Nelnet
Encyclopedia
Nelnet is a Lincoln
, Nebraska
-based lending conglomerate
that deals in the administration and repayment of student loans.
Nelnet owns over 50 subsidiaries that administer and collect student loans throughout the United States
and Canada
, such as inTuition, infiNET, LoanSTAR, and TriCura Canada, Inc.
One of their lobbyists is Clark Lytle Gelduldig & Cranford.
Nelnet was recently investigated by the Inspector General
's Office for allegations of misuse of federal student loan programs. A United States Department of Education
audit revealed that since 1993, Nelnet has abused a loophole in federal tax legislation that allowed the company to receive a higher interest rate on specified loans, generating $278 million from taxpayers and possibly an excess $1.2 billion in profits. Nelnet has disputed the findings of the audit through a letter written to the United States Department of Education letting them know of this loophole. This letter was met with a response 13 months later from the Department of Education which stated that the Department did not know of this and gave a list of people to contact to see what was wrong with the loophole.
Ultimately, U.S. Department of Education Under Secretary Sara Tucker
allowed Nelnet to keep the $278 million windfall. It is worth noting that Tucker had ties to Nelnet through the Hispanic College Fund
, where she is the former Chief Executive Officer
.
Nelnet has also made financial contributions to United States
congressional campaigns, a practice that some have argued is improper given the fact that interest rates and lending preferences are often set by congressional committees. While some have argued that these contributions have led to favoritism shown to Nelnet, a conclusive link between the contributions and congressional actions has yet to be established.
In February 2007, New York Attorney General Andrew Cuomo
launched an investigation into alleged deceptive lending practices by student loan providers, including The College Board, EduCap, Nelnet, Citibank
, and Sallie Mae.
The New York Times
reported in August 2007, that Senator Jon Bruning, the current Nebraska Attorney General
, allowed Nelnet to renege on a $1 million settlement the company reached with Bruning in April 2007. Nelnet was accused of industry wide kickbacks, improper inducements, and gifts from student loan providers to colleges and universities. Nelnet quickly shut down a Nebraska investigation into its activities by agreeing to provide $1 million to the state in support of a national financial aid awareness campaign. Bruning decided in August 2007 to forgive Nelnet its $1 million obligation after the company announced that it had reached a separate $2 million settlement with New York State Attorney General Andrew Cuomo
to end the AG's investigation into Nelnet's business practices. Mr. Bruning called Cuomo’s investigation of Nelnet and other student-loan companies “ridiculous” and “political.” According to Bruning's spokeswoman, Bruning decided to forgive Nelnet's obligation because "it doesn’t make sense to create two funds for the same purpose." Officials from Nelnet and Union Bank & Trust Company
, which are both owned by the same family, gave $16,100 to Bruning for his Senate election campaign, including $2,300 from Nelnet President Jeff Noordhoek, just 16 days before the two would appear together to announce the $1 million settlement. In his interview with the Omaha World-Herald
, Mr. Bruning called himself “a friend of Nelnet” and said he would “never apologize” for his relationship with the company.
The Chronicle of Higher Education
reported in August 2010, that Nelnet settled a case for $55 million. The suit was filed by a former Department of Education researcher named Dr. Jon Oberg. Nelnet and other lenders were accused of defrauding taxpayers of billions of dollars in student loan subsidies. The largest student lender in the country, Sallie Mae, is also listed as a defendant in the case.
Lincoln, Nebraska
The City of Lincoln is the capital and the second-most populous city of the US state of Nebraska. Lincoln is also the county seat of Lancaster County and the home of the University of Nebraska. Lincoln's 2010 Census population was 258,379....
, Nebraska
Nebraska
Nebraska is a state on the Great Plains of the Midwestern United States. The state's capital is Lincoln and its largest city is Omaha, on the Missouri River....
-based lending conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
that deals in the administration and repayment of student loans.
History
Nelnet was founded as the UNIPAC Loan Service Corporation in 1978 and renamed Nelnet in 1996. Its current Chairman & Chief Executive Officer is Michael S. Dunlap. Nelnet holds over $25 billion in student loans as of 2007, roughly one-third of all federally subsidized student loans currently held by students in the United States.Nelnet owns over 50 subsidiaries that administer and collect student loans throughout the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, such as inTuition, infiNET, LoanSTAR, and TriCura Canada, Inc.
One of their lobbyists is Clark Lytle Gelduldig & Cranford.
Controversies
Nelnet appears to be one of the sources of the many problems experienced in October 2011 with the U.S. Department of Education's transition from its proprietary website to what appears to be a "Nelnet, Inc. (US)" hosted website for a new platform for online servicing of federal student loans formerly handled by the government.Nelnet was recently investigated by the Inspector General
Inspector General
An Inspector General is an investigative official in a civil or military organization. The plural of the term is Inspectors General.-Bangladesh:...
's Office for allegations of misuse of federal student loan programs. A United States Department of Education
United States Department of Education
The United States Department of Education, also referred to as ED or the ED for Education Department, is a Cabinet-level department of the United States government...
audit revealed that since 1993, Nelnet has abused a loophole in federal tax legislation that allowed the company to receive a higher interest rate on specified loans, generating $278 million from taxpayers and possibly an excess $1.2 billion in profits. Nelnet has disputed the findings of the audit through a letter written to the United States Department of Education letting them know of this loophole. This letter was met with a response 13 months later from the Department of Education which stated that the Department did not know of this and gave a list of people to contact to see what was wrong with the loophole.
Ultimately, U.S. Department of Education Under Secretary Sara Tucker
Sara Tucker
Sara Martinez Tucker was the Under Secretary of Education at the U.S. Department of Education and former president and Chief Executive Officer of the Hispanic Scholarship Fund....
allowed Nelnet to keep the $278 million windfall. It is worth noting that Tucker had ties to Nelnet through the Hispanic College Fund
Hispanic College Fund
Hispanic College Fund, Inc. is a nonprofit organization whose mission is to prepare the next generation of Hispanic professionals. It serves primarily high school and college students.The Hispanic College Fund PipelineHigh School Programs:...
, where she is the former Chief Executive Officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
.
Nelnet has also made financial contributions to United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
congressional campaigns, a practice that some have argued is improper given the fact that interest rates and lending preferences are often set by congressional committees. While some have argued that these contributions have led to favoritism shown to Nelnet, a conclusive link between the contributions and congressional actions has yet to be established.
In February 2007, New York Attorney General Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
launched an investigation into alleged deceptive lending practices by student loan providers, including The College Board, EduCap, Nelnet, Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
, and Sallie Mae.
The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
reported in August 2007, that Senator Jon Bruning, the current Nebraska Attorney General
Nebraska Attorney General
The Nebraska Attorney General is the chief law enforcement officer and lawyer for the U.S. state of Nebraska.-List of Attorneys General:-Notes:Term began February 21, 1867.Joint Populist-Democratic ticket.Resigned....
, allowed Nelnet to renege on a $1 million settlement the company reached with Bruning in April 2007. Nelnet was accused of industry wide kickbacks, improper inducements, and gifts from student loan providers to colleges and universities. Nelnet quickly shut down a Nebraska investigation into its activities by agreeing to provide $1 million to the state in support of a national financial aid awareness campaign. Bruning decided in August 2007 to forgive Nelnet its $1 million obligation after the company announced that it had reached a separate $2 million settlement with New York State Attorney General Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
to end the AG's investigation into Nelnet's business practices. Mr. Bruning called Cuomo’s investigation of Nelnet and other student-loan companies “ridiculous” and “political.” According to Bruning's spokeswoman, Bruning decided to forgive Nelnet's obligation because "it doesn’t make sense to create two funds for the same purpose." Officials from Nelnet and Union Bank & Trust Company
Union Bank & Trust Company
Union Bank & Trust Company is a privately owned, state chartered commercial bank headquartered in Lincoln, Nebraska. The bank was founded on February 28, 1917 under the name Farmer's State Bank. The name was changed to Union Bank in 1935, then to its current name in 1959 with the addition of...
, which are both owned by the same family, gave $16,100 to Bruning for his Senate election campaign, including $2,300 from Nelnet President Jeff Noordhoek, just 16 days before the two would appear together to announce the $1 million settlement. In his interview with the Omaha World-Herald
Omaha World-Herald
The Omaha World-Herald, based in Omaha, Nebraska, is the primary daily newspaper of Nebraska, as well as portions of southwest Iowa. For decades it circulated daily throughout Nebraska, and in parts of Kansas, South Dakota, Missouri, Colorado and Wyoming. In 2008, distribution was reduced to the...
, Mr. Bruning called himself “a friend of Nelnet” and said he would “never apologize” for his relationship with the company.
The Chronicle of Higher Education
The Chronicle of Higher Education
The Chronicle of Higher Education is a newspaper and website that presents news, information, and jobs for college and university faculty, staff members and administrators....
reported in August 2010, that Nelnet settled a case for $55 million. The suit was filed by a former Department of Education researcher named Dr. Jon Oberg. Nelnet and other lenders were accused of defrauding taxpayers of billions of dollars in student loan subsidies. The largest student lender in the country, Sallie Mae, is also listed as a defendant in the case.