1258602--3/3/2009--NELNET

related topics

{regulation, government, change}

{loan, real, estate}

{tax, income, asset}

{condition, economic, financial}

{operation, international, foreign}

{financial, litigation, operation}

{system, service, information}

{capital, credit, financial}

{regulation, change, law}

{product, market, service}

{stock, price, operating}

{loss, insurance, financial}

{debt, indebtedness, cash}

The Company may be subject to penalties and sanctions if it fails to comply with governmental regulations or guaranty agency rules. Competition created from other lenders and servicers may adversely impact the volume of future originations and the Company s loan and guaranty servicing businesses. Competition created by the Federal Direct Loan Program may adversely impact the volume of future originations and the Company s loan and guaranty servicing business. The reduction in the Company s student loan purchases from branding and forward flow partners could have an adverse impact on its business. servicing volume could have a negative effect on the Company s earnings. Future losses due to defaults on loans held by the Company present credit risk which could adversely affect the Company s earnings. The Company must satisfy certain requirements necessary to maintain the federal guarantees of its federally insured loans, and the Company may incur penalties or lose its guarantees if it fails to meet these requirements. Higher rates of prepayments of student loans could reduce the Company s profits. Consolidation loan activity by competitors or through the Direct Loan Program presents a risk to the Company s loan portfolio and profitability. The Company faces liquidity risks associated with financing student loan originations and acquisitions. Elimination of the FFEL Program by the Federal Government would have a significant negative effect on the Company s earnings and operations. Utilization by lenders of the Department s Participation and Purchase Program could reduce servicing, default aversion, and collection revenue. Operating Segments Fee-Based Businesses Changes in legislation and regulations could have a negative impact upon the Company s business and may affect its profitability. The Company s results are affected by competitive conditions, economic changes, and customer preferences. The Company faces liquidity and funding risk to meet its financial obligations. The Company is exposed to mark-to-formula collateral support risk on its FFELP warehouse facility. The Company faces counterparty risk. The Company is exposed to interest rate risk in the form of basis risk and repricing risk because the interest rate characteristics of the Company s assets do not match the interest rate characteristics of the funding for the assets. Characteristics unique to asset-backed securitizations may negatively affect the Company s continued liquidity. The Company is exposed to interest rate risk because of the interest rate characteristics of certain of its assets and the interest rate characteristics of the related funding of such assets. The Company is subject to foreign currency exchange risk and such risk could lead to increased costs. The Company s derivative instruments may not be successful in managing interest and foreign currency exchange rate risks, which may negatively impact the Company s operations. The ratings of the Company or of any securities issued by the Company may change, which may increase the Company s costs of capital and may reduce the liquidity of the Company s securities. A continued economic recession could reduce demand for Company products and services and lead to lower revenue and lower earnings. Changes in accounting policies or accounting standards, changes in how accounting standards are interpreted or applied, and incorrect estimates and assumptions by management in connection with the preparation of the Company s consolidated financial statements could materially affect the reported amounts of asset and liabilities, the reported amounts of income and expenses, and related disclosures. The Company s future results may be affected by various legal and regulatory proceedings. The market price of the Company s Class A common stock may fluctuate significantly, which may result in losses for investors. Negative publicity that may be associated with the student lending industry, including negative publicity about the Company, may harm the Company s reputation and adversely affect operating results. If management does not effectively execute the Company s restructuring objectives to reduce infrastructure costs and reposition the Company in the education market place, it could adversely affect the Company s customers, operations, revenue, and ability to compete. Failures in the Company s information technology system could materially disrupt its business. A compromise of customer data could negatively impact the Company s business. Exposure related to certain tax issues could decrease the Company s net income.

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1258602--3/3/2009--NELNET_INC