SEC Info - Nelnet Student Loan Funding LLC - 10-K - For 12/31/04

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Nelnet Student Loan Funding LLC · 10-K · For 12/31/04 · EX-99.13

Filed On 3/31/05 10:18am ET · SEC File 333-82280 · Accession Number 870156-5-46

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/31/05  Nelnet Student Loan Funding LLC   10-K       12/31/04   14:28                                     Stratus Fund Inc

Annual Report · Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                          7     41K 
 2: EX-99.1     Miscellaneous Exhibit                                  1      7K 
 3: EX-99.2     Miscellaneous Exhibit                                  1      8K 
 4: EX-99.3     Miscellaneous Exhibit                                  1      7K 
 5: EX-99.4     Miscellaneous Exhibit                                  1      8K 
 6: EX-99.5     Miscellaneous Exhibit                                  1      7K 
 7: EX-99.6     Miscellaneous Exhibit                                  1      8K 
 8: EX-99.7     Miscellaneous Exhibit                                  1      8K 
 9: EX-99.8     Miscellaneous Exhibit                                  1      8K 
10: EX-99.9     Miscellaneous Exhibit                                  1      8K 
11: EX-99.10    Miscellaneous Exhibit                                  1      8K 
12: EX-99.11    Miscellaneous Exhibit                                  1      7K 
13: EX-99.12    Miscellaneous Exhibit                                  1      8K 
14: EX-99.13    Servicer Compliance Audit                              9     39K

EX-99.13 · Servicer Compliance Audit

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                                                                   Exhibit 99.13

--------------------------------------------------------------------------------

NELNET

--------------------------------------------------------------------------------

 Compliance Audits (Attestation Engagements) For Lenders and
 Lender Servicers Participating in the Federal Family Education Loan Program

Year Ended December 31, 2004

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NELNET

 TABLE OF CONTENTS

                                                                    PAGE

Independent Accountants' Report                                            1    

Nelnet Statement of Compliance                                             3    

APPENDIX                                                                        

A    Background                                                            6    

B    Listing of Lenders Covered by Compliance Attestation                  7    

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 INDEPENDENT ACCOUNTANTS' REPORT

The Board of Directors                                                          
Nelnet, Inc.:                                                                   

We have examined management's assertions, included in its representation letter 
dated January 14, 2005 that Nelnet, Inc. (Nelnet) complied with the following   
compliance requirements specified in the Audit Guide, COMPLIANCE AUDITS         
(ATTESTATION ENGAGEMENTS) FOR LENDERS AND LENDER SERVICERS PARTICIPATING IN THE 
FEDERAL FAMILY EDUCATION LOAN PROGRAM (the Guide), issued by the U.S. Department
of Education, Office of the Inspector General, dated December 1996, relative to 
Nelnet's administration of the Federal Family Education Loan Program on behalf  
of its lender clients during the year ended December 31, 2004 and that Nelnet   
maintained effective internal control over compliance with the aforementioned   
compliance requirements as of December 31, 2004:                                

o       Support for LaRS (formerly known as the ED Form 799)                    
o       Loan Documentation                                                      
o       Calculation of Loan Origination Fees                                    
o       Interest Benefits--Eligibility, Proper Rate and Proper Calculations     
o       Special Allowance Payments--Eligibility and Proper Calculation of       
Average Daily Balances                                          
o       Accurate Loan Principal Balances                                        
o       Reporting of Sales, Purchases and Transfers                             
o       Recording of Student Status Changes                                     
o       Payment Processing                                                      
o       Due Diligence in the Collection of Loans                                
o       Timely Filing of Claims                                                 
o       Curing Due Diligence/Timely Filing Violations                           

As discussed in that representation letter, management is responsible for       
Nelnet's compliance with--and the effectiveness of Nelnet's internal control    
over compliance with--those requirements. Our responsibility is to express an   
opinion on management's assertions about Nelnet's compliance with--and the      
effectiveness of Nelnet's internal control over compliance with--the specified  
compliance requirements based on our examination.                               

Our examination was conducted in accordance with attestation standards          
established by the American Institute of Certified Public Accountants,          
GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the United  
States, and the Guide and, accordingly, included examining, on a test basis,    
evidence about Nelnet's compliance with those requirements; obtaining an        
understanding of the internal control over compliance with the specified        
compliance requirements, testing, and evaluating the design and operating       
effectiveness of the internal control; and performing such other procedures as  
we considered necessary in the circumstances. We believe that our examination   
provides a reasonable basis for our opinion. Our examination does not provide a 
legal determination on Nelnet's compliance with specified requirements.         

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Because of inherent limitations in any internal control, errors or fraud may    
occur and not be detected. Also, projections of any evaluation of the internal  
control over compliance with the specified requirements to future periods are   
subject to the risk that internal control over compliance may become inadequate 
because of changes in conditions, or that the degree of compliance with the     
policies and procedures may deteriorate.                                        

In our opinion, management's assertions that Nelnet complied with the           
aforementioned compliance requirements for the year ended December 31, 2004 is  
fairly stated, in all material respects. Also in our opinion, management's      
assertion that Nelnet maintained effective internal control over compliance with
the aforementioned compliance requirements as of December 31, 2004, is fairly   
stated, in all material respects, based upon criteria established in INTERNAL   
CONTROL-INTEGRATED FRAMEWORK issued by the Committee of Sponsoring Organizations
of the Treadway Commission.                                                     

This report is intended solely for the information and use of the audit         
committee and management of Nelnet, lender clients, and the U.S. Department of  
Education, and is not intended to be, and should not be, used by anyone other   
than these specified parties.                                                   

/s/ KPMG LLP                                                                    

January 14, 2005                                                                

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REPORT ON MANAGEMENT'S ASSERTIONS ON COMPLIANCE WITH SPECIFIED
FEDERAL FAMILY EDUCATION LOAN PROGRAM REQUIREMENTS

We, as members of Nelnet, Inc. (Nelnet) are responsible for complying with the  
requirements of the Federal Family Education Loan (FFEL) Program. We are        
responsible for and we have established and maintained an effective internal    
control structure over FFEL Program requirements. We have performed an          
evaluation of Nelnet's compliance with the following requirements of the FFEL   
Program during the year ended December 31, 2004. Based on this evaluation, we   
assert that during the year ended December 31, 2004, Nelnet has materially      
complied with the FFEL Program requirements below relative to those services    
provided to our clients.                                                        

o    The loan information (loan types, interest rate, beginning and ending      
principal loan balances), and loan status (past due, in grace, in     
deferment) reported in Parts I, II, III, IV, and V of either the LaRS 
   prepared by Nelnet and submitted to ED on behalf of our lender clients or
the billing information prepared by Nelnet and submitted to our lender
clients during the year ended December 31, 2004 agrees with Nelnet's  
  summary records/ledger and as of December 31, 2004, Nelnet had effective
internal control over compliance with the requirements that such      
information be in agreement.                                          

o    Nelnet supported loans reported in either the LaRS prepared by Nelnet and  
    submitted to ED on behalf of our lender clients or the billing information
prepared by Nelnet and submitted to our lender clients during the year
ended December 31, 2004 with--and as of December 31, 2004, Nelnet had 
effective internal control over compliance requirements for supporting
  loans with--loan records that include all applicable documents listed in
   Section II, Compliance Requirements 2, of the Audit Guide that our lender
clients have contracted with Nelnet to store.                         

o    During the year ended December 31, 2004, Nelnet completely reported,       
  classified and computed, in accordance with LaRS instructions--and as of
  December 31, 2004, Nelnet had effective internal control over compliance
    with LaRS instructions for classifying and computing--the loan origination
  information reported in Part I in either the LaRS prepared by Nelnet and
    submitted to ED on behalf of our lender clients or the billing information
prepared by Nelnet and submitted to our lender clients.               

   Although Nelnet prepared LaRS billing information for our lender clients,
each individual lender client will have to make their own assertion   
 regarding compliance with requirements for payment to ED of origination
fees in excess of interest and special allowance.                     

o    Loans included in Part II of either the LaRS prepared by Nelnet and        
    submitted to ED on behalf of our lender clients or the billing information
prepared by Nelnet and submitted to our lender clients during the year
ended December 31, 2004 were--and as of December 31, 2004, Nelnet had 
     effective internal control over compliance with requirements that loans are
  (1) in a status eligible for interest benefits, (2) assigned the correct
interest rate in accordance with Section 427A(a)-(i) of the HEA, as   
amended, and (3) classified in the correct interest rate category in  
    accordance with LaRS instructions. Ending principal amounts, average daily
   balances, and interest amounts were calculated in accordance with--and as
of December 31, 2004, Nelnet had effective internal controls over     
   compliance with requirements for calculation in accordance with--the LaRS
instructions.                                                         

3 

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o    Loans included in Part III of either the LaRS prepared by Nelnet and       
    submitted to ED on behalf of our lender clients or the billing information
prepared by Nelnet and submitted to our lender clients during the year
ended December 31, 2004 were--and as of December 31, 2004, Nelnet had 
 effective internal control over compliance with requirements that loans
are--(1) in a status eligible for special allowance and (2) properly  
  categorized on the LaRS in accordance with the LaRS instructions. Ending
     principal balances, average daily balances, and adjustments for differences
 in average daily balances were calculated in accordance with--and as of
   December 31, 2004, Nelnet had effective internal controls over compliance
with requirements for calculation in accordance with--the LaRS        
instructions.                                                         

o    In Parts IV and V of the LaRS prepared by Nelnet and submitted to ED on    
    behalf of our lender clients or the billing information prepared by Nelnet
and submitted to our lender clients during the year ended December 31,
2004, Nelnet properly classified and accurately reported--and as of   
  December 31, 2004, Nelnet had effective internal control over compliance
    with requirements to properly classify and report--loan principal balances
     in accordance with the LaRS instructions and included all outstanding loans
  (except those for which the guaranty was voided are not included in Part
VI.)                                                                  

o    Loan purchases and sales made on behalf of our lender clients during the   
year ended December 31, 2004 were recorded by Nelnet in accordance    
  with--and as of December 31, 2004, Nelnet had effective internal control
over compliance for recording loan purchases/sales in accordance with 
     (identify the applicable documents such as purchase/sales agreements or the
    instructions lender provided to Nelnet) with respect to the start/end date
of eligibility for interest, special allowance and responsibility for 
    payment of loan origination fees. During the year ended December 31, 2004,
    Nelnet recorded completely and accurately in the servicer's loan servicing
     systems--and as of December 31, 2004, Nelnet had effective internal control
  over compliance with requirements to record completely and accurately in
  the servicer's loan servicing systems--all applicable LaRS loan data for
loans transferred, including beginning balances.                      

   Although Nelnet prepared LaRS billing information for our lender clients,
each individual lender client will have to make their own assertion   
 regarding compliance with requirements for payment to ED of origination
fees in excess of interest and special allowance.                     

o    Upon receipt of Student Status Confirmation Reports or other notification  
     of change information for loans serviced during the year ended December 31,
  2004, Nelnet accurately updated--and as of December 31, 2004, Nelnet had
    effective internal control over compliance with requirements to accurately
     update--loan records for changes to student status, including conversion to
repayment status in accordance with 34 CFR 682.401(b)(20) and 34 CFR  
682.209, respectively.                                                

o    For loans serviced during the year ended December 31, 2004, Nelnet: (a)    
calculated--and as of December 31, 2004, Nelnet had effective internal
control over compliance with requirements to calculate--interest and  
principal in accordance with 34 CFR 682.304 and (b) applied--and as of
  December 31, 2004, Nelnet had effective internal control over compliance
with requirements to apply (i) loan payments effective with the day of
receipt and (ii) prepayments in accordance with 34 CFR 682.209 or the 
documented specific request of the borrower.                          

o    For loans serviced during the year ended December 31, 2004, Nelnet complied
  with--and as of December 31, 2004, Nelnet had effective internal control
over compliance with--the due diligence requirements for collection of
     delinquent loans, including the requirements for skip-tracing or pre-claims
assistance set forth in 34 CFR 682.411 (c)-(m).                       

4 

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o    For loans serviced during the year ended December 31, 2004, Nelnet complied
  with--and as of December 31, 2004, Nelnet had effective internal control
over compliance with--deadlines for timely filing of claims with the  
   guaranty agency concerning death, disability, false certification, closed
   schools, or bankruptcy contained in 34 CFR 682.402(b), (c), (d), (e), (f)
 and (g) for default claims contained in 34 CFR 682.406(a)(5). For loans
serviced during the year ended December 31, 2004, Nelnet accurately   
 categorized--and as of December 31, 2004, Nelnet had effective internal
control over compliance with requirements for accurately              
categorizing--amounts pertaining to claims in the LaRS.               

o    For loans with timely-filing violations or due diligence violations that   
    were cured during the year ended December 31, 2004, Nelnet documented that
   it performed--and, as of December 31, 2004, Nelnet had effective internal
control over compliance with requirements to perform--cure procedures 
     required by 34 CFR 682 Appendix D [Bulletin 88-G-138]. For loans on which a
  cure was required but that were not cured during the year ended December
     31, 2004, Nelnet properly categorized--and, as of December 31, 2004, Nelnet
 had effective internal control over compliance with the requirements to
   properly categorize the loans in the LaRS prepared and submitted to ED on
    behalf of our lender clients or the billing information prepared by Nelnet
and submitted to our lender clients.                                  

Very Truly Yours,                                                               

Nelnet, Inc.                                                                    

/s/ Mike Dunlap                             /s/ Terry Heimes                    
------------------------------              -------------------------------     
Mike Dunlap                                 Terry Heimes                        
CHAIRMAN AND CO-CEO                         CHIEF FINANCIAL OFFICER             

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APPENDIX A

Background

   The Higher Education Act of 1965 (HEA), as amended, requires each lender,
     as defined in section 428(b)(1)(U) of the HEA, participating in the Federal
    Family Education Loan (FFEL) Program to obtain a compliance attestation of
     its FFEL Program. These compliance attestations are performed in accordance
    with the AICPA's Professional Standards for Attestation Engagements (SSAE)
No. 10, Section 800, the general fieldwork and reporting standards in 
 GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the
United States; and the Audit Guide, COMPLIANCE AUDITS (ATTESTATION    
    ENGAGEMENTS) FOR LENDERS AND LENDER SERVICERS PARTICIPATING IN THE FEDERAL
    FAMILY EDUCATION LOAN PROGRAM (the Guide) issued by the U.S. Department of
Education, Office of Inspector General, dated December 1996.          

    Lenders using a third-party service organization(s) to service all or part
of its FFEL Program loan portfolio may not be able to make all of the 
    assertions required in Section II of the Audit Guide. In those situations,
the Department of Education will accept, as meeting the lender audit  
    requirement, an independent accountants' report based upon an "alternative
   or combined" engagement as defined in Section III of the Audit Guide. The
lender must obtain from the service organization an audit/attestation 
  report that meets the requirements described in Section III of the Audit
Guide.                                                                

The independent accountants' report(s) must include their opinion with
respect to the service organization's compliance with the specified   
requirements in Section II of the Audit Guide pertaining to functions 
carried out by the servicing organization.                            

  Nelnet, Inc. (Nelnet) is a for profit third-party student loan servicing
organization responsible for the proper and timely performance of many
  aspects of student loan processing. Nelnet operates servicing centers in
Denver, CO; Jacksonville, FL; Indianapolis, IN; and Lincoln, NE. The  
primary services provided to the loan holders by Nelnet are:          

 o    accepting loan origination and disbursement information on new and
existing borrowers;                                         

o    processing of general borrower correspondence, forbearance and   
deferment requests and borrower status changes;             

o    receiving and tracking original, imaged or electronic loan       
documentation;                                              

   o    maintaining borrower demographic information while the student is in
    school, billing accrued interest to the appropriate parties, and
combining multiple loans where appropriate;                 

    o    processing borrower loans through the grace period, placing the loans
into repayment and calculating monthly payment amounts; and;

  o    applying loan payments, calculating delinquency periods, collection
       activities, claim processing on defaulted loans and cure procedures
for defaulted loans rejected by the guarantor.              

The functions described above provide a basis for Nelnet to prepare   
information for the quarterly Lender's Interest and Special Allowance 
Request and Reports--LaRS.                                            

The lender ID's covered by this report are included in Appendix B.    

6 

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                                                                · Download Table


                             APPENDIX B                                      
        LISTING OF LENDERS COVERED BY COMPLIANCE ATTESTATION                 

                                                                             
203760  802828      805974     811949      823065      828067  830628  833212
213760  802843      805997     812211      823185      828141  830631  833214
231455  802965      806078     812265      823296      828148  830772  833220
233580  802983      806126     813133      823299      828259  830796  833271
313760  802995      806208     813169      823546      828295  830868  833273
331300  803000      806361     813285      823817      828375  830953  833294
421623  803017      806400     813760      823964      828478  830974  833305
428577  803128      806595     814392      824004      828564  830977  833310
430628  803238      806773     815502      824060      828577  831008  833325
508471  803258      807418     815657      824072      828634  831149  833361
521623  803264      807669     815678      824135      828728  831213  833452
528577  803266      807743     815897      824289      828785  831299  833456
530604  803342      807806     815979      824327      828793  831300  833457
530868  803348      808036     816298      824335      828875  831419  833471
531300  803359      808047     816799      824397      829005  831455  833487
605156  803408      808134     817408      824495      829030  831484  833495
605974  803414      808173     817409      824504      829077  831593  833500
607743  803447      808217     817411      824573      829167  831692  833501
608036  803488      808238     817420      824690      829191  831819  833580
608543  803508      808258     817516      824800      829223  831836  833585
610755  803516      808260     817729      825033      829262  831846  833610
611353  803533      808316     818313      825310      829302  831870  833659
619628  803547      808426     819524      825323      829366  831970  833669
620682  803557      808441     819628      825495      829394  832036  833670
622660  803588      808471     819648      825585      829458  832057  833674
630868  803606      808543     819824      825641      829464  832198  833702
631300  803608      808606     819922      826087      829489  832339  833733
631484  803631      808628     819931      826140      829565  832347  833741
633820  803634      808662     820198      826212      829626  832398  833806
633832  803645      808711     820334      826351      829650  832415  833817
700030  803654      808863     820393      826442      829691  832445  833820
700121  803670      808874     820622      826509      829704  832500  833821
705147  803672      808877     820682      826625      829717  832502  833832
713760  803694      808888     820685      826710      829763  832584  833872
724690  803709      808896     820937      826717      829769  832710  833881
728577  803758      808936     820967      826730      830111  832775  833873
732775  803799      808942     821024      826757      830186  832934  833892
733135  803909      808959     821449      826865      830227  832998  833895
800241  804283      809063     821471      826943      830248  833005  833934
800802  804456      809479     821623      826947      830288  833032  833953
801890  804575      809678     821666      826953      830293  833051  834036
801891  804860      809685     821806      826978      830309  833074  834078
801894  804868      810007     821830      827192      830343  833078  834097
801935  804959      810086     822022      827231      830372  833079  834100
801943  805041      810088     822046      827511      830427  833088  834133
801947  805147      810123     822243      827537      830469  833093  834148
801953  805178      810148     822366      827603      830513  833101  888884
802285  805317      810240     822384      827610      830525  833135  888886
802301  805593      810470     822660      827735      830529  833174  899980
802330  805806      810509     822671      827800      830547  833189  899982
802560  805849      810755     822745      827855      830549  833205  899988
802759  805923      811077     822908      827866      830617  833207  999712
802794  805943      811353     822927      827954      830624  833211  999990


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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-K Filing	Date	First	Last	Other Filings

For The Period Ended	12/31/04	1	7	8-K
	1/14/05	3	4
Filed On / Filed As Of	3/31/05

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Nelnet Student Loan Funding LLC · 10-K · For 12/31/04 · EX-99.13

Filed On 3/31/05 10:18am ET · SEC File 333-82280 · Accession Number 870156-5-46

Annual Report · Form 10-KFiling Table of Contents

EX-99.13 · Servicer Compliance Audit

Dates Referenced Herein and Documents Incorporated By Reference

Annual Report · Form 10-K
Filing Table of Contents