Nelnet Issues Statement Regarding Ministry of Education’s NextGen Business Process Exploitation Proposal

LINCOLN, Neb., June 22, 2020 / PRNewswire / – Nelnet (NYSE: NNI) today announced that the U.S. Department of Education, Office of Federal Student Aid (Department) has notified the company that the company’s proposal in response to the component Department’s Business Process Operations (BPO) The procurement process of the NextGen Financial Services Environment (NextGen) contract was deemed ineligible for award, claiming that the company’s response did not meet certain requirements related to the participation of small enterprises. BPO is the back office and operational call center functions to serve the department’s 43 million student loan clients. Nelnet has requested a debriefing by the ministry, and the company is considering its legal options, including filing a protest challenging the decision.

“We are shocked that the two highest rated service agents and the dedicated employees who are responsible for achieving these rankings are not being considered by the ministry for this contract,” said Jeff Noordhoek, Managing Director of Nelnet. “We are frustrated and disappointed with this decision and the lack of transparency in the process and we will pursue all available legal avenues to ensure that students receive the high quality service they expect from us. The federal student loan program is very complicated. administering, and simply throwing away the training and experience of Nelnet, Great Lakes and our dedicated associates is a recipe for an implementation disaster that will negatively impact borrowers. “

The Department’s NextGen contractual procurement process includes solicitations, including BPO and the Enhanced Processing Solution (EPS) transitional information technology platform, which will provide a new framework for servicing all student loans held by the Department. . At April 2, 2020, Nelnet announced that the ministry had notified the company that the company’s response to the EPS component was deemed to be outside the competitive range and would no longer be considered for an award. The company filed an initial complaint and two additional complaints with the Government Accountability Office to challenge the ministry’s decision regarding the PES. The company cannot predict the outcome of these protests. A decision is expected at the end of July.

Nelnet Servicing, LLC (Nelnet Servicing) and Great Lakes Educational Loan Services, Inc. (Great Lakes) were awarded student loan management contracts by the Ministry in June 2009 to service loans held by the Ministry. From March 31, 2020, Nelnet Servicing repaired $ 185.5 billion student loans for 5.5 million borrowers under its contract, and Great Lakes served $ 243.2 billion student loans for 7.3 million borrowers under its contract. These maintenance contracts expire on December 14, 2020 with two potential six-month extensions at the discretion of the Ministry December 14th, 2021. If the Department’s contractual decisions are upheld, Nelnet Servicing and Great Lakes will eventually have to migrate these portfolios to another vendor’s system and the company will restructure the company’s loan service segment for long-term success. term.

Nelnet will continue to be a leader in serving the Federal Family Education Loans (FFEL) program, private education and consumer loans to clients. From March 31, 2020, the company maintained $ 48.7 billion in the FFEL program, private education and consumer loans for 2.1 million borrowers. The company continues to have opportunities to increase its private and consumer lending services for FinTech lenders, as well as its professional services for businesses and states.

“The ministry’s contractual decisions are difficult and, if upheld, will have a long-term impact on Nelnet,” Noordhoek added. “Fortunately, we are financially strong and have diversified considerably over the years. Going forward, I have no doubts that there will be better days and we will continue to grow our core businesses and invest in new opportunities by focusing on exceptional service and leveraging our great place to work. ”

Forward-looking statements and cautions

This press release contains forward-looking statements within the meaning of federal securities laws. The words “anticipate”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “,”. as well as forward-looking statements, are intended to identify forward-looking statements. These statements are based on management’s current expectations as of the date of this press release and are subject to known and unknown risks and uncertainties which may cause actual results or performance to differ materially from those expressed or implied by forward-looking statements. Such risks include, but are not limited to: risks related to the ability to successfully maintain and increase the allocated volumes of student loans managed by the Company under existing and future management contracts with the Ministry, including current contracts accounted for 30 percent of revenue in 2019; business risks associated with the Department’s initiatives to secure new contracts for federal student loan service, including the pending and uncertain nature of the Department’s procurement process, the uncertain timing and nature of the outcome of the company’s protest against the Ministry’s reported decision on the company’s proposal for the SAE portion of the ministry’s procurement, the uncertain timing and nature of the outcome of the company’s intentional protest against the decision reported by the Department on the company’s proposal for the BPO stream, the possibility that awards or other evaluations of the proposals may be challenged by various interested parties and may not be finalized within the currently scheduled timeframe or not at all, the risks that the company will not be successful in securing one of these potential new contracts, and the risks associated with a company’s ability to honor agreements with third party customers for loan servicing; risks related to the severity, scale and duration of the COVID-19 pandemic, including changes in the macroeconomic environment and consumer behavior, restrictions on business, personal or travel activities intended to slow down the spread of the pandemic and the volatility of market conditions resulting from the pandemic; risks and uncertainties associated with changes in the credit and services market resulting from changes in applicable laws, regulations, government programs, budgets and annual credits, and other factors; and cybersecurity risks, including potential system disruption, disclosure of confidential information and / or damage to reputation resulting from cyber breaches. For more information, see the “Risk Factors” sections and other cautionary discussions about risks and uncertainties included in documents filed or provided by the Company with the Securities and Exchange Commission. All forward-looking statements contained in this press release are as of the date of this press release. Although the company may voluntarily update or revise its forward-looking statements from time to time to reflect actual results or changes in the company’s expectations, the company disclaims any commitment to do so, except as required by applicable laws. securities.

(code #: nnig)

SOURCE Nelnet, Inc.

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