Nelnet Releases Statement Regarding Canadian Student Loan Contract

Lincoln, NE - Nelnet, Inc. announced recently that the Government of Canada has notified EDULINX Canada Corporation, a subsidiary of Nelnet, that the Government of Canada has decided to award a competitive contract to provide financial and related administrative services in support of the Canada and Integrated Student Loans Program (CSLP) upon the expiration of the current EDULINX contract for such services to another service provider.

"We are very disappointed by the Government of Canada's decision," said George Hopkinson, President of EDULINX. "We remain committed to providing exceptional service to our clients and customers and we will work closely with the Government of Canada and the selected service provider to ensure a seamless transition for those student borrowers impacted by this change."

Under its existing contract with the Government of Canada, EDULINX provides services for student borrowers attending public institutions. This contract is currently scheduled to expire on July 31, 2007 (the Government of Canada has the option to extend the existing contract to March 31, 2008). As a result of this decision, EDULINX will be required to transition the existing CSLP portfolio it services to the selected service provider.

EDULINX currently administers more than $9.2B(USD) in student loan assets of which approximately $7.9B(USD) is from the existing contract with the Government of Canada. The company will continue to service the remaining volume for its clients.

For the nine months ended September 30, 2006, servicing revenue for EDULINX was $48.2M(USD) of which $37.3M (USD) was earned under the CSLP contract. For the nine-month period ended September 30, 2006, EDULINX contributed $3.7M (USD), or $0.07 per share, to Nelnet's consolidated GAAP net income.

For the year ending December 31, 2006, the company expects to earn approximately $65M(USD) of servicing revenue from EDULINX. Of this amount, approximately $51M (USD) is expected to be earned under the contract with the Government of Canada. For the year ending December 31, 2006, it is expected that EDULINX will contribute approximately $5M (USD), or $0.09 per share, to Nelnet's consolidated GAAP net income.

Additionally, as a result of the Government of Canada's decision to award the contract to provide financial and related administrative services for CSLP to another service provider, Nelnet concluded that an impairment charge for certain EDULINX assets, including servicing software and hardware under development, intangible assets, and goodwill, was required under GAAP. The company has filed a current report on Form 8-K with the Securities and Exchange Commission, which contains additional information regarding the impairment charge and the potential impact on certain non-GAAP performance measures that the company utilizes.

SOURCE: Nelnet, Inc.