Derivative settlements consist of settlements received related to the Company's derivatives used to hedge student loans earning fixed rate floor income.

Gross fixed rate floor income decreased for the three and six months ended June 30, 2024 compared with the same periods in 2023 due to higher interest rates in 2024 compared with 2023.

The Company had a significant portfolio of derivative instruments in which the Company paid a fixed rate and received a floating rate to economically hedge loans earning fixed rate floor income. During the first quarter of 2023, to minimize the Company's exposure to market volatility and increase liquidity, the Company terminated its derivative portfolio hedging loans earning fixed rate floor income ($2.8 billion in notional amount of derivatives). Through March 15, 2023, the Company had received cash or had a receivable from its clearinghouse related to variation margin equal to the fair value of the $2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $183.2 million, which included $19.1 million related to current period settlements. Subsequent to terminating these derivatives, during the second and fourth quarters of 2023, the Company entered into a total of $400.0 million notional amount of derivatives to hedge loans earning fixed rate floor income and other loans and investments in which the Company receives a fixed rate.

For further details of the Company’s derivatives used to hedge fixed rate loans, see note 5 of the notes to consolidated financial statements included in Part I, Item 1 of this report.

The following table shows AGM’s federally insured student loan assets that were earning fixed rate floor income as of June 30, 2024.

Fixed interest rate range	Borrower/lender weighted average yield	Estimated variable conversion rate (a)	Loan balance
8.0 - 8.99%	8.25%	5.61%	$	146,990
> 9.0%	9.06%	6.42%	97,129
			$	244,119

(a) The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of June 30, 2024, the weighted average estimated variable conversion rate was 5.93% and the short-term interest rate was 556 basis points.

AGM is also exposed to interest rate risk in the form of repricing risk and basis risk because the interest rate characteristics of AGM’s assets do not match the interest rate characteristics of the funding for those assets. The following table presents AGM’s FFELP student loan assets and related funding for those assets arranged by underlying indices as of June 30, 2024.

Index	Frequency of variable resets	Assets		Funding of student loan assets
30-day average SOFR (a)	Daily	$	8,890,701	—
3-month H15 financial commercial paper	Daily	300,782		—
3-month Treasury bill	Daily	292,250		—
30-day average SOFR / 1-month CME Term SOFR	Monthly	—		5,628,802
90-day average SOFR / 3-month CME Term SOFR (a)	Quarterly	—		2,317,187
Asset-backed commercial paper / SOFR (b)	Varies	—		964,196
Fixed rate	—	—		389,462
Auction-rate (c)	Varies	—		75,735
Other (d)	—	1,116,944		1,225,295
		$	10,600,677	10,600,677

(a) The Company has certain basis swaps outstanding in which the Company receives and pays the term adjusted SOFR plus the tenor spread adjustment to LIBOR. Prior to the discontinuation of LIBOR on June 30, 2023, the Company received three-month LIBOR set discretely in advance and paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps"). The Company entered into these derivative instruments to better match the interest rate characteristics on its student loan assets and the debt funding such assets. The following table summarizes the 1:3 Basis Swaps outstanding as of June 30, 2024.

Maturity	Notional amount (i)
2026	$	1,150,000
2027	250,000
	$	1,400,000

(i) The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2024 was the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.4 basis points.

(b) The interest rate on the Company's FFELP warehouse facilities is indexed to asset-backed commercial paper rates and daily SOFR.

(c) As of June 30, 2024, the Company was sponsor for $75.7 million of outstanding asset-backed securities that were set and provide for interest rates to be periodically reset via a "dutch auction" (the “Auction Rate Securities”). Since the auction feature has essentially been inoperable for substantially all auction rate securities since 2008, 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 SOFR or Treasury Securities, or the Net Loan Rate as defined in the financing documents.

(d) Assets include accrued interest receivable and restricted cash. Funding represents overcollateralization (equity) and other liabilities included in FFELP loan asset-backed securitizations and warehouse facilities.

Sensitivity Analysis

The following tables summarize the effect on the Company’s consolidated earnings, based upon a sensitivity analysis performed on AGM’s assets and liabilities assuming hypothetical increases and decreases in interest rates of 100 basis points and 300 basis points while funding spreads remain constant. In addition, a sensitivity analysis was performed assuming the funding index increases 10 basis points and 30 basis points while holding the asset index constant, if the funding index is different than the asset index. The sensitivity analysis was performed on AGM’s variable rate assets (including loans earning fixed rate floor income) and liabilities.

	Interest rates
	Change from increase of<br>100 basis points				Change from increase of<br>300 basis points				Change from decrease of<br>100 basis points				Change from decrease of<br>300 basis points
	Dollars		Percent		Dollars		Percent		Dollars		Percent		Dollars		Percent
	Three months ended June 30, 2024
Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements	$	862	1.5	%	$	2,910	5.0	%	$	1,479	2.5	%	$	6,858	11.7	%
Impact of derivative settlements	746		1.3		2,238		3.8		(746)		(1.3)		(2,238)		(3.8)
Increase in net income before taxes	$	1,608	2.8	%	$	5,148	8.8	%	$	733	1.2	%	$	4,620	7.9	%
Increase in basic and diluted earnings per share	$	0.03			$	0.11			$	0.02			$	0.10
	Three months ended June 30, 2023
Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements	$	712	2.4	%	$	3,029	10.2	%	$	314	1.1	%	$	3,762	12.7	%
Impact of derivative settlements (a)	33		0.1		99		0.3		(33)		(0.1)		(99)		(0.3)
Increase in net income before taxes	$	745	2.5	%	$	3,128	10.5	%	$	281	1.0	%	$	3,663	12.4	%
Increase in basic and diluted earnings per share	$	0.02			$	0.06			$	0.01			$	0.07
	Six months ended June 30, 2024
Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements	$	1,573	1.0	%	$	5,410	3.6	%	$	3,420	2.2	%	$	15,415	10.1	%
Impact of derivative settlements	1,492		1.0		4,476		2.9		(1,492)		(1.0)		(4,476)		(2.9)
Increase in net income before taxes	$	3,065	2.0	%	$	9,886	6.5	%	$	1,928	1.2	%	$	10,939	7.2	%
Increase in basic and diluted earnings per share	$	0.06			$	0.20			$	0.04			$	0.23
	Six months ended June 30, 2023
Effect on earnings:
Increase in pre-tax net income before impact of derivative settlements	$	1,484	2.4	%	$	7,432	12.2	%	$	390	0.6	%	$	7,412	12.2	%
Impact of derivative settlements (a)	33		0.1		99		0.2		(33)		(0.1)		(99)		(0.2)
Increase in net income before taxes	$	1,517	2.5	%	$	7,531	12.4	%	$	357	0.5	%	$	7,313	12.0	%
Increase in basic and diluted earnings per share	$	0.03			$	0.15			$	0.01			$	0.15

(a)On March 15, 2023, the Company terminated its derivative portfolio hedging loans earning fixed rate floor income. The table above excludes the impact of these derivatives for the entire period.

	Asset and funding index mismatches
	Increase of<br>10 basis points				Increase of<br>30 basis points				Increase of<br>10 basis points				Increase of<br>30 basis points
	Dollars		Percent		Dollars		Percent		Dollars		Percent		Dollars		Percent
	Three months ended June 30, 2024								Three months ended June 30, 2023
Effect on earnings:
Decrease in pre-tax net income before impact of derivative settlements	$	(878)	(1.5)	%	$	(2,633)	(4.5)	%	$	(1,182)	(4.0)	%	$	(3,547)	(12.0)	%
Impact of derivative settlements	348		0.6		1,044		1.8		785		2.7		2,356		8.0
Decrease in net income before taxes	$	(530)	(0.9)	%	$	(1,589)	(2.7)	%	$	(397)	(1.3)	%	$	(1,191)	(4.0)	%
Decrease in basic and diluted earnings per share	$	(0.01)			$	(0.03)			$	(0.01)			$	(0.02)
	Six months ended June 30, 2024								Six months ended June 30, 2023
Effect on earnings:
Decrease in pre-tax net income before impact of derivative settlements	$	(1,895)	(1.2)	%	$	(5,683)	(3.7)	%	$	(2,295)	(3.8)	%	$	(6,886)	(11.3)	%
Impact of derivative settlements	1,131		0.7		3,393		2.2		1,562		2.6		4,686		7.7
Decrease in net income before taxes	$	(764)	(0.5)	%	$	(2,290)	(1.5)	%	$	(733)	(1.2)	%	$	(2,200)	(3.6)	%
Decrease in basic and diluted earnings per share	$	(0.02)			$	(0.05)			$	(0.01)			$	(0.04)

Interest Rate Risk - Nelnet Bank

To manage Nelnet Bank's risk from fluctuations in market interest rates, the Company actively monitors interest rates and other interest sensitive components to minimize the impact that changes in interest rates have on the fair value of assets, net income, and cash flow. To achieve this objective, the Company manages and mitigates Nelnet Bank’s exposure to fluctuations in market interest rates through several techniques, including managing the maturity, repricing, and mix of fixed and variable rate assets and liabilities and the use of derivative instruments.

The following table presents Nelnet Bank's loan assets, asset-backed security investments, and deposits by rate characteristics:

	As of June 30, 2024				As of December 31, 2023
	Dollars		Percent		Dollars		Percent
Fixed-rate loan assets	$	534,988			$	424,284
Fixed-rate investments	72,195				34,644
Total fixed-rate assets	607,183		52.4	%	458,928		47.7	%
Variable-rate loan assets	7,363				8,588
Variable-rate investments	545,160				495,004
Total variable rate assets	552,523		47.6		503,592		52.3
Total assets	$	1,159,706	100.0	%	$	962,520	100.0	%
Fixed-rate deposits	$	323,857	31.3	%	$	280,736	33.1	%
Variable-rate deposits (a)	709,600		68.7		566,828		66.9
Total deposits	$	1,033,457	100.0	%	$	847,564	100.0	%

(a) Nelnet Bank uses derivative instruments to hedge exposure to variability in cash flows of variable rate deposits to minimize the exposure to volatility in cash flows from future changes in interest rates. The derivatives are not reflected in the above table. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for a summary of Nelnet Bank's derivatives outstanding as of June 30, 2024.

Interest Rate and Market Risk - Investments

The following table presents the rates earned on the Company’s available-for-sale debt securities (investments) and debt facilities used to fund a portion of such investments. The table below excludes securities (investments) held by Nelnet Bank.

	Average balance		Interest income/ expense	Average yields/ rates		Average balance		Interest income/ expense	Average yields/ rates
	Three months ended June 30,
	2024					2023
Investments:
Asset-backed securities available-for-sale (a) (b)	$	827,144	13,991	6.78	%	$	919,698	14,561	6.35	%
Debt funding asset-backed securities available-for-sale:
Participation agreement - variable rate (c)	$	11,374	175	6.17	%	$	76,966	1,094	5.70	%
Repurchase agreements - variable rate (d)	112,016		1,842	6.60		415,514		6,277	6.06
	$	123,390	2,017	6.56		$	492,480	7,371	6.00
	Six months ended June 30,
	2024					2023
Investments:
Asset-backed securities available-for-sale (a) (b)	$	845,389	28,110	6.67	%	$	1,083,959	32,610	6.07	%
Debt funding asset-backed securities available-for-sale:
Participation agreement - variable rate (c)	$	5,731	176	6.16	%	$	230,889	6,153	5.37	%
Repurchase agreements - variable rate (d)	126,461		4,259	6.75		463,637		13,045	5.67
	$	132,192	4,435	6.73		$	694,526	19,198	5.57

(a) The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. The table above includes these repurchased bonds.

(b) The majority of the Company’s asset-backed securities earn floating rates with expected returns of approximately SOFR + 100 to 350 basis points to maturity. As of June 30, 2024, $206.5 million (par value) of the Company’s asset-backed securities earn a weighted average fixed rate of 3.22%.

(c) Interest incurred by the Company on amounts borrowed under the participation agreement is at a variable rate of SOFR + 62.5 basis points.

(d) Interest incurred by the Company on amounts borrowed under repurchase agreements is at a variable rate of SOFR + 100 to 140 basis points.

The Company’s portfolio of asset-backed investment securities has limited liquidity, and the Company could incur a significant loss if the investments were sold prior to maturity at an amount less than the original purchase price. As of June 30, 2024, the gross unrealized loss on the Company’s available-for-sale debt securities was $26.7 million, and the aggregate fair value of available-for-sale debt securities with unrealized losses was $401.2 million. The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company's principal executive and principal financial officers, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2024. Based on this evaluation, the Company’s principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material changes from the information referred to in the Legal Proceedings section of the Company's Annual Report on Form 10-K for the year ended December 31, 2023 under Part I, Item 3 of such Form 10-K.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 in response to Part I, Item 1A of such Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Stock Repurchases

The following table summarizes the repurchases of Class A common stock during the second quarter of 2024 by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934. Certain share repurchases included in the table below were made pursuant to a trading plan adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.

Period	Total number of shares purchased (a)	Average price paid per share (b)		Total number of shares purchased as part of publicly announced plans or programs (c)	Maximum number of shares that may yet be purchased under the plans or programs (c)
April 1 - April 30, 2024	353,408	$	94.26	353,408	3,471,359
May 1 - May 31, 2024	80,934	95.83		80,934	3,390,425
June 1 - June 30, 2024	53,638	99.50		48,690	3,341,735
Total	487,980	$	95.10	483,032

(a) The total number of shares includes: (i) shares repurchased pursuant to the stock repurchase program discussed in footnote (c) below; and (ii) shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. Shares of Class A common stock tendered by employees to satisfy tax withholding obligations included 4,948 shares in June 2024. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the Company’s shares on the date of vesting.

(b) The average price of shares repurchased excludes excise taxes.

(c) On May 9, 2022, the Company announced that its Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2025.

Working capital and dividend restrictions/limitations

The Company's $495.0 million unsecured line of credit, which is available through September 22, 2026, imposes restrictions on the payment of dividends through covenants requiring a minimum consolidated net worth and a minimum level of unencumbered cash, cash equivalent investments, and available borrowing capacity under the line of credit. In addition, trust indentures and other financing agreements governing debt issued by the Company's lending subsidiaries generally have limitations on the amounts of funds that can be transferred to the Company by its subsidiaries through cash dividends at certain times. Further, Nelnet Bank is subject to laws and regulations that restrict the ability of Nelnet Bank to pay dividends to the Company, and authorize regulatory authorities to prohibit or limit the payment of dividends by Nelnet Bank to the Company. These provisions do not currently materially limit the Company's ability to pay dividends, and, based on the Company's current financial condition and recent results of operations, the Company does not currently anticipate that these provisions will materially limit the future payment of dividends.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

The following table describes contracts, instructions, or written plans for the purchase or sale of the Company's securities adopted by the Company's directors or executive officers during the second quarter of 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans.

Name and Title	Date of Adoption of Rule 10b5-1 Trading Plan	Scheduled Expiration Date of Rule 10b5-1 Trading Plan (a)	Aggregate Number of Securities to Be Purchased or Sold
William J. Munn<br><br>Corporate Secretary / Chief Governance Officer / General Counsel	5/16/2024	9/15/2024 (b)	Gift transfer of 100 shares of Class A common stock
Michael S. Dunlap<br><br>Executive Chairman	5/29/2024	9/29/2024	Gift transfer of 35,000 shares of Class A common stock

(a) A trading plan may also expire on such earlier date as all transactions under the trading plan are completed.

(b) This trading plan was subsequently terminated on August 2, 2024, and no transfers were made pursuant to the plan.

On March 5, 2024, Kathleen A. Farrell, Director, terminated a trading arrangement she had previously adopted with respect to the sale of securities of the Company's Class A common stock. Ms. Farrell's Rule 10b5-1 Trading Plan was adopted on June 16, 2023, had a term of one year, and provided for the sale of up to 1,000 shares of Class A common stock. As of the date of termination of this Rule 10b5-1 Trading Plan, Ms. Farrell had sold no shares of Class A common stock under its terms. Notice of this termination was inadvertently omitted from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

ITEM 6. EXHIBITS

10.1	Nelnet, Inc. Restricted Stock Plan, as amended and restated through May 16, 2024, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on May 21, 2024 and incorporated herein by reference.
10.2*#	Modification of Contract dated effective as of March 26, 2024 for Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.
31.1*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer Jeffrey R. Noordhoek.
31.2*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer James D. Kruger.
32**	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	*	Filed herewith
---	---
**	Furnished herewith
#	Provided herewith for purposes of providing a complete set of all modifications to the Student Loan Servicing Contract between the United States Department of Education and Nelnet Servicing, LLC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NELNET, INC.
Date:	August 8, 2024	By:	/s/ JEFFREY R. NOORDHOEK
		Name:	Jeffrey R. Noordhoek
		Title:	Chief Executive Officer<br><br>Principal Executive Officer	Date:	August 8, 2024	By:	/s/ JAMES D. KRUGER
---	---	---	---
		Name:	James D. Kruger
		Title:	Chief Financial Officer<br><br>Principal Financial Officer and Principal Accounting Officer

exhibit102servicingamend

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing items 8 and 15, and returning or (c) By separate letter or electronic communication which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by letter or electronic communication, provided each letter or electronic communication makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. E. IMPORTANT: Contractor is not is required to sign this document and return copies to the issuing office. AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1. CONTRACT ID CODE 2. AMENDMENT/MODIFICATION NUMBER 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQUISITION NUMBER 5. PROJECT NUMBER (If applicable) 7. ADMINISTERED BY (If other than Item 6) CODE STANDARD FORM 30 (REV. 11/2016) Prescribed by GSA FAR (48 CFR) 53.243 FACILITY CODE 9A. AMENDMENT OF SOLICITATION NUMBER 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NUMBER 10B. DATED (SEE ITEM 13) 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers is extended. is not extended. 12. ACCOUNTING AND APPROPRIATION DATA (If required) copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NUMBER AS DESCRIBED IN ITEM 14. CHECK ONE A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NUMBER IN ITEM 10A. B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: D. OTHER (Specify type of modification and authority) Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect. 15C. DATE SIGNED 15A. NAME AND TITLE OF SIGNER (Type or print) 16C. DATE SIGNED 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.) PAGE OF PAGES 6. ISSUED BY CODE 8. NAME AND ADDRESS OF CONTRACTOR (Number, street, county, State and ZIP Code) (X) CODE 15B. CONTRACTOR/OFFEROR (Signature of person authorized to sign) 16B. UNITED STATES OF AMERICA (Signature of Contracting Officer) Previous edition unusable See Attachment Page 1 99 91003123D0005P00020 MAR 26, 2024 FSA-ACQ US Department of Education FSA - Acquisitions, 830 First St NE - Suite 91F3 Washington DC 20202 See Block 6 00030812 91003123D0005 APR 24, 2023 See Schedule ✖ FAR 52.243-1 Changes-Fixed Price (Aug 1987) Alternate I (Apr 1984) ✖ 1 Jackson McClam, Contracting Officer 202-304-2149 jackson.mcclam@ed.gov MAR 26, 2024 UEI: MNXKQ62J7AE8 Cage Code: 5JZQ5 NELNET SERVICING LLC 121 S. 13TH STREET SUITE 201 LINCOLN NE 68508 Modification Amount: $0.00 Modification Obligated Amount: $0.00 ✖ JACKSON MCCLAM Digitally signed by JACKSON MCCLAM Date: 2024.03.26 15:12:07 -04'00'

Attachment Page PAGE 2 OF 99 91003123D0005P00020 The purpose of this modification is to revise the contract requirements and contract pricing as a result of negotiations to ensure FSA’s requirements stay within FSA’s funding. The changes made are as follows: 1. Changes to Call Center Hours that effects CLIN 3 Contact Center and Back-Office Processing. a. Within the Section C Performance Work Statement the b. General Borrower Account Servicing Requirements subpart i.2 is revised as follows: FROM: 2. Establish the Contact Center with the following hours of operation: Monday 8 AM to 11 PM EST, Tuesday through Friday 8 AM to 8 PM EST, and Saturday 10 AM to 2 PM EST. This excludes Federal holidays. TO: 2. Establish the Contact Center with the following hours of operation: a. From April 1, 2024, through March 31, 2025 • Mon: 0800-2100 ET • Tue – Wed: 0800-2000 ET • Thur – Fri: 0800-1800 ET b. From April 1, 2025 through the end of the contract. • Mon: 0800-2300 ET • Tue – Fri: 0800-2000 ET • Sat: 1000-1400 ET b. Within the Attachment 01 Business Operations Servicing Requirements requirement series 49000.011 is added as follows: • 49000.000: The contractor shall maintain a customer contact center(s) for borrowers. o 49000.010: The contractor shall ensure the contact center is open the following minimum hours: • Mon: 0800-2300 ET • Tue – Fri: 0800-2000 ET • Sat: 1000-1400 ET o 49000.011: [ADDED] From April 1, 2024, through March 31, 2025, the contractor shall ensure the contact center is open the following minimum hours: • Mon: 0800-2100 ET • Tue – Wed: 0800-2000 ET • Thur – Fri: 0800-1800 ET 2. Changes to Delinquency outreach within the Attachment 01 Business Operations Servicing Requirements series 24011.000 with the addition of 24011.011 as follows: • 24011.000: The contractor shall perform Delinquency outreach to all customers. Any manual processes will be performed by the contractor. Attachment: 24011 Due Diligence Delinquency Calls v2b Post Award, the contractor shall provide current outreach detail during LMM review

Attachment Page PAGE 3 OF 99 91003123D0005P00020 o 24011.010: The contractor shall perform the basic delinquency outreach activities that align with CFR 682.411, except that through September 30, 2024, the number of calls required for a diligent effort is reduced from 2 call attempts to 1 call attempt before the borrower is 90 days delinquent. During this period Servicers are allowed to count borrower activity such as auto pay enrollment, IDR application submission, inbound call from the borrower, etc., as satisfying the outbound call due diligence requirement. Servicers should send letters at intervals prescribed in CFR 682.411.  24011.011: [ADDED] From April 1, 2024, through September 30, 2024, the responsibility to conduct basic due diligence efforts normally occurring between days 90 and 180 are waived. No other element of due diligence is waived. • Replace Business Operations Servicing Requirements Attachment 24011 Due Diligence Delinquency Calls v2 with v2b which adds language from the revised 24011.010 requirement. 3. Additional changes within the Attachment 01 Business Operations Servicing Requirements 24010.000 series and a revised 24010 Pre-Repayment Contact attachment referenced as follows: • 24010.000: [CHANGE] The contractor shall perform PRE-REPAYMENT outreach to “at risk” customers. Any manual processes will be performed by the contractor. See Attachment: 24010 Pre-Repayment Contact v3 Post Award, the contractor shall provide current outreach detail during LMM review o 24010.010: [CHANGE] The contractor shall perform the “at risk” pre-repayment outreach activities identified in attachment. o 24010.020: DELETED o 24010.030: The contractor shall perform the “at risk” pre-repayment outreach activities on accounts identified by FSA as needing “at risk” outreach. These accounts may be identified by characteristics provided by FSA and/or specific SSNs provided by FSA. o 24010.040: The contractor shall meet with FSA on at least a quarterly basis (each calendar quarter) to review the effectiveness of the “at risk” modelling and additional outreach. 4. As a result of the changes described earlier a revised conformed copy of Attachment 01 Business Operations Servicing Requirements will be issued in a later modification. 5. Modify the contractual Abandon Rate Service Level Agreement amount, from 4% to 8% from April 1, 2024, through March 31, 2025 returning to 4% thereafter. In addition, revise the language associated with the negative performance incentive and measurement of the SLAs from monthly to quarterly. Updates to names and references in the Timeliness SLA are made. Loan Consolidations (LVC) is changed to a Service Level Objective. Further change Customer Service SLA from 70% to 60% for April 1, 2024 through September 30, 2024 and changing its Negative Performance Incentive (NPI) factor from 25 to 15. a. Attachment 8 Service Level Methodology Performance Metrics and Attachment and Attachment 9 SLA and Future Borrower Allocation Calculator are hereby revised to update the specific language effected replacing the previous versions.

Attachment Page PAGE 4 OF 99 91003123D0005P00020 b. Revise within the Attachment 01 Business Operations Servicing Requirements 49000 series .20 and .030 as follows: i. 49000.030: The contract shall maintain a minimum of customer satisfaction rating of at least 60% or higher from 4/1/2024 through 9/30/2024 and thereafter 70% or higher as determined by FSA’s Customer Satisfaction Survey. ii. 49000.040: The contractor shall maintain a monthly abandon rate from 4/1/2024 through 3/31/2025 of 8.0% or lower and thereafter 4% or lower. 6. Revise CLIN 3 Contact Center and Back-Office Processing prices resulting from the changes above. Section B CLIN price tables are updated with the revised pricing. This includes the revision of the Ordering Period pricing for the addition of a period between April 24, 2024 and September 30, 2024 and period between October 1, 2024 and March 31, 2025. 7. For administrative purposes, acceptance of changes to the Terms and Conditions shown in the previous modification has been done. 8. This modification is the full and complete adjustment in price and scope for the changes described above to the contract. This modification represents total agreement of both parties.

SCHEDULE Continued ITEM NO. SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT Contracting Officer: Jackson McClam, 202-304-2149, jackson.mcclam@ed.gov Primary Contracting Officer Representative: Maxine Jackson, 404-974-9311, maxine.jackson@ed.gov Alternate Contracting Officer Representative(s): None Property Administrator Point of Contact: None Primary Technical Point of Contact: None Alternate Technical Point(s) of Contact: None PAGE 5 OF 99 91003123D0005P00020

Table of Contents SECTION C DESCRIPTION/SPECIFICATIONS/WORK STATEMENT...................................................7 C.1 P00020 conformed T&C of Base Contract...................................................... 7 PAGE 6 OF 99 91003123D0005P00020

SECTION C DESCRIPTION/SPECIFICATIONS/WORK STATEMENT C.1 P00020 conformed T&C of Base Contract PAGE 7 OF 99 91003123D0005P00020 I. Part I: The Schedule (continued) B. Section B: Services & Prices 1. B. 1 Contract Line-Item Number (CLIN) Descriptions The following table describes the available CLINs under the Contract for Task Orders and their associated contract types. General CLIN Descriptions CLIN 1 Title: Servicing System Operations Basic system operations and support, including: servicing system infrastructure (hardware, software, network, data and image storage etc.) maintenance and upgrades and IT staffing (system support, system development and overhead) for normal operations and maintenance and routine system upgrades (i.e. interest rate changes, business rule updates, regulatory changes, etc.) in accordance with the contract requirements. This CLIN is fixed price with economic price adjustment with tiered rates tied to the number of borrower accounts on the USDS Servicer’s system. CLIN 2 Title: Cybersecurity Services Cybersecurity costs including, but not limited to: labor for Cybersecurity requirements, software licensing, 3rd party vendor support, overhead, etc. required to support requirements for cybersecurity operations and maintenance. This CLIN does not include Servicing System Operations (CLIN 1), Website and Mobile Services (CLIN 4) or User Authentication Services (CLIN 5). This CLIN is fixed price with economic price adjustment with tiered rates tied to the number of borrower accounts on the USDS Servicer’s system. CLIN 3 Title: Contact Center and Back-Office Processing Operation & Maintenance Basic contact center and back-office operations, including: staffing, recruiting, equipment, software, training, quality monitoring, overhead, facilities, etc. to perform the requirements of the Contract. This CLIN also includes the requirements for servicing military borrower accounts. This CLIN is fixed price with economic price adjustment with one or more performance incentives and with tiered rates tied to the number of borrower accounts on the USDS Servicer’s system. Performance Incentives Performance Incentive for At-risk Borrowers (Applies to CLIN 3 and includes military borrower accounts) Performance Incentive for SLA/SLO Performance Metrics (Applies to CLIN 3 and includes military borrower accounts) CLIN 4 Title: Website and Mobile Services Website and mobile services including: web and mobile staffing (IT infrastructure, IT design & development and overhead), normal maintenance and routine upgrades (i.e. form revisions, borrower messaging and text changes, business rule updates, regulatory changes, etc.), hardware and software. This CLIN is fixed price with economic price adjustment with tiered rates tied to the number of borrower accounts on the USDS Servicer’s system.

PAGE 8 OF 99 91003123D0005P00020 CLIN 5 Title: User Authentication Services User authentication (will be eliminated upon implementation of FSA Single Sign On) including: staff, software, support for password reset and equipment. This CLIN is fixed price with economic price adjustment and with a fixed price rate tied to the number of borrower accounts on the USDS Servicer’s system. CLIN 6 Title: Fulfillment Services Fulfillment services including, but not limited to: equipment, personnel, postage, paper, printing, mail scanning, other 3rd party vendor tasks. This CLIN is fixed price with economic price adjustment with fixed price unit rates for envelops (letter(s)) sent (which includes postage and labor), scanned documents, and alternate format documents. CLIN 7 Title: Development, Modernization & Enhancements. Development, Modernization & Enhancement including, but not limited to: projects or services to further develop, modernize, or enhance the requirements under this Contract. This CLIN will be firm-fixed price or fixed price with economic price adjustment (prices and contract type determined at Task Order level). This CLIN establishes a table of labor categories and associated labor rates, subject to the economic price adjustment clause, for use in future Task Orders, contract modifications, and Change Requests (CR). CLIN 8 Title: Specialty Task - Image Repository See PWS section 3.3. This CLIN is fixed price with economic price adjustment and with a fixed price rate tied to per image per month on the USDS Servicer’s system. CLIN 9 Title: Specialty Task - Decommissioned Servicer Data and Payment Support See PWS section 3.3. Services in accordance with the Contract. This CLIN is fixed price with economic price adjustment and with fixed price rate tied to the number of borrower accounts on the USDS servicer’s system. CLIN 10 Title: Specialty Task - FFEL Guaranty Agency Rehabilitation Loan Purchases See PWS section 3.3. This CLIN is fixed price with economic price adjustment and with fixed price rate per number of successful rehabilitation deals. CLIN 11 Title: Loan Consolidation Origination and Disbursement See Attachment 01 – Business Operations and Servicing Requirements (section 15000) This CLIN is fixed price with economic price adjustment and with fixed price rates per number of successful consolidation originations and adjustments (different rates for each type) CLIN 12 Title: Specialty Task - Legacy Loan Consolidation Origination and Disbursement Support Functions See PWS section 3.3 This CLIN is fixed price with economic price adjustment and with fixed price rates per number of successful consolidation adjustments (different rates for each type)

PAGE 9 OF 99 91003123D0005P00020 2. CLIN Pricing and Rates Each CLIN contains the prices and/or rates available to be applied with the Task Orders issued under the Contract, for each year of the Contract’s base period and all option periods. The Federal Acquisition Regulations (FAR) clause 52.217-8 Option to Extend Services, is applicable to all CLINs under the Contract for the contract and all Task Orders. In accordance with FAR clause 52.216-22, Indefinite Quantity, the maximum under this Contract is $16,000,000,000 dollars. The minimum under this Contract is the value of the initial Task Order (Initial Task Order) issued against the Contract. CLIN pricing set by negotiation shall be incorporated at award within this section on the next page.

PAGE 10 OF 99 91003123D0005P00020 CL IN R at es : N ot e: M e qu al s M ill io ns O pt io n O rd er in g Pe rio d 3 (1 Y ea rs ) Ra te s R ow # : CL IN 1 S er vi ci ng S ys te m O pe ra tio ns - Co m m on P ric in g Q ua nt ity b y U ni t - b or ro w er p er m on th Ap r 1 2 02 4 - Se p 30 2 02 4 O ct 1 2 02 4 - M ar 3 1 20 25 Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s O rd er in g Ye ar 1 O rd er in g Pe rio d 2a O rd er in g Pe rio d 2b O rd er in g Ye ar 3 O rd er in g Ye ar 4 O rd er in g Ye ar 5 O rd er in g Ye ar 6 O rd er in g Ye ar 7 O rd er in g Ye ar 8 O rd er in g Ye ar 9 O rd er in g Ye ar 1 0 1 Ti er 1 U p to 2 .5 M $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 $0 .7 62 05 2 2 Ti er 2 2. 5M - 5M $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 $0 .5 73 46 3 3 Ti er 3 5M - 7. 5M $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 $0 .4 66 71 5 4 Ti er 4 7. 5M - 10 M $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 $0 .3 79 97 7 5 Ti er 5 10 M - 15 M $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 $0 .2 59 33 0 6 Ti er 6 >1 5M $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 $0 .2 06 81 1 CL IN 2 C yb er se cu rit y Se rv ic es - Co m m on P ric in g Q ua nt ity b y U ni t - b or ro w er p er m on th Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s 7 Ti er 1 U p to 2 .5 M $0 .0 90 86 4 $0 .0 92 45 5 $0 .0 92 45 5 $0 .0 94 07 3 $0 .0 95 71 9 $0 .0 97 39 4 $0 .0 99 09 8 $0 .1 00 83 2 $0 .1 02 59 7 $0 .1 04 39 2 $0 .1 06 21 9 8 Ti er 2 > 2. 5M - 5M $0 .0 78 71 2 $0 .0 80 08 9 $0 .0 80 08 9 $0 .0 81 49 1 $0 .0 82 91 7 $0 .0 84 36 8 $0 .0 85 84 4 $0 .0 87 34 6 $0 .0 88 87 5 $0 .0 90 43 0 $0 .0 92 01 3 9 Ti er 3 >5 M - 7. 5M $0 .0 52 38 2 $0 .0 53 29 8 $0 .0 53 29 8 $0 .0 54 23 1 $0 .0 55 18 0 $0 .0 56 14 6 $0 .0 57 12 8 $0 .0 58 12 8 $0 .0 59 14 5 $0 .0 60 18 0 $0 .0 61 23 4 10 Ti er 4 >7 .5 M - 10 M $0 .0 47 04 9 $0 .0 47 87 2 $0 .0 47 87 2 $0 .0 48 71 0 $0 .0 49 56 2 $0 .0 50 43 0 $0 .0 51 31 2 $0 .0 52 21 0 $0 .0 53 12 4 $0 .0 54 05 4 $0 .0 55 00 0 11 Ti er 5 >1 0M - 15 M $0 .0 37 99 1 $0 .0 38 65 6 $0 .0 38 65 6 $0 .0 39 33 3 $0 .0 40 02 1 $0 .0 40 72 1 $0 .0 41 43 4 $0 .0 42 15 9 $0 .0 42 89 7 $0 .0 43 64 8 $0 .0 44 41 1 12 Ti er 6 >1 5M $0 .0 33 97 6 $0 .0 34 57 1 $0 .0 34 57 1 $0 .0 35 17 6 $0 .0 35 79 2 $0 .0 36 41 8 $0 .0 37 05 5 $0 .0 37 70 4 $0 .0 38 36 4 $0 .0 39 03 5 $0 .0 39 71 8 CL IN 3 C on ta ct C en te r a nd B ac k- O ff ic e Pr oc es si ng O pe ra tio n & M ai nt en an ce - C om m on P ric in g Q ua nt ity b y U ni t - b or ro w er p er m on th Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s 13 Ti er 1 U p to 2 .5 M $1 .3 92 28 1 $1 .3 03 31 4 $1 .3 59 98 0 $1 .4 41 43 7 $1 .4 66 66 2 $1 .4 92 32 9 $1 .5 18 44 4 $1 .5 45 01 7 $1 .5 72 05 5 $1 .5 99 56 6 $1 .6 27 55 8 14 Ti er 2 > 2. 5M - 5M $1 .2 53 48 8 $1 .1 73 39 0 $1 .2 24 40 7 $1 .2 97 74 4 $1 .3 20 45 4 $1 .3 43 56 2 $1 .3 67 07 5 $1 .3 90 99 9 $1 .4 15 34 1 $1 .4 40 11 0 $1 .4 65 31 1 15 Ti er 3 >5 M - 7. 5M $1 .1 52 30 7 $1 .0 78 67 4 $1 .1 25 57 3 $1 .1 92 99 0 $1 .2 13 86 8 $1 .2 35 11 0 $1 .2 56 72 5 $1 .2 78 71 8 $1 .3 01 09 5 $1 .3 23 86 4 $1 .3 47 03 2 16 Ti er 4 >7 .5 M - 10 M $1 .1 24 38 6 $1 .0 52 53 8 $1 .0 98 30 0 $1 .1 64 08 4 $1 .1 84 45 5 $1 .2 05 18 3 $1 .2 26 27 4 $1 .2 47 73 4 $1 .2 69 56 9 $1 .2 91 78 6 $1 .3 14 39 3 17 Ti er 5 >1 0M - 15 M $1 .1 17 31 0 $1 .0 45 91 4 $1 .0 91 38 8 $1 .1 56 75 8 $1 .1 77 00 2 $1 .1 97 59 9 $1 .2 18 55 7 $1 .2 39 88 2 $1 .2 61 58 0 $1 .2 83 65 7 $1 .3 06 12 1 18 Ti er 6 >1 5M $1 .0 62 02 7 $0 .9 94 16 3 $1 .0 37 38 8 $1 .0 99 52 3 $1 .1 18 76 5 $1 .1 38 34 3 $1 .1 58 26 4 $1 .1 78 53 4 $1 .1 99 15 8 $1 .2 20 14 3 $1 .2 41 49 6 Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s 19 Ti er 1 U p to 2 .5 M $1 .4 25 63 9 $1 .3 34 54 0 $1 .3 92 56 4 $1 .4 75 97 3 $1 .5 01 80 2 $1 .5 28 08 4 $1 .5 54 82 5 $1 .5 82 03 5 $1 .6 09 72 0 $1 .6 37 89 0 $1 .6 66 55 3 20 Ti er 2 > 2. 5M - 5M $1 .0 32 50 8 $0 .9 66 53 1 $1 .0 08 55 4 $1 .0 68 96 2 $1 .0 87 66 9 $1 .1 06 70 3 $1 .1 26 07 1 $1 .1 45 77 7 $1 .1 65 82 8 $1 .1 86 23 0 $1 .2 06 98 9 21 Ti er 3 >5 M - 7. 5M $1 .0 04 68 7 $0 .9 40 48 7 $0 .9 81 37 8 $1 .0 40 15 8 $1 .0 58 36 1 $1 .0 76 88 2 $1 .0 95 72 8 $1 .1 14 90 3 $1 .1 34 41 4 $1 .1 54 26 6 $1 .1 74 46 6 22 Ti er 4 >7 .5 M - 10 M $0 .9 96 94 6 $0 .9 33 24 2 $0 .9 73 81 7 $1 .0 32 14 5 $1 .0 50 20 7 $1 .0 68 58 6 $1 .0 87 28 6 $1 .1 06 31 3 $1 .1 25 67 4 $1 .1 45 37 3 $1 .1 65 41 7 23 Ti er 5 >1 0M - 15 M $0 .9 84 45 7 $0 .9 21 55 0 $0 .9 61 61 8 $1 .0 19 21 5 $1 .0 37 05 1 $1 .0 55 20 0 $1 .0 73 66 6 $1 .0 92 45 5 $1 .1 11 57 3 $1 .1 31 02 5 $1 .1 50 81 8 24 Ti er 6 >1 5M $0 .9 76 26 4 $0 .9 13 88 0 $0 .9 53 61 4 $1 .0 10 73 2 $1 .0 28 42 0 $1 .0 46 41 7 $1 .0 64 72 9 $1 .0 83 36 2 $1 .1 02 32 1 $1 .1 21 61 2 $1 .1 41 24 0 Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s 25 Ti er 1 U p to 2 .5 M $1 .2 73 53 9 $1 .1 92 16 0 $1 .2 43 99 3 $1 .3 18 50 3 $1 .3 41 57 7 $1 .3 65 05 5 $1 .3 88 94 3 $1 .4 13 25 0 $1 .4 37 98 2 $1 .4 63 14 6 $1 .4 88 75 1 26 Ti er 2 > 2. 5M - 5M $1 .0 88 31 7 $1 .0 18 77 4 $1 .0 63 06 8 $1 .1 26 74 1 $1 .1 46 45 9 $1 .1 66 52 2 $1 .1 86 93 7 $1 .2 07 70 8 $1 .2 28 84 3 $1 .2 50 34 8 $1 .2 72 22 9 27 Ti er 3 >5 M - 7. 5M $0 .8 96 11 6 $0 .8 38 85 4 $0 .8 75 32 6 $0 .9 27 75 4 $0 .9 43 99 0 $0 .9 60 51 0 $0 .9 77 31 8 $0 .9 94 42 2 $1 .0 11 82 4 $1 .0 29 53 1 $1 .0 47 54 8 28 Ti er 4 >7 .5 M - 10 M $0 .8 68 28 0 $0 .8 12 79 7 $0 .8 48 13 6 $0 .8 98 93 6 $0 .9 14 66 7 $0 .9 30 67 4 $0 .9 46 96 0 $0 .9 63 53 2 $0 .9 80 39 4 $0 .9 97 55 1 $1 .0 15 00 8 29 Ti er 5 >1 0M - 15 M $0 .8 58 35 0 $0 .8 03 50 2 $0 .8 38 43 7 $0 .8 88 65 6 $0 .9 04 20 7 $0 .9 20 03 1 $0 .9 36 13 1 $0 .9 52 51 4 $0 .9 69 18 3 $0 .9 86 14 3 $1 .0 03 40 1 30 Ti er 6 >1 5M $0 .8 54 30 6 $0 .7 99 71 6 $0 .8 34 48 7 $0 .8 84 46 9 $0 .8 99 94 7 $0 .9 15 69 6 $0 .9 31 72 0 $0 .9 48 02 6 $0 .9 64 61 6 $0 .9 81 49 7 $0 .9 98 67 3 CL IN 4 W eb si te a nd M ob ile S er vi ce s - C om m on P ric in g Q ua nt ity b y U ni t - b or ro w er p er m on th Pr ic in g Le ve l N um be r o f B or ro w er A cc ou nt s 31 U p to 2 .5 M $0 .0 20 95 0 $0 .0 21 31 7 $0 .0 21 31 7 $0 .0 21 69 0 $0 .0 22 06 9 $0 .0 22 45 5 $0 .0 22 84 8 $0 .0 23 24 8 $0 .0 23 65 5 $0 .0 24 06 9 $0 .0 24 49 0 32 > 2. 5M - 5M $0 .0 15 04 5 $0 .0 15 30 9 $0 .0 15 30 9 $0 .0 15 57 7 $0 .0 15 84 9 $0 .0 16 12 6 $0 .0 16 40 9 $0 .0 16 69 6 $0 .0 16 98 8 $0 .0 17 28 5 $0 .0 17 58 8 33 >5 M - 7. 5M $0 .0 10 63 6 $0 .0 10 82 3 $0 .0 10 82 3 $0 .0 11 01 2 $0 .0 11 20 5 $0 .0 11 40 1 $0 .0 11 60 0 $0 .0 11 80 3 $0 .0 12 01 0 $0 .0 12 22 0 $0 .0 12 43 4 34 >7 .5 M - 10 M $0 .0 09 93 5 $0 .0 10 10 9 $0 .0 10 10 9 $0 .0 10 28 6 $0 .0 10 46 6 $0 .0 10 64 9 $0 .0 10 83 6 $0 .0 11 02 5 $0 .0 11 21 8 $0 .0 11 41 5 $0 .0 11 61 4 35 >1 0M - 15 M $0 .0 09 19 6 $0 .0 09 35 7 $0 .0 09 35 7 $0 .0 09 52 0 $0 .0 09 68 7 $0 .0 09 85 7 $0 .0 10 02 9 $0 .0 10 20 5 $0 .0 10 38 3 $0 .0 10 56 5 $0 .0 10 75 0 36 >1 5M $0 .0 09 64 7 $0 .0 09 81 6 $0 .0 09 81 6 $0 .0 09 98 8 $0 .0 10 16 3 $0 .0 10 34 1 $0 .0 10 52 2 $0 .0 10 70 6 $0 .0 10 89 3 $0 .0 11 08 4 $0 .0 11 27 8 CL IN 5 U se r A ut he nt ic at io n Se rv ic es - Co m m on P ric in g Q ua nt ity b y U ni t - b or ro w er p er m on th $0 .0 10 81 7 $0 .0 11 00 6 $0 .0 11 00 6 $0 .0 11 19 9 $0 .0 11 39 5 $0 .0 11 59 4 $0 .0 11 79 7 $0 .0 12 00 3 $0 .0 12 21 3 $0 .0 12 42 7 $0 .0 12 64 5 CL IN 6 F ul fil lm en t S er vi ce s - C om m on P ric in g Q ua nt ity b y U ni t O rd er in g Ye ar 1 O rd er in g Pe rio d 2a O rd er in g Pe rio d 2b O rd er in g Ye ar 3 O rd er in g Ye ar 4 O rd er in g Ye ar 5 O rd er in g Ye ar 6 O rd er in g Ye ar 7 O rd er in g Ye ar 8 O rd er in g Ye ar 9 O rd er in g Ye ar 1 0 37 En ve lo ps (L et te r( s) ) S en t pe r e nv el op $0 .7 68 00 8 $0 .7 81 44 8 $0 .7 81 44 8 $0 .7 95 12 3 $0 .8 09 03 8 $0 .8 23 19 6 $0 .8 37 60 2 $0 .8 52 26 0 $0 .8 67 17 4 $0 .8 82 35 0 $0 .8 97 79 1 38 Sc an ne d Do cu m en ts pe r d oc um en t $0 .6 54 49 2 $0 .6 65 94 6 $0 .6 65 94 6 $0 .6 77 60 0 $0 .6 89 45 8 $0 .7 01 52 4 $0 .7 13 80 0 $0 .7 26 29 2 $0 .7 39 00 2 $0 .7 51 93 4 $0 .7 65 09 3 39 Al te rn at iv e Fo rm at D oc um en ts pe r d oc um en t $5 .3 18 18 1 $5 .4 11 24 9 $5 .4 11 24 9 $5 .5 05 94 6 $5 .6 02 30 0 $5 .7 00 34 0 $5 .8 00 09 6 $5 .9 01 59 8 $6 .0 04 87 6 $6 .1 09 96 1 $6 .2 16 88 5 CL IN 7 D ev el op m en t, M od er ni za tio n, a nd E nh an ce m en ts O rd er in g Ye ar 1 O rd er in g Pe rio d 2a O rd er in g Pe rio d 2b O rd er in g Ye ar 3 O rd er in g Ye ar 4 O rd er in g Ye ar 5 O rd er in g Ye ar 6 O rd er in g Ye ar 7 O rd er in g Ye ar 8 O rd er in g Ye ar 9 O rd er in g Ye ar 1 0 40 CL IN 8 S pe ci al ty T as k - I m ag e Re po si to ry Q ua nt ity b y U ni t - p er im ag e pe r m on th $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 $0 .0 00 8 41 CL IN 9 S pe ci al ty T as k - D ec om m is si on ed S er vi ce r D at a an d Pa ym en t S up po rt Q ua nt ity b y U ni t - b or ro w er p er m on th $0 .0 30 0 $0 .0 31 0 $0 .0 31 0 $0 .0 32 0 $0 .0 33 1 $0 .0 34 2 $0 .0 35 3 $0 .0 36 5 $0 .0 37 7 $0 .0 39 0 $0 .0 40 3 42 CL IN 1 0 Sp ec ia lty T as k - F FE L Gu ar an ty A ge nc y Re ha bi lit at io n Lo an P ur ch as es Q ua nt ity b y U ni t - p er su cc es sf ul re ha bi lit at io n de al $6 08 .0 00 0 $6 28 .4 28 8 $6 28 .4 28 8 $6 49 .5 44 0 $6 71 .3 68 7 $6 93 .9 26 7 $7 17 .2 42 6 $7 41 .3 42 0 $7 66 .2 51 1 $7 91 .9 97 1 $8 18 .6 08 2 43 CL IN 1 1 Lo an C on so lid at io n O rig in at io n an d Di sb ur se m en t Q ua nt ity b y U ni t - p er su cc es sf ul co ns ol id at io n or ig in at io n $3 3. 63 00 $3 4. 76 00 $3 4. 76 00 $3 5. 92 80 $3 7. 13 52 $3 8. 38 30 $3 9. 67 27 $4 1. 00 58 $4 2. 38 36 $4 3. 80 77 $4 5. 27 97 Q ua nt ity b y U ni t - p er su cc es sf ul ad ju st m en ts $2 0. 17 22 $2 0. 85 00 $2 0. 85 00 $2 1. 55 06 $2 2. 27 48 $2 3. 02 33 $2 3. 79 69 $2 4. 59 65 $2 5. 42 30 $2 6. 27 73 $2 7. 16 03 44 CL IN 1 2 Sp ec ia lty T as k - L eg ac y Lo an C on so lid at io n O rig in at io n an d Di sb ur se m en t S up po rt F un ct io ns Q ua nt ity b y U ni t - p er su cc es sf ul ad ju st m en ts $2 0. 17 22 $2 0. 85 00 $2 0. 85 00 $2 1. 55 06 $2 2. 27 48 $2 3. 02 33 $2 3. 79 69 $2 4. 59 65 $2 5. 42 30 $2 6. 27 73 $2 7. 16 03 O pt io n O rd er in g Pe rio d 1 (2 Y ea rs ) O pt io n O rd er in g Pe rio d 2 (2 Y ea rs ) St an da rd L oa n Se rv ic in g Pa rt 1 S ec tio n B. 3 C LI N P ric in g an d Ra te s Ta bl e Pr ic in g/ Ra te s f or C LI N 7 sh al l b e co m pl et ed o n th e La bo r C at eg or y W or ks he et ta b. N at io na l E m er ge nc y Fo rb ea ra nc e (C AR ES A ct ) S er vi ci ng Ba se O rd er in g Pe rio d (5 y ea rs ) Se rv ic e M em be r / M ili ta ry S er vi ci ng

PAGE 11 OF 99 91003123D0005P00020 Attachment Page L ab or C at eg or y L ab or C at eg or y D es cr i p tio n W or k Pe rf or m ed b y L ab or c at eg or y L oc al ity (C ity , S ta te ) O rd er in g Y ea r 1 O rd er in g Y ea r 2 O rd er in g Y ea r 3 O rd er in g Y ea r 4 O rd er in g Y ea r 5 O rd er in g Y ea r 6 O rd er in g Y ea r 7 O rd er in g Y ea r 8 O rd er in g Y ea r 9 O rd er in g Y ea r 10 Di re ct Ca ll Ce nt er A dv iso r Th e Ca ll Ce nt er A dv iso r p ro vi de s p ro fe ss io na l, qu al ity , a nd " be st in c la ss " se rv ic e fo r ex ist in g an d pr os pe ct iv e cu st om er s b y us in g a co ns ul ta tiv e ap pr oa ch . T hi s r ol e in vo lv es ac tiv iti es in cl ud in g, b ut n ot li m ite d to , i nb ou nd a nd o ut bo un d ph on e ca lls , e m ai l, liv e ch at , l et te r, fa x, a nd d at a en tr y. T hi s r ol e is re sp on sib le fo r f ac ili ta tin g, a na ly zin g, a nd re so lv in g cu st om er is su es , a s w el l a s p ro vi di ng p ro du ct su pp or t a nd fo llo w ‐u p to re so lv e co nc er ns in a n ac cu ra te a nd ti m el y m an ne r. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 56 .9 3 58 .8 4 60 .8 2 62 .8 7 64 .9 9 67 .1 8 69 .4 4 71 .7 8 74 .2 0 76 .7 0 Di re ct Cy be rs ec ur ity A na ly st Th e Cy be rs ec ur ity A na ly st p ar tic ip at es in se cu rit y in ve st ig at io ns , a nd m on ito rs , re se ar ch es , c la ss ifi es , a nd a na ly ze s s ec ur ity e ve nt s t ha t o cc ur o n th e ne tw or k or e nd po in t w ith a fo cu s o n th e de te rm in at io n of w he th er e ve nt s c on st itu te se cu rit y in ci de nt s. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 12 9. 96 13 4. 33 13 8. 84 14 3. 51 14 8. 33 15 3. 31 15 8. 46 16 3. 78 16 9. 28 17 4. 97 Di re ct Cy be rs ec ur ity A rc hi te ct Th e Cy be rs ec ur ity A rc hi te ct h as a st ro ng u nd er st an di ng o f t he b us in es s, it s g oa ls, in fo rm at io n te ch no lo gy (I T) , a nd se cu rit y. T hi s r ol e w or ks c lo se ly w ith v ar io us b us in es s lin es a nd te ch no lo gy te am s t o he lp sh ap e, d ef in e, im pl em en t, an d bu ild n et w or k in fr as tr uc tu re se cu re ly . 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 18 3. 80 18 9. 98 19 6. 36 20 2. 96 20 9. 78 21 6. 83 22 4. 12 23 1. 65 23 9. 43 24 7. 47 Di re ct Cy be rs ec ur ity E ng in ee r Th e Cy be rs ec ur ity E ng in ee r i de nt ifi es ri sk s a nd th re at s t o th e po te nt ia l d isc lo su re , m od ifi ca tio n, o r l os s o f d at a. T hi s r ol e re co m m en ds c ou nt er m ea su re s a nd sa fe gu ar ds to m iti ga te ri sk , i nc lu di ng m on ito rin g an d re vi ew in g te ch no lo gy in iti at iv es to p ro vi de se cu rit y as su ra nc e. T hi s r ol e m an ag es a nd m ai nt ai ns se cu rit y‐ re la te d te ch no lo gi es , a nd al so e st ab lis he s c or po ra te b as el in e se cu rit y po lic ie s a nd st an da rd s. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 16 2. 75 16 8. 22 17 3. 87 17 9. 71 18 5. 75 19 1. 99 19 8. 44 20 5. 11 21 2. 00 21 9. 12 Di re ct IT A rc hi te ct Th e In fo rm at io n Te ch no lo gy (I T) A rc hi te ct d es ig ns e nt er pr ise ‐w id e, c ro ss ‐fu nc tio na l so lu tio ns a nd p ro vi de s g ui da nc e an d le ad er sh ip to te ch no lo gy te am s. T hi s l ab or c at eg or y in cl ud es S of tw ar e Ar ch ite ct s, In fr as tr uc tu re A rc hi te ct s, a nd C yb er se cu rit y Ar ch ite ct s. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 18 3. 80 18 9. 98 19 6. 36 20 2. 96 20 9. 78 21 6. 83 22 4. 12 23 1. 65 23 9. 43 24 7. 47 Di re ct IT B us in es s A na ly st Th e In fo rm at io n Te ch no lo gy (I T) B us in es s A na ly st fo rm ul at es a nd d ef in es sy st em sc op e an d ob je ct iv es th ro ug h re se ar ch a nd fa ct ‐fi nd in g, c om bi ne d w ith a n un de rs ta nd in g of ap pl ic ab le b us in es s s ys te m s a nd in du st ry re qu ire m en ts . T hi s r ol e de ve lo ps o r m od ifi es m od er at el y co m pl ex in fo rm at io n sy st em s. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 11 9. 55 12 3. 57 12 7. 72 13 2. 01 13 6. 45 14 1. 03 14 5. 77 15 0. 67 15 5. 73 16 0. 96 Di re ct IT E ng in ee r Th e In fo rm at io n Te ch no lo gy (I T) E ng in ee r i s r es po ns ib le fo r d ev el op in g en te rp ris e‐ w id e, cr os s‐ fu nc tio na l s of tw ar e so lu tio ns , w or ki ng c lo se ly w ith IT A rc hi te ct s a nd IT B us in es s An al ys t t ec hn ic al te am s. T hi s l ab or c at eg or y in cl ud es S of tw ar e En gi ne er s, In fr as tr uc tu re En gi ne er s, a nd C yb er se cu rit y En gi ne er s. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 16 2. 75 16 8. 22 17 3. 87 17 9. 71 18 5. 75 19 1. 99 19 8. 44 20 5. 11 21 2. 00 21 9. 12 Di re ct O pe ra tio na l A na ly st Th e O pe ra tio na l A na ly st sp ec ia liz es in st re am lin in g pr oc es se s f or a dj us tm en t pr oc es sin g, in ve nt or y m an ag em en t, an d re se ar ch in th e ba ck o ffi ce . T he O pe ra tio na l An al ys t u se s a na ly tic al to ol s, c rit ic al th in ki ng , a nd p ro bl em so lv in g to h el p so lv e co m pl ex ta sk s f or th e ba ck ‐o ffi ce te am s. T hi s r ol e pr ov id es su bj ec t m at te r e xp er tis e on p ro je ct s an d co m pl ex re se ar ch a nd in iti at iv es . 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 75 .0 0 77 .5 2 80 .1 2 82 .8 1 85 .5 9 88 .4 7 91 .4 4 94 .5 1 97 .6 9 10 0. 97 Di re ct O pe ra tio ns S pe ci al ist Th e O pe ra tio ns S pe ci al ist p er fo rm s m ul tip le c om pl ex d ut ie s t ha t i nc lu de , b ut a re n ot lim ite d to , p ro ce ss in g fin an ci al a dj us tm en ts /r et ro ac tiv e ad ju st m en ts o r a cc ou nt in g du tie s, in ve nt or y m an ag em en t, w or ki ng o n sp ec ia l p ro je ct s, a ss ist in g op er at io na l m an ag em en t, an d re se ar ch in g, m on ito rin g, o r r es ol vi ng u ni qu e or e sc al at ed a cc ou nt s a nd re po rt in g di sc re pa nc ie s w ith /o r c or re ct in g N at io na l S tu de nt L oa n Da ta S ys te m (N SL DS ) er ro r r ep or ts . T hi s r ol e co m m un ic at es p er fo rm an ce d at a, c oa ch es /m en to rs n ew h ire s, ev al ua te s t he re su lts o f n ew ‐h ire w or k to id en tif y tr en ds o r t he n ee d fo r a dd iti on al tr ai ni ng , a nd a ss ist s l ea de rs hi p w ith m ai nt ai ni ng te am c om pl ia nc e. T hi s r ol e tr ac ks , ad m in ist er s, a nd a na ly ze s w or k flo w . T he O pe ra tio ns S pe ci al ist re sp on ds to ex te rn al /in te rn al c us to m er in qu iri es a nd p ro vi de s a ss ist an ce to h ig h‐ pr io rit y ac co un ts . 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 67 .2 8 69 .5 4 71 .8 8 74 .3 0 76 .8 0 79 .3 9 82 .0 6 84 .8 2 87 .6 7 90 .6 2 In di re ct Pr od uc t O w ne r Th e Pr od uc t O w ne r c re at es a c ol la bo ra tiv e an d tr an sp ar en t e nv iro nm en t t ha t h el ps de liv er b us in es s v al ue in a q ui ck a nd it er at iv e fa sh io n. C ol la bo ra tio n, re la tio ns hi p‐ bu ild in g, c om m un ic at io n, a nd le ad er sh ip a re k ey a sp ec ts o f t he ro le . T he u lti m at e pu rp os e of th e Pr od uc t O w ne r i s t o un de rs ta nd th e st ak eh ol de r n ee ds , p rio rit ize th os e ne ed s b as ed o n bu sin es s v al ue , a nd c om m un ic at e th os e to th e te ch no lo gy te am so th ey ca n co nt in uo us ly im pr ov e th e pr od uc t. 1) L in co ln , N E 2) C en te nn ia l, CO 3) M ad iso n, W I 4) R em ot e 12 9. 65 13 4. 01 13 8. 51 14 3. 16 14 7. 97 15 2. 94 15 8. 08 16 3. 39 16 8. 88 17 4. 55 Fu ll Ti m e Eq ui va le nt (F TE ) H ou rly F ul ly B ur de ne d La bo r R at es Pa rt 1 S ec tio n B. 3 C LI N 7 L ab or C at eg or y Ra te s T ab le Th es e la bo r c at eg or ie s a nd ra te s s ha ll be u se d fo r t he p ric in g of th e la bo r p or tio n of w or k un de r C LI N 7 D ev el op m en t, M od er ni za tio n an d En ha nc em en ts a nd c ha ng es to th e co nt ra ct o r T as k O rd er s.

PAGE 12 OF 99 91003123D0005P00020 C. Section C: Performance Work Statement (PWS) 1. Introduction The U.S Department of Education (Department) Office of Federal Student Aid (FSA) issued Solicitation No. 91003122R0007 (Solicitation) seeking servicers to provide continued servicing capabilities for FSA’s student aid recipients using the requirements applicable under Title IV Additional Servicers (TIVAS) and Not-For-Profit (NFP) servicers (collectively, Legacy Servicers) resulting Unified Servicing and Data Solution (USDS) contract (Contract) which will replace the existing, Legacy Servicers’ contracts, and provide the following: • Complete Student Loan Servicing; • Student Loan Consolidation Origination and Disbursement; • Financial Reporting; • Processing of Specialty Claims (discharge, forgiveness, and cancellation); • Complete Fulfillment; • Operational Reporting; • Compliance Monitoring; and • Data Integrations with other FSA Systems. 2. BACKGROUND AND GOALS FSA administers all phases of the Federal student financial aid programs from a student’s submission of the Free Application for Federal Student Aid (FAFSA®) through retirement of student loan debt. Federal Student loans have become a core component of postsecondary education financing. FSA directly manages servicing for more than 35 million non-defaulted Federal student loan borrowers with a total value over $1.25 trillion. This contract supports the following FSA goals: • Provide all federally managed borrowers with complete account management capabilities on StudentAid.gov; • Reduce the disruption of account transfers; and • Increase accountability for servicers via clear, measurable service-level agreements. 3. REQUIREMENTS, MILESTONES, AND DELIVERABLES 1) General Operating Requirements The USDS Servicer shall provide services as more fully described in Attachment 01 - Business Operations Servicing Requirements (Attachment 1), Attachment 02 – Financial Technical Requirements (Attachment 2) and associated attachments; and Attachment 03 – IT Requirements Repository (Attachment 3). As fully described in Attachments 1, 2, and 3, the services and related requirements provided by the USDS Servicer include but are not limited to: a. Integration: USDS Servicer shall integrate with existing FSA or third-party solutions, and Next Gen solutions, as necessary. Post-award integration requirements will be managed by the Change Management Process, as described in Attachment 05 – Business Change Management Plan (Attachment 5 or Change Management). b. Adaptability, Flexibility, and Ongoing Performance: USDS Servicer shall adapt and adhere to changes in FSA’s operating environment. USDS Servicer shall adhere to FSA’s Change Management Process. The USDS

PAGE 13 OF 99 91003123D0005P00020 Servicer’s solution shall have the ability to efficiently scale to changes in borrower account and transaction volumes. Performance testing results are a requirement of this effort. c. Customer Experience Focus: USDS Servicer shall prioritize borrower needs and preferences to deliver an improved borrower experience. USDS Servicer shall implement an approach that minimizes risk and disruption to borrowers while deploying more efficient and effective solutions. d. Monitoring and Adhering to Changes in Laws, Regulations, and other Policies: USDS Servicer shall comply with all applicable Federal and State rules, laws, regulations, and Department guidelines applicable to the USDS Program (including all accessibility elements such as 504/508 compliance). USDS Servicer shall establish a process to monitor changes to applicable laws and regulations to ensure compliance. If the USDS Servicer identifies a change in applicable law, the USDS Servicer must notify FSA by email to the Contracting Officer (CO) to determine the implications of such change to the Contract, the technical design, and/or operational procedures. This includes any scope changes to the Contract to ensure compliance with applicable Federal and State laws and regulations. e. Cybersecurity, Hosting, and Middleware: USDS Servicer shall ensure the USDS solution meets Federal Information Security Management Act (FISMA) and National Institute of Standards and Technology (NIST) standards. See Cybersecurity and IT Requirements as fully described in Department of Education Security and Privacy Requirements for IT Procurements within Attachment 3 and referenced under section C.5 of this document. f. Financial Accuracy and Compliance: USDS Servicer shall adhere to the requirements listed in Attachment 2, and associated Financial Technical Requirements, and provide measures for ensuring the compliance and accuracy of financial transactions and reporting. g. Requirements Changes: Changes to the business operations, finance, technical, and/or cybersecurity requirements delivered under this Contract must follow the change management process as described in Attachment 5. h. Specialty Servicing Programs: The specialty servicing programs (e.g., PSLF, TEACH, TPD) require the USDS Servicer to strictly adhere to the requirements in Attachment 1. USDS Servicer is responsible for the following: providing borrowers with basic information about these programs; connecting borrowers to resources on StudentAid.gov and at 1-800-4-FEDAID: and processing borrower account status changes, discharges, and forgiveness based on information transmitted by FSA. i. Specialty Servicing Tasks. There are discrete specialty tasks that FSA intends to award to USDS Servicer(s) via task orders (Task Orders) under the Contract. Task Orders may include, but are not limited to: FSA Image Repository; Decommissioned Servicer Data Support and Payment Support; Legacy Loan Consolidation Adjustments (work contained within CLIN 12); and FFEL Guaranty Agency Rehabilitation Loan Purchases. These anticipated Task Orders are further described in Section C.3. Specialty Servicing Tasks. j. Trained Personnel: USDS Servicer shall ensure personnel are trained and aware of pertinent, applicable laws, regulations, programs, and FSA’s performance expectations. Development of training content and material shall be done in coordination with FSA and/or FSA’s designees, as required.

PAGE 14 OF 99 91003123D0005P00020 k. Performance Management: USDS Servicer shall adhere to FSA’s Service Level Agreements (SLAs)/Service Level Objectives (SLOs) and shall include performance management mechanisms that enable improved and ongoing achievement of metrics. FSA will utilize the performance management framework and methodology in Attachment 08 – Service Level Methodology Performance Metrics (Attachment 8) and Attachment 09 – SLA and Future Borrower Allocation Calculator (Attachment 9) to support USDS performance management and to document achievement of the established SLAs and SLOs. Attachment 9 explains the process by which the SLAs and SLOs will be measured. In order to strengthen transparency, FSA reserves the right to publicly release data related to USDS Servicer’s performance including, but not limited to, call center performance and timeliness. See also “Service Level Agreements & Objectives Performance Incentive” under Part II Contract Clauses, Section I, Subsection 3 Additional Clauses, of the Contract for the functioning of these requirements as a performance incentive. l. Quality Control and Compliance Management: USDS Servicer shall document, provide policies and procedures, and adhere to its quality management system to ensure quality is measured and managed on a consistent basis. USDS Servicer shall maintain a sound compliance management system (CMS) that is integrated into the overall framework for product design, delivery, and administration across the entire product and service lifecycle. Compliance must be part of the day-to-day responsibilities of management and the employees; issues should be self-identified; and corrective action(s) must be initiated by the USDS Servicer. USDS Servicer must manage relationships with USDS subcontractors and service providers to ensure such subcontractors and service providers effectively manage compliance with applicable statutory, regulatory, and contractual requirements. m. Allocation of Current Borrower Accounts: FSA reserves the right to unilaterally shift current borrower accounts among USDS Servicers at the CO’s direction when it is in the best interest of FSA or its borrowers, at no additional cost to FSA. It is anticipated that the movement of borrower accounts will be done with reasonable and prudent cause. n. Allocation of New Borrower Accounts: The allocation of new borrower account volume during Task Order performance will be determined based on the performance of each USDS Servicer in relation to the other USDS Servicers awarded as further described in Attachment 21 and Attachment 9. [added with P00009] FSA may stop the allocation of new borrower account volume if all planned activities of the Initial Task Order are not complete by 07/16/2024. FSA may, at its discretion, chose to not allocate new borrower accounts after that date, until such time as all cyber requirements outlined in the Contract are met, and a second ATO is approved. o. Non-Compliance and Invoicing: For any borrower accounts that the USDS Servicer caused or substantially contributed to non-compliant servicing of such borrower accounts, the servicing of such shall not be billable to FSA from the initial point of occurrence. Such non-compliant servicing includes borrower accounts not being serviced in compliance with any applicable statutory requirements, regulatory requirements, the terms and conditions of the Contract, or FSA guidance. FSA guidance is written operational or technical direction necessary to accomplish contractual requirements. For example, the USDS Servicer properly using the FSA provided parameters for an outreach call campaign as per the Business Operations Servicing Requirements number 33003.020. Examples of non-compliant servicing of borrower accounts include, but are not limited to: inaccurate payment counts towards forgiveness, incorrect interest calculations, incorrect balances, incorrect interest determination and calculations, notices not being sent properly or not adhering

PAGE 15 OF 99 91003123D0005P00020 to due diligence requirements. FSA reserves the right to request reimbursement of fees that have been invoiced and paid to the USDS Servicer for improper servicing, in a manner determined by FSA, and all other remedies available to FSA under the Contract and law. p. Borrower Account Data Ownership: FSA has exclusive ownership of all information created, received, stored, retrieved, modified, handled, and/or archived as part of this Contract. The USDS Servicer shall have no rights in such information and no rights to such information shall vest in the USDS Servicer by virtue of its performance of this Contract. The USDS Servicer shall not use borrower account data in any manner other than as authorized under the Contract and necessary for performance in accordance with applicable laws and regulations. q. Contractor Acknowledgement: USDS Servicer acknowledges that it is not the U.S. Department of Education, and is not acting as the U.S. Government under this Contract. As such the USDS Servicer acknowledges that any claim or defense of Sovereign Immunity or Qualified Immunity is not applicable to work performed under the Contract and any Task Order issued under the Contract. r. Personnel Security Requirements: The USDS Servicer shall comply with the Department of Education Acquisition Regulation (EDAR) clause 3452.204-72 Contractor Vetting Security Requirements and the Contractor Vetting Security Requirements document contained in Attachment 3. s. Identity, Credential, and Access Management (ICAM) Requirements: i. General ICAM Requirements: 1. All contractors accessing Department and FSA networks and/or data centers who are classified as Privileged Users (PU) are required to use Government furnished Personal Identity Verification (PIV) cards for authentication and access. Note: FSA prohibits contractors from granting access to FSA systems without approval by the Department. 2. The USDS Servicer shall not issue the PIV-I card to the PUs of the FSA system until FSA has approved access for these PUs. 3. The USDS Servicer shall ensure that both PUs and non-Privileged Users, who work on IT resources and applications (for example, the USDS Servicer systems) containing or accessing FSA’s data, utilize PIV/PIV-I cards. The USDS Servicer shall provide card readers and require PUs and non-Privileged Users to use the PIV/PIV-I card for authentication and access to IT resources and applications containing or accessing FSA’s data satisfying an Identity Assurance Level (IAL3) and Authentication Assurance Level 3 (AAL3) as defined in NIST SP 800-63-3. [ADDED P00005] If the USDS Servicer wants to define and document an alternative PIV-I process for these two use cases: a) Servicers that lose, misplace, or forget their PIV-I b) FSA employees and Contractors that need to access the Servicer sites and don’t have a PIV-I. This would include servicer oversight, penetration test teams, 508 compliance testing, etc.

PAGE 16 OF 99 91003123D0005P00020 The servicer/vendor must document this process for the two use cases above in the appropriate locations in their System Security Plan (SSP) (i.e. IA-02, AC-02, Access Control Policy, etc.) and be approved by the FSA CISO prior to use. The process for servicer contractors who lose, misplace, need to reset the PIN, etc. must be similar in duration (24 hours with ability to renew) to what ED/FSA employees use for when they don’t have access to their PIV card. This process must be documented in the appropriate locations in their USDS System Security Plan (SSP) (i.e. IA-02, AC-02, Access Control Policy, etc.) and be approved by the FSA CISO prior to use. Additionally, a monthly report showing those individuals requesting alternative PIV-I along with both the duration (not to exceed 10 business days) and number of times they’ve requested an alternative PIV-I needs to be provided to FSA. FSA leaves it to the Servicer to determine the format. To keep reporting dates synchronized, send it when the “Personnel Roster and Monthly PIV Card Report” is due. It needs to be sent to the ISSO and ISO and doesn’t need to be sent to FSA-CyberArkTeam@ed.gov or FSA_Cyber_Audits@ed.gov The monthly alternate PIV-I report should also include the following fields as a minimum: individual’s name, reason/use case, duration (star/end), Total Days Using Alternate PIV, Cumulative Frequency. For example, Name Reason/Use Case Start End Total Days Using Alternate PIV Cumulative Frequency John Doe Lost PIV 6/22/2023 6/25/2023 4 2 times Jane Smith Expired PIV Certificate 6/2/2023 13 3 times 4. The USDS Servicer shall ensure that a Privileged Access Management (PAM) system is utilized for all PU access to information systems. The PAM solution will manage access and log user activity. USDS Servicer must provide monthly access logs to FSA. 5. The USDS Servicer shall ensure that websites require multi-factor authentication when providing access to PII and other sensitive information. 6. The USDS Servicer shall request ed.gov accounts, and ensure PIV cards are issued, for all individuals that require access to Department and/or FSA business information systems, networks, or email accounts. 7. For a USDS Servicer(s) using a Government furnished equipment (GFE) Laptop, the user shall use the Department provided Virtual Private Network (VPN) solution(s).

PAGE 17 OF 99 91003123D0005P00020 ii. ICAM Reporting Requirements: 1. The USDS Servicer shall provide a monthly PIV Card report to FSA including: a) Number of PUs with PIV cards disabled in the last 30 calendar days. b) Number of PUs with PIV cards enabled in the last 30 calendar days. c) Total number of PUs with PIV cards. 2. The USDS Servicer shall track and retain records of everyone who has approved access (user ID) to the servicing system, including clearances, training, and signed security documents; ensure that necessary clearances do not lapse; and suspend FSA access for anyone not in compliance. 3. The USDS Servicer shall provide a monthly PIV and/or PIV Card report(s) to FSA including: a) Number of PUs with PIV cards disabled in the last 30 calendar days. b) Number of PUs with PIV cards enabled in the last 30 calendar days. c) Total number of PUs with PIV cards. 4. The USDS Servicer shall send an email to all FSA System Security Officers at any time a user is no longer employed or no longer requires access to FSA systems, advising the FSA System Security Officers that the status of the person(s) identified is "no longer employed" or "no longer requires access to FSA systems." This email shall be sent at least 5 calendar days prior to an employee's removal from the Contract or immediately in cases that require immediate removal of an individual for security or suitability reasons. t. USDS Servicer shall submit its Background Investigation Requests electronically. USDS Servicer shall: i. Follow the term FSA 39-8 – Supplemental Instructions to EDAR 3452.204-72, Contractor Security Vetting Requirements. (DEVIATION) (AUG 2023) located in Section G subsection K. 2) Operating Elements and Related Requirements The USDS Servicer shall provide operating elements and related requirements as more fully described in Attachment 1. Such requirements include: a. Customer Accounts Migration: i. USDS Servicer shall receive historical and current customer borrower accounts from Legacy Servicers. This includes both active and non-active borrower accounts. USDS Servicer shall cooperate with Legacy Servicers in transferring borrower accounts to the USDS Servicer. USDS Servicer should expect reasonable cooperation from Legacy Servicers. USDS Servicer shall promptly report to FSA any issues or disputes regarding the transfer of borrower accounts. ii. USDS Servicer shall ensure that borrower accounts successfully transfer. Transfer data includes: borrower account’s historical record of balances and transactions, loan consolidation, origination and disbursement records (e.g., underlying loan pay-off, lender detail, funding histories), auto-pay preferences, complete payment history, deferment and forbearance history, repayment plan history, contact preferences, and prior loan transfer imaged

PAGE 18 OF 99 91003123D0005P00020 records. Additional borrower data types may be added through contract modification, Task Order modification or through the Change Management Process over the life of the Contract. iii. USDS Servicer shall transfer loan data and images from closed/inactive borrower accounts from each non-default retiring Legacy Servicer. USDS Servicer must be able to reopen/ rebuild loans and return the borrower accounts to active servicing. iv. USDS Servicer shall send and support the development and delivery of customer communications about the migration of borrower accounts before, during, and after the migration per FSA instructions. Communications under this Contract to customers being transferred cannot start until after Authorization to Operate (ATO) has been granted. v. USDS Servicer shall convert Loan Consolidation Origination and Disbursement data in accordance with Attachment 1. Future CLIN 7 development work includes developing the requirements state where as follows: i. USDS Servicer shall convert all underlying loan detail and payoff information including all loan verification detail, loan summary statements, initial payoff information (including all financial and non-financial transactions), and under and over payment detail from active consolidation origination and disbursement systems. USDS Servicer shall ensure the solution is able to process all under- and over-payment adjustments. vi. Upon decommissioning as a Federal Loan Servicer, the USDS Servicer shall support the offloading and transfer of all historical borrower account data in accordance with the Phase-Out Plan, reviewed and approved by FSA, as further described in paragraph C.4.c below and in the records retention section of Attachment 1. b. General Borrower Account Servicing Requirements: i. USDS Servicer shall ensure the solution can execute the full range of servicing functions as fully described in Attachments 1, 2, and 3. The services provided by the USDS Servicer and associated requirements include, but are not limited to: 1. Provide staff, either in-house or through subcontracting, who perform front-end contact center agent and back- office agent work necessary to deliver all requirements. 2. Establish the Contact Center with the following hours of operation: : Monday 8 AM to 11 PM EST, Tuesday through Friday 8 AM to 8 PM EST, and Saturday 10 AM to 2 PM EST. This excludes Federal holidays a. From April 1, 2024, through March 31, 2025 • Mon: 0800-2100 ET • Tue – Wed: 0800-2000 ET • Thur – Fri: 0800-1800 ET b. From April 1, 2025 through the end of the contract. • Mon: 0800-2300 ET • Tue – Fri: 0800-2000 ET • Sat: 1000-1400 ET 2.

PAGE 19 OF 99 91003123D0005P00020 3. Have a Call Management System that will be used to handle all inbound and outbound calls including required recording and reporting, as well as Interactive Voice Response capabilities. 4. Provide the migration of all physical documentation, for borrower accounts assigned to them, from the existing Legacy Servicers. USDS Servicer is required to cooperate with existing Legacy Servicers in transferring physical documentation to the USDS Servicer. USDS Servicer should expect reasonable cooperation from Legacy Servicers. USDS Servicer must report disputes regarding transfer of physical documentation to FSA without delay. 5. Provide Loan servicing for all borrowers in all loan statuses and monitor borrowers as they move through those statuses. 6. Establish repayment plans for borrowers across FSA-held Title IV Loans. 7. Determine and execute eligibility determination, annual recertification, and payment recalculation for Income- Driven Repayment (IDR) plans tied to a borrower’s income, family situation, and other characteristics that may fluctuate. IDR plans include, but are not limited to Income-Contingent, Income-Based, Pay-As-You-Earn, and Revised-Pay-As-You-Earn. 8. Process, predetermine, and/or execute discharge/forgiveness under various Title IV programs (e.g., Income- Driven Repayment, Closed School, Automatic Closed School, Death, False Certification). 9. Execution, discharge and forgiveness for Public Service Loan Forgiveness, Teacher Loan Forgiveness, Total Permanent Disability, and Borrower Defense. 10. Determination, execution, and implementation of eligibility for various forbearance/deferment programs. 11. Engage in delinquency management and default prevention to assist borrowers in staying current with their repayment plans. 12. Accurately report the status of borrower accounts to the national Credit Reporting Agencies (CRAs) in compliance with the Fair Credit Reporting Act (FCRA) and respond timely to borrower disputes. 13. Process loan consolidation origination and disbursement, including application, pay off, booking new loans, maintaining borrower account histories, performing all reconciliation and financial reporting, and other activities. o This includes the processing of under/over payment adjustments for legacy consolidation loans and any future decommissioned consolidation origination systems. 14. Accommodate changes in repayment plan options, in accordance with Attachment 5. 15. Accurately complete retroactive adjustment processing (e.g., retroactive application of deferments, forbearances, payments, and manual adjustments). 16. Respond to control mail, congressional mail, FSA escalations, FSA feedback, borrower complaints and borrower account disputes. 17. Comply with all applicable Federal, and State laws, rules, and regulations applicable to its performance under the Contract (e.g., the Fair Credit Reporting Act, the Fair Debt Collections Practices Act, the Truth in Lending Act, etc.)

PAGE 20 OF 99 91003123D0005P00020 and shall maintain a sound compliance management system (CMS) that is integrated into the overall framework for product design, delivery, and administration across their entire product and service lifecycle. 18. Execute internal quality control on all operational activities, submit operational and performance reports to facilitate transparency, oversight, and accountability, promptly notify FSA of any issue or instances of non- compliance, and support monitoring and oversight. c. Financial Functions: i. USDS Servicer shall perform all financial functions as outlined in Attachment 2 and associated attachments. This includes, but is not limited to: 1. Process specific financial and non-financial activity/transactions to correctly record all transactions processed to the servicing system and sending equivalent summary transactions to FSA’s general ledger (FMS). Perform various accounting process flows for loan account types unique to the Government sector. 2. Utilize specific file transmission mechanisms and processing channels for various system integration processes associated with the Oracle FMS used by FSA. 3. Utilize specific financial report and reconciliation file layouts to complete accurate financial deliverables that comply with all associated requirements by the required due date as indicated in the Finance Requirements. Generate various reports and reconciliations to demonstrate that the underlying servicing system data and process flows incorporated in the various reports and ensure reconciliations generated are accurate. 4. Incorporate a system of internal controls consistent with requirements derived from applicable Federal laws, regulations, policies and authoritative guidance. These laws, regulations, and guidance include, but are not limited to: Federal Financial Management Improvement Act (FFMIA); Federal Managers' Financial Integrity Act (FMFIA); CFO Act; Government Performance and Results Act (GPRA); GAO's Standards for Internal Control (i.e., the "Green Book"); OMB Circulars A-123 and A- 130; FISMA; NIST Special Publications; the Treasury Financial Manual (TFM); GAO's Financial Audit Manual (FAM); and GAO's Federal Information System Controls Audit Manual (FISCAM). ii. USDS Servicer shall conduct error and dispute resolution investigation and processing, including, but not limited to: 1. Borrower account maintenance, including manual correction of errors identified through data integrity scans and manual adjustments as identified by FSA. 2. Payment and refund processing, including researching lost or misapplied payments and payment reapplication at the request of borrowers or FSA. iii. USDS Servicer shall maintain data history, including retroactive processing (e.g., “as-was” vs “as-is”), and tracing loans through consolidation payoff (initial payoff, under and over payments) transactions. This data shall be available and shared with other solutions and systems as directed by FSA.

PAGE 21 OF 99 91003123D0005P00020 iv. USDS Servicer shall provide timely support for FSA’s future-state processing solution from requirements gathering through development, including access to the USDS Servicer’s Subject Matter Experts and solution set (e.g., system code, workflows, processing tools and infrastructure/environment, etc.). d. FSA Branding: i. FSA requires that all public-facing, USDS Servicer products shall follow the FSA Servicer Brand Guidelines, as more fully described in Attachment 11 (FSA Servicer Brand Guidelines). The FSA Brand Guidelines include the FSA Writing Style Guide and co-branding elements for all public-facing products. In addition, when directly presenting FSA brand elements such as the FSA logo, the USDS Servicer shall follow the FSA Brand Style guide and FSA Design System (collectively, Style Guide and Design) attached hereto as Attachment 10. ii. As further described in the FSA Servicer Brand Guidelines and Style Guide and Design, the USDS Servicer shall comply with the following FSA brand requirements when creating, designing, developing, writing, updating, and maintaining both information technology products and document products: 1. FSA Servicer Brand Guideline and Style Guide and Design requirements apply to all websites and mobile apps, all configured screens within information systems, all mobile application screens, all social media, and all customer-facing documentation/content that is intended for use by students, parents, borrowers, or schools. 2. The FSA Servicer Brand Guidelines and Style Guide and Design requirements apply to all new or edited content and does not imply the need to audit all past content for compliance. 3. Documentation that is purely internal in nature for use by FSA staff and contractors, such as project management documentation and documentation used to manage information systems, shall not be subject to the branding requirements. Information technology that is purely back-end in nature (the user base consists of system administrators or only IT-personnel) shall not be subject to the branding requirements. 4. USDS Servicer shall submit brand layouts or plans, appropriate to the product they are producing and specified by the FSA Servicer Brand Guidelines and Style Guide and Design prior to work on co- branded or FSA branded elements of the product(s). FSA may require changes to conform with the FSA Servicer Brand Guidelines and Style Guide and Design. FSA will work with the USDS Servicer to provide additional design elements when needed. a) Screen mock-ups showing planned FSA servicer co-branding for websites, configured screens within information systems, mobile applications, and social media shall be submitted for Department approval. b) Templates and layouts customer-facing documentation shall be submitted for Department approval. 5. FSA may modify or update the FSA Servicer Brand Guidelines and Style Guide and Design at any time through modification of the Task Order and/or Contract. When such modifications occur, the USDS Servicer shall incorporate relevant updates into the next major product release or at another time as agreed to by FSA.

PAGE 22 OF 99 91003123D0005P00020 6. The USDS Servicer may request a waiver from specific elements of the FSA Servicer Brand Guidelines and Style Guide and Design. FSA will consider such requests and may also work with the USDS Servicer to achieve an alternative solution to the specific branding element(s) at issue in the waiver request. The final decision on specific elements waived and any potential consideration or reduction in price due to a reduction in requirements must be accomplished through modification of the Contract and/or applicable Task Order. e. Imaging, Printing, and Mailing: i. USDS Servicer shall receive, image, index, and process physical mail. USDS Servicer shall also provide tracking of and reporting on outbound mail items. USDS Servicer shall identify cost efficiency opportunities and work with FSA to implement changes to processes and practices (e.g., statement or envelope design). Changes effecting requirements and/or prices must be accomplished through modification of the Contract and/or applicable Task Order. ii. USDS Servicer shall generate and send all communications necessary for servicing all assigned borrower accounts under the terms of the Contract (physical and electronic). iii. USDS Servicer shall enable borrowers, customers, partners, and other relevant third parties to be able to fax materials and tag the faxes upon receipt for tracking. iv. USDS Servicer shall image and index inbound correspondence, including physical checks, as well as materials received via fax. USDS Servicer shall then provide access or visibility to the images to FSA. v. USDS Servicer shall provide skip tracing capability to identify updated contact information for invalid postal mail and invalid phone numbers. f. Digital Engagement Layer: i. USDS Servicer shall provide a digital engagement and mobile responsive website solution for borrowers, customers and partners to interact with FSA and complete customer tasks (e.g., view statements and make payments) and partner tasks (e.g., view student loan history and download resources for students). ii. USDS Servicer shall provide an access portal to Title IV partners (e.g., FSA, etc.) as described below: 1. The access shall provide customer account access to FSA and other partners as approved by FSA. The portal shall display, at a minimum, customer demographic detail, loan detail, loan disbursement detail, and access to images (bills, repayment plans, applications, communications etc.). The portal shall allow for downloading and printing of information displayed. 2. The portal shall include a Loan Holder Services website that Guarantee Agencies (GA) and Lenders will use for loan consolidation application processing. 3. The portal shall allow FSA and other trading partners (schools will not access this data) access to the FSA Image Repository, Decommissioned Servicer data, and Legacy Consolidation Support data as outlined in Section C.3 Specialty Servicing Tasks, below.

PAGE 23 OF 99 91003123D0005P00020 3) Specialty Servicing Tasks FSA anticipates awarding Specialty Servicing Tasks to one (1) or more USDS Servicers. As further described in Attachment 1, USDS Servicer is required to have a plan to provide the following Specialty Servicing Tasks: a. Specialty Servicing Task 1 – FSA Image Repository: USDS Servicer shall transfer in, maintain, and provide access to an FSA image repository (FSA Image Repository). The FSA Image Repository maintains all historical images from previously decommissioned servicing systems and ancillary systems. All images shall be accessed via the partner portal. b. Specialty Servicing Task 2 – Decommissioned Servicer Data Support and Payment Support Servicing Functions: Decommissioned servicer data includes archived data that is stored from decommissioned servicers including but not limited to ACS Education Servicing System (ACES) and Direct Loan Servicing System (DLSS), decommissioned NFP servicers and future decommissioned TIVAS servicers. The USDS Servicers shall: i. Provide FSA the ability to access pre-defined queries, which will be provided during Contract performance, as well as perform ad-hoc queries of the data. ii. Provide payment support services such as processing refunds, researching missing payments, providing check copies. c. Specialty Servicing Task 3 – Legacy Loan Consolidation Origination and Disbursement Support Functions: Legacy loan consolidation origination and support functions include performing all manual adjustments received for underlying loans held by FEEL Lenders, Guaranty Agencies, the Debt Management and Collection System (DMCS), and Direct Loans that were previously consolidated by decommissioned consolidation vendors (e.g. ACES, Title IV Additional Servicer (TIVAS), or other Title IV servicers), (collectively, Legacy Consolidation Vendors). USDS Servicer shall: i. Process all under/over payments received on legacy consolidation loans. ii. Convert all data for all under/over payment adjustments that have been processed since the Legacy Consolidation Vendor was decommissioned. iii. Create updated Consolidation Origination Loan History Records for each adjustment processed and upload such records to the FSA Image Repository. iv. Create adjustment spreadsheets needed to complete the adjustment processing. d. Specialty Servicing Task 4 – FFEL Guaranty Agency Rehabilitation Loan Purchases: USDS Servicer shall support rehabilitation loan purchases from participating FFEL guarantors. This support function includes: i. Acceptance of rehabilitated loan assignments from guaranty agencies. ii. Creation and transmittal of purchase funding request files to FMS and loan purchase detail and summary files to FSA. iii. Full reconciliation of loan purchases and transferred of data. iv. Support for overpayments and underpayments of the purchase amount

PAGE 24 OF 99 91003123D0005P00020 v. Inclusion of rehabilitated loan purchases in default management processes 4) USDS Servicing IT Requirements As fully described in Attachment 3, USDS Servicer is required to provide the following IT Requirements as part of the Contract: a. FSA System Development Lifecycle (SDLC): The USDS Servicer shall comply with the FSA System Development Lifecycle process (FSA-SDLC), currently named the Lifecycle Management Methodology (LMM) as fully described in Attachment 06 - Lifecycle Management Methodology Process Guide (Attachment 6), during the term of the Contract. Document templates for compliance are provided within Attachment 04 - IT Deliverable Repository (Attachment 4). b. Collaboration Requirement: In carrying out the scope of work under the Contract, the USDS Servicer shall collaborate with and share technical information with FSA and other contractor support staff in the holistic delivery of solutions, services, and results to FSA. This collaboration may be required in specific situations at the direction of the CO or as may be delegated to the COR. The USDS Servicer is responsible for coordinating any necessary non-disclosure agreements between the USDS Servicer and collaborating support contractors. See EDAR 3452.227-72 Use and Non-Disclosure Agreement and EDAR 3452.227-73 Limitations on the use or disclosure of Government-furnished information marked with restrictive legends for more information. c. Transition Support: In accordance with FAR Part 52.237-3, the services provided under the Contract are vital to the Government and must be continued without interruption. The USDS Servicer shall provide phase-in and phase-out services as further described below. i. Transition Support Instructions: To ensure a smooth transition, and support of such continuity of service requirements as may be stipulated in the Contract; the USDS Servicer shall submit a Phase-In Plan as a part of the Contract. ii. The USDS Servicer shall establish and implement plans for an orderly phase-out of the contracted operations at the termination of the Contract (Phase-Out Plan), as further described below. The USDS Servicer shall submit a Phase-Out Plan to the CO for evaluation and approval six (6) months after Contract award. The USDS Servicer’s phase-out procedures shall not disrupt or adversely impact the day-to-day conduct of Government business. The USDS Servicer shall maintain the Phase-Out Plan as Contract changes are made and provide the CO with the copies of changes and revisions for review and approval prior to finalizing the updated Phase-Out Plan. The USDS Servicer will use this plan to ensure the smooth transition of services to a successor contractor in accordance with FAR 52.237-3. iii. Transition Support (Phase-In): The USDS Servicer shall develop comprehensive procedures for phasing- in its performance to the level required and within the time allowed under the terms of the Contract and, if required, by a Task Order. 1. The period between Initial Task Order award date and Go Live date will constitute the phase-in period (Phase-In Period). During the Phase-In-Period, the USDS Servicer shall prepare to assume full responsibility for all areas of operation in accordance with the terms and conditions of the Contract. The USDS Servicer shall take all actions necessary for a smooth transition of the USDS operations.

PAGE 25 OF 99 91003123D0005P00020 2. FSA will make all applicable GFE and Government Furnished Information (GFI) available to the USDS Servicer during the Phase-In-Period. 3. During the Phase-In-Period, the USDS Servicer shall ensure it is ready to fully perform the Contract without assistance from the Legacy Servicers or the Government by the Go-Live date. Phase-In tasks include but are not limited to: a) Establish a USDS Servicer’s Project Management Office to coordinate phase-in tasks and to be the single point of contact for the Government during the Phase-In-Period. b) Recruit and hire necessary personnel. c) Obtain all required certifications and clearances, including personnel security clearances. d) Participate in development of joint inventories (e.g., borrower account and Federal records) and sign for Government furnished property/ equipment/information. e) Develop and submit any required deliverables. f) Attend post-award meetings as required. g) Accomplish necessary training to support the operations and maintenance functions of the USDS program. iv. Transition Support (Phase-Out): The USDS Servicer shall develop a Phase-Out Plan (Phase-Out Plan) to affect a smooth and orderly transfer of contract responsibility to a successor. The Phase-Out Plan shall fully describe how the USDS Servicer will approach project Phase-Out including but not limited to the following issues: employee notification; retention of key personnel; turn-over of work-in-progress, inventories (e.g. Federal records including borrower accounts, Standard Operating Procedures (SOPs), software licenses, telephone lines), Government property; GFE, GFI, removal of USDS Servicer property form Government facilities; data and information transfer; surrender of Federal records, and any other actions required to ensure continuity of operations. 1. The USDS Servicer’s Phase-Out Plan shall require that the USDS Servicer and the Government to conduct an inventory of all systems, GFE, Federal records, contract deliverables, work in progress, and other items required for the support of the USDS Solution. Following such inventory, the USDS Servicer will conduct a joint inventory with the successor contractor and/or FSA to ensure a smooth transition of all applicable services. 2. The Phase-Out Plan must also include the following: reconciliation of all property accounts, requisitions, work-in-progress; turn-in of excess property; USDS Servicers’ work areas clean-up; plan for training successor contractor, specialized equipment, utilities systems, and ongoing work that the successor would be required to complete; transfer of Federal records, sanitizing USDS Servicer equipment and systems of all Federal records, and, security debriefings in accordance with FSA security procedures for incumbent personnel holding security clearances. v. The Phase-Out Plan must address the phase-in activities required under FAR 52.237-3 including a training program for the incoming contractor, transition dates for work described in the plan observation periods, access to employees of on-site interviews etc. The Phase-Out Plan must include an

PAGE 26 OF 99 91003123D0005P00020 observation period at which time management personnel of the incoming workforce can observe operations and performance methods of the USDS Servicer. This will allow for orderly turnover of facilities, equipment, and Federal records and will help to ensure continuity of service. The USDS Servicer shall not defer any requirements of the Transition-Out plan for the purpose of avoiding responsibility or of transferring services to the succeeding contractor. The USDS Servicer shall fully cooperate with the succeeding contractor and the Government so as not to interfere with their work or duties. vi. Decommissioning Plan: The USDS Servicer shall provide an IT Decommissioning Plan in compliance with NIST SP 800-14, "Generally Accepted Principles and Practices for Securing Information Technology Systems", NIST SP 800-53 "Recommended Security Controls for Federal Information Systems", NIST SP 800-64 "Security Considerations in the System Development Life Cycle", and NIST SP 800-88 "Guidelines for Media Sanitization". The Decommissioning Plan is to address decommissioning in connection with any expiration/termination of the Contract and/or the removal/retirement of USDS Servicer’s equipment used in performance of the Contract. Such decommissioning of USDS Servicer’s equipment and systems shall be at no additional cost to FSA. d. Intellectual Property: Unless specified in a Task Order, FSA’s interest in Intellectual property is defined in the Clauses of the Contract. e. Software Licensing: i. The USDS Servicer shall provide a listing of all required commercial off the shelf (COTS) software to include product descriptions and quantities with itemized unit and extended costs for each product. ii. If FSA procures or funds any software through the USDS Servicer, the USDS Servicers shall provide FSA visibility and access to license oversight, including real-time distribution (even if being distributed by the USDS Servicer) and usage at time of procurement. iii. For any COTS software not procured through the USDS Servicer, software will be distributed by FSA as needed. Administrator and support access will be shared with USDS Servicer for software management, maintenance, support, deployment and/or distribution so long as FSA retains required visibility. f. Contractor Support of Technology Refreshment: As part of its standard technology refreshment program, FSA requires regularly scheduled and periodic upgrades of the underlying infrastructure, support software, and enabling frameworks to (at minimum) N-1 versions (where N is the latest version and N-1 is the second latest version). i. SaaS, PaaS, and/or IaaS Solutions: The USDS Servicer performing integration services for FSA in connection with FISMA-approved cloud computing services (SaaS, PaaS, IaaS) shall ensure the infrastructure, support software, and enabling components and frameworks are maintained to (at minimum) N-1 versions as part of a standard technology refreshment program. ii. Infrastructure and COTS Software: The USDS Servicer shall support refreshment activities, including infrastructure and software upgrades and patches led by FSA’s infrastructure and middleware vendors. As needed, the USDS Servicer shall support planning and scheduling, impact analysis, changes to the application, and testing.

PAGE 27 OF 99 91003123D0005P00020 iii. Applications and Enabling Components and Frameworks: The USDS Servicer shall ensure that functionality and application design are optimized; maintenance is cost efficient; the enabling technology remains under support by third party vendors (e.g., IBM, Oracle, or Microsoft); the application code and its underlying frameworks are maintained at the N-1 or N version. USDS Servicer must comply with the Attachment 19 - Technology Standards and Products Guide (Attachment 19). g. Cybersecurity Requirements: The USDS Servicer shall comply with the cybersecurity and privacy requirements as described in the 2022 Security and Privacy Requirements for Information Technology Procurements document within Attachment 3. Any solution making use of cloud services must use FedRAMP certified cloud packages and be approved by the Department for use. h. FSA Cybersecurity Requirements: The following sub-sections describe FSA Cybersecurity requirements that supplement Attachment 3. i. FSA General Cybersecurity Requirements: 1. The USDS Servicer shall ensure the solution is defined, designed, developed, and maintained in a manner such that it implements the cybersecurity requirements and standards. FSA and the Department have implemented a risk-based approach and measurement methodology for each system and the information system’s cybersecurity performance under FSA contracts. The USDS Servicer shall ensure that the USDS systems and associated technologies meets all requirements for cybersecurity including but not limited to the cybersecurity scorecard. 2. The USDS Servicer shall ensure that it fully participates, and enters in the appropriate agreements, with the FSA and Department of Homeland Security (DHS) Cyber Hygiene programs. 3. The USDS Servicer shall designate a Security Manager, who shall serve as a primary contact point regarding security related issues. The Security Manager shall work with the designated Information System Security Officer (ISSO) to ensure that the USDS information system(s) used for performance of the Contract remains secure, vulnerabilities are addressed, and that all required security documentation and reporting is maintained. 4. The USDS Servicer shall allow FSA access to FSA information including data schemas, meta data, and other associated data artifacts on USDS Servicer’s systems. USDS Servicer is required to ensure FSA can fully and appropriately retrieve FSA information from USDS Servicer’s systems. USDS Servicer must ensure FSA has the ability to store, read, and process such information. This requirement includes, but is not limited to data stored on recovery media, tape backups, images, etc. 5. The USDS Servicer shall provide data loss prevention capability to ensure that Controlled Unclassified Information (CUI) and privacy data are monitored and protected.

PAGE 28 OF 99 91003123D0005P00020 6. The USDS Servicer’s designated security personnel must obtain an ed.gov account (network/e- mail) and PIV Badge. 7. The USDS Servicer’s security personnel must obtain access to the Government’s Cyber Security Assessment and Management (CSAM) system to provide reporting for the USDS Servicer’s systems associated with the scope of the Contract. The USDS Servicer’s security personnel shall be responsible for maintaining all system security artifacts in CSAM, including, but not limited to, the System Security Plan (SSP). 8. The USDS Servicer’s security personnel must obtain access to the Department’s PowerBI system where system scorecards are stored for the applicable USDS system(s) that has an ATO. 9. The USDS Servicer shall be liable for breaches of security resulting from failure to follow applicable Federal, NIST, DHS, Department and FSA security processes and/or Federal law, guidance documents, and security standards. 10. Machine to Machine Communication (MTM). USDS Servicer must be capable of sending log data in real time via machine-to-machine communication over encrypted sessions to FSA’s SOC SIEM, which is in a FedRAMP GovCloud. The log types are defined in OMB-M-21-31, Appendix C and Executive Order (EO) 14028. 11. [P00019 Revised] Continuous Diagnostics and Mitigation Program (CDM). To be implemented no later than 07/31/2024, the USDS Servicer shall implement continuous security monitoring in accordance with NIST SP 800-137 and CISA’s latest release of “Continuous Diagnostics and Mitigation Program, Technical Capabilities, Volume Two: Requirements Catalog”. The CDM capabilities shall be capable of satisfying an ongoing security authorization. The USDS Servicer's Continuous Monitoring must feed into the Department and FSA continuous monitoring programs via machine-to-machine near-real-time updates and static frequency-based updates. The USDS Servicer shall ensure all information is entered into the Department's FISMA management tool and kept current with all changes. USDS Servicer must adhere to the DHS deployment phases as required by DHS. See Attachment 3 for additional CDM requirements documents. 12. End Point Detection and Response (EDR). USDS Servicer must provide end point detection and response (EDR) in accordance with DHS requirements. The EDR solution must be able to integrate with DHS. See Attachment 3 for additional EDR requirements documents. 13. [P00019 Revised] IPv6. Compliance with networks operating only at Internet Protocol Version 6 (IPv6) must be in accordance with OMB 21-07 timelines. See also Attachment 3 (Security and Privacy Requirements for Information Technology Procurements). The IPv6 implementation schedule is revised to implement according to the Detailed Implementation Plan with road map submitted to obtain native IPv6 compliance for getting to: At least 50% of IP-enabled assets on Federal networks are operating in IPv6-only environment by 9/30/2024; At least 80% of IP- enabled assets on Federal networks are operating in IPv6-only environment by 9/30/2025; and Identify and justify Federal information systems that cannot be converted to use IPv6 and provide a schedule for replacing or retiring these systems.

PAGE 29 OF 99 91003123D0005P00020 ii. FSA Data Segregation Requirements: 1. Physical Separation: a) USDS Servicer shall provide and maintain a physically segregated network. b) USDS Servicer shall ensure separate hardware for each landing zone to include, but not limited to network devices, routers, switches, firewalls, and load balancers. c) In non-cloud environments, the USDS Servicer shall ensure virtual machines exist on physically separate equipment for each landing zone including virtual routers and switches. 2. Logical Separation: a) FSA data and transactions on mainframes shall be hosted in separate partitions that do not share resources with other IT users of the mainframe. b) For virtual and cloud environments, the USDS Servicer shall ensure FSA systems are hosted in separate instances, also may be referred to as containers, or tenants. 3. Monitoring and reporting segregation: a) The USDS Servicer shall provide a quarterly report that identifies systems by name and IP address to identify potential problems in maintaining segregation of USDS systems. b) The USDS Servicer shall monitor, track, and report monthly on physical segregation to ensure it is maintained. c) The USDS Servicer shall follow an FSA approved process for changes to network configurations. d) The USDS Servicer shall provide a report to validate that moves, additions, and changes have been appropriately requested and implemented. e) The USDS Servicer shall use the change-management process to identify potential security gaps in segregation maintenance and shall report status and findings quarterly. iii. FSA Cybersecurity References: 1. The USDS Servicer shall use the current versions and current revisions for applicable Federal Cybersecurity Laws and Regulations, OMB Memorandums, NIST guidance documents, Department of Homeland Security Guidance documents, Department of Education policy and guidance documents, and Federal Student Aid policy, procedures, and guidance documents. 2. On a quarterly basis, FSA will provide the USDS Servicer with a list of updated Cybersecurity References. Any work required to comply with the updated references shall be coordinated through the Information System Owner, ISSO, Program Manager, COR, and CO. 3. The USDS Servicer understands and agrees that (i) any list of updated Cybersecurity References provided by FSA is provided purely as a courtesy; (ii) FSA does not provide any warranties, including but not limited to those of accuracy and currency, related to such lists; (iii) nothing in the lists, nor any other information provided by FSA shall be interpreted as legal advice and (iv) the USDS Servicer is required to

PAGE 30 OF 99 91003123D0005P00020 perform independent due diligence and seek the advice of its legal counsel on all questions of compliance, including those related the Cybersecurity References. i. FSA IT Retirement Requirements: i. When an Information Resource, as defined in OMB A-130 and 44 USC 3502, reaches the end of its life cycle, and access to the resource by all users has been terminated, data resident on the resources shall be protected and transferred to the Department in a usable form within 120 days after resource retirement and in a format that ensuring the data is available for future use, and other assets shall be disposed of in accordance with NIST publication 800-88. ii. The USDS Servicer shall complete the destruction of all copies of Federal records on the USDS Servicer systems, as directed by the CO, within an agreed upon timeframe, after the end of the Contract performance period or after the Contract is suspended or terminated by FSA for any reason. j. FSA Information Data Exchange: i. The USDS Servicer shall provide cybersecurity relevant date, to support Information Security Continuous Monitoring (ISCM) for Federal Information Systems and Organizations, in a machine-to- machine manner to the FSA Security Operations Center. ii. The USDS Servicer shall implement Internet access via TIC or MTIPS in accordance OMB Memorandum M-19-26, "Update to the Trusted Internet Connections (TIC) Initiative”, September 12, 2019. k. Capacity Planning and Management: i. The USDS Servicer shall provide capacity planning and management information to the Department, including, but not limited to: capacity planning reports and recommendations; annual forecast and recommendations it proposes to adopt in fulfillment of the Contract with specific sizes, quantities, specifications and timing. ii. The USDS Servicer shall support FSA’s capacity planning schedule and process. The USDS Servicer will provide input relative to the performance of the application/tool and its supporting infrastructure. This will, include but not be limited to system response time and/or latency, system capacity, storage requirements, utilization, performance, etc. iii. The USDS Servicer shall monitor and manage capacity to ensure that information technology resources are being operated within minimum and maximum thresholds. iv. The USDS Servicer shall produce written capacity management reports at intervals defined in Attachment 04a – Deliverable Table of Attachment 4 (Attachment 4a) . The capacity management report must summarize actions taken since the last report and which provide prescriptive recommendations to minimize cost and maximize efficiency. v. The USDS Servicer shall keep the USDS system(s)’s average annual uptime at 99.99% excluding scheduled maintenance. l. Data Planning and Management:

PAGE 31 OF 99 91003123D0005P00020 i. Data Planning: The USDS Servicer shall provide a Data Migration Plan for solutions that involve the movement, creation, modification, or decommissioning of operations data supporting any FSA information system in accordance with the approved Federal records schedule in Attachment 1 and paragraph m of this section, Federal Records and Controlled Unclassified Information (CUI), below. Refer to the FSA System Development Lifecycle (FSA SDLC)/Lifecycle Management Methodology (LMM) section of the Federal Student Aid Technology Office IT Standards Library for additional information. https://studentaid.ed.gov/about/contracting-info/it-standards ii. Data Management: The USDS Servicer shall provide detailed file layouts for all production data files, loads, and extracts comprising or supporting any USDS Servicer information system(s) per the guidance provided in the current Federal Student Aid Data Standardization Policies and Procedures within Attachment 4. Additionally, the USDS Servicer shall include detailed source target mapping, conceptual (where applicable), logical and physical data models, and detailed data dictionaries for all production database structures per the guidance provided in Federal Student Aid Data Model Standards and Guidelines, Registration Policies and Procedures, and Federal Student Aid Enterprise Data Dictionary Standards within Attachment 4. The USDS Servicer shall provide this information on an as-needed basis when requested by FSA. m. Federal Records and Controlled Unclassified Information (CUI): i. "Federal record" as defined in 44 U.S.C. § 3301, includes all recorded information, regardless of form or characteristics, made or received by the Department under Federal law or in connection with the transaction of public business and preserved or appropriate for preservation by the Department or its legitimate successor as evidence of the organization, functions, policies, decisions, procedures, operations, or other activities of the U. S. Government or because of the informational value of data in them. ii. The term Federal record: 1. Includes Department Records. 2. Does not include personal materials. 3. Applies to records created, received, or maintained by the USDS Servicer pursuant to the Contract. 4. May include deliverables and documentation associated with deliverables, as described in the Contract. iii. The USDS Servicer shall comply with all applicable Federal records management laws and regulations, as well as National Archives and Records Administration (NARA) records policies, including but not limited to, the Federal Records Act (44 U.S.C. chs. 21, 29, 31, 33), NARA regulations at 36 CFR Chapter XII Subchapter B, including 36 CFR part 1236, and those policies associated with the safeguarding of Federal records covered by the Privacy Act of 1974, as amended (5 U.S.C. 552a). These Federal laws, regulations, and policies include the appropriate preservation of all Federal records, regardless of form or characteristics, mode of transmission, or state of completion. iv. In accordance with 36 CFR 1222.32, all data created for U.S. Government use and delivered to, or falling under the legal control of the U. S. Government are Federal records subject to the provisions of 44 U.S.C. chapters 21, 29, 31, and 33, the Freedom of Information Act (5 U.S.C. 552), as amended, and the Privacy Act

PAGE 32 OF 99 91003123D0005P00020 of 1974 (5 U.S.C. 552a), as amended and must be managed and scheduled for disposition only as permitted by Federal statute or regulation. v. In accordance with 36 CFR 1222.32, USDS Servicer shall maintain all Federal records created for U.S. Government use, created during Contract performance, and/or delivered to, or under the legal control of the U.S. Government in accordance with Federal law. Electronic Federal records and associated metadata must be accompanied by sufficient technical documentation to facilitate their understanding and use. vi. USDS Servicer must additionally manage Federal records which contain CUI in accordance with all applicable laws, regulations, and U.S. Government-wide policies (LRGWP) to include Executive Order EO 13556, 32 CFR Part 2002, ED Directive OCIO 3-113, and NIST-800-171 Revision 2 (or current version). vii. The USDS Servicer is responsible for preventing the alienation or unauthorized destruction of Federal records, under the Contract, including all forms of mutilation. Federal records may not be removed from the legal custody of the Department or destroyed except in accordance with the provisions of the Contract and Federal Records Act. Willful and unlawful destruction, damage or alienation of Federal records is subject to the fines and penalties imposed by 18 U.S.C. 2701. The USDS Servicer shall immediately report any unlawful or accidental removal, defacing, alteration, or destruction of Federal records to the CO. viii. The USDS Servicer shall immediately notify the CO upon discovery of any inadvertent or unauthorized disclosures of information, data, documentary materials, records or equipment. The USDS Servicer shall ensure that the appropriate personnel, administrative, technical, and physical safeguards are established to ensure the security and confidentiality of all Federal records in accordance with applicable law. ix. The USDS Servicer shall not remove material from U.S. Government facilities or systems, or facilities or systems operated or maintained on the U.S. Government's behalf, without the express written permission of the Department’s Records Officer. x. Under no circumstances shall the USDS Servicer retain possession of, nor access to, Federal records, or any copies thereof, after the expiration or termination of the Contract. Under no circumstances shall the USDS Servicer destroy Federal records except in accordance with the provisions of the Contract and the Federal Records Act. xi. The USDS Servicer is required to obtain the CO's approval prior to engaging in any contractual relationship (sub-contractor) in support of the Contract requiring the disclosure to the subcontractor of information, documentary material and/or Federal records generated under, or relating to, the performance of the Contract. The USDS Servicer (and any sub-contractor) is required to abide by U.S. Government and Department guidance for protecting sensitive, proprietary information, classified, and CUI. The U.S. Government reserves the right to inspect, at any time, USDS Servicer and subcontractor policies, procedures, and strategies for ensuring that Federal records are appropriately preserved. xii. The USDS Servicer’s use of U.S. Government IT equipment is limited to Contract performance or any purposes otherwise authorized by the Contract and in accordance with Department policy. xiii. The USDS Servicer shall not create or maintain any Federal records containing any non-public Department information not specified or authorized by the Contract.

PAGE 33 OF 99 91003123D0005P00020 xiv. The USDS Servicer shall not retain, use, sell, or disseminate copies of any Federal record or deliverable that contains information covered by the Privacy Act of 1974, as amended (5 U.S.C. 552a), or that which is generally protected from public disclosure by an exemption to the Freedom of Information Act, as amended (5 U.S.C. 552). xv. The Department owns the rights to all data and Federal records produced as part of the Contract. All deliverables under the Contract are the property of the U.S. Government for which the Department shall have unlimited rights to use, dispose of, or disclose such data contained therein as it determines to be in the public interest. Any of the Contractor’s rights in the data or deliverables must be identified, as required by FAR 52.227-11 through FAR 52.227-20. xvi. The USDS Servicer shall incorporate the substance of this Federal Records and Controlled Unclassified Information (CUI) section, its terms and requirements including this paragraph, in all subcontracts requiring the disclosure to a subcontractor of information, documentary material, and/or Federal records generated under, or relating to, the performance of the Contract, and require written subcontractor acknowledgement of same. Violation by a subcontractor of any provision set forth in this clause will be attributed to the USDS Servicer. xvii. All USDS Servicer employees assigned to the Contract who create, work with, or otherwise handle Federal records are required to complete Department-provided records management training. The USDS Servicer is responsible for confirming training has been completed according to Department policies, including initial training and any annual or refresher training. USDS Servicer must confirm the applicable individuals complete the training as follows: 1. All USDS Servicer personnel with Department email accounts or access to Department IT networks or networks with Department data must complete records management training within 60 calendar days of employment and must complete annual refresher training. 2. All USDS Servicer personnel that create, receive, access, or use Federal records on behalf of the Department, regardless of whether those individuals have Department email accounts or IT network access. 3. USDS Servicer is required to take the annual Information Management Requirements training, because the Contract includes CUI and the CUI Identification and Marking Training is required. Additional Category or POC specific trainings may be assigned. USDS Servicer will maintain completion certificates and provide them to FSA upon request. 4. Annual training must be completed within 60 calendar days of receiving the training materials. 5. Attestation that all applicable staff have completed training will be sent by email to the CO or COR with a cc to the CO, from an official authorized to communicate on behalf of the USDS Servicer. xviii. Electronic Information System Requirements: Any electronic information system should address, at minimum, the regulations in 36 CFR 1236.10. Information systems that process, store, or transmit CUI must fulfill the requirements outlined in 32 CFR 2002.14(g). xix. Marking Requirements: The USDS Servicer shall mark CUI as outlined in Department training.

PAGE 34 OF 99 91003123D0005P00020 xx. Handling and Safeguarding Requirements: The USDS Servicer will ensure that CUI is managed appropriately. The requirements include safeguarding, controlled environments, shipping and mailing or transporting protections, and reproduction protections (see 32 CFR 2002.14(a-e)). xxi. Information Security Incidents (ISI) Requirements: USDS Servicer must immediately report all suspected security incidents, breaches, and events involving Department information to the Department’s Computer Incident Response Center (EDCIRC) email: edcirc@ed.gov, and ED’s Security Operations Center (EDSOC) email: edsoc@ed.gov; voice: 202-243-6550, regardless of whether the ISI is suspected, known, or determined to involve IT systems operated in support of the Contract. In the event of an ISI, the Department must be provided immediate access to all USDS Servicer and/or subcontractor IT systems used in support of the Contract for inspection and analysis. n. IT Accessibility Requirements (Section 508 of the Rehabilitation Act) Please note that a hyperlink included provides guidance on the following statements except for the last bullet relating to acceptance criteria. i. Section 508 of the Rehabilitation Act, as amended by P.L. 105-220, requires that when Federal agencies develop, procure, maintain, or use information and communication technology (ICT), it shall be accessible to people with disabilities. Products, platforms and services delivered as part of this work statement that are or contain ICT, must conform to the Revised 508 Standards, at 36 C.F.R. § 1194.1 & Apps. A, C & D (found at https://www.access-board.gov/guidelines-and-standards/communications-and-it/about-the-ict- refresh/final-rule/text-of-the-standards-and-guidelines). ii. Applicable requirements for software features and components: Where the USDS Servicer provides client server software (installed on a computer), the WCAG Level AA Success Criteria, 502 Interoperability with Assistive Technology, 503 Application applies. iii. Applicable requirements to Webpage and Web Applications: Where the USDS Servicer provides web-based application (browser based), the WCAG Level AA Success Criteria applies (found at: https://www.w3.org/TR/WCAG20/). iv. Applicable requirements for hardware features and components: Where the USDS Servicer provides hardware (e.g., Copiers, fax machines, phones, scanner etc.), the requirements for hardware features and comments applies (found at https://www.access-board.gov/ict/#E206-hardware). v. Applicable support services and documentation: Where the USDS Servicer provides support documentation or services for ICT, such documentation and services shall conform to the requirements in Chapter 6 (found at https://www.access-board.gov/guidelines-and-standards/communications-and-it/about-the-ict- refresh/final-rule/text-of-the-standards-and-guidelines#602-support-documentation). vi. Section 508 Compliance Criteria: Prior to acceptance, the Government reserves the right to perform testing on required ICT items to validate the USDS Servicer’s Section 508 conformance claims. 1. If Department OCIO testing of ICT implementations and enhancements determines such enhancements fail to meet Section 508 requirements, then final payment for the implementation may be withheld by the Government until the product is updated to pass 508 compliance testing by Department OCIO.

PAGE 35 OF 99 91003123D0005P00020 2. If FSA determines that Section 508 conformance claims for COTS software products provided by the USDS Servicer represents a higher level of conformance than what is provided to FSA, then the Government may, at its option: a) Require the USDS Servicer to remediate the item to align with the USDS Servicer’s original accessibility (Section 508) conformance claims prior to acceptance; and b) Require the USDS Servicer to substitute a compliant product. o. Technology Business Management Data Reporting i. The Technology Business Management (TBM) Data Report – The USDS Servicer must submit the TBM Data Report. The TBM Data Report Template is included within Attachment 4. The USDS Servicer shall submit the TBM Data Report as an annual deliverable, as requested by the Department, and as-need when the distribution percentages need to be changed. The USDS Servicer shall complete all pertinent fields of the TBM Data Report and provide timely delivery consistent with the due date for the annual Capital Planning and Investment Control (CPIC) submission. The specific deliverable descriptions for the TBM IT Towers and IT Cost Pools are provided within Attachment 4. ii. The USDS Servicer shall review all of the provided informational materials and select the IT Towers and IT Cost Pools that pertain to the Contract. Not all IT Towers nor all of the IT Cost Pools may apply to the Contract. The USDS Servicer shall enter the appropriate amounts into each cell for each pertinent fiscal year. The USDS Servicer shall ignore the first IT Cost Pool for Internal Labor which pertains to Government FTE costs which will be provided by FSA before the initial deliverable due date in August 2023. p. Contractor Qualifications – Capability Maturity Model Integration (CMMI) The USDS Servicer shall maintain mature IT management processes and a mature System Development Life Cycle (SDLC) methodology. This can be demonstrated through a minimum of a Capability Maturity Model Integration (CMMI) Level 2 assessment. FSA accepts either CMMI-Dev or CMMI-Services. Self-certification of CMMI Level 2 is adequate only if followed up with achievement of full certification within a year of Contract award. FSA has a strong preference for CMMI Level 3. CMMI is desired; however, a similar rating like ISO 9001 or equivalent in the commercial space may also be taken under consideration. For example, FSA will accept a combination of ISO 9001 and ISO 27001 certifications, with a list of CMMI attributes they conform to. Personnel assigned to the Contract must comply with the USDS Servicer’s CMMI Level 2 or equivalent processes and be familiar with the CMMI or equivalent requirements that apply to their role. q. Network Management For all telecommunication requirement changes, the USDS Servicer shall submit a written request through the Federal Student Aid Enterprise Change Management (ECM) process. All such changes, new or existing, shall conform to Federal Student Aid Security standards and shall undergo security reviews. r. IT Incident Management The USDS Servicer shall use the FSA data center services and the Department’s Help Desk to report all incidents (Incidents). Incidents include those occurring inside the FSA data center environment, and those Incidents occurring in

PAGE 36 OF 99 91003123D0005P00020 USDS Servicer’s applications outside of the FSA data center environment. Until service is restored, the USDS Servicer shall assist in timely notification, within 30 minutes of the Incident occurrence and within 24 hours of follow up issues, escalation and resolution of any Incidents that impact application degradation or outages. The USDS Servicer shall collaboratively participate in identifying the root cause of Incident. The USDS Servicer shall also, develop solutions that resolve the issues, implement, and test any corrective actions. In matters relevant to FSA systems impacted by the USDS Servicer’s work effort, the USDS Servicer shall provide FSA and the FSA data center support and input into root-cause analysis. 5) Milestones a. ATO & Security Requirements: USDS Servicer shall be able to meet Security and Privacy Requirements as described within Attachment 3 prior to Code Freeze date; and be ready to provide services in compliance with Requirements by the Go Live date. b. Business Operations Servicing Requirements: USDS Servicer shall provide services in support of FSA’s Business Operations Servicing Requirements as fully described in Attachment 1 and associated attachments. As part of the Initial Task Order awarded under the Contract, all system development work in support of these requirements must be completed by the Code Freeze date and any other efforts to implement these requirements (e.g., system deployments, procedure development, staffing, training, etc.) must be ready by the Go Live date. c. Financial Technical Requirements: USDS Servicer shall provide services in support of FSA’s Financial Technical Requirements as fully defined in Attachment 2 and associated attachments. As part of the Initial Task Order awarded under the Contract, all system development work in support of these requirements must be completed by the Code Freeze date and any other efforts to implement these requirements (e.g., system deployments, procedure development, staffing, training, etc.) must be ready by the Go Live date. d. Specialty Program Servicing Requirements: USDS Servicer shall provide all Specialty Program Servicing Requirements as fully described in Attachment 1. As part of the Initial Task Order awarded under the Contract, all system development work in support of these requirements must be completed by the Code Freeze date and any other efforts to implement these requirements (e.g., system deployments, procedure development, staffing, training, etc.) must be ready by the Go Live date e. Specialty Task Servicing Requirements: USDS Servicer shall provide all Specialty Servicing Task Requirements as more fully described in Attachment 1. As part of the Initial Task Order awarded under the Contract, all system development work in support of these requirements must be completed by the Code Freeze date and any other efforts to implement these requirements (e.g., system deployments, procedure development, staffing, training, etc.) must be ready by the Go Live date f. Unmet Requirements: For any of the requirements that the USDS Servicer will not meet upon award, the USDS Servicer has identified the unmet requirements. Such unmet requirements and the planned completion dates to meet those requirements are provided in Attachment 23 - Requirements Development and Costs Template (Attachment 23). The associated costs (if applicable) to meet these requirements are incorporated in the Initial Task Order. 6) Deliverables: A complete list of contract deliverables can be found in the following 3 attachments: Attachment 1a Business Operations Deliverable Table (Attachment 1a), Attachment 2a Financial Deliverables Table (Attachment 2a), and Attachment 4a IT Deliverables Table (Attachment 4a).

PAGE 37 OF 99 91003123D0005P00020 a. Format: Deliverables shall be provided electronically whenever possible. Electronic delivery via e-mail is acceptable, with the files delivered in both Acrobat (.pdf) and a current Microsoft Office format suitable for the report (Word or Excel) unless otherwise directed by the CO to provide in a different format. b. Delivery Points of Contact: Deliverables shall be submitted to the CO, the COR, Program Manager, and Project Manager. c. Review Period: i. Unless specified differently in Attachments 1a, 2a, or 4a, or at the Task Order level, FSA shall review each deliverable and provide written notice of acceptance or rejection within fifteen (15) business days upon receipt. ii. Changes and Comments: 1. Upon notice of formal written rejection of a deliverable from FSA’s CO, USDS Servicer shall address all comments/changes and submit a revised deliverable within five (5) business days if the comments/changes can be easily addressed and understood by both FSA and USDS Servicer. 2. If the deliverable is rejected and/or requires significant revision to address all FSA comments/changes, USDS Servicer will have seven (7) business days from date of FSA’s written rejection to submit the revised deliverable. d. Deliverable Due Date: USDS Servicer shall furnish deliverables specified herein in accordance with the delivery schedule and requirements, to the delivery point(s) specified in paragraph b of this section and as further described in Attachments 1a, 2a, and/or 4a or at the Task Order level. i. If a deliverable is due on a calendar day that falls on a weekend day or on a Federal Government holiday, the deliverable is due on the following business day. ii. Unless otherwise specified, deliverables shall be submitted by noon (12:00 PM EST) on the deliverable due date. e. General Deliverable Acceptance Criteria: The acceptance criteria for each deliverable is included in Attachments 1a, 2a, and 4a. Such acceptance criteria include, but is not limited to, the following: i. The CO, the COR, Program Manager, and Project Manager will review the deliverable to determine that: 1. The deliverable is organized appropriately and written clearly. 2. The information in the deliverable is accurate and relevant. 3. The deliverable adheres to FSA documentation standards, including technical quality. ii. Documentation created by the USDS Servicer as part of the Contract shall comply with the templates contained within FSA’s LMM, Attachment 6. These templates may be modified by mutual agreement of the parties, to address the needs of the Contract, contract modification, or Task Order under the Contract. iii. A deliverable that is poorly organized, incomplete, unclear, inaccurate, or contains grammar/spelling errors will be deemed unacceptable. As further described in paragraph c of this section, the CO will provide written rejection to the USDS Servicer.

PAGE 38 OF 99 91003123D0005P00020 f. Single Points of Contact (SPOCs): The USDS Servicer shall provide Single-Points-of-Contact (SPOCs) for all USDS products and services. The USDS Servicer shall use SPOCs to ensure effective and consistent communication with the Government. 4. Initial USDS Servicer Task Order: [P00009 updated] a. The Initial Task Order (ITO) is a firm-fixed price task order for the tasks and deliverables required for the USDS Servicer to become performance ready. b. The period of performance for the ITO is from the date of Contract award thru completion of ITO requirements, receipt of post 7/16/2024 ATO, and resolution of all issues discovered during the ATO process. c. USDS Servicer shall provide the tasks required to achieve ATO and go-live of the servicing system (Go-Live) according to the schedule in the table below. The requirements are as fully described in Attachments 1, 2, and 3. d. The Initial Task Order Milestones/Deliverables and associated due dates are contained in the table below and in part g of this section. If a due date falls on a holiday or weekend, then the due date will move to the next business day (Monday – Friday). Additional Initial Task Order deliverables are marked and contained in the deliverable table and Attachments 1a, 2a, and 4a. i. The USDS Servicer shall enhance its IT/Cybersecurity posture to meet all requirements in Attachment 3 by the start of the ATO process with the exceptions as described in part g of this section. ii. The ATO assessment may result in required Plan of Action and Milestones (POA&M) that the Government may accept remediation over an FSA defined period. Any exceptions or PO&AM items that are a result of an FSA decision to delay on implementing or providing an alternative schedule approval on specific requirements will be reviewed and negotiated with the Contracting Officer and adjusted through contract modification. iii. The Department Authorizing Official (AO) shall have final authority to accept or reject the ATO. e. The Department may withhold final payment of any outstanding cybersecurity requirements under the Initial Task Order until ATO is met and FSA accepts all deliverables under the Initial Task Order and any POA&M remediations. f. USDS Servicer shall coordinate with FSA to ensure all personnel have completed all required training and security requirements to perform under the Contract. g. In accordance with the attached Nelnet Recommended Project Approach (Attachment 32) the following actions are required by the given dates: a. Nelnet ATO Assessment processes begins no later than 11/10/2023 b. All data segmentation completed by 2/28/2024. c. Full network segmentation and cybersecurity requirements completed by 7/16/2024. All USDS required business applications* and associated tools / infrastructure will be hosted in either an on-premise or AWS-hosted Federal only network and environment. With respect only to the USDS Servicer’s obligation to complete network segmentation on or

PAGE 39 OF 99 91003123D0005P00020 before 7/16/2024 (“Segmentation Deadline"), including moving on-premises TIVAS applications to Amazon Web Services (“AWS”) as specified below under the heading “Application Migration Groupings and Target Dates” and subheading “Groups 3-7 Migrations and Final Network Segmentation” the USDS Servicer’s failure to meet the Segmentation Deadline may result in reductions to the Initial Task Order (“ITO”) price, as set forth in Attachment 31, Delivery Delay Reduction Schedule, and may result in reductions to the USDS Servicer’s allocation of new borrowers in future periods. For clarity however, (a) failure to meet the Segmentation Deadline due to action or inaction of the Government will not trigger reductions in the ITO price or borrower allocation, and (b) the ITO price reductions and borrower allocation reductions do not apply to any other dates or deliverables. *Total and Permanent Disability application systems, infrastructure and associated network connectivity is excluded from USDS cybersecurity requirements and implementation of USDS segmentation requirements will be excluded from the definition of completion of this milestone. In addition, TPD portals will be exempt from co-branding and single sign-on USDS requirements. [P00019 Removed]In alignment with Nelnet’s proposed migration approach (Attachment 32), Nelnet will migrate its current set of TIVAS applications that support FSA into the Federal-only network / domain no later than 7/16/2024. Below are the current identified groupings of applications and targeted date timeframes; however, Nelnet will manage scope of individual groups based on the overall project schedule and ultimate milestone of 7/16/2024 for completion of all application and data migration into a fully segmented USDS (federal) environment. d. Application Migration Groupings and Target Dates: • Group 1 -FileNet and MTTMS Data Migration to occur prior to 03/14/2024 USDS go live. • Group 1 - Quadient and MoveIT Data Migration to be completed prior to 05/01/2024. • Group 2 - Cobranding and SSO Readiness to occur prior to 03/14/2024 USDS go live.  MMA  JDS (Data Caching Service)  NserviceBus  Telligent • Groups 3 – 7 Migrations and Final Network Segmentation - Business applications to be migrated prior to 7/16/2024 Group 3 Software Migration (Call Center Systems)  Workspace  Calculator  CXOne  IVR  TOAST Group 4 - Software Migration (Financial Reporting)  NDSFS  PRISM  Legacy Consol Group 5 - Software Migration and Business Objects Data Migration (Partner Portal, Reporting and NSLDS) • Nsight • NSLDS • Reporting Hub • Borrower Search • Business Object Data Migration

PAGE 40 OF 99 91003123D0005P00020 Group 6 - Software Migration (Back Office Processing) • Midas • Nergize • Cruise Group 7 - Software Migration (External Facing Systems) • Connect Direct • Data Trade • NACHA Payments • Retro Calculator • DCC API • KONG • Financial Aggregator e. Final Network Segmentation, Security Impact Assessment (SIA) and ATO. Prior to the completion of all business applications into the Nelnet USDS federal environment, Nelnet will submit an SIA for FSA evaluation and FSA will determine the scope of the ATO to validate any cybersecurity impacts, changes and configurations. These may include but are not necessarily limited to data center network changes, modification of security groups and network traffic policies and disaster recovery validation. Table 2 Initial Task Order Deliverables/Milestones Activity Due Date FSA Circuit Pre-Order Questionnaire Due within five (5) business days of Initial Task Order award Personnel Security Package for “Implementation” Personnel Due no later than fourteen (14) calendar days after Initial Task Order award Code Freeze Due no later than 199 calendar days after Initial Task Order award Original ATO Process Begins Due no later than 199 calendar days after Initial Task Order award Original ATO Approval Decision Due no later than 287 calendar days after Initial Task Order award Submit Completed Personnel Security Package for “On-boarding” CSRs Due no later than 264 calendar days after Initial Task Order award Production Readiness Review [P00015 updated] Due no later than March 18, 2024 System Go-Live [P00015 updated] Due no later than 11:59 pm Eastern Time Sunday March 24, 2024. after Initial Task Order award

PAGE 41 OF 99 91003123D0005P00020 Final Network Segmentation and Security Impact Assessment (SIA) Due by 7/16/2024 34000 PSLF Series & 34200 TEACH Series Implementation Completed [P00013 Added] Due by 6/30/2024 23020.000 – 23020.090 USDS Base PSLF Discharge Implementation Completed [P00013 Added] Due by 6/30/2024 23021.000 – 23021.041 USDS Base TPD Discharge Implementation Completed [P00013 Added] Due by 11/10/2024 14010.000 IDR counters Implementation Completed [P00013 Added] Due by 5/31/2024 14011.000 Deferment or Forbearance time counters Implementation Completed [P00016 Added] Due by 5/31/2024 18006.010 requirement to use the FSA format BHAR. Contractor shall instead use their own BHAR format until the FSA BHAR is implemented by 7/31/2024 [P00013 Added] Due by 7/31/2024 CR 6715 18000 Series Additional Attachments Implementation Completed [P00013 Added] Due by 7/31/2024 3001.070: The website shall provide IDR payment counters [P00017 added] Due by 08/30/2024 D. Packaging and Marking Reference Part I Section C PWS, Section H, Part II Section I, and Part III Section J for specific requirements regarding packaging, marking, and preservation. E. Inspection and Acceptance Outside any specific requirements of this section, reference Part I Section C PWS, Section H, Part II Section I, and Part III Section J for specific requirements regarding inspection and acceptance 52.246-4 INSPECTION OF SERVICES-FIXED-PRICE (AUG 1996) (a) Definition. "Services," as used in this clause, includes services performed, workmanship, and material furnished or utilized in the performance of services.

PAGE 42 OF 99 91003123D0005P00020 (b) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the services under this contract. Complete records of all inspection work performed by the Contractor shall be maintained and made available to the Government during contract performance and for as long afterwards as the contract requires. (c) The Government has the right to inspect and test all services called for by the contract, to the extent practicable at all times and places during the term of the contract. The Government shall perform inspections and tests in a manner that will not unduly delay the work. (d) If the Government performs inspections or tests on the premises of the Contractor or a subcontractor, the Contractor shall furnish, and shall require subcontractors to furnish, at no increase in contract price, all reasonable facilities and assistance for the safe and convenient performance of these duties. (e) If any of the services do not conform with contract requirements, the Government may require the Contractor to perform the services again in conformity with contract requirements, at no increase in contract amount. When the defects in services cannot be corrected by reperformance, the Government may- (1) Require the Contractor to take necessary action to ensure that future performance conforms to contract requirements; and (2) Reduce the contract price to reflect the reduced value of the services performed. (f) If the Contractor fails to promptly perform the services again or to take the necessary action to ensure future performance in conformity with contract requirements, the Government may- (1) By contract or otherwise, perform the services and charge to the Contractor any cost incurred by the Government that is directly related to the performance of such service; or (2) Terminate the contract for default. (End of clause) F. Deliveries or Performance Reference Part I Section C PWS, Section H, Part II Section I, and Part III Section J for specific requirements regarding deliveries and/or performance. G. Contract Administrative Data A. CLAUSES 52.216-32 TASK-ORDER AND DELIVERY-ORDER OMBUDSMAN (SEPT 2019) (a) In accordance with 41 U.S.C. 4106(g), the Agency has designated the following task-order and delivery-order Ombudsman for this contract. The Ombudsman must review complaints from the Contractor concerning all task-order and delivery-order actions for this contract and ensure the Contractor is afforded a fair opportunity for consideration in the award of orders, consistent with the procedures in the contract. Christopher J. Rosier, 400 Maryland Ave SW, Washington, DC 20202/(202) 453-6338/Chris.Rosier@ed.gov (b) Consulting an ombudsman does not alter or postpone the timeline for any other process (e.g., protests).

PAGE 43 OF 99 91003123D0005P00020 (c) Before consulting with the Ombudsman, the Contractor is encouraged to first address complaints with the Contracting Officer for resolution. When requested by the Contractor, the Ombudsman may keep the identity of the concerned party or entity confidential, unless prohibited by law or agency procedure. (End of clause) B. TYPE OF CONTRACT AND TASK ORDERS The Contract is a Multiple Award, Indefinite Delivery, Indefinite Quantity (IDIQ) Contract with the ability to issue Task Orders with multiple or singular contract types. The contract types available are Fixed Price with Economic Price Adjustment (FP-EPA), Fixed Price with Economic Price Adjustment and with Performance Incentives (FP-EPA-PI), and Firm-Fixed Price (FFP). C. TASK ORDERS Task Orders: Task Orders shall be issued based on the terms and conditions of the Contract. FSA will implement servicing solution through the issuance of Task Orders. These Task Orders will be priced based upon the terms and conditions of the Contract including the established common pricing and pricing for Initial Task Order. See subsection D, Pricing and Payment below. D. PRICING AND PAYMENT a. Progressive Fixed-Price Rates Explanation: i. Progressive Fixed-Price Rate. A progressive fixed-price rate means the USDS Servicer will invoice FSA for different rates depending on the number of borrower accounts with a remaining balance on the USDS Servicer’s system. For example, if the USDS Servicer has 7.5 million borrowers, FSA will pay one rate (A) for the first 5 million borrowers and a different rate (B) for the next 2.5 million borrowers. The monthly billing for this CLIN would = (5 million x Rate A) + (2.5 million x Rate B). See Attachment 22 - Progressive Fixed- Price Calculator (Attachment 22) for an example of how to calculate or estimate using the methodology described in this section. ii. Borrower Accounts Pending Discharge. For billing purposes, borrower accounts pending discharge, which include but are not limited to: conditional disability, death, or bankruptcy, shall be counted in the deliverable status at the time of the discharge request. iii. Borrower Accounts in Default. Borrower accounts in default status will be transferred from the USDS Servicer to DMCS, FSA’s system for managing defaulted borrower accounts. Upon borrower account transfer to DMCS, USDS Servicer will no longer invoice FSA for that account. iv. Last Day of Billing Period. The last day of the billing period for services provided by the USDS Servicer is defined as the last day of FSA’s monthly billing period. b. CLIN 1 Servicing System Operations: USDS Servicer will invoice FSA on a monthly basis for the services provided under CLIN 1 Servicing System Operations.

PAGE 44 OF 99 91003123D0005P00020 Monthly billing will be on a progressive fixed-price basis tied to the number of borrower accounts with a remaining balance on the USDS Servicer’s system as of the last day of the month for which the invoice is submitted. Pricing will be in accordance with Contract Section B.2 CLIN Pricing and Rates. c. CLIN 2 Cybersecurity Services: USDS Servicer will invoice FSA on a monthly basis for the services provided under CLIN 2 Cybersecurity Services. Monthly billing will be on a progressive fixed-price basis tied to the number of borrower accounts with a remaining balance on the USDS Servicer’s system as of the last day of the month for which the invoice is submitted. Pricing will be in accordance with Contract Section B.2 CLIN Pricing and Rates. d. CLIN 3 Contact Center and Back-Office Processing Operation & Maintenance: USDS Servicer will invoice FSA for services provided under CLIN 3 Contact Center and Back-Office Processing Operation & Maintenance for up to 80% of the total value of services provided. The remaining 20% may be billed after receipt and application of the amount of the Service Level Agreements and Objectives Performance Incentive. Billing will be on a progressive fixed-price basis tied to the number of borrower accounts with a remaining balance on the USDS Servicer’s system as of the last day of the month for which the services were provided. Pricing will be in accordance with Contract Section B.2 CLIN Pricing and Rates. Types of CLIN 3 Servicing Rates: Standard Loan Servicing: Borrower accounts serviced following the standard requirements of the Contract and who do not fit into the two servicing rate types below. Service Member / Military Servicing: Borrowers identified by unique borrower social security numbers (SSNs) with balance not equal to $0.00 currently serviced using the Servicemembers Civil Relief Act (SCRA) 6% interest limit (borrower has one or more loans with rate reduced to 6% or SCRA Eligible loans already at or under 6%). These borrowers are: • In a Military Service Deferment; • In a Post Active Duty Deferment; OR • Using the 0% interest while serving in a hostile area (borrower has one or more loans with rate reduced to 0%). National Emergency Forbearance (CARES Act) Servicing: These are the borrowers that qualify under the Coronavirus Aid, Relief, and Economic Security Act Pub. L. No. 116-136 (2020) (CARES Act) for national emergency forbearance servicing. Performance Incentives: i. At-Risk Borrower Performance Incentive: Payments for the At-Risk Borrower Performance Incentive associated with CLIN 3 shall be in accordance with the At-Risk Borrower Performance Incentive clause. The clause is in the Contract within Part II, Section I, Part 3 Additional Clauses. ii. Service Level Agreements & Objectives Performance Incentive: Invoice adjustments for this performance incentive associated with CLIN 3 shall be in accordance with the Service Level Agreements & Objectives Performance Incentive clause. The clause is in the Contract within Part II, Section I, Part 3 Additional Clauses.

PAGE 45 OF 99 91003123D0005P00020 e. CLIN 4 Website and Mobile Services: USDS Servicers will invoice FSA on a monthly basis for the services associated with CLIN 4 Website and Mobile Services. Monthly billing will be on a progressive fixed-price basis tied to the number of borrower accounts with a remaining balance on the USDS Servicer’s system as of the last day of the month for which the invoice is submitted. Pricing will be in accordance with Contract Section B.2 CLIN Pricing and Rates. f. CLIN 5 User Authentication Services: USDS Servicer will invoice the FSA on a monthly basis for the services associated with CLIN 5 User Authentication Services. Monthly billing will be on a fixed-price basis tied to the number of borrower accounts with a remaining balance on the USDS Servicer’s system as of the last day of the month for which the invoice is submitted. Pricing will be in accordance with Contract Section B.2 CLIN Pricing and Rates. g. CLIN 6 Fulfillment Services: USDS Servicer will invoice FSA on a monthly basis for the services associated with CLIN 6 Fulfillment Services. Monthly billing will be based on the fixed-prices for CLIN 6 in accordance with Contract Section B.2 CLIN Pricing and Rates. h. CLIN 7 Development, Modernization & Enhancements: FSA will issue Task Orders for implementation or development of future requirements that are within scope of the Contract but not within the base requirements at Contract award. The USDS Servicer shall submit an invoice(s) to FSA in accordance with the payment schedule for CLIN 7 services established in the Task Order. i. Initial Task Order: The Initial Task Order under the Contract shall be invoiced in accordance with the clauses and procedures of the Contract and payment schedule established in the Initial Task Order. j. Billing and Prices – Less than one cent: All CLIN Task Order total prices and invoices shall be rounded up to a cent, if the quantity of units multiplied by the unit price results in a number with greater than two decimal places, to result in billing price or CLIN price with two decimal places. For example, if a fixed unit price was 0.00073 and the invoice was for a quantity of 20 units the total of 0.0146 would be rounded up to $0.02. The total of invoices may not exceed the funding on the CLIN as a result of this process. The last invoice for the full amount of unit quantities on the CLIN would invoice for the quantities delivered and at the amount which would total the total funding of the CLIN. This would result in the total quantity of units being delivered and total value of the CLIN being paid. E. PERIOD OF PERFORMANCE The Period of Performance for this IDIQ Contract may last up to ten (10) years, consisting of a five-year Base Period; two, two-year Option Periods; and one, one-year Option Period. Table 4, Period of Performance, below describes the period of performance of the Contract. Table 4, Period of Performance Term Start date End date 5 Year Base Period Upon contract award. See See Schedule CLIN 0001.

PAGE 46 OF 99 91003123D0005P00020 Term Start date End date Schedule CLIN 0001. 2 Year Option Period 1 See Schedule CLIN 0002. See Schedule CLIN 0002. 2 Year Option Period 2 See Schedule CLIN 0003. See Schedule CLIN 0003. 1 Year Option Period 3 See Schedule CLIN 0004. See Schedule CLIN 0004. F. ORDERING General The Task Orders issued under the Contract, may only be issued by an authorized FSA warranted CO (Ordering CO). Ordering COs must obtain permission in advance to issue a Task Order Request For Proposal (RFP) from the FSA CO or Contracting Office responsible for administering the Contract. Ordering COs are responsible for clearly identifying the applicable order type(s), in each Task Order, and making all required pre-solicitation determinations. Task Orders that are not within the scope of the Contract are not authorized. Ordering COs shall ensure Task Order proposals are responsive to RFP evaluation criteria and that proposed prices are fair and reasonable within the Contract pre- established labor rates. Ordering COs are responsible for all administration duties associated with Task Orders, including the timely closeout of Task Orders as they are completed. Requesting Proposal The authorized FSA warranted CO may solicit responses to requirements from USDS Servicers within a technical area covered by the Scope of Work. Generally, the Task Order solicitation will include, but is not limited to: 1. Statement of Work 2. Reporting Requirements and Deliverables 3. Proposal Due Date and Location to Deliver Proposals 4. Period of Performance of Task Order 5. Anticipated type of Task Order 6. Technical Proposal Instructions 7. Business proposal Instructions 8. Evaluation Factors for Award All Task Order solicitations/proposal requests or notices of intent to place an order shall include the provision 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment (NOV 2021). Fair Opportunity In accordance with FAR 16.505, Ordering, all USDS Servicers under the awarded IDIQ contracts pursuant to Solicitation No. 91003122R0007shall be provided with fair opportunity to compete for Task Order awards

PAGE 47 OF 99 91003123D0005P00020 unless an exception applies. Any Task Order awarded without providing for fair opportunity, must be documented in accordance with the applicable section of FAR 16.505. H. Special Contract Requirements A. Testing Approach FSA will leverage the USDS Servicer’s test plans in executing its oversight and to ensure proper testing of the USDS Servicer’s solution. FSA shall have access to all testing materials (e.g., scripts, testing results, etc.) for review and feedback and shall be given the capability to oversee testing in person or remotely. FSA shall have the ability to conduct side-by-side user acceptance testing with USDS Servicer to reduce cycle times. (End of Clause) B. Technology Business Management (TBM) Data Report The TBM Data Report Template is included as an attachment within Attachment 4. This Office of Management and Budget (OMB) required report shall be a quarterly deliverable under the Contract. The USDS Servicer shall complete all pertinent fields of the TBM Data Report and provide timely delivery consistent with the instructions contained in the annual A-11 OMB Circular on the Budget Submission Requirement, specifically in the section containing the annual OMB Guidance on the Capital Planning and Investment Control (CPIC) submission requirements for Information Technology (IT) investments. The specific deliverable descriptions for the IT Towers and sub-towers and Cost Pools are found in Attachment 4. USDS Servicer shall review the informational materials and select the IT Towers and Cost Pools that pertain to its Contract. Not all of the IT Towers nor all of the Cost Pools may apply to the Contract. USDS Servicer shall enter the percent (%) of total cost associated with each selected IT Tower and Cost Pool. The total of the percentages must be 100%. USDS Servicer shall ignore the first IT Cost Pool for Internal Labor. FSA will determine that percentage and adjust the remainder of the Cost Pool percentages in order to sum the percentages to 100%. In addition, after FSA receives this deliverable, it will calculate the actual amounts using the percentages and actual total IT cost of the investment. FSA will provide the USDS Servicer the Security and Compliance actual costs so that the USDS Servicer can calculate the Cyber BDR Costs Percentages by NIST Categories deliverable. OMB requires that the total of the IT Towers equal the total of the IT Cost Pools equal the total of the Lifecycle Cost table in the investment’s business case. (End of Clause) C. Subcontracting with Disabled and Severely Disabled Individuals The Government has preference for companies who employ disabled and severely disabled individuals and allow such individuals to support FSA remotely. Persons with blindness and other disabilities provide a ready source of capable labor. The AbilityOne Program is the largest source of employment for people who are blind or have significant disabilities in the United States. More than 550 nonprofit organizations employ these individuals and provide quality products and services to the Federal Government at a fair market price. They offer call center and helpdesk services with customer satisfaction scores and productivity levels that rival commercial call centers. These services are offered on your site, their site, or from “At-Home” agents. In addition, USDS Servicer may find they are able to fill many of USDS Servicer’s other service needs for the Contract. The Department strongly encourages the USDS Servicer to subcontract

PAGE 48 OF 99 91003123D0005P00020 with an AbilityOne organization, or another organization that employees disabled and severely disabled individuals for at least a portion of the USDS Servicer call center, helpdesk and other service needs. (End of Clause) D. Annual Submittal of Financial Audit Statements. USDS Servicer shall submit annually a copy of its current Financial Audit Statement to the CO 60 days prior to the end of the current period of performance. This information will be a factor in assessing responsibility prior to exercising options or issuing new Task Orders, as applicable. E. Reserved [P00006] F. Labeling of Documents. The USDS Servicer shall not label any data produced in performance of the Contract in a way that would restrict the U.S. Government's right to use or release the information, unless limited or restricted rights, as define by 52.227-14, Rights in Data-General, were agreed upon and the Contract explicitly delineates the data that are subject to limited or restricted rights. If applicable, the USDS Sevier shall include a legend that identifies sensitive data that should not be released for security reasons. Deliverables shall not contain USDS Servicer-specific logos, mottos, watermarks, or holograms. The USDS Servicer shall not use, particularly for proposals, U.S. Government logos, such as the U.S. Department of Education or Federal Student Aid. G. USDS Servicers Use of Government Commercial Software. This section applies to all commercial software that is– 1. provided by the Government to the USDS Servicer for performance of the Contract; 2. purchased, licensed, or maintained by the USDS Servicer and is directly reimbursed by the Government; or 3. purchased or licensed by the USDS Servicer in the name of the Department. Software provided by the Government will be supplied by the FSA Software Asset Management Team via the CO or COR. The USDS Servicer performing work on behalf of the Department shall not: 1. Install, reproduce, distribute, transmit, or otherwise use software for which the Department lacks the appropriate license, unless such software is properly licensed and used in accordance with Departmental policy and the applicable license. If the USDS Servicer becomes aware of the reproduction, distribution, or use of unauthorized software, the USDS Servicer will notify the CO or COR who in turn will notify the FSA Software Asset Management Team. All use above the licensed entitlement will be removed or purchased by the USDS Servicer. 2. Install, reproduce, or use any software upgrade on a computer that does not already have resident the original, licensed version of the software. 3. Loan, distribute, or transmit Department software to any third party, unless the employee or contractor is expressly authorized to do so by the COR and the applicable license. If the USDS Servicer performing work on behalf of the Department has any question concerning entitlement for

PAGE 49 OF 99 91003123D0005P00020 use of any software, it has the responsibility to seek clarification, via the CO or COR, of the Software Asset Management Team. The terms of this section apply to the USDS Servicer, and its employees performing work on behalf of the Government and accessing or using Government software assets from any off-site or remote work location. For example, this includes all telework locations, use of non-Government equipment while performing Government work, and/or use of any/all devices for this purpose that have the ability to connect/access any Government network or software product. The USDS Servicer shall hold the Government harmless for any noncompliance with this section or the licenses under which the software is provided. The USDS Servicer will be responsible for paying all damages, penalties, extra license fee or any other expense associated with its noncompliance without reimbursement or compensation from the Government. The USDS Servicer shall report annually by March 31, or more frequently if requested by the CO, the following: 1. Software product name 2. Software version number 3. Username 4. Workstation owner, as applicable 5. Server name, as applicable 6. Metrics required by license (e.g., the names of actual users if license is named user base.) The USDS Servicer is subject to audits by the Government or the software manufacturer at the USDS Servicer’s location to ensure it is complying with this section and licenses. The USDS Servicer shall remove the software immediately from its machines and certify to the CO its removal and the destruction or return of all documentation when any of the following occurs: 1. Contact under which software is required ends without renewal; 2. The software license’s term ends without renewal; 3. The software license is terminated by manufacturer for cause; or 4. The software is no longer required for performance of the Contract. For named user-based or client-based licenses, the USDS Servicer will report within 30 calendar days the addition, replacement, or termination of access of any specific named-user or the addition, transfer or removal of software from client machines. Such report will contain the name of the former client as well as the new client, as applicable. For server or core-based licenses, the USDS Servicer will report within 30 days the addition, transfer or removal of software from servers. Such report will contain the name of the former server as well as the new server, as applicable.

PAGE 50 OF 99 91003123D0005P00020 H. Continuation of Mission Critical Contractor Services. As used in this section: 1. Mission Critical Contractor System or Other Services are defined as a system or other services that have a material impact on the accomplishment of the Federal Student Aid mission. 2. The services under the Contract are vital to the mission of the Department. The USDS Servicer shall be responsible for the availability of all systems operated, or other services performed by the USDS Servicer for the Department, regardless of location. This section applies to all or any part of the Contract that includes services that directly support the Department's mission. 3. The USDS Servicer shall provide, implement, and maintain a Continuation of Mission Critical Services Plan (also referred to as Contingency Plan, or “The Plan”) for continuing performance of services no matter the circumstances. The Plan shall describe the processes and procedures that will be followed to ensure continued availability of services under the Contract. Any alternate site used as part of Disaster Recovery shall be fully operational within 48 hours of a declared disaster. The USDS Servicer shall identify in the Plan the provisions made for the acquisition of mission critical personnel and resources, if necessary, for continuity of operations for up to 30 calendar days or until normal operations can be resumed. 4. Within 60 calendar days after contract award, the USDS Servicer shall submit its Plan for approval, which shall be consistent with and further detail the approach contained in the USDS Servicer's final revised proposal. The Plan, as approved by the CO, shall be incorporated into the Contract as a compliance document. The Plan must, at a minimum, address: i. Name of the USDS Servicer’s officer overall responsible for the maintenance, management, exercising and execution of the Plan; ii. Plans and procedures; iii. Identification of mission critical functions; iv. The time lapse associated with the initiation of the acquisition of mission critical personnel and resources and their actual availability on site; v. Delegations of authority, planned order of succession, and cross-training to ensure personnel are available to provide services and make key decisions; vi. Proposed alternate operating facilities, interoperable, connectivity and emergency communications approach; vii. Critical records or data storage procedures;

PAGE 51 OF 99 91003123D0005P00020 viii. Protection of human capital; ix. Testing approach for annual tests; x. Training plan; xi. Delegation of control and direction; xii. Reconstitution and resuming normal operations plans; and xiii. Schedule for periodic review and revisions of Plan. 5. The USDS Servicer shall maintain and update its Plan as necessary and adhere to its requirements throughout the Contract term. The USDS Servicer shall not materially alter the Plan without the CO's written consent. 6. As directed by the CO, the USDS Servicer shall participate and collaborate with the Department and its contractors in training events, exercises, and drills associated with Government efforts to test the effectiveness of continuity of operations procedures and practices with internal and external entities. Results of the exercises shall be delivered to the CO or other designated representative within 30 calendar days after the exercise. 7. In the event the USDS Servicer anticipates not being able to perform any of the mission critical contractor services identified in the paragraph above, the USDS Servicer shall notify the CO or other designated representative immediately and use its best efforts to cooperate with the Government in the Government’s efforts to maintain the continuity of operations. In no way does this paragraph relieve the USDS Servicer of financial responsibility in meeting the Contract terms and conditions. 8. The Government reserves the right to use Federal employees of other agencies or support from other parties or to enter into new contracts for mission critical contractor services. Any new contracting efforts would be conducted in accordance with OFPP letter, “Emergency Acquisitions’’ May 2011 and FAR Part 18, respectively, or any other subsequent emergency guidance issued. 9. The USDS Servicer is required to coordinate all changes to mission critical USDS Servicer systems or other services used to implement Federal Student Aid IT operations and services with the CO, the COR, and to Department representatives as directed by the CO, at least five business days prior to the changes, absent exigent circumstances. Emergency changes require immediate notification of the CO, the COR, and to Department representatives as directed by the CO as soon as the charge requirement is known, but prior to the change. If the continuity of such systems or services is disrupted as a consequence of the USDS Servicer’s failure to adequately coordinate these changes with the Department, the USDS Servicer may be

PAGE 52 OF 99 91003123D0005P00020 subject to contractual remedies available to the Government pursuant to the terms of the Contract or as authorized by law. 10. The USDS Servicer shall contact the CO and the COR to coordinate all changes to mission critical USDS Servicer systems or services. 11. The USDS Servicer shall include the substance of this section, including this paragraph (11), in subcontracts for the mission critical services. I. Monthly Vendor Employee Report. The Monthly Vendor Employee Report template is included as Attachment 26 to the Contract. This report is a monthly deliverable under the Contract. The USDS Servicer shall complete all fields of the Monthly Vendor Employee Report template and provide timely delivery consistent with the instructions contained in the Monthly Vendor Employee Report template. J. Contractor Security Responsibilities. 1. The USDS Servicer shall ensure that no USDS Servicer’s employee is granted access to the Department’s confidential and/or personally identifiable information (PII), and/or system(s) that permit access to the aforementioned data, until the USDS Servicer’s employee has completed the required security training and receives written access approval from the applicable Government Information System Security Officer (ISSO). If the employee requires access to multiple systems, approval must come from each system’s ISSO before receiving access to that system. 2. The written approval provided to the USDS Servicer by the ISSO shall identify the USDS Servicer’s employee/applicant, the system/platform for which access is being granted, whether privileged (6c) or non- privileged (5c) access is granted, and the Person Handle number (formerly referred to as “unique identification number”) assigned to the USDS Servicer’s employee. The written notification may include multiple USDS Servicer’s employees, but each USDS Servicer’s employee shall be listed separately, including the aforementioned information relevant to the access approval of each individual listed. 3. All USDS Servicer’s employees must complete the required security training as a prerequisite to accessing the Department’s confidential and/or PII data, and/or system(s), and must complete required training annually thereafter. The USDS Servicer’s employee responsible for security shall promptly forward a copy of the completion certificate (training completed within 12 months of the date of access approval will suffice) or other equivalent proof of completion to both the COR and the ISSO(s). Access will not be granted until proof of completion is received. 4. If the ISSO does not grant access to the USDS Servicer’s employee within 20 calendar days of submitting all required documents for a security investigation and the proof of security training completion, the USDS Servicer’s employee responsible for security shall contact the COR and ISSO(s) to ascertain the status of the approval.

PAGE 53 OF 99 91003123D0005P00020 5. The USDS Servicer’s employee responsible for security shall maintain a separate copy of the aforementioned written authorization and proof of security training completion for each individual USDS Servicer’s employee granted access, as evidence that access has been granted. The Person Handle shall also be included as reference to each employee in the Monthly Vendor Employee Report required under paragraph i, Monthly Vendor Employee Report, above. Each system/location receiving separate access approval will be listed separately on the Monthly Vendor Employee Report. K. FSA 39-8 – Supplemental Instructions to EDAR 3452.204-72, Contractor Security Vetting Requirements. (DEVIATION) (AUG 2023) EDAR 3452.204.72, Contractor Security Vetting Requirements, paragraph (j)(1) is supplemented by the following: (j)(1)(a) Contractors will submit their completed Background Investigation Requests electronically. Upload the documents into electronic Questionnaires for Investigation Process (eQIP), or beginning October 1, 2023, its successor system the National Background Investigation Servicers’ electronic application (e-App), and release the Investigation Request Packet to FSA in e-QIP, or e-App. (b) Send an electronic copy of the completed coversheet to your contract COR and system ISSO(s). If contractors require a blank coversheet, please contact the COR. When transmitting the cover sheet, please use the following subject in the header of the Microsoft Outlook Message: Subject: [Name of Prime Contractor-Company Name (Name of Sub-Contractor- Company Name, if applicable)]: [Background Investigation (BI) Type] [BI Level] [Date of Submission] [Name of Company Official Responsible for Background applications] (c) Please ensure that each coversheet is encrypted and password protected with a unique password. Do not send the password with the coversheet; instead send a separate email with the exact same subject line with the password in the body of the email. The password should include upper- and lower-case letters, numbers and special characters. (d) Other than entering the requested data, do not modify the cover sheet format, structure, or any other part of the spreadsheet. Any such change may result in the return of the cover sheet and background investigation paperwork for corrections and delay the processing of the packages. (e) Do not submit System Access Requests (SARs) with the background investigation paperwork. SARs are to be submitted to the Information System Security Officer (ISSO) that is responsible for the applicable system(s). Please contact the ISSO(s) for specific information regarding the delivery (email, etc.) of the System Access Requests. (f) Contact your assigned COR with questions.

PAGE 54 OF 99 91003123D0005P00020 II. Part II: Contract Clauses I. Contract Clauses 1. Federal Acquisition Regulation (FAR) Clauses 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) The Contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the CO will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es): https://www.acquisition.gov/far/ and https://www2.ed.gov/policy/fund/reg/clibrary/edar.html (End of Clause) 52.202-1 Definitions (JUN 2020) 52.203-3 Gratuities (APR 1984) 52.203-5 Covenant Against Contingent Fees (May 2014) 52.203-6 Restrictions on Subcontractor Sales to the Government (Jun 2020) 52.203-7 Anti-Kickback Procedures (Jun 2020) 52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (May 2014) 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity (May 2014) 52.203-12 Limitation on Payments to Influence Certain Federal Transactions (JUN 2020) 52.203-13 Contractor Code of Business Ethics and Conduct (Nov 2021) 52.203-14 Display of Hotline Poster(s) (Nov 2021) 52.203-17 Contractor Employee Whistleblower Right and Requirement to Inform Employees of Whistleblower Rights (JUN 2020) 52.203-19 Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (Jan 2017) 52.204-4 Printed or Copied Double-Sided on Postconsumer Fiber Content Paper (MAY 2011) 52.204-9 Personal Identity Verification of Contractor Personnel (JAN 2011) 52.204-10 Reporting Executive Compensation and First-Tier Subcontract Awards (Jun 2020) 52.204-13 System for Award Management Maintenance (OCT 2018) 52.204-15 Service Contract Reporting Requirements for Indefinite-Delivery Contracts (Oct 2016) 52.204-18 Commercial and Government Entity Code Maintenance (AUG 2020)

PAGE 55 OF 99 91003123D0005P00020 52.204-19 Incorporation by Reference of Representations and Certifications (Dec 2014) 52.204-23 Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities (Nov 2021) 52.204-25 Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment (Nov 2021) 52.209-6 Protecting the Government’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (Nov 2021) 52.209-9 Updates of Publicly Available Information Regarding Responsibility Matters (Oct 2018) 52.209-10 Prohibition on Contracting with Inverted Domestic Corporations (Nov 2015) 52.210-1 Market Research (Nov 2021) 52.215-8 Order of Precedence-Uniform Contract Format (Oct 1997) 52.215-10 Price Reduction for Defective Certified Cost or Pricing Data (Aug 2011) 52.215-11 Price Reduction for Defective Certified Cost or Pricing Data -Modifications (Jun 2020) 52.215-12 Subcontractor Certified Cost or Pricing Data (Jun 2020) 52.215-13 Subcontractor Certified Cost or Pricing Data -Modifications (Jun 2020) 52.215-14 Integrity of Unit Prices (Nov 2021) 52.215-15 Pension Adjustments and Asset Reversions (Oct 2010) 52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits (PRB) Other Than Pensions (July 2005) 52.215-19 Notification of Ownership Changes (Oct 1997) 52.215-21 Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data - Modifications (Nov 2021) 52.219-4 Notice of Price Evaluation Preference for HUBZone Small Business Concerns (Sep 2021) 52.219-8 Utilization of Small Business Concerns (Oct 2018) 52.219-9 Small Business Subcontracting Plan (Nov 2021) Alternate II (Nov 2016) 52.219-16 Liquidated Damages-Subcontracting Plan (Sep 2021) 52.219-28 Post-Award Small Business Program Rerepresentation (Sep 2021) 52.222-3 Convict Labor (June 2003) 52.222-21 Prohibition of Segregated Facilities (Apr 2015) 52.222-26 Equal Opportunity (Sept 2016) 52.222-37 Employment Reports on Veterans (Jun 2020)

PAGE 56 OF 99 91003123D0005P00020 52.222-40 Notification of Employee Rights Under the National Labor Relations Act (Dec 2010) 52.222-41 Service Contract Labor Standards (Aug 2018) 52.222-43 Fair Labor Standards Act and Service Contract Labor Standards-Price Adjustment (Multiple Year and Option Contracts) (Aug 2018) 52.222-49 Service Contract Labor Standards-Place of Performance Unknown (May 2014) Fill In: (a) “following: _No additional places or areas_. The CO will request wage determinations for additional places or areas of performance if asked to do so in writing by __ 20 calendar days prior to the solicitation proposal submission due date__.” 52.222-50 Combating Trafficking in Persons (Nov 2021) 52.222-54 Employment Eligibility Verification (Nov 2021) 52.222-55 Minimum Wages For Contractor Workers Under Executive Order 14026 (JAN 2022) 52.222-62 Paid Sick Leave Under Executive Order 13706 (Jan 2022) 52.223-6 Drug-Free Workplace (May 2001) 52.223-18 Encouraging Contractor Policies to Ban Text Messaging While Driving (Jun 2020) 52.224-1 Privacy Act Notification (Apr 1984) 52.224-2 Privacy Act (Apr 1984) 52.224-3 Privacy Training (Jan 2017) 52.225-13 Restrictions on Certain Foreign Purchases (Feb 2021) 52.227-1 Authorization and Consent (Jun 2020) 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement (Jun 2020) 52.227-3 Patent Indemnity (Apr 1984) 52.227-9 Refund of Royalties (Apr 1984) 52.227-14 Rights in Data – General (MAY 2014) Alternate II (DEC 2007) Alternate III (DEC 2007 52.227-16 Additional Data Requirements (JUN 1987) 52.227-17 Rights in Data-Special Works (DEC 2007) 52.229-3 Federal, State, and Local Taxes (Feb 2013) 52.232-1 Payments (APR 1984) 52.232-8 Discounts for Prompt Payment (FEB 2002) 52.232-9 Limitation on Withholding of Payments (APR 1984) 52.232-11 Extras (APR 1984)

PAGE 57 OF 99 91003123D0005P00020 52.232-17 Interest (May 2014) 52.232-18 Availability of Funds (Apr 1984) 52.232-23 Assignment of Claims (May 2014) 52.232-25 Prompt Payment (JAN 2017) 52.232-29 Unenforceability of Unauthorized Obligations (Jun 2013) 52.232-40 Providing Accelerated Payments to Small Business Subcontractors (Nov 2021) 52.233-1 Disputes (May 2014) 52.233-4 Applicable Law for Breach of Contract Claim (Oct 2004) 52.233-3 Protest after Award (Aug 1996) 52.237-3 Continuity of Services (JAN 1991) 52.239-1 Privacy or Security Safeguards (Aug 1996) 52.242-5 Payments to Small Business Subcontractors (Jan 2017) 52.242-13 Bankruptcy (July 1995) 52.242-15 Stop Work Order (AUG 1989) 52.242-17 Government Delay of Work (Apr 1984) 52.243-1 Changes-Fixed Price (Aug 1987) Alternate I (Apr 1984) 52.243-7 Notification of Changes (Jan 2017) Fill in - (b) 3 days_ & (d) 4 days 52.244-5 Competition in Subcontracting (Dec 1996) 52.244-6 Subcontracts for Commercial Products and Commercial Services (Jan 2022) 52.245-1 Government Property (Sep 2021) 52.245-9 Use and Charges (Apr 2012) 52.246-25 Limitation of Liability – Services (FEB 1997) 52.247-55 F.O.B. Point for Delivery of Government-Furnished Property (JUN 2003) 52.249-2 Termination for Convenience of the Government (Fixed-Price) (Apr 2012) 52.249-8 Default (Fixed-Price Supply and Service) (Apr 1984) 52.253-1 Computer Generated Forms (Jan 1991)

PAGE 58 OF 99 91003123D0005P00020 52.204-21 BASIC SAFEGUARDING OF COVERED CONTRACTOR INFORMATION SYSTEMS (NOV 2021) (a) Definitions. As used in this clause— Covered contractor information system means an information system that is owned or operated by a contractor that processes, stores, or transmits Federal contract information. Federal contract information means information, not intended for public release, that is provided by or generated for the Government under a contract to develop or deliver a product or service to the Government, but not including information provided by the Government to the public (such as on public websites) or simple transactional information, such as necessary to process payments. Information means any communication or representation of knowledge such as facts, data, or opinions, in any medium or form, including textual, numerical, graphic, cartographic, narrative, or audiovisual (Committee on National Security Systems Instruction (CNSSI) 4009). Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information ( 44 U.S.C. 3502). Safeguarding means measures or controls that are prescribed to protect information systems. (b) Safeguarding requirements and procedures. (1) The Contractor shall apply the following basic safeguarding requirements and procedures to protect covered contractor information systems. Requirements and procedures for basic safeguarding of covered contractor information systems shall include, at a minimum, the following security controls: (i) Limit information system access to authorized users, processes acting on behalf of authorized users, or devices (including other information systems). (ii) Limit information system access to the types of transactions and functions that authorized users are permitted to execute. (iii) Verify and control/limit connections to and use of external information systems. (iv) Control information posted or processed on publicly accessible information systems. (v) Identify information system users, processes acting on behalf of users, or devices. (vi) Authenticate (or verify) the identities of those users, processes, or devices, as a prerequisite to allowing access to organizational information systems. (vii) Sanitize or destroy information system media containing Federal Contract Information before disposal or release for reuse.

PAGE 59 OF 99 91003123D0005P00020 (viii) Limit physical access to organizational information systems, equipment, and the respective operating environments to authorized individuals. (ix) Escort visitors and monitor visitor activity; maintain audit logs of physical access; and control and manage physical access devices. (x) Monitor, control, and protect organizational communications (i.e., information transmitted or received by organizational information systems) at the external boundaries and key internal boundaries of the information systems. (xi) Implement subnetworks for publicly accessible system components that are physically or logically separated from internal networks. (xii) Identify, report, and correct information and information system flaws in a timely manner. (xiii) Provide protection from malicious code at appropriate locations within organizational information systems. (xiv) Update malicious code protection mechanisms when new releases are available. (xv) Perform periodic scans of the information system and real-time scans of files from external sources as files are downloaded, opened, or executed. (2) Other requirements. This clause does not relieve the Contractor of any other specific safeguarding requirements specified by Federal agencies and departments relating to covered contractor information systems generally or other Federal safeguarding requirements for controlled unclassified information (CUI) as established by Executive Order 13556. (c) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (c), in subcontracts under this contract (including subcontracts for the acquisition of commercial products or commercial services, other than commercially available off-the-shelf items), in which the subcontractor may have Federal contract information residing in or transiting through its information system. (End of clause) (P00002 addition) FAR 52.204-27 Prohibition on a ByteDance Covered Application (Jun 2023) (a) Definitions. As used in this clause— Covered application means the social networking service TikTok or any successor application or service developed or provided by ByteDance Limited or an entity owned by ByteDance Limited. Information technology, as defined in 40 U.S.C. 11101(6)— (1) Means any equipment or interconnected system or subsystem of equipment, used in the automatic acquisition, storage, analysis, evaluation, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by the executive agency, if

PAGE 60 OF 99 91003123D0005P00020 the equipment is used by the executive agency directly or is used by a contractor under a contract with the executive agency that requires the use— (i) Of that equipment; or (ii) Of that equipment to a significant extent in the performance of a service or the furnishing of a product; (2) Includes computers, ancillary equipment (including imaging peripherals, input, output, and storage devices necessary for security and surveillance), peripheral equipment designed to be controlled by the central processing unit of a computer, software, firmware and similar procedures, services (including support services), and related resources; but (3) Does not include any equipment acquired by a Federal contractor incidental to a Federal contract. (b) Prohibition. Section 102 of Division R of the Consolidated Appropriations Act, 2023 (Pub. L. 117-328), the No TikTok on Government Devices Act, and its implementing guidance under Office of Management and Budget (OMB) Memorandum M-23-13, dated February 27, 2023, “No TikTok on Government Devices” Implementation Guidance, collectively prohibit the presence or use of a covered application on executive agency information technology, including certain equipment used by Federal contractors. The Contractor is prohibited from having or using a covered application on any information technology owned or managed by the Government, or on any information technology used or provided by the Contractor under this contract, including equipment provided by the Contractor’s employees; however, this prohibition does not apply if the Contracting Officer provides written notification to the Contractor that an exception has been granted in accordance with OMB Memorandum M-23-13. (c) Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts, including subcontracts for the acquisition of commercial products or commercial services. (End of clause) (P00012 addition) FAR 52.204-30 Federal Acquisition Supply Chain Security Act Orders - Prohibition (Dec 2023) (a) Definitions. As used in this clause— Covered article, as defined in 41 U.S.C. 4713(k), means— (1) Information technology, as defined in 40 U.S.C. 11101, including cloud computing services of all types; (2) Telecommunications equipment or telecommunications service, as those terms are defined in section 3 of the Communications Act of 1934 (47 U.S.C. 153);

PAGE 61 OF 99 91003123D0005P00020 (3) The processing of information on a Federal or non-Federal information system, subject to the requirements of the Controlled Unclassified Information program (see 32 CFR part 2002); or (4) Hardware, systems, devices, software, or services that include embedded or incidental information technology. FASCSA order means any of the following orders issued under the Federal Acquisition Supply Chain Security Act (FASCSA) requiring the removal of covered articles from executive agency information systems or the exclusion of one or more named sources or named covered articles from executive agency procurement actions, as described in 41 CFR 201–1.303(d) and (e): (1) The Secretary of Homeland Security may issue FASCSA orders applicable to civilian agencies, to the extent not covered by paragraph (2) or (3) of this definition. This type of FASCSA order may be referred to as a Department of Homeland Security (DHS) FASCSA order. (2) The Secretary of Defense may issue FASCSA orders applicable to the Department of Defense (DoD) and national security systems other than sensitive compartmented information systems. This type of FASCSA order may be referred to as a DoD FASCSA order. (3) The Director of National Intelligence (DNI) may issue FASCSA orders applicable to the intelligence community and sensitive compartmented information systems, to the extent not covered by paragraph (2) of this definition. This type of FASCSA order may be referred to as a DNI FASCSA order. Intelligence community, as defined by 50 U.S.C. 3003(4), means the following— (1) The Office of the Director of National Intelligence; (2) The Central Intelligence Agency; (3) The National Security Agency; (4) The Defense Intelligence Agency; (5) The National Geospatial-Intelligence Agency; (6) The National Reconnaissance Office; (7) Other offices within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs; (8) The intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Coast Guard, the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Department of Energy; (9) The Bureau of Intelligence and Research of the Department of State; (10) The Office of Intelligence and Analysis of the Department of the Treasury;

PAGE 62 OF 99 91003123D0005P00020 (11) The Office of Intelligence and Analysis of the Department of Homeland Security; or (12) Such other elements of any department or agency as may be designated by the President, or designated jointly by the Director of National Intelligence and the head of the department or agency concerned, as an element of the intelligence community. National security system, as defined in 44 U.S.C. 3552, means any information system (including any telecommunications system) used or operated by an agency or by a contractor of an agency, or other organization on behalf of an agency— (1) The function, operation, or use of which involves intelligence activities; involves cryptologic activities related to national security; involves command and control of military forces; involves equipment that is an integral part of a weapon or weapons system; or is critical to the direct fulfillment of military or intelligence missions, but does not include a system that is to be used for routine administrative and business applications (including payroll, finance, logistics, and personnel management applications); or (2) Is protected at all times by procedures established for information that have been specifically authorized under criteria established by an Executive order or an Act of Congress to be kept classified in the interest of national defense or foreign policy. Reasonable inquiry means an inquiry designed to uncover any information in the entity's possession about the identity of any covered articles, or any products or services produced or provided by a source. This applies when the covered article or the source is subject to an applicable FASCSA order. A reasonable inquiry excludes the need to include an internal or third-party audit. Sensitive compartmented information means classified information concerning or derived from intelligence sources, methods, or analytical processes, which is required to be handled within formal access control systems established by the Director of National Intelligence. Sensitive compartmented information system means a national security system authorized to process or store sensitive compartmented information. Source means a non-Federal supplier, or potential supplier, of products or services, at any tier. (b) Prohibition. (1) Unless an applicable waiver has been issued by the issuing official, Contractors shall not provide or use as part of the performance of the contract any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by an applicable FASCSA orders as follows: (i) For solicitations and contracts awarded by a Department of Defense contracting office, DoD FASCSA orders apply. (ii) For all other solicitations and contracts DHS FASCSA orders apply. (2) The Contractor shall search for the phrase “FASCSA order” in the System for Award Management (SAM) at https://www.sam.gov to locate applicable FASCSA orders identified in paragraph (b)(1).

PAGE 63 OF 99 91003123D0005P00020 (3) The Government may identify in the solicitation additional FASCSA orders that are not in SAM, which are effective and apply to the solicitation and resultant contract. (4) A FASCSA order issued after the date of solicitation applies to this contract only if added by an amendment to the solicitation or modification to the contract (see FAR 4.2304(c)). However, see paragraph (c) of this clause. (5) (i) If the contractor wishes to ask for a waiver of the requirements of a new FASCSA order being applied through modification, then the Contractor shall disclose the following: (A) Name of the product or service provided to the Government; (B) Name of the covered article or source subject to a FASCSA order; (C) If applicable, name of the vendor, including the Commercial and Government Entity code and unique entity identifier (if known), that supplied or supplies the covered article or the product or service to the Offeror; (D) Brand; (E) Model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (F) Item description; (G) Reason why the applicable covered article or the product or service is being provided or used; (ii) Executive agency review of disclosures. The contracting officer will review disclosures provided in paragraph (b)(5)(i) to determine if any waiver is warranted. A contracting officer may choose not to pursue a waiver for covered articles or sources otherwise covered by a FASCSA order and to instead pursue other appropriate action. (c) Notice and reporting requirement. (1) During contract performance, the Contractor shall review SAM.gov at least once every three months, or as advised by the Contracting Officer, to check for covered articles subject to FASCSA order(s), or for products or services produced by a source subject to FASCSA order(s) not currently identified under paragraph (b) of this clause. (2) If the Contractor identifies a new FASCSA order(s) that could impact their supply chain, then the Contractor shall conduct a reasonable inquiry to identify whether a covered article or product or service produced or provided by a source subject to the FASCSA order(s) was provided to the Government or used during contract performance. (3)

PAGE 64 OF 99 91003123D0005P00020 (i) The Contractor shall submit a report to the contracting office as identified in paragraph (c)(3)(ii) of this clause, if the Contractor identifies, including through any notification by a subcontractor at any tier, that a covered article or product or service produced or provided by a source was provided to the Government or used during contract performance and is subject to a FASCSA order(s) identified in paragraph (b) of this clause, or a new FASCSA order identified in paragraph (c)(2) of this clause. For indefinite delivery contracts, the Contractor shall report to both the contracting office for the indefinite delivery contract and the contracting office for any affected order. (ii) If a report is required to be submitted to a contracting office under (c)(3)(i) of this clause, the Contractor shall submit the report as follows: (A) If a Department of Defense contracting office, the Contractor shall report to the website at https://dibnet.dod.mil. (B) For all other contracting offices, the Contractor shall report to the Contracting Officer. (4) The Contractor shall report the following information for each covered article or each product or service produced or provided by a source, where the covered article or source is subject to a FASCSA order, pursuant to paragraph (c)(3)(i) of this clause: (i) Within 3 business days from the date of such identification or notification: (A) Contract number; (B) Order number(s), if applicable; (C) Name of the product or service provided to the Government or used during performance of the contract; (D) Name of the covered article or source subject to a FASCSA order; (E) If applicable, name of the vendor, including the Commercial and Government Entity code and unique entity identifier (if known), that supplied the covered article or the product or service to the Contractor; (F) Brand; (G) Model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (H) Item description; and (I) Any readily available information about mitigation actions undertaken or recommended. (ii) Within 10 business days of submitting the information in paragraph (c)(4)(i) of this clause:

PAGE 65 OF 99 91003123D0005P00020 (A) Any further available information about mitigation actions undertaken or recommended. (B) In addition, the Contractor shall describe the efforts it undertook to prevent submission or use of the covered article or the product or service produced or provided by a source subject to an applicable FASCSA order, and any additional efforts that will be incorporated to prevent future submission or use of the covered article or the product or service produced or provided by a source that is subject to an applicable FASCSA order. (d) Removal. For Federal Supply Schedules, Governmentwide acquisition contracts, multi-agency contracts or any other procurement instrument intended for use by multiple agencies, upon notification from the Contracting Officer, during the performance of the contract, the Contractor shall promptly make any necessary changes or modifications to remove any product or service produced or provided by a source that is subject to an applicable FASCSA order. (e) Subcontracts. (1) The Contractor shall insert the substance of this clause, including this paragraph (e) and excluding paragraph (c)(1) of this clause, in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial products and commercial services. (2) The Government may identify in the solicitation additional FASCSA orders that are not in SAM, which are effective and apply to the contract and any subcontracts and other contractual instruments under the contract. The Contractor or higher-tier subcontractor shall notify their subcontractors, and suppliers under other contractual instruments, that the FASCSA orders in the solicitation that are not in SAM apply to the contract and all subcontracts. (End of clause) 52.215-2 AUDIT AND RECORDS-NEGOTIATION (JUN 2020) (a) As used in this clause, "records" includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. (b) Examination of costs. If this is a cost-reimbursement, incentive, time-and-materials, labor-hour, or price redeterminable contract, or any combination of these, the Contractor shall maintain and the Contracting Officer, or an authorized representative of the Contracting Officer, shall have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. This right of examination shall include inspection at all reasonable times of the Contractor’s plants, or parts of them, engaged in performing the contract. (c) Certified cost or pricing data. If the Contractor has been required to submit certified cost or pricing data in connection with any pricing action relating to this contract, the Contracting Officer, or an authorized representative of the Contracting Officer, in order to evaluate the accuracy, completeness, and currency of the certified cost or pricing data, shall have the right to examine and audit all of the Contractor’s records, including computations and projections, related to- (1) The proposal for the contract, subcontract, or modification;

PAGE 66 OF 99 91003123D0005P00020 (2) The discussions conducted on the proposal(s), including those related to negotiating; (3) Pricing of the contract, subcontract, or modification; or (4) Performance of the contract, subcontract or modification. (d) Comptroller General.- (1) The Comptroller General of the United States, or an authorized representative, shall have access to and the right to examine any of the Contractor’s directly pertinent records involving transactions related to this contract or a subcontract hereunder and to interview any current employee regarding such transactions. (2) This paragraph may not be construed to require the Contractor or subcontractor to create or maintain any record that the Contractor or subcontractor does not maintain in the ordinary course of business or pursuant to a provision of law. (e) Reports. If the Contractor is required to furnish cost, funding, or performance reports, the Contracting Officer or an authorized representative of the Contracting Officer shall have the right to examine and audit the supporting records and materials, for the purpose of evaluating- (1) The effectiveness of the Contractor’s policies and procedures to produce data compatible with the objectives of these reports; and (2) The data reported. (f) Availability. The Contractor shall make available at its office at all reasonable times the records, materials, and other evidence described in paragraphs (a), (b), (c), (d), and (e) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in subpart 4.7, Contractor Records Retention, of the Federal Acquisition Regulation (FAR), or for any longer period required by statute or by other clauses of this contract. In addition- (1) If this contract is completely or partially terminated, the Contractor shall make available the records relating to the work terminated until 3 years after any resulting final termination settlement; and (2) The Contractor shall make available records relating to appeals under the Disputes clause or to litigation or the settlement of claims arising under or relating to this contract until such appeals, litigation, or claims are finally resolved. (g) The Contractor shall insert a clause containing all the terms of this clause, including this paragraph (g), in all subcontracts under this contract that exceed the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, and— (1) That are cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable type or any combination of these; (2) For which certified cost or pricing data are required; or

PAGE 67 OF 99 91003123D0005P00020 (3) That require the subcontractor to furnish reports as discussed in paragraph (e) of this clause. The clause may be altered only as necessary to identify properly the contracting parties and the Contracting Officer under the Government prime contract. (End of clause) 52.232-32 PERFORMANCE-BASED PAYMENTS (APR 2012) (a) Amount of payments and limitations on payments. Subject to such other limitations and conditions as are specified in this contract and this clause, the amount of payments and limitations on payments shall be specified in the contract’s description of the basis for payment. (b) Contractor request for performance-based payment. The Contractor may submit requests for payment of performance-based payments not more frequently than monthly, in a form and manner acceptable to the Contracting Officer. Unless otherwise authorized by the Contracting Officer, all performance-based payments in any period for which payment is being requested shall be included in a single request, appropriately itemized and totaled. The Contractor’s request shall contain the information and certification detailed in paragraphs (l) and (m) of this clause. (c) Approval and payment of requests. (1) The Contractor shall not be entitled to payment of a request for performance-based payment prior to successful accomplishment of the event or performance criterion for which payment is requested. The Contracting Officer shall determine whether the event or performance criterion for which payment is requested has been successfully accomplished in accordance with the terms of the contract. The Contracting Officer may, at any time, require the Contractor to substantiate the successful performance of any event or performance criterion which has been or is represented as being payable. (2) A payment under this performance-based payment clause is a contract financing payment under the Prompt Payment clause of this contract and not subject to the interest penalty provisions of the Prompt Payment Act. The designated payment office will pay approved requests on the 30th day after receipt of the request for performance- based payment by the designated payment office. However, the designated payment office is not required to provide payment if the Contracting Officer requires substantiation as provided in paragraph (c)(1) of this clause, or inquires into the status of an event or performance criterion, or into any of the conditions listed in paragraph (e) of this clause, or into the Contractor certification. The payment period will not begin until the Contracting Officer approves the request. (3) The approval by the Contracting Officer of a request for performance-based payment does not constitute an acceptance by the Government and does not excuse the Contractor from performance of obligations under this contract. (d) Liquidation of performance-based payments. (1) Performance-based finance amounts paid prior to payment for delivery of an item shall be liquidated by deducting a percentage or a designated dollar amount from the delivery payment. If the performance-based finance payments are on a delivery item basis, the liquidation amount for each such line item shall be the percent of that delivery item price that was previously paid under performance-based finance payments or the designated dollar amount. If the performance-based finance payments are on a whole contract basis, liquidation shall be by either predesignated liquidation amounts or a liquidation percentage.

PAGE 68 OF 99 91003123D0005P00020 (2) If at any time the amount of payments under this contract exceeds any limitation in this contract, the Contractor shall repay to the Government the excess. Unless otherwise determined by the Contracting Officer, such excess shall be credited as a reduction in the unliquidated performance-based payment balance(s), after adjustment of invoice payments and balances for any retroactive price adjustments. (e) Reduction or suspension of performance-based payments. The Contracting Officer may reduce or suspend performance-based payments, liquidate performance-based payments by deduction from any payment under the contract, or take a combination of these actions after finding upon substantial evidence any of the following conditions: (1) The Contractor failed to comply with any material requirement of this contract (which includes paragraphs (h) and (i) of this clause). (2) Performance of this contract is endangered by the Contractor’s- (i) Failure to make progress; or (ii) Unsatisfactory financial condition. (3) The Contractor is delinquent in payment of any subcontractor or supplier under this contract in the ordinary course of business. (f) Title. (1) Title to the property described in this paragraph (f) shall vest in the Government. Vestiture shall be immediately upon the date of the first performance-based payment under this contract, for property acquired or produced before that date. Otherwise, vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract. (2) "Property," as used in this clause, includes all of the following described items acquired or produced by the Contractor that are or should be allocable or properly chargeable to this contract under sound and generally accepted accounting principles and practices: (i) Parts, materials, inventories, and work in process; (ii) Special tooling and special test equipment to which the Government is to acquire title; (iii) Nondurable (i.e., noncapital) tools, jigs, dies, fixtures, molds, patterns, taps, gauges, test equipment and other similar manufacturing aids, title to which would not be obtained as special tooling under paragraph (f)(2)(ii) of this clause; and (iv) Drawings and technical data, to the extent the Contractor or subcontractors are required to deliver them to the Government by other clauses of this contract. (3) Although title to property is in the Government under this clause, other applicable clauses of this contract (e.g., the termination clauses) shall determine the handling and disposition of the property. (4) The Contractor may sell any scrap resulting from production under this contract, without requesting the Contracting Officer’s approval, provided that any significant reduction in the value of the property to which the Government has title under this clause is reported in writing to the Contracting Officer.

PAGE 69 OF 99 91003123D0005P00020 (5) In order to acquire for its own use or dispose of property to which title is vested in the Government under this clause, the Contractor shall obtain the Contracting Officer’s advance approval of the action and the terms. If approved, the basis for payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the Contractor shall refund the related performance-based payments in accordance with paragraph (d) of this clause. (6) When the Contractor completes all of the obligations under this contract, including liquidation of all performance-based payments, title shall vest in the Contractor for all property (or the proceeds thereof) not- (i) Delivered to, and accepted by, the Government under this contract; or (ii) Incorporated in supplies delivered to, and accepted by, the Government under this contract and to which title is vested in the Government under this clause. (7) The terms of this contract concerning liability for Government-furnished property shall not apply to property to which the Government acquired title solely under this clause. (g) Risk of loss. Before delivery to and acceptance by the Government, the Contractor shall bear the risk of loss for property, the title to which vests in the Government under this clause, except to the extent the Government expressly assumes the risk. If any property is lost (see 45.101), the basis of payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the Contractor shall refund the related performance-based payments in accordance with paragraph (d) of this clause. (h) Records and controls. The Contractor shall maintain records and controls adequate for administration of this clause. The Contractor shall have no entitlement to performance-based payments during any time the Contractor’s records or controls are determined by the Contracting Officer to be inadequate for administration of this clause. (i) Reports and Government access. The Contractor shall promptly furnish reports, certificates, financial statements, and other pertinent information requested by the Contracting Officer for the administration of this clause and to determine that an event or other criterion prompting a financing payment has been successfully accomplished. The Contractor shall give the Government reasonable opportunity to examine and verify the Contractor’s records and to examine and verify the Contractor’s performance of this contract for administration of this clause. (j) Special terms regarding default. If this contract is terminated under the Default clause, (1) the Contractor shall, on demand, repay to the Government the amount of unliquidated performance-based payments, and (2) title shall vest in the Contractor, on full liquidation of all performance-based payments, for all property for which the Government elects not to require delivery under the Default clause of this contract. The Government shall be liable for no payment except as provided by the Default clause. (k) Reservation of rights. (1) No payment or vesting of title under this clause shall- (i) Excuse the Contractor from performance of obligations under this contract; or (ii) Constitute a waiver of any of the rights or remedies of the parties under the contract. (2) The Government’s rights and remedies under this clause-

PAGE 70 OF 99 91003123D0005P00020 (i) Shall not be exclusive, but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) Shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the Government. (l) Content of Contractor’s request for performance-based payment. The Contractor’s request for performance-based payment shall contain the following: (1) The name and address of the Contractor; (2) The date of the request for performance-based payment; (3) The contract number and/or other identifier of the contract or order under which the request is made; (4) Such information and documentation as is required by the contract’s description of the basis for payment; and (5) A certification by a Contractor official authorized to bind the Contractor, as specified in paragraph (m) of this clause. (m) Content of Contractor's certification. As required in paragraph (l)(5) of this clause, the Contractor shall make the following certification in each request for performance-based payment: I certify to the best of my knowledge and belief that- (1) This request for performance-based payment is true and correct; this request (and attachments) has been prepared from the books and records of the Contractor, in accordance with the contract and the instructions of the Contracting Officer; (2) (Except as reported in writing on __________), all payments to subcontractors and suppliers under this contract have been paid, or will be paid, currently, when due in the ordinary course of business; (3) There are no encumbrances (except as reported in writing on _________) against the property acquired or produced for, and allocated or properly chargeable to, the contract which would affect or impair the Government's title; (4) There has been no materially adverse change in the financial condition of the Contractor since the submission by the Contractor to the Government of the most recent written information dated _____________; and (5) After the making of this requested performance-based payment, the amount of all payments for each deliverable item for which performance-based payments have been requested will not exceed any limitation in the contract, and the amount of all payments under the contract will not exceed any limitation in the contract. (End of clause) 52.216-18 ORDERING (AUG 2020) (a) Any supplies and services to be furnished under the Contract shall be ordered by issuance of delivery orders or Task Orders by the individuals or activities designated in the Schedule. Such orders may be issued from _Contract award_________ through _the last day of the Contract’s period of performance___________.

PAGE 71 OF 99 91003123D0005P00020 (b) All delivery orders or Task Orders are subject to the terms and conditions of the Contract. In the event of conflict between a delivery order or Task Order and the Contract, the contract shall control. (c) A delivery order or Task Order is considered "issued" when— (1) If sent by mail (includes transmittal by U.S. mail or private delivery service), the Government deposits the order in the mail; (2) If sent by fax, the Government transmits the order to the USDS Servicer 's fax number; or (3) If sent electronically, the Government either— (i) Posts a copy of the delivery order or task order to a Government document access system, and notice is sent to the USDS Servicer; or (ii) Distributes the delivery order or task order via email to the USDS Servicer 's email address. (d) Orders may be issued by methods other than those enumerated in this clause only if authorized in the Contract. (End of clause) 52.216-19 ORDER LIMITATIONS (OCT 1995) (a) Minimum order. When the Government requires supplies or services covered by the Contract in an amount of less than $500, the Government is not obligated to purchase, nor is the USDS Servicer obligated to furnish, those supplies or services under the Contract. (b) Maximum order The USDS Servicer is not obligated to honor- (1) Any order for a single item and/or service in excess of $7,000,000,000; (2) Any order for a combination of items and/or services in excess of $7,000,000,000; or (3) A series of orders from the same ordering office within 5 calendar days that together call for quantities exceeding the limitation in paragraph (b)(1) or (2) of this section. (c) If this is a requirements contract (i.e., includes the Requirements clause at subsection 52.216-21 of the Federal Acquisition Regulation (FAR)), the Government is not required to order a part of any one requirement from the USDS Servicer if that requirement exceeds the maximum-order limitations in paragraph (b) of this section. (d) Notwithstanding paragraphs (b) and (c) of this section, the USDS Servicer shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within 4 calendar days after issuance, with written notice stating the USDS Servicer’s intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source. (End of clause)

PAGE 72 OF 99 91003123D0005P00020 52.216-22 INDEFINITE QUANTITY (OCT 1995) (a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by the Contract. (b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The USDS Servicer shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the "maximum." The Government shall order at least the quantity of supplies or services designated in the Schedule as the "minimum." (c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the USDS Servicer within the time specified in the order. The Contract shall govern the USDS Servicer’s and Government’s rights and obligations with respect to that order to the same extent as if the order were completed during the Contract’s effective period; provided, that the USDS Servicer shall not be required to make any deliveries under this contract after 365 calendar days after the last day of the Contract’s period of performance. (End of clause) 52.217-8 OPTION TO EXTEND SERVICES (NOV 1999) The Government may require continued performance of any services within the limits and at the rates specified in the Contract. These rates may be adjusted only as a result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months. The CO may exercise the option by written notice to the USDS Servicer within 30 calendar days of the end of the period of performance. (End of clause) 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 2000) (a) The Government may extend the term of the Contract by written notice to the USDS Servicer within 20 calendar days of the term’s end; provided that the Government gives the USDS Servicer a preliminary written notice of its intent to extend at least 20 calendar days before the Contract expires. The preliminary notice does not commit the Government to an extension. (b) If the Government exercises this option, the extended Contract shall be considered to include this option clause. (c) The total duration of the Contract, including the exercise of any options under this clause, shall not exceed 10 years and 6 months. (End of clause) 52.222-35 EQUAL OPPORTUNITY FOR VETERANS (JUN 2020) (a) Definitions. As used in this clause-

PAGE 73 OF 99 91003123D0005P00020 "Active duty wartime or campaign badge veteran," "Armed Forces service medal veteran," "disabled veteran," "protected veteran," "qualified disabled veteran," and "recently separated veteran" have the meanings given at Federal Acquisition Regulation (FAR) 22.1301. (b) Equal opportunity clause. The Contractor shall abide by the requirements of the equal opportunity clause at 41 CFR 60-300.5(a), as of March 24, 2014. This clause prohibits discrimination against qualified protected veterans, and requires affirmative action by the Contractor to employ and advance in employment qualified protected veterans. (c) Subcontracts. The Contractor shall insert the terms of this clause in subcontracts valued at or above the threshold specified in FAR 22.1303(a) on the date of subcontract award, unless exempted by rules, regulations, or orders of the Secretary of Labor. The Contractor shall act as specified by the Director, Office of Federal Contract Compliance Programs, to enforce the terms, including action for noncompliance. Such necessary changes in language may be made as shall be appropriate to identify properly the parties and their undertakings. (End of clause) 52.222-36 EQUAL OPPORTUNITY FOR WORKERS WITH DISABILITIES (JUN 2020) (a) Equal opportunity clause. The Contractor shall abide by the requirements of the equal opportunity clause at 41 CFR 60-741.5(a), as of March 24, 2014. This clause prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by the Contractor to employ and advance in employment qualified individuals with disabilities. (b) Subcontracts. The Contractor shall include the terms of this clause in every subcontract or purchase order in excess of the threshold specified in Federal Acquisition Regulation (FAR) 22.1408(a) on the date of subcontract award, unless exempted by rules, regulations, or orders of the Secretary, so that such provisions will be binding upon each subcontractor or vendor. The Contractor shall act as specified by the Director, Office of Federal Contract Compliance Programs of the U.S. Department of Labor, to enforce the terms, including action for noncompliance. Such necessary changes in language may be made as shall be appropriate to identify properly the parties and their undertakings. (End of clause) 52.222-42 STATEMENT OF EQUIVALENT RATES FOR FEDERAL HIRES (MAY 2014) In compliance with the Service Contract Labor Standards statute and the regulations of the Secretary of Labor (29 CFR Part 4), this clause identifies the classes of service employees expected to be employed under the contract and states the wages and fringe benefits payable to each if they were employed by the contracting agency subject to the provisions of 5 U.S.C.5341 or 5 332. This Statement is for Information Only: It is not a Wage Determination Employee Class Monetary Wage-Fringe Benefits CSR - (Customer Service Representative) $43,056

PAGE 74 OF 99 91003123D0005P00020 Employee Class Monetary Wage-Fringe Benefits Operations Manager $111,001 IT Specialist $84,493 Clerical Support $31,582 Call Center Supervisor $72,161 (End of clause) 52.232-19 AVAILABILITY OF FUNDS FOR THE NEXT FISCAL YEAR (APR 1984) – FOR USE AT TASK ORDER LEVEL Funds are not presently available for performance under this contract beyond __[Fill In]______. The Government’s obligation for performance of this contract beyond that date is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. No legal liability on the part of the Government for any payment may arise for performance under this contract beyond [Fill in]_____, until funds are made available to the Contracting Officer for performance and until the Contractor receives notice of availability, to be confirmed in writing by the Contracting Officer. (End of clause) 52.232-32 PERFORMANCE-BASED PAYMENTS (APR 2012) (a) Amount of payments and limitations on payments. Subject to such other limitations and conditions as are specified in this contract and this clause, the amount of payments and limitations on payments shall be specified in the contract’s description of the basis for payment. (b) Contractor request for performance-based payment. The Contractor may submit requests for payment of performance-based payments not more frequently than monthly, in a form and manner acceptable to the Contracting Officer. Unless otherwise authorized by the Contracting Officer, all performance-based payments in any period for which payment is being requested shall be included in a single request, appropriately itemized and totaled. The Contractor’s request shall contain the information and certification detailed in paragraphs (l) and (m) of this clause. (c) Approval and payment of requests. (1) The Contractor shall not be entitled to payment of a request for performance-based payment prior to successful accomplishment of the event or performance criterion for which payment is requested. The Contracting Officer shall determine whether the event or performance criterion for which payment is requested has been successfully accomplished in accordance with the terms of the contract. The Contracting Officer may, at any time, require the Contractor to substantiate the successful performance of any event or performance criterion which has been or is represented as being payable.

PAGE 75 OF 99 91003123D0005P00020 (2) A payment under this performance-based payment clause is a contract financing payment under the Prompt Payment clause of this contract and not subject to the interest penalty provisions of the Prompt Payment Act. The designated payment office will pay approved requests on the 30thcalendar day after receipt of the request for performance-based payment by the designated payment office. However, the designated payment office is not required to provide payment if the Contracting Officer requires substantiation as provided in paragraph (c)(1) of this clause, or inquires into the status of an event or performance criterion, or into any of the conditions listed in paragraph (e) of this clause, or into the Contractor certification. The payment period will not begin until the Contracting Officer approves the request. (3) The approval by the Contracting Officer of a request for performance-based payment does not constitute an acceptance by the Government and does not excuse the Contractor from performance of obligations under this contract. (d) Liquidation of performance-based payments. (1) Performance-based finance amounts paid prior to payment for delivery of an item shall be liquidated by deducting a percentage or a designated dollar amount from the delivery payment. If the performance-based finance payments are on a delivery item basis, the liquidation amount for each such line item shall be the percent of that delivery item price that was previously paid under performance-based finance payments or the designated dollar amount. If the performance-based finance payments are on a whole contract basis, liquidation shall be by either predesignated liquidation amounts or a liquidation percentage. (2) If at any time the amount of payments under this contract exceeds any limitation in this contract, the Contractor shall repay to the Government the excess. Unless otherwise determined by the Contracting Officer, such excess shall be credited as a reduction in the unliquidated performance-based payment balance(s), after adjustment of invoice payments and balances for any retroactive price adjustments. (e) Reduction or suspension of performance-based payments. The Contracting Officer may reduce or suspend performance-based payments, liquidate performance-based payments by deduction from any payment under the contract, or take a combination of these actions after finding upon substantial evidence any of the following conditions: (1) The Contractor failed to comply with any material requirement of this contract (which includes paragraphs (h) and (i) of this clause). (2) Performance of this contract is endangered by the Contractor’s- (i) Failure to make progress; or (ii) Unsatisfactory financial condition. (3) The Contractor is delinquent in payment of any subcontractor or supplier under this contract in the ordinary course of business. (f) Title. (1) Title to the property described in this paragraph (f) shall vest in the Government. Vestiture shall be immediately upon the date of the first performance-based payment under this contract, for property acquired or produced before that date. Otherwise, vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract. (2) "Property," as used in this clause, includes all of the following described items acquired or produced by the Contractor that are or should be allocable or properly chargeable to this contract under sound and generally accepted accounting principles and practices:

PAGE 76 OF 99 91003123D0005P00020 (i) Parts, materials, inventories, and work in process; (ii) Special tooling and special test equipment to which the Government is to acquire title; (iii) Nondurable (i.e., noncapital) tools, jigs, dies, fixtures, molds, patterns, taps, gauges, test equipment and other similar manufacturing aids, title to which would not be obtained as special tooling under paragraph (f)(2)(ii) of this clause; and (iv) Drawings and technical data, to the extent the Contractor or subcontractors are required to deliver them to the Government by other clauses of this contract. (3) Although title to property is in the Government under this clause, other applicable clauses of this contract (e.g., the termination clauses) shall determine the handling and disposition of the property. (4) The Contractor may sell any scrap resulting from production under this contract, without requesting the Contracting Officer’s approval, provided that any significant reduction in the value of the property to which the Government has title under this clause is reported in writing to the Contracting Officer. (5) In order to acquire for its own use or dispose of property to which title is vested in the Government under this clause, the Contractor shall obtain the Contracting Officer’s advance approval of the action and the terms. If approved, the basis for payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the Contractor shall refund the related performance-based payments in accordance with paragraph (d) of this clause. (6) When the Contractor completes all of the obligations under this contract, including liquidation of all performance-based payments, title shall vest in the Contractor for all property (or the proceeds thereof) not- (i) Delivered to, and accepted by, the Government under this contract; or (ii) Incorporated in supplies delivered to, and accepted by, the Government under this contract and to which title is vested in the Government under this clause. (7) The terms of this contract concerning liability for Government-furnished property shall not apply to property to which the Government acquired title solely under this clause. (g) Risk of loss. Before delivery to and acceptance by the Government, the Contractor shall bear the risk of loss for property, the title to which vests in the Government under this clause, except to the extent the Government expressly assumes the risk. If any property is lost (see 45.101), the basis of payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the Contractor shall refund the related performance-based payments in accordance with paragraph (d) of this clause. (h) Records and controls. The Contractor shall maintain records and controls adequate for administration of this clause. The Contractor shall have no entitlement to performance-based payments during any time the Contractor’s records or controls are determined by the Contracting Officer to be inadequate for administration of this clause. (i) Reports and Government access. The Contractor shall promptly furnish reports, certificates, financial statements, and other pertinent information requested by the Contracting Officer for the administration of this clause and to determine that an event or other criterion prompting a financing payment has been successfully accomplished. The

PAGE 77 OF 99 91003123D0005P00020 Contractor shall give the Government reasonable opportunity to examine and verify the Contractor’s records and to examine and verify the Contractor’s performance of this contract for administration of this clause. (j) Special terms regarding default. If this contract is terminated under the Default clause, (1) the Contractor shall, on demand, repay to the Government the amount of unliquidated performance-based payments, and (2) title shall vest in the Contractor, on full liquidation of all performance-based payments, for all property for which the Government elects not to require delivery under the Default clause of this contract. The Government shall be liable for no payment except as provided by the Default clause. (k) Reservation of rights. (1) No payment or vesting of title under this clause shall- (i) Excuse the Contractor from performance of obligations under this contract; or (ii) Constitute a waiver of any of the rights or remedies of the parties under the contract. (2) The Government’s rights and remedies under this clause- (i) Shall not be exclusive, but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) Shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the Government. (l) Content of Contractor’s request for performance-based payment. The Contractor’s request for performance-based payment shall contain the following: (1) The name and address of the Contractor; (2) The date of the request for performance-based payment; (3) The contract number and/or other identifier of the contract or order under which the request is made; (4) Such information and documentation as is required by the contract’s description of the basis for payment; and (5) A certification by a Contractor official authorized to bind the Contractor, as specified in paragraph (m) of this clause. (m) Content of Contractor's certification. As required in paragraph (l)(5) of this clause, the Contractor shall make the following certification in each request for performance-based payment: I certify to the best of my knowledge and belief that- (1) This request for performance-based payment is true and correct; this request (and attachments) has been prepared from the books and records of the Contractor, in accordance with the contract and the instructions of the Contracting Officer; (2) (Except as reported in writing on __________), all payments to subcontractors and suppliers under this contract have been paid, or will be paid, currently, when due in the ordinary course of business; (3) There are no encumbrances (except as reported in writing on _________) against the property acquired or produced for, and allocated or properly chargeable to, the contract which would affect or impair the Government's title;

PAGE 78 OF 99 91003123D0005P00020 (4) There has been no materially adverse change in the financial condition of the Contractor since the submission by the Contractor to the Government of the most recent written information dated _____________; and (5) After the making of this requested performance-based payment, the amount of all payments for each deliverable item for which performance-based payments have been requested will not exceed any limitation in the contract, and the amount of all payments under the contract will not exceed any limitation in the contract. (End of clause) 52.239-70 ACCESS TO CONTRACTOR AND SUBCONTRACTOR INFORMATION SYSTEMS AND RELATED RESOURCES IN CARRYING OUT PRIVACY AND INFORMATION SECURITY INSPECTIONS (DEVIATION) (a) Privacy and security inspections. In accordance with the terms of this contract and as authorized by law, the Government carries out a program of privacy and information security inspections. Such inspections may be undertaken for various purposes, including but not limited to: (1) Examination of the security of federal information systems or of contractor information systems that process, store or transmit Government data, Government-related data, or controlled unclassified information, or which provide security protection for such systems (including vulnerability testing); (2) Information Technology security reviews; (3) Investigation and audit of administrative, technical, and physical safeguards taken to protect against threats and hazards to the integrity, confidentiality, and availability of Government data, Government-related data, or controlled unclassified information, or to the function of computer systems operated on behalf of the Government; (4) Review of contractor policies, procedures and practices for handling Government data, Government-related data, controlled unclassified information and other sensitive data; (5) Investigation of incidents involving actual or suspected improper releases of information (including cyber security incident response and reporting); (6) Conduct of forensic analyses, investigation of computer crime, or the preservation of evidence of computer crime; or (7) Review of the contractor’s performance for compliance with the terms and conditions in the contract governing privacy and the security of information and information systems. (b) Requirement to provide access to information systems and related resources. The contractor shall afford the Government, any Federal agency and its subcomponents including the Office of Inspector General, the Comptroller General of the United States, and their authorized third-party representatives, full and timely access to contractor information systems and related resources to the extent required to carry out privacy and information security inspections. The contractor resources to which Government inspectors shall have access shall include the contractor’s installations, facilities, infrastructure, data centers, equipment (including but not limited to all servers, computing devices, and portable media), operations, documentation (whether in electronic, paper, or other forms) including full and complete certification and accreditation records, databases, and personnel used in the performance of this contract. In the case of security audits, access shall be provided to all systems, components, network devices, virtualized devices, and the like, for the purposes of evaluating the security postures and controls implemented to prevent unauthorized access, modification, or destruction to Government data and systems. In addition, the contractor shall provide the Government the following information upon request:

PAGE 79 OF 99 91003123D0005P00020 (1) any or all user-ids; (2) any or all system and/or database administrator passwords used for the operation and maintenance of the system or environment, and (3) security credentials, encryption keys, security algorithms, and the like; to the extent needed to allow unfettered access to conduct a security audit or other privacy or information security inspection specified by the Government. The contractor shall also provide the Government access to all user passwords and all password files to the extent necessary to validate the contractor’s password policy. The contractor agrees to provide user ids and passwords regardless of whether the user is a Federal employee or not, so long as the user works in support of a Government contract, or may have access to Government data or Government related data. In addition to providing such access, the contractor agrees to fully cooperate with the Government in its conduct of privacy and information security inspections. That cooperation shall include, among other things, timely and complete production of data, metadata, information, and records, and making employees of the contractor available for interview upon request. Cooperation also includes allowing the Government to make reproductions or copies of information and equipment, including, if necessary, collecting a machine or system image capture. What constitutes “timely” access for purposes of compliance with this clause will depend on the circumstances surrounding the inspection being performed, the urgency of the matter under inspection, the procedures governing the inspection, logistical considerations, and other factors. In some cases, such as when investigating an on-going cyber security breach, access may be required within minutes of the Government’s request. In other cases, access provided by the contractor within a few days of a request may be acceptable. In the event of an information security incident, including, but not limited to, incidents involving the loss or potential loss of Personally Identifiable information in physical or electronic form, the contractor must respond (as required by other provisions of this contract, Departmental Directive OM: 6-107 “External Breach Notification Policy and Plan” and Handbook OCIO-14 “Handbook for Information Security Incident Response and Reporting Procedures” within specified time frames. Access to the contractor and subcontractor’s information systems under this clause shall be provided when, and as necessary, to meet any applicable information security incident response times. (c) Access to subcontractor information systems and related resources and clause flow-down. Access shall also be provided to information systems and related resources of subcontractors at any tier that are providing information technology which requires security of information technology, and/or is designing, developing, or operating a system of records using commercial information technology services or support services. The fact that an information system is owned or operated by a subcontractor shall not excuse the prime contractor from ensuring full and timely access to such information systems and related resources to the extent necessary to conduct privacy and information security inspections under this contract or as authorized by law. The contractor shall ensure that it retains operational and configurational control over any information system (whether operated by the contractor or a subcontractor) as needed to conduct privacy and information security inspections. The Contractor shall include the substance of this clause, including this paragraph (c), in all subcontracts, including subcontracts for commercial items. (d) Cost of compliance. The aforementioned access and cooperation shall be provided by the contractor at no additional cost to the Government. However, if a Government inspection unduly delays the contractor’s performance of the contract, the Contracting Officer may grant a contractor’s request for a non-compensable delay, as appropriate and provided the contractor submits information adequate to support the request. (e) Access to information systems where a cloud or a co-mingled data environment is used. When the contractor will perform all or part of the work using commercial cloud computing services (whether directly or through a subcontract),

PAGE 80 OF 99 91003123D0005P00020 or where Government data, Government related data or controlled unclassified information will be comingled with non- Government data, the contractor shall ensure that appropriate measures and controls are in place to allow Government inspectors to search the information systems and access information needed to conduct required privacy and information security inspections. The contractor may choose to create (at no cost to the Government) a segregated data space where inspections may take place without undue interference with non-Government data. However, the fact that Government data and non-Government data is co-mingled in the contractor’s information system shall not excuse the contractor from affording the Government full and timely access and cooperation as needed to conduct privacy and information security inspections. The Government shall protect against the unauthorized use or release of information obtained from the Contractor (or derived from information obtained from the Contractor) under this clause that includes Contractor proprietary information. To the extent practicable, the Contractor shall identify and mark proprietary information. In making an authorized release of such information, the Government will implement appropriate procedures to minimize the Contractor proprietary information that is included in such authorized release, seeking to include only that information that is necessary for the authorized purpose(s) for which the information is being released (f) Miscellaneous. The access obligations under this clause will survive the expiration or termination of this contract, and this term is not to be less than 3 years following the final disposition and close out of the contract. (g) Remedies for breach. A breach of the obligations or restrictions set forth in this clause may subject the Contractor to a Termination for Default, in addition to any other appropriate remedies under the contract. (h) Relation to other requirements. The requirements of this clause are in addition to those required by any other inspection or audit clause of this contract. To the extent that requirements imposed by Federal law, regulation, Executive Orders, Office of Management and Budget (OMB) guidance, or standards promulgated by the National Institute of Standards and Technology (NIST) are in direct and irreconcilable conflict with the requirements of this clause, those other requirements, standards, laws, or regulations shall take precedence. In conducting its security testing the Government intends to follow NIST Special Publication 800-115 Technical Guide to Information Security Testing and Assessment and other appropriate testing and assessment standards. Further, the Contractor agrees to negotiate in good faith rules of engagement and other supplementary agreements to govern specific privacy and information security inspections, with the goal of ensuring access necessary to conduct such inspections while protecting the contractor’s property and other interests. Any such rules of engagement and supplementary agreements are incorporated into this contract to the extent not inconsistent with the terms of this clause. (End of Clause) 52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES (NOV 2020) (a) The use in this Contract of any Federal Acquisition Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the date of the clause. (b) The use in this Contract of any Department of Education Acquisition Regulation (EDAR) (48 CFR 34) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the name of the regulation. (End of clause)

PAGE 81 OF 99 91003123D0005P00020 2. Department of Education Acquisition Regulations (EDAR) Clauses A. EDAR Clauses Incorporated by Reference The Contract incorporates one or more clauses by reference in accordance with FAR clause 52.252-2 Clauses Incorporated By Reference (FEB 1998). The full text of a clause may be accessed electronically at this address: https://www2.ed.gov/policy/fund/reg/clibrary/edar.html 3452.202-1 Definitions – Department of Education (MAR 2011) 3452.208-71 Printing (MAR 2011) 3452.208-72 Paperwork Reduction Act (MAR 2011) 3452.224–70 Release of information under the Freedom of Information Act (MAR 2011) 3452.227-70 Publication and Publicity (MAR 2011) 3452.227-71 Advertising of Awards (MAR 2011) 3452.227-72 Use and Non-Disclosure Agreement (MAR 2011) 3452.227-73 Limitations on the use or disclosure of Government-furnished information marked with restrictive legends 3452.237-71 Observance of Administrative Closures (MAR 2011) 3452.239-70 Internet Protocol Version 6 (MAR 2011) 3452.242-71 Notice to The Government of Delays (MAR 2011) 3452.242-73 Accessibility of Meetings, Conferences, and Seminars to Persons with Disabilities (MAR 2011) 3452.247-70 Foreign Travel (MAR 2011) B. 3452.201–70 Contracting Officer’s Representative (COR) (MAR 2011) (a) The COR is responsible for the technical aspects of the project, technical liaison with the USDS Servicer, and any other responsibilities that are specified in the Contract. These responsibilities include inspecting all deliverables, including reports, and recommending acceptance or rejection to the CO. (b) The COR is not authorized to make any commitments or otherwise obligate the Government or authorize any changes that affect the Contract price, terms, or conditions. Any USDS Servicer requests for changes shall be submitted in writing directly to the CO or through the COR. No such changes shall be made without the written authorization of the CO. (c) The COR’s name and contact information: Maxine Cross Phone: 404-974-9311 Email: maxine.cross@ed.gov (d) The COR may be changed by the Government at any time, but notification of the change, including the name and address of the successor COR, will be provided to the USDS Servicer by the CO in writing. (End of Clause)

PAGE 82 OF 99 91003123D0005P00020 C. 3452.204-72 Contractor Security Vetting Requirements. (DEVIATION) (JUN 2021) (a) The USDS Servicer and its subcontractors shall comply with Department of Education personnel, cyber, privacy, security policy requirements as set forth in “Contractor Security Vetting Requirements” at http://www.ed.gov/fund/contract/about/bsp.html. (b) USDS Servicer employees who will have access to proprietary or sensitive ED information including “Controlled Unclassified Information” as defined in 32 CFR Part 2002.4(h), ED IT systems, contractor systems operated with ED data or interfacing with ED systems, ED facilities or space, and/or perform duties in a school or in a location where children are present, must undergo a personnel security screening and a receive favorable determination and are subject to reinvestigation as described in the “Contractor Vetting Security Requirements.” Compliance with the “Contractor Vetting Security Requirements,” as amended, is required. (c) The type of security investigation required to commence work on an ED contract is dictated by the position designation determination assigned by ED. All ED contractor positions are designated commensurate with their position risk/sensitivity, in accordance with Title 5 Code of Federal Regulations (5 CFR 731.106) and OPM’s Position Designation Tool (PDT) located at: https://pdt.nbis.mil/. The position designation determines the risk level and the corresponding level of background investigations required. (d) The USDS Servicer shall comply with all contractor position designations established by ED. (e) The following are the contractor employee positions required under the Contract and their designated risk levels: High Risk (HR): Positions on this contract that perform the duties of system administrator, database administrator, software/code developer, IT operations support manager, system technicians with administrative privileges, software test manager, quality assurance manager, configuration manager, system analyst, security manager, security analyst, any position with access to vulnerability scan/penetration testing results, customer services manager, project manager, program manager, policy officer, program executive, and any IT-related positions designated as key personnel are required to meet requirements for High Risk/Public Trust Contractor Positions Moderate Risk (MR): All other contractor positions. Low Risk (LR): Not applicable. (f) For performance-based contracts where ED has not identified required labor categories for contractor positions, ED considers the risk sensitivity of the services to be performed and the access to ED facilities and systems that will be required during performance, to determine the uniform contractor position risk level designation for all USDS Servicer employees who will be providing services under the Contract. The uniform contractor position risk level designation applicable to this performance-based contract is: Not Applicable (g) Only U.S. citizens will be eligible for employment on contracts requiring a Moderate Risk/Public Trust, High Risk/Public Trust, or a National Security designation. (h) Permanent resident aliens may be eligible for employment on contracts requiring Low Risk/ Public Trust access. (i) An approved waiver, in accordance with “Contractor Vetting Security Requirements” is required for any exception to the requirements of paragraphs (g) and (h) above.

PAGE 83 OF 99 91003123D0005P00020 (j) The USDS Servicer shall- (1) Comply with the Principal Office (PO) processing requirements for personnel security screening, (2) Ensure that no USDS Servicer employee is placed in a higher risk position than for which he or she is approved, (3) Ensure USDS Servicer employees submit required security forms for reinvestigation in accordance with the timeframes set forth in the “Contractor Vetting Security Requirements,” (4) Report to the COR any information (i.e., personal conduct, criminal conduct, financial difficulties, etc.) that would raise a concern about the suitability of the USDS Servicer or whether a USDS Servicer employee’s continued employment would promote the efficiency of the service or violate the public trust, (5) Protect sensitive and Privacy Act-protected, including “Controlled Unclassified Information” as defined in 32 CFR Part 2002.4(h), from unauthorized access, use or misuse by its contractor employees, prevent unauthorized access by others, and report any instances of unauthorized access, use or misuse to the COR, (6) Report to the COR within two business days any removal of a USDS Servicer employee from a contract; or within one business day if removed for cause, (7) Upon the occurrence of any of the events listed under paragraph (b) of FAR Clause 52.204-9, Personal Identity Verification of Contractor Personnel, return a PIV ID to the COR within seven business days of the USDS Servicer employee’s departure; and (8) Report to the COR any change to job activities that could result in a change in the USDS Servicer employee’s position or the need for increased security access. (k) Failure to comply with any of the personnel security requirements, set forth in “Contractor Security Vetting Requirements” at http://www.ed.gov/fund/contract/about/bsp.html, may result in a termination of the Contract for default or cause. (End of Clause) D. 3452.209-71 Conflict of interest (MAR 2011) (a)(1) The USDS Servicer, subcontractor, employee, or consultant, has certified that, to the best of its knowledge and belief, there are no relevant facts or circumstances that could give rise to an organizational or personal conflict of interest ( see FAR Subpart 9.5 for organizational conflicts of interest) (or apparent conflict of interest) for the organization or any of its staff, and that the USDS Servicer, subcontractor, employee, or consultant has disclosed all such relevant information if such a conflict of interest appears to exist to a reasonable person with knowledge of the relevant facts (or if such a person would question the impartiality of the USDS Servicer, subcontractor, employee, or consultant). Conflicts may arise in the following situations: (i) Unequal access to information —A USDS Servicer, subcontractor, employee, or consultant has access to non-public information through its performance on a Government contract. (ii) Biased ground rules —A USDS Servicer, subcontractor, employee, or consultant has worked, in one Government contract, or program, on the basic structure or ground rules of another Government contract.

PAGE 84 OF 99 91003123D0005P00020 (iii) Impaired objectivity —A USDS Servicer, subcontractor, employee, or consultant, or member of their immediate family (spouse, parent, or child) has financial or other interests that would impair, or give the appearance of impairing, impartial judgment in the evaluation of Government programs, in offering advice or recommendations to the Government, or in providing technical assistance or other services to recipients of Federal funds as part of its contractual responsibility. “Impaired objectivity” includes but is not limited to the following situations that would cause a reasonable person with knowledge of the relevant facts to question a person's objectivity: (A) Financial interests or reasonably foreseeable financial interests in or in connection with products, property, or services that may be purchased by an educational agency, a person, organization, or institution in the course of implementing any program administered by the Department; (B) Significant connections to teaching methodologies that might require or encourage the use of specific products, property, or services; or (C) Significant identification with pedagogical or philosophical viewpoints that might require or encourage the use of a specific curriculum, specific products, property, or services. (2) USDS Servicer must provide the disclosure described above on any actual or potential conflict (or apparent conflict of interest) of interest regardless of their opinion that such a conflict or potential conflict (or apparent conflict of interest) would not impair their objectivity. (3) In a case in which an actual or potential conflict (or apparent conflict of interest) is disclosed, the Department will take appropriate actions to eliminate or address the actual or potential conflict (or apparent conflict of interest), including but not limited to mitigating or neutralizing the conflict, when appropriate, through such means as ensuring a balance of views, disclosure with the appropriate disclaimers, or by restricting or modifying the work to be performed to avoid or reduce the conflict. In this clause, the term “potential conflict” means reasonably foreseeable conflict of interest. (b) The USDS Servicer, subcontractor, employee, or consultant agrees that if “impaired objectivity”, or an actual or potential conflict of interest (or apparent conflict of interest) is discovered after the award is made, it will make a full disclosure in writing to the CO. This disclosure shall include a description of actions that the USDS Servicer has taken or proposes to take, after consultation with the CO, to avoid, mitigate, or neutralize the actual or potential conflict (or apparent conflict of interest). (c) Remedies. The Government may terminate the Contract for convenience, in whole or in part, if it deems such termination necessary to avoid the appearance of a conflict of interest. If the USDS Servicer was aware of a potential conflict of interest prior to award or discovered an actual or potential conflict (or apparent conflict of interest) after award and did not disclose or misrepresented relevant information to the CO, the Government may terminate the Contract for default, or pursue such other remedies as may be permitted by law or the Contract. These remedies include imprisonment for up to five years for violation of 18 U.S.C. 1001 and fines of up to $5,000 for violation of 31 U.S.C. 3802. Further remedies include suspension or debarment from contracting with the Federal Government. The USDS Servicer may also be required to reimburse the Department for costs the Department incurs arising from activities related to conflicts of interest. An example of such costs would be those incurred in processing Freedom of Information Act requests related to a conflict of interest. (d) In cases where remedies short of termination have been applied, the USDS Servicer, subcontractor, employee, or consultant agrees to eliminate the organizational conflict of interest, or mitigate it to the satisfaction of the CO.

PAGE 85 OF 99 91003123D0005P00020 (e) The USDS Servicer further agrees to insert in any subcontract or consultant agreement hereunder, provisions that conform substantially to the language of this clause, including specific mention of potential remedies and this paragraph (e). (End of Clause) E. [P00019 Added] EDAR 3452.232-73 Limitation of Government’s Obligation When Fully Funding Variable Quantity Contract Line Items (JAN 2024) (a) This clause applies to the following CLIN(s): CLIN 1 Servicing System Operations CLIN 2 Cybersecurity Services CLIN 3 Contact Center and Back-Office Processing Operation & Maintenance CLIN 4 Website and Mobile Services CLIN 5 User Authentication Services CLIN 6 Fulfillment Services CLIN 8 Specialty Task - Image Repository CLIN 9 Specialty Task - Decommissioned Servicer Data and Payment Support CLIN 10 Specialty Task - FFEL Guaranty Agency Rehabilitation Loan Purchases CLIN 11 Loan Consolidation Origination and Disbursement CLIN 12 Specialty Task - Legacy Loan Consolidation Origination and Disbursement Support Functions (b) The total estimated price of the CLIN(s) is a product of the fixed-unit price, as specified in the order or contract, multiplied by an estimated quantity for the period of performance specified in the order or contract. (c) The Contractor shall notify the Contracting Officer in writing whenever it has reason to believe either that- (1) The total quantity the Contractor expects in the next 60 days, when added to all previous quantities and multiplied by the fixed-unit rate, will exceed 75 percent of the total estimated price specified in the order or contract; or (2) The total quantity for the performance of the CLIN(s) will be either greater or less than the total estimated quantity in the order or contract. (d) As part of the required notification in (c) above, the Contractor shall provide the Contracting Officer a revised estimate of the total quantity and the basis for the estimate. (e) Upon either the Contractor’s notification under (c) or upon notification by the Contracting Officer that the Government estimates a quantity lower or higher than that currently specified for the CLIN(s), the parties will negotiate a revised estimate and modify the order or contract accordingly. (End of Clause) F. EDAR 3452.239-72 Department Security Requirements (DEVIATION) (JUN 2021) (a) The USDS Servicer and its subcontractors shall, at all times, maintain compliance with the most current version of Department of Education requirements as set forth in “Security and Privacy Requirements for Information Technology Procurements” posted at

PAGE 86 OF 99 91003123D0005P00020 http://www.ed.gov/fund/contract/about/bsp.html. (b) Performance of the Contract will [X] will not [ ] involve access to Department IT systems and/or contractor systems operated with Department data or interfacing with Department systems. For contracts that require access to Department IT systems and/or contractor systems operated with Department data or interfacing with Department systems, the Information Security Categorization applicable to each security objective has been determined to be: Confidentiality: [ ] Low [X] Moderate [ ] High (Contracting Officer to complete) Integrity: [ ] Low [X] Moderate [ ] High (Contracting Officer to complete) Availability: [ ] Low [X] Moderate [ ] High (Contracting Officer to complete) Overall Risk Level: [ ] Low [X] Moderate [ ] High (Contracting Officer to complete) (c) Performance of the Contract [X] does involve [ ] does not involve Personally Identifiable information (PII) or “Controlled Unclassified Information” as defined in 32 CFR Part 2002.4(h). The Confidentiality Impact Level of such information has been determined to be: [ ] Not Applicable [ ] Low [X] Moderate [ ] High. (d) Failure to comply with Department of Education Security and Privacy Requirements for Information Technology Procurements may result in a termination of the Contract for default or cause. (End of Clause) G. 3452.232-72 Limitation of Government’s Obligation – For use in Task Orders Sufficient funds are not presently available to cover the total price of the CLIN(s) listed in paragraph (l) below. The CLIN(s) identified in paragraph (l) below are incrementally funded to cover the identified period of performance. Additional funds are intended to be allotted to the applicable CLIN(s) by contract modification up to and including the full price of the entire period of performance. This notwithstanding, the Government will not be obligated to pay the USDS Servicer for amounts payable in excess of the amount actually allotted, nor will the USDS Servicer be obligated to perform in excess of such amount. (a) The CLIN(s) in paragraph (l) of this clause is/are incrementally funded. Paragraph (l) also lists the allotment amount presently available for payment and allotted to the CLIN(s), inclusive of any termination costs for the Government’s convenience, and the allotment schedule which provides the last date of USDS Servicer performance for which it is estimated the allotted amount will cover. The parties contemplate that the Government may allot additional funds incrementally to the applicable CLIN(s) under the Contract, up to the full price specified in the Contract. The USDS Servicer agrees to perform work under the applicable CLIN(s) up to the point at which the total amount paid and payable by the Government under the Contract for the applicable CLIN(s), including estimated costs in the event of termination of those CLIN(s) for the Government’s convenience, approximates the total amount currently allotted to such CLIN(s). (b) Notwithstanding the dates specified in the allotment schedule in paragraph (l) of this clause, the USDS Servicer shall notify the CO in writing at least thirty (30) days prior to the date when, in the USDS Servicer’s best judgment, the work will reach the point at which the total amount payable by the Government, including any

PAGE 87 OF 99 91003123D0005P00020 cost for termination for the Government’s convenience, will approximate 75 percent of the total amount then allotted to the Contract for performance of the applicable CLIN(s). The notification will state (1) the estimated date when that point will be reached and (2) an estimate of additional funding, if any, needed to continue performance of applicable CLIN(s) up to the date in paragraph (l) of this clause, or to a mutually agreed upon substitute date. (c) If, after notification pursuant to paragraph (b) of this clause, additional funds are not allotted by the date identified in paragraph (l), the date identified in the USDS Servicer’s notification, or by an agreed substitute date, upon the USDS Servicer’s written request, the CO may terminate for the Government’s convenience any CLIN(s) for which additional funds have not been allotted. If the USDS Servicer estimates that the funds available will allow it to continue to discharge its obligations beyond that date, it may specify a later date in its request to terminate the applicable CLIN(s), and the CO may terminate such CLIN(s) on that later date. In no event is the Contractor authorized to continue work on those CLIN(s) beyond the time when the amount payable, to include costs of termination for the Government’s convenience, is equal to the funds allotted. (d) If, solely by reason of failure of the Government to allot additional funds, by the dates indicated in paragraph (l) of this clause, in amounts sufficient for timely performance of the CLIN(s) identified in paragraph (l) of this clause, the USDS Servicer incurs additional costs or is delayed in the performance of the work under the Contract and if additional funds are allotted, the USDS Servicer may request an equitable adjustment to the price or prices (including appropriate target, billing, and ceiling prices, where applicable) of the applicable CLIN(s), or in the time of delivery, or both, by written request to the CO with sufficient documentation to support such equitable adjustment. Failure to agree to any such equitable adjustment hereunder will be a dispute concerning a question of fact within the meaning of the clause entitled “Disputes.” Notwithstanding anything to the contrary herein, in no event will an equitable adjustment under this paragraph (d) be due to the USDS Servicer for costs that arise from or relate to the USDS Servicer’s breach of the notification obligations in paragraph (b) of this clause. (e) Except as required by other provisions of the Contract, specifically citing and stated to be an exception to this clause- (1) The Government is not obligated to pay for goods or services, to include reimbursement of costs for termination for the Government’s convenience, in excess of the total amount allotted by the Government to the CLIN(s) identified in paragraph (l) of this clause; and (2) The USDS Servicer is not authorized to continue performance of the CLIN(s) identified in paragraph (l) of this clause in excess of the amount allotted by the Government to the applicable CLIN(s). (3) As used in this clause, the total amount payable by the Government in the event of termination of applicable CLIN(s) for convenience includes reasonable costs, profit, and termination settlement costs for those item(s). (f) No communication or representation in any form other than in writing from the C O shall affect the amount allotted by the Government to the Contract and applicable CLIN(s). The Government is not obligated to reimburse the USDS Servicer for any costs in excess of the total amount allotted by the Government to the applicable CLIN(s), whether incurred during the course of the Contract or as a result of termination.

PAGE 88 OF 99 91003123D0005P00020 (g) The Government may at any time prior to termination allot additional funds for the performance of the CLIN(s) identified in paragraph (l) of this clause. (h) When additional funds are allotted for continued performance of the CLIN(s) identified in paragraph (l) of this clause, the parties will agree as to the period of contract performance that will be covered by the funds. The provisions of this clause will apply in like manner to the additional allotted funds and agreed substitute date, and the Contract will be modified accordingly. (i) The termination provisions of this clause do not limit the rights of the Government to terminate the Contract, in whole or in part, for cause in the event of any breach or default by the USDS Servicer. The provisions of this clause are limited to the work and allotment of funds for the CLIN(s) set forth in paragraph (l) of this clause. This clause no longer applies once the Contract is fully funded except with regard to the rights or obligations of the parties concerning equitable adjustments negotiated under paragraph (d) of this clause. (j) Nothing in this clause affects the right of the Government to terminate the Contract, in whole or in part, for convenience or cause. (k) Nothing in this clause shall be construed as authorization of voluntary services whose acceptance is otherwise prohibited under 31 U.S.C. 1342. (l) Incremental funds are allotted to the CLIN(s) under the Contract as follows: CLIN Amount Allotted Last Date of Performance (End of clause) 3. Additional Clauses AT-RISK BORROWER PERFORMANCE INCENTIVE Task Orders may include when awarded or through modification a performance incentive for At-Risk Borrowers associated with performance under CLIN 0003 Contact Center and Back-Office Processing Operation & Maintenance. Funding for the performance incentive shall be held in a separate CLIN to be designated on the Task Order which may as detailed in the Task Order either be for the initial period of the performance incentive or for multiple periods of the performance incentive.

PAGE 89 OF 99 91003123D0005P00020 The additional terms of the performance incentive and an example of how to calculate the achieved performance incentive amount are in the following incorporated contract attachments: Attachment 20 – At Risk Borrower Incentive (Attachment 20) and Attachment 20a – At Risk Borrower Incentive Calculator (Attachment 20a). SERVICE LEVEL AGREEMENTS & OBJECTIVES PERFORMANCE INCENTIVE Task Orders containing CLIN 3 Contact Center and Back-Office Processing Operation & Maintenance are subject to a Service Level Agreement & Service Level Objective performance incentive as further described in Attachment 8 Service Level Methodology Performance Metrics (Attachment 8) and Attachment 9 SLA and Future Borrower Allocation Calculator (Attachment 9). ECONOMIC PRICE ADJUSTMENT FSA will apply a standard escalation methodology to pricing established under the Contract. The following escalation methodology is based upon multiple indexes and rates from sources like the Bureau of Labor Statistics (BLS) which are applicable to different CLINs to account for significant inflation and/or deflation: CLIN Cost Indexes & Published Rates 1, 2, 4, 5 7, 8, 9, 10, 11, & 12 BLS Employment Cost Index (ECI) for Total compensation for Private industry workers in Service-providing; management, professional, and related occupations, 12- month percent change -- Series ID (CIU201S000100000A (B) Not seasonally adjusted) 3 & 6 (Scanned Documents & Alternative Format Documents) BLS Employment Cost Index (ECI) for Total compensation for Private industry workers in Service occupations, 12- month percent change – Series ID (CIU2010000300000A (B) Not seasonally adjusted) 6 Envelops (Letter(s)) Sent US Postal Service (USPS) Rate for First-Class Mail Commercial Letters (Weight Not Over 1 oz for Automation 5-Digit) & BLS Producer Price Index (PPI) for Paper, except newsprint, mills-Primary products, not seasonally adjusted – Series ID (PCU322121322121P) In the event of the change to any of these indexes or the USPS category is no longer published or is changed, FSA will unilaterally update the ones affected to one FSA determines most appropriate and modify the Contract. In June of the Contract’s second year of performance Federal Student Aid will review the indexes and published rates listed in the table above to determine whether an economic price adjustment in accordance with this clause is applicable. The indexes in the above table from the BLS will be from the BLS website www.bls.gov. The USPS rate for comparison will be as found on the https://pe.usps.com/ website in the Price List effective on the 1st day of June for First-Class Mail Commercial Letters (Weight Not Over 1 oz for Automation 5-Digit). When any of the indexes or the USPS rate cited in in the table increases or decreases more than three and a half (3.5) percent starting in the second year of the Contract’s period of performance, the Government will adjust the established pricing in the affected CLINs by the amount above 3.5% up to a ceiling of 3%. The adjustment ceiling of 3% would be reached if the increase or decrease is 6.5%. The escalation amount for the CLINs using indexes excluding CLIN 6 will equal the amount that the listed 12-month percent change shown for the series for quarter 4 (Qtr4) of the prior

PAGE 90 OF 99 91003123D0005P00020 calendar year is over 3.5% up to the ceiling of 3%. For example, if the 12-month percent change is 5% then the escalation amount would be 1.5% and if it was negative 5% the escalation would be negative 1.5%. All adjusted prices shall be rounded to four decimal places. For example, if after calculating the adjustment the price is $1.155549 then it would be rounded down to $1.1555 or if the price is $1.155562 then it would be rounded up to $1.1556. For escalation of CLIN 6 Envelops (Letter(s)) Sent price the escalation is calculated by determining first the percentage change for the USPS rate from the prior year’s rate and the percentage change for the BLS PPI from the prior year’s February index to the current year’s index rate (final or preliminary) and the amount each is greater than 3.5% in the positive or negative direction up to the ceiling of 3%. Second the prior year’s USPS rate is subtracted from the Letters/Envelops Sent price and the resultant price is adjusted by the percentage that the PPI is greater than 3.5% up to the ceiling of 3%. Third the USPS prior year rate is adjusted by the percentage that is greater than 3.5% up to the ceiling of 3% and the resultant amount is added back into the price from the second step to calculate the adjusted price. The adjusted price is then rounded if necessary to four decimal places. An example of the escalation for CLIN 6’s Envelopes (Letter(s)) Sent price using the methodology above where the postal rate has gone up five percent. For the example the Envelops (Letter(s)) Sent price is $0.64, the percentage change for the BLS PPI is 6%, and the USPS rates are $0.426 for the prior year and $.0447 for the current year. Calculation: First Step: USPS Percentage Change: ($0.426 - $0.447) / $0.426 = .05 or 5% Amount Greater than 3.5%: 5% - 3.5% = 1.5% BLS PPI Percentage Change: 6% Amount greater than 3.5%: 6% - 3.5% = 2.5% Second Step: $0.64 - $0.426 = $0.214 $0.214 X 1.025 = $0.219350 Third Step: $0.426 X 1.015 = $0.43239 $0.219350 + $0.43239 = $0.651740 then rounded down to four decimal places equals $0.6517 Total adjusted Envelops (Letter(s)) Sent price would be $0.6517. The USPS rate used for the prior year’s rate for the first calculation in June of the Contract’s second ordering year period is the rate set in the Contract at time of award effective that month as follows: USPS Rate at time of Contract award: _____$0.471________ For the CLINs that met the criteria for adjustment, the CLIN prices are adjusted for the current ordering period and all the subsequent remaining base and option period ordering CLINs. The Contract will be unilaterally modified to update the CLIN pricing and rates adjusted by this clause in Section B of the Contract. Task Orders will be unilaterally modified to update the rates that are fixed price with economic price adjustment that meet this clause’s criteria for adjustment. Firm-fixed prices within Task Orders are not subject to this

PAGE 91 OF 99 91003123D0005P00020 clause and will not be adjusted. Adjusted Contract and Task Order prices or rates will be effective beginning the first of September of the same year. (End of Clause) 4. Additional Terms COMMON PRICING ADJUSTMENTS FOR CLAUSE CHANGES TO WAGES The common pricing established under the Contract shall be adjusted across all USDS IDIQ Contract holders in the event of required changes to USDS Servicer pricing resulting from either clauses 52.222-55 Minimum Wages For Contractor Workers Under Executive Order 14026 (JAN 2022) or 52.222-43 Fair Labor Standards Act and Service Contract Labor Standards-Price Adjustment (Multiple Year and Option Contracts) (Aug 2018) or any other clause in the Contract with similar mandatory contract price changes. USDS Servicer shall provide supporting documentation as required by the clauses. The Contract shall be modified unilaterally increasing the affected CLIN’s common prices. (End of Term) FSA 19-2 SUBCONTRACT REPORTING AND ACHIEVEMENTS (APR 2014) The USDS Servicer shall submit timely and accurate subcontract reporting, which will be a factor used in assessing contractor past performance. In addition, contractors are advised that achievements related to subcontracting plans can and may be used as part of responsibility determinations under future procurements. (End of Clause) FSA 32-3, Alternate 1 - Invoice and Contract Financing Requests Submission – Invoice Processing Platform (December 2017) (a) Payments shall be rendered in accordance with the identified payment schedule(s). (b) The USDS Servicer shall submit invoices electronically in the web-based system, Invoice Processing Platform (IPP) that can be accessed at: http://www.ipp.gov/. All submitted invoices must be accompanied by supporting documentation in accordance with the Contract’s terms and conditions. The supporting documentation shall be submitted in the following formats: Adobe Acrobat (pdf), Microsoft Word (doc), Pictures (jpeg), Microsoft Excel (excel), or Microsoft Outlook message (msg). The invoice processing platform limits 25 attachments per invoice at 10 MB per attachment. (c) If the supporting documentation contains Personally Identifiable Information (PII) or Sensitive Unclassified Information, this information shall be sent to the COR, encrypted and/or password protected by email external to the IPP system. (d) Request for Financing Payment – financing payments are not subject to the Prompt Payment Act. Failure to identify the invoice as a request for financing may result in delay of payment. Invoices that are identified as Requests for Finance Payments shall only include the finance payments listed in the Contract. Requests for finance payments shall not be combined with other types of invoice payments.

PAGE 92 OF 99 91003123D0005P00020 (e) If the USDS Servicer does not have an IPP account that was established by either the Department of Education or another Government agency, the USDS Servicer will need to go to www.IPP.gov and select “Vendors Enroll Now” and complete enrollment. (f) The USDS Servicer must ensure that the “Accounts Receivable POC” Section of its SAM registration is accurate and up-to-date. (g) Upon completion of enrollment and within ten (10) business days of the USDS Servicer entering or updating the “Accounts Receivable POC” information within the USDS Servicer’s SAM registration, the USDS Servicer’s Designated Primary Administrator will receive an email from the IPP Customer Support Team containing the USDS Servicer’s Designated Primary Administrator’s IPP username. Within 24 hours of receiving the initial email, the USDS Servicer’s Designated Primary Administrator will receive a second email containing their IPP password. Once both emails have been received, the USDS Servicer’s Designated Primary Administrator must log into IPP and complete the registration process. (h) The USDS Servicer’s Designated Primary Administrator will be authorized to further designate other administrators under USDS Servicer’s IPP account who may submit invoices on behalf of the USDS Servicer. (i) In the event that an invoice is rejected in IPP, the USDS Servicer shall make the necessary corrections and resubmit the invoice by means of IPP. Any questions, concerns, or issues regarding the use of IPP should be directed to IPP Customer Support Team, as identified at http://www.ipp.gov/ (End of Clause) FSA 37-3 DISRUPTION OF MISSION CRITICAL CONTRACTOR SYSTEM OR OTHER SERVICES (Sep 2012) (a) Definition. As used in this clause— (1) Mission Critical Contractor System or Other Services - are defined as a system or other services that have a material impact on the accomplishment of the Federal Student Aid mission. (b) The USDS Servicer is required to coordinate all changes to mission critical USDS Servicer’s systems or other services used to implement Federal Student Aid IT operations and services with the individual(s) identified in (c) at least five business days prior to the changes, absent exigent circumstances. Emergency changes require immediate notification of the individual(s) identified in (c) as soon as the charge requirement is known, but prior to the change. If the continuity of such systems or services is disrupted as a consequence of the USDS Servicer’s failure to adequately coordinate these changes with FSA, the USDS Servicer may be subject to contractual remedies available to the Government pursuant to the terms of the Contract or as authorized by law. (c) The USDS Servicer shall contact the following individuals to coordinate all changes to mission critical USDS Servicer systems or services. System Owner: Jeremy Dick Email: jeremy.dick@ed.gov Phone: (202) 377-3238

PAGE 93 OF 99 91003123D0005P00020 The notice shall be sent to the CO as well. (End of Clause) FSA 39-3 FSA Section 508 and Electronic and Information Technology Accessibility Standards Compliance (September, 2016) (a) Members of the public with disabilities that are seeking information or services from the USDS Servicer shall have access to and use of information and data maintained and provided to the public under the Contract that is comparable to the access to and use of information and data by members of the public who are not individuals with disabilities. The USDS Servicer’s Website, and any documents or other forms of communication that may be viewed by the public via the Website, shall remain current with manners of assistive technology utilized by the public for accessing such information. In order to maintain an accessible Website and documents or other forms of communication, the USDS Servicer shall ensure that the public can access required information in a variety of ways, which do not have to rely on a single sense or ability of the user. FSA 39-4 Remedies for Contractor’s Violation of System Security Requirements If Personally Identifiable Information (PII) is improperly disclosed, released to or accessed by an unauthorized system(s) or individual(s), or is otherwise compromised (collectively referred to as PII Breach), or if the USDS Servicer has knowledge of a potential PII Breach, in addition to the requirements elsewhere under the Contract, the USDS Servicer shall immediately: a. take all reasonable measures necessary to implement security safeguards to prevent further compromise of PII, improper disclosure of PII, or release of or access of PII by unauthorized systems or individuals. b. mitigate any potential harm suffered by those individuals whose PII may have been exposed in a PII Breach (Affected Individuals) once a PII Breach is confirmed and notices to Affected Individuals are sent as provided under the Contract. Such mitigation shall include, at a minimum, data breach protection services (Data Protection Services), including identity theft and credit protection, to all Affected Individuals for a period not less than 18 months from the date of discovery of the improper disclosure. Data Protection Services must include: i. one year of credit monitoring services consisting of automatic daily monitoring of at least 3 relevant credit bureau reports; ii. data breach analysis; iii. fraud resolution services, including writing dispute letters, initiating fraud alerts and credit freezes, to assist affected individuals to bring matters to resolution; iv. three years of identity theft insurance with up to $1,000,000.00 coverage at $0 deductible; and v. reimbursement of necessary legal expenses that Affected Individuals may incur to repair falsified or damaged credit records, histories, or financial affairs. (End of Term) FSA 45-1 SPECIAL CONTRACT REQUIREMENTS FOR GOVERNMENT FURNISHED PROPERTY – TWO FACTOR AUTHENTICATION TOKENS (TFA) (JUN 2015) In addition to the requirements of FAR 52.245-1(b) - Government Property, the USDS Servicer shall:

PAGE 94 OF 99 91003123D0005P00020 a) Ensure the USDS Servicer’s Government Property Manager or designee shall sign a distribution letter provide by the CO upon receipt of Government Property; b) Comply with instructions on how to register the tokens using the Federal Student Aid Two Factor Authentication Token For FSA User Handout distributed with the tokens; c) Seek immediate assistance with any challenges encountered with FSA CITRIX and TFA and immediately report any security or other incidents by telephone or email to the helpdesk at: 1-877-603-4188 or ed.customer.service@ed.gov and; d) Provide a Property Management Plan to the CO within 5 business days of receipt of the Government Furnished Property. Among other requirement required under FAR 52.245-1(b) the Property Management Plan must contain at minimum the following: * Description on how the USDS Servicer will establish and maintain an auditable record of the token assignment to its employees by individual name and token Serial Number (AVT+9 digits); * Method by which the USDS Servicer shall ensure that the serial number label on the back of each token remains legible and secure to the device. * Security and management process for the physical devices as well as changes in assignment. e) Upon written notification from the CO, the USDS Servicer shall affirm its understanding and compliance with the Government’s requirement for quarterly re-certification of user access and token activation. In the event of any reported security breach, the Government shall immediately disable or deactivate USDS Servicer access to its network without prior notice. f) Soft Tokens can be used instead of hard tokens. The soft token is an app that runs on the user’s mobile device. After downloading and registering the free Symantec VIP Access app on a phone or tablet, a user simply opens the app and an One-Time Password (OTP) is automatically generated similar to a hard token. Use of a soft token is optional, however users who have a compatible mobile device are encouraged to transition to a soft token. There is no requirement to maintain property records on soft tokens. g) Contact Information. For additional information on TFA or the use of a soft token, contact the TFA Support Center at 800/330-5947, option 2 (TDD/TTY 800/511-5806) or by email at TFASupport@ed.gov. (End of Clause) III. List of Documents, Exhibits, and Other Attachments J.1 List of Attachments Attachment Title 01 01 - Business Operations Servicing Requirements-P00018 01a 01a – Business Operations Deliverables Table 02 02 - Financial Technical Requirements-P00004 02a 02a – Financial Deliverables Table-P00005

PAGE 95 OF 99 91003123D0005P00020 03 03 - IT Requirements Repository – P00001 03a 03a – Modification version tracker for IT Requirements Repository-P00001 04 04 – IT Deliverable Repository-P00011 04a 04a – IT Deliverable Table-P00015 04b 04b – Modification version tracker for IT Deliverable Repository-P00011 05 05 - Business Change Management Plan 06 06 – LMM Process Guide 06a 06a - LMM Reference Files Repository 07 07 - Initial Authorization to Operate Timeline Actions 08 08 - Service Level Methodology Performance Metrics-P00020 09 09 - SLA and Future Borrower Allocation Calculator-P00020 10 10 - FSA Brand Style and FSA Design System 2021 11 11 - FSA Servicer Brand Guidelines 12 12 - FSA Writing Style Guide 2021 13* Reserved 14* Reserved 15* Reserved 16* Reserved 17* Reserved 18* Reserved 19 19 - Technology Standards and Products Guide 20 20 – At Risk Borrower Incentive 20a 20a – At Risk Borrower Incentive Calculator 21 21 – Future Borrower Allocation Methodology 22 22 – Progressive Fixed-Priced Calculator 23* Reserved 24* Reserved 25* Reserved 26 26 - FSA 39-5 Monthly Vendor Reporting Deliverable Template (AUG 2018) 27* Reserved 28 28 – Wage Determination Repository 29 29 – Awardee SB Subcontracting Plan – P00001 30a-c 30a – CR 6778 att 1 TPD012_JointTPD_result 30b – CR 6778 att 2 TPD012_JointTPD_submission 30c – CR 6778 Att 3 Requirements 31 Delivery Delay Reduction Schedule-P00009 32 Nelnet Recommended Project Approach-P00009 33a-b 33a – CR 6675 – USDS – CRI Servicer & Specialty Processing Subsystem (SPS) Setup 33b – CR 6675 att - Requirements attachment

PAGE 96 OF 99 91003123D0005P00020 J.2. List of Change Request or Requirements modifications Numbered Modification Change Request number/Title P00003 CR6735-USDS Mobile App Removal P00004 CR6714-USDS - Financial Requirements Change 1; Attachment 04a – IT Deliverable Table update included P00005 CR6744- USDS - Temporary, Alternate PIV-I Use for USDS; CR6782- USDS - Changes to 02a - Financial Deliverables Table P00006 Update of Security Related Terms/Clauses P00007 CR6778- USDS - Temporary Extension of TPD Servicer Contract; Include temporary CR 6778 attachments 30a-c. P00008 Novation Agreement Incorporation P00009 Initial Task Order Staggered Approach; includes attachment 31 and 32 P00010 CR6675 – USDS – CRI Servicer & Specialty Processing Subsystem (SPS) Setup; Include CR 6675 attachments 33a-b. 34 34 – CR 6715 att 1 USDS CR1_Validation Artifacts 35a-d 35a – CR 6681 – Revised 10-17-23 USDS IDR Proxy Payment for Servicers 35b – CR 6681 att Revised 10-17-23 35c – CR 6681 Att NSLDS IDR- Development Document 35d – CR 6681 Att 2 18000 IDR Payment file 36a-h 36a – CR 6677 Attachment 2 PSLF Borrower File 36b – CR 6677 Attachment 3 Loan Forbearance Notification ICD_EDMAPS V3 36c – CR 6677 Attachment 4 Loan Forgiveness Notification ICD_EDMAPS V2 36d – CR 6677 Attachment 5 Teach Conversion Notification and Response ICD_EDMAPS V3 36e – CR 6677 Attachment 6 Teach Loan Cancellation Notification and Response ICD_EDMAPS V3 36f – CR 6677 Attachment 7 USDS Servicer Interfaces - Streaming Approach Overview - 09-25-2023 36g – CR 6677 Attachment 8 COD TEACH Update Schema Sample 36h – CR 6677 Attachment 9 COD ATS Schema Sample 37a-d 37a CR6924 Att 2 - 16003 ApplicationSchema_v1.7 37b CR6924 Att 3 - 16003 Common Application File Layout V17_11062023 37c CR6924 Att 4 16002 CommonAppInterface SuppGuide_IDR V26_11062023 37d CR6924 Att 5 48001_DischargeApplication&AgingReport (Monthly) v2 38 38 – CR 6894 Att 1 39 39 – CR 6912 Att 1 40a-b 40a CR 6889 Att Deliverable Table 40b CR 6889 Servicer Information Portal Data * Attachments removed and number reserved at award.

PAGE 97 OF 99 91003123D0005P00020 CR6715 – USDS –Business Requirements Change 1; Attachment 01 - Business Operations Servicing Requirements v100 included. Include CR 6715 attachment 34. P00011 Revise Section C: Performance Work Statement 3.2)a. Customer Accounts Migration: Section v. CR6681 – Revised 10-17-23 USDS IDR Proxy Payment for Servicers; Include CR 6681 attachments 35a-d. CR6681 – USDS –Business Requirements Change 2; Attachment 01 - Business Operations Servicing Requirements v110 included. CR6796 – IT-Cybersecurity Template and Guidance Updates 1; Attachments 04 - IT Deliverable Repository and 04b - Modification version tracker for IT Deliverable Repository are included. P00012 Part II: Contract Clauses – Incorporate FAR 52.204-30 Federal Acquisition Supply Chain Security Act Orders – Prohibition by full text. P00013 Revise Section C: Performance Work Statement 4.g.e. Table 2 Initial Task Order Deliverables/Milestones. USDS –Business Requirements Change 3 P00014 CR6677 – USDS - USDS Servicer Integration with SPS; Attachment 01 – Business Operations Servicing Requirements v1.2.1 included. Include CR 6677 attachments 36a-h. P00015 Revise Section C Table 2 Initial Task Order Deliverables/Milestones; Attachment 01 - Business Operations Servicing Requirements v1.3.0 included. Include CR 6924 attachments 37a-d. P00016 CR6845 – USDS - School Portal Not Allowed; Attachment 01 – Business Operations Servicing Requirements v1.4.0 included. Revise Section C: Performance Work Statement 2.f. Digital Engagement Layer and Table 2 Initial Task Order Deliverables/Milestones. P00017 CR6894 – USDS - Support USDS Servicers Changing Their Borrower Facing website URL; include CR 6894 attachment 38. CR6912 – USDS Implementation of FSA Google Analytics; include CR 6912 attachment 39. Attachment 01 – Business Operations Servicing Requirements v1.5.0 included. Revise Section C: Performance Work Statement 4.g.e. Table 2 Initial Task Order Deliverables/Milestones. P00018 CR 6889 - USDS Servicer Information Portal Integration with AIMS MFA; include CR 6889 attachments 40a-b. Attachment 01 – Business Operations Servicing Requirements v1.6.0 included. P00019 Revise Section C: Performance Work Statement 3.4)h.i. FSA General Cybersecurity Requirements paragraphs 11 and 13 and Remove ITO IPv6 implementation schedule from paragraph 4.g.c. Part II: Contract Clauses – Incorporate EDAR 3452.232-73 Limitation of Government’s Obligation by full text. P00020 Revise Section C: Performance Work Statement 3.2)b. General Borrower Account Servicing Requirements subpart i.2. Attachment 01 – Business Operations Servicing Requirements: 49000.011 and 24011.011 are added; 24010.000, 49000.030, and 49000.040 are revised. Revise Attachment 8 Service Level Methodology Performance Metrics.

PAGE 98 OF 99 91003123D0005P00020 Revise Attachment 9 SLA and Future Borrower Allocation Calculator.

PAGE 99 OF 99 91003123D0005P00020

Document

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey R. Noordhoek, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Nelnet, Inc. (the “Company”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 8, 2024	/s/ JEFFREY R. NOORDHOEK
		Jeffrey R. Noordhoek Chief Executive Officer<br>Principal Executive Officer

Document

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James D. Kruger, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Nelnet, Inc. (the “Company”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 8, 2024	/s/ JAMES D. KRUGER
		James D. Kruger<br><br>Chief Financial Officer<br><br>Principal Financial Officer and Principal Accounting Officer

Document

Exhibit 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Nelnet, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 8, 2024	By: /s/ JEFFREY R. NOORDHOEK
		Name: Jeffrey R. Noordhoek<br><br>Title: Chief Executive Officer<br><br>Principal Executive Officer
		By: /s/ JAMES D. KRUGER
		Name: James D. Kruger<br><br>Title: Chief Financial Officer<br><br>Principal Financial Officer and Principal Accounting Officer