LINCOLN, Neb., May 3 /PRNewswire/ -- Nelnet has led the student loan
industry in transparency and disclosure regarding our relationships with
colleges and universities. We have publicly disclosed our internal findings
and adopted a voluntary national code of conduct through an agreement with
the Nebraska Attorney General. Today, the New York Attorney General issued
a subpoena to the company, requesting information regarding our
relationships with college and university alumni associations nationally.
Throughout the New York Attorney General's inquiry process we have been
open regarding our relationships with alumni associations and in fact
specifically discussed this issue with his office several weeks ago.
We have been and remain proud of our affinity relationships with alumni
associations. These relationships provide valuable information and
opportunities to alumni regarding student loan consolidation, as well as
generating income that helps alumni associations carry out their mission.
Clearly, we will continue to cooperate with the New York Attorney
General, as we have done all along, which makes today's action by the
Attorney General very surprising to us. We believe our agreements are
appropriate and completely in accordance with the law. Our agreements are
similar to affinity relationships that many companies and industries have
with alumni associations to offer members a variety of products and
services.
An excerpt from Nelnet's ITEMS UNDER REVIEW AND CONSIDERATION, which is
available publicly at http://www.nelnet.net, is provided below:
Over the past several years, in order to assist in Nelnet's generalized
marketing activity undertaken for its consolidation loan products, Nelnet
has entered into affinity agreements and license agreements (like many
financial services firms) with various organizations including
approximately one hundred twenty (120) college and university alumni
associations. Under these agreements, alumni associations grant Nelnet
licenses to use certain intellectual property, including (i) member lists
in order to market Nelnet's consolidation loan products to the
association's members, and (ii) the alumni association's logo for use in
Nelnet's marketing correspondence. The correspondence describes Nelnet's
consolidation products and asks the borrower to direct any inquiries to
Nelnet. In consideration of these rights, Nelnet typically pays the
alumni association an annual fee, as well as, in some cases, a fixed fee
for each loan consolidation application ready for guarantee that is
received by Nelnet from a borrower on a member list. Nelnet markets its
consolidation product only to borrowers who become eligible for
consolidation loans only after they have separated from school under the
Higher Education Act, as identified on the association's member list. It
is Nelnet's understanding that these alumni associations have no role in
the selection of lenders for placement on any school's preferred lender
list. The alumni associations are not involved in contacting prospective
applicants or handling applications in any way. Similar to direct
marketing arrangements between alumni associations and, for example,
insurance companies, car rental agencies and hotels, in these agreements
the alumni associations receive a fee in exchange for providing access to
their member lists. In addition, Nelnet enters into similar arrangements
with entities other than alumni associations.
For all of these reasons, Nelnet has concluded that these affinity and
license agreements do not constitute prohibited remuneration and are
permitted under federal law; however, to eliminate any potentially
perceived conflict of interest, Nelnet will disclose to the individuals
consolidating their loans any monetary arrangement that goes to the
alumni association. In addition, Nelnet intends to work with alumni
associations to eliminate any fixed fee that Nelnet pays for each
consolidation loan application. (See Section I of the Code of Conduct.)
For 28 years, Nelnet (NYSE: NNI) has been helping the education-seeking
family plan for their education, pay for their education, and prepare for
their careers. The company has invested hundreds of millions of dollars in
products, services, and technology improvements for students and the
educational institutions they attend. These services include live
counseling to help families through all aspects of the financial aid
process, benefits for borrowers, including tens of millions of dollars in
fee reductions, and Nelnet sponsored scholarships. Nelnet serves students
in 50 states, employs approximately 4,000 associates, and has $25.0 billion
in net student loan assets.
Additional information is available at http://www.nelnet.net.
Information contained in this press release, 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
are 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. For more information see our
filings with the Securities and Exchange Commission.
SOURCE Nelnet
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Related links:
http://www.nelnet.net
CONTACT:
Media, Ben Kiser, +1-402-458-3024, or
Investors, Cheryl Watson, +1-317-469-2064, both of Nelnet
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