A financial services and technology company born in Lincoln, Nebraska, Nelnet started in 1996 when founders Mike Dunlap and Steve Butterfield set out to make student loan servicing friendlier. Today it services loans for millions of borrowers, runs the FACTS tuition payment and school software platform, and operates Nelnet Bank. Its name is short for "National Education Loan Network," a tidy title for a company that has since branched into sports video (Hudl) and fiber-optic internet (ALLO).
Nelnet Q2 2026 net income fell 63% to $66.7M as a prior-year $175M one-off gain and rising solar tax equity losses reshaped results.
Nelnet's earnings fell back to earth after a one-off gain inflated the prior year. dropped 63% to $66.7M, driven by the absence of a $175.0M ALLO investment gain and a $22.5M hit from solar tax equity partnerships, even as rose 21% on lower funding costs. The core lending and fee-based businesses are strengthening, but the quarter shows how much the bottom line still depends on items outside them.
Key takeaways
fell 63% to $66.7M from $181.5M a year earlier, almost entirely because Q2 2025 included a $175.0M non-recurring pre-tax gain on the partial redemption of ALLO membership interests.
rose 21% to $96.0M as a decline in from lower debt balances and cost of funds more than offset a drop in loan interest income.
The increased to $41.1M from $17.9M, driven by establishing initial allowances for a large volume of acquired Pay Later .
Section summaries
Management's Discussion and Analysis
Nelnet Q2 2026 GAAP net income fell 63% YoY to $66.7M, driven by higher solar tax equity losses and a prior-year $175M ALLO gain.
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Consolidated attributable to Nelnet dropped to $66.7M from $181.5M, largely due to a $175.0M gain on an ALLO investment redemption in Q2 2025 and $22.5M in solar tax equity losses in Q2 2026.
Nelnet Bank swung to a $13.8M pre-tax profit from a $0.5M loss, fueled by loan and deposit growth and the transfer of $716.3M in federally insured loans from the AGM .
Loan Servicing and Systems fell to $14.8M from $20.0M as lower Department of Education servicing volume was partially offset by new from the Canadian acquisition and cost reductions.
Corporate and Other Activities reported a $33.7M pre-tax loss, compared to $156.7M in income last year, due to the missing ALLO gain and $22.5M in solar tax equity partnership losses.
What changed
The $175M ALLO gain flagged in Q1 2025 and realized in Q2 2025 has now fully rolled off, creating a difficult comparison that was expected.
Solar tax equity losses, flagged as a watch item after Q1 2026's $22.5M loss, repeated at the same $22.5M level this quarter, showing the runoff is steady rather than accelerating.
AGM's core loan spread was not explicitly stated this quarter, but rose 21% and the company earned $3.1M in gross fixed-rate floor income in the first half, up from prior periods, suggesting the cash-funded spread is holding.
LSS excluding the $11.3M NDS Canada contribution declined, confirming the underlying Department of Education contract trend of lower volumes that was flagged last quarter.
Nelnet Bank's profitability turned sharply positive, resolving the pre-tax loss trend that had been a watch item since 2024, as assets and deposits scaled.
What to watch
Q3 2026 AGM core loan spread and to confirm the cash-funded spread holds as the FFELP book amortizes and floor income evolves.
Size of any further solar tax equity losses beyond the $22.5M quarterly run-rate as retained partnerships wind down.
Q3 2026 LSS and margin excluding the NDS Canada contribution to see the underlying Department of Education contract trend.
Nelnet Bank loan loss provisions as the Pay Later book seasons and the initial allowance established this quarter is adjusted.
rose 21% to $96.0M, as a decrease in on lower debt balances and cost of funds more than offset a decline in loan interest income.
The surged to $41.1M from $17.9M, primarily driven by establishing initial allowances for a significant volume of acquired Pay Later .
Nelnet Bank's pre-tax income swung to a $13.8M profit from a $0.5M loss, fueled by loan and deposit growth and the contribution of $716.3M in federally insured loans from the AGM .
The Loan Servicing and Systems 's pre-tax income fell to $14.8M from $20.0M, as a decline in Department of Education servicing from fewer borrowers was partially offset by new Canadian servicing revenue and cost reductions.
Corporate and Other Activities reported a pre-tax loss of $33.7M, compared to income of $156.7M, due to the absence of the prior-year ALLO gain and increased solar tax equity losses.
Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk from mismatched asset/liability indices and fixed-rate floor income is the primary market risk, managed via derivatives and monitored across segments.
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AGM's variable-rate assets (77.8% of loans) are funded mostly by variable-rate debt (95.8%), creating repricing and from mismatched reset frequencies and indices.
AGM earned $3.1M in gross fixed-rate in H1 2026 from FFELP loans where the fixed borrower rate exceeds the floating SAP rate, partially offset by derivative settlements.
A 10 increase in funding rates relative to asset indices would decrease AGM's pre-tax by $0.6M before derivatives, while a 30 bps increase would decrease it by $1.7M.
Nelnet Bank manages interest rate risk by matching asset/liability repricing and using derivatives; 72.6% of its assets and 58.6% of its deposits are variable-rate.
A consolidated +100 rate shock would increase pre-tax income by $3.6M in Q2 2026, driven by gains in Nelnet Bank, NFS, ETSP, and Corporate segments, while a -100 bps shock would decrease it by $2.4M.
The company's available-for-sale debt securities had a gross of $18.0M as of June 30, 2026, with no credit losses, and the company intends to hold them to maturity.
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, 2025 under Part I, Item 3 of such Form 10-K.
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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, 2025 under Part I, Item 3 of such Form 10-K.
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, 2025 in response to Part I, Item 1A of such Form 10-K.
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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, 2025 in response to Part I, Item 1A of such Form 10-K.