UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 6, 2006
NELNET, INC.
(Exact name of registrant as specified in its charter)
Nebraska 001-31924 84-0748903
-------- --------- ----------
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
121 South 13th Street, Suite 201, Lincoln, Nebraska 68508
------------------------------------------------------------ ---------
(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code (402) 458-2303
--------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS.
On October 6, 2006, Nelnet, Inc. (the "Company") received a letter from
the Department of Education (the "Department") related to the previously
disclosed audit report issued on September 29, 2006 by the Department's Office
of Inspector General (the "OIG") regarding the Company's portfolio of student
loans receiving 9.5% special allowance payments. The Department's letter
indicated that, until the issues raised in the OIG audit report are resolved,
the Department will pay future regular special allowance payments on the
underlying loans at the generally applicable statutory rate, and not the 9.5%
special allowance rate. The letter also stated that if resolution of the audit
upholds the propriety of Nelnet's billings for special allowance payments at the
9.5% minimum rate, the Department will pay the withheld amounts.
The Company estimates that the special allowance payments to be withheld
will be approximately $10 million for the quarter ended September 30, 2006.
The Company disagrees with the OIG's audit report, and continues to
believe that the Company has billed for the 9.5% special allowance payments in
accordance with applicable laws, regulations and the Department's previous
guidance. The Company intends to seek a satisfactory resolution of this matter
with the Department, and examine other remedies if a satisfactory resolution
cannot be reached with the Department. However, the Company cannot predict the
final outcome of any subsequent review by the Department or of any
administrative or other legal proceedings following any further action by the
Department. If the Company is ultimately required to return deemed overpayments
in connection with the 9.5% special allowance payment program, is no longer
eligible to receive 9.5% special allowance payments, and/or incurs significant
other costs, expenses or loss of revenues associated with an adverse final
outcome of this matter, it may have a material adverse effect on the Company's
financial condition and results of operations.
The Company issued a press release on October 6, 2006 announcing it
received the letter from the Department. A copy of the press release is attached
to this report as Exhibit 99.1 and is hereby incorporated by reference into this
Item 8.01.
Information contained or incorporated in this report, other than
historical information, may be considered forward looking in nature and is
subject to various risks, uncertainties, and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated,
or expected. Among the key factors that may have a direct bearing on Nelnet's
operating results, performance, or financial condition expressed or implied by
the forward-looking statements are the pending nature of the resolution of the
audit and the issues related thereto discussed in this report, changes in terms
of student loans and the educational credit marketplace, changes in the demand
for educational financing or in financing preferences of educational
institutions, students and their families, or changes in the general interest
rate environment and in the securitization markets for education loans.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits. The following exhibit is filed as part of this report:
Exhibit
No. Description
----------- ------------------------------------------------------------
99.1 Press release by Nelnet, Inc. dated October 6, 2006 -
"Nelnet receives letter from Department of Education"
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 hereunto duly authorized.
NELNET, INC.
Date: October 6, 2006 By: /s/ TERRY J. HEIMES
------------------------------------
Terry J. Heimes
Chief Financial Officer
EXHIBIT INDEX
Exhibit
No. Description
----------- ------------------------------------------------------------
99.1 Press release by Nelnet, Inc. dated October 6, 2006 -
"Nelnet receives letter from Department of Education"