Nelnet, Inc Case Study

Nelnet, Inc. is one of the leading educational planning and finance companies in the United States. They have been in business for over 20 years and have steadily grown their share of the student lending market through their years of business. By having a strong vision with equally strong planning and goal setting functions in place, they have securely set themselves up for success in the educational lending and finance arena.

Nelnet’s vision of “Making educational dreams possible” [1] shows the priority that Nelnet, as a company, gives to their customers. They also utilize a set of Core values that shows priority to their customers, business partners and associates.

Nelnet is currently building their strategic plan around their suite of services centered on quality educational planning and finance products. The strategy helps families across the country reach their individual educational goal. The strategy can start helping families as early as Kindergarten and all the way through Graduate school. The strategy is known as the educational life cycle. [See graph 1] It should also be noted that the strategic life cycle also relates to school clients that Nelnet serves as well. So with one strategy, Nelnet is covering all customers. An integral piece of the strategy is becoming part of the educational seeking family at an early stage in their planning and goal setting portion of obtaining an education. Whether Nelnet is helping the family save for College by starting a 529 college savings plan, helping the family pay for elementary, middle or high school with tuition payment plans, or obtaining a grant through the Grant & Aid program offered by Nelnet. The education life cycle gets Nelnet in the front door of the family or school by the definition of strategic management by Robert Lamb, “Strategic management is an ongoing process that assesses the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984:ix)[2], Nelnet supports this idea with the product life cycle they use but, “we stretch out our plan for 3-5 years and then go back and evaluate” [3], according to Mike Dunlap, CEO. After their most recent evaluation, Nelnet updated their plan from being just a student loan originating and servicing company to an educational planning and financing company which in turn has made them update their strategic goals.

Strategic goals as defined in our book, “Broad statements of where the organization wants to be in the future; pertain to the organization as a whole rather than to specific divisions or departments.” [4] Nelnet had a unique situation come their way due to new student loan legislation passed which reflected substantial changes to the Federal Family Educational Loan Program (FFELP). These changes, affecting Nelnet’s profit margins on FFELP loans, brought about new strategic goals. By looking at the future of the company and where Mike Dunlap, CEO, wanted to be in the future, Nelnet changed their plan and goals 3 years ago “Our key elements of the company’s business model are to diversify revenue streams, increase fee-based income, generate high quality student loan assets, and deploy capital with a long term focus” [5]. Peter Drucker, an author of management related material, once said: “The best way to predict the future is to create it.” [6]. That is exactly what Nelnet followed in changing their strategic plan and essentially the goals they wanted to achieve in preparing for industry change. Nelnet’s short term goals were changed from twenty percent net income growth and fifty percent plus growth in fee income by 2010 to sustaining diversification through recurring fee income and managing both revenue and expenses as well as organic growth through innovation and simultaneously pursuing differentiation and low costs. Nelnet’s long term goals changed from 100 billion in assets by 2014 to creating value for 10 million students and families annually. [See graph 2 & 3] By looking into the future Nelnet used an event driven management plan defined as “Evolutionary planning that responds to the current reality of what the environment and the market place demands” [7]. The current reality was the U.S. Government can change the laws governing