Nelnet Sells 2 Student Loan Portfolios

Student lender Nelnet Inc. has sold two student loan portfolios with total outstanding balances of $858 million and $428 million, according to a Securities and Exchange Commission filing on Wednesday.

Nelnet said the buyer was a large national bank.

The company expects to recognize a first-quarter loss of about $18 million from its sale of the $858 million portfolio through a subsidiary. The portfolio, which was sold on March 31, was originated under the Federal Family Education Loan Program.

Nelnet sold the $428 million portfolio Tuesday. The company expects to book a first-quarter loss of about $10 million on the sale.

After the transactions, Nelnet said there was about $4.5 billion in student loans remaining under the company's multiyear committed financing facility for FFELP loans.

The combined purchase price represented about 98 percent of the principal balance of the loan portfolios and included about $842 million of consolidation loans, Nelnet said.

In connection with the sale, Nelnet also entered into an agreement with the purchaser for the existing and future loan origination and servicing activities. As a result, the company expects to generate revenue from the loan portfolios that were sold.

Nelnet also disclosed that it held about $600,000 of private student loans on its balance sheet that are insured by The Education Resource Institute, or TERI, as of March 31. TERI, a nonprofit firm that provides financial guarantees, filed for bankruptcy protection late Monday.

Nelnet said is currently not originating new private student loans to be held on its balance sheet.

Nelnet shares gained 32 cents, or 2.6 percent, to $12.87 in morning trading. The stock has fallen from a 52-week high of $29.34 last April to a low of $8.63 last month.