UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             -----------------------
                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                        PURSUANT TO SECTIONS 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                   For the fiscal year ended December 31, 1999
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
           For the transition period from ........... to ............

                        Commission file number 333-08929
                         ------------------------------
                        NELNET STUDENT LOAN CORPORATION-1
             (Exact name of registrant as specified in its charter)
                   (formerly Union Financial Services-1, Inc.)

            Nevada                                    86-0817755
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

      1801 California St., Suite 3920
            Denver, Colorado                               80202
(Address of principal executive offices)                 (Zip Code)

                                 (303) 292-6930
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                      None

     INDICATE BY CHECK MARK  WHETHER THE  REGISTRANT:  (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE  ACT OF
1934  DURING  THE  PRECEDING  12 MONTHS  (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO ___

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT  FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S  KNOWLEDGE,  IN DEFINITIVE PROXY OR INFORMATION  STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

     THE AGGREGATE  MARKET VALUE OF THE VOTING STOCK HELD BY  NON-AFFILIATES  OF
THE REGISTRANT ON DECEMBER 31, 1999: NONE

     THE  NUMBER  OF  SHARES  OUTSTANDING  OF  REGISTRANT'S  COMMON STOCK  AS OF
MARCH 15, 2000 WAS 1,000.

                       -----------------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE

Portions  of the  Registrant's  Registration  Statement  on Form S-3  (File  No.
333-28551),  as  amended  and  supplemented,  as filed with the  Securities  and
Exchange  Commission  on October  14,  1997 are  incorporated  in Part I of this
report by reference.

                                       1
<PAGE>


                                TABLE OF CONTENTS


                                                                            Page

PART I
         ITEM 1.  BUSINESS....................................................2
         ITEM 2.  PROPERTIES..................................................8
         ITEM 3.  LEGAL PROCEEDINGS...........................................8
         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........8

PART II
         ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS.........................................8
         ITEM 6.  SELECTED FINANCIAL DATA.....................................9
         ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS........................10
         ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                  MARKET RISK................................................12
         ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................13
         ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE........................13

PART III
         ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.........14
         ITEM 11. EXECUTIVE COMPENSATION.....................................15
         ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT.............................................16
         ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............16

PART IV
         ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                  FORM 8-K...................................................17

SIGNATURES...................................................................20


<PAGE>


                                     PART I

ITEM 1. BUSINESS

THE COMPANY

               NELNET Student Loan Corporation-1 (the "Company"), formerly Union
Financial  Services-1,  Inc.,  was  incorporated  under the laws of the State of
Nevada on February  28,  1996.  Effective  March 2, 2000,  the Company  became a
wholly owned subsidiary of NelNet,  Inc. and a wholly owned indirect  subsidiary
of UNIPAC Service Corporation,  a Nebraska Corporation  ("UNIPAC").  UNIPAC is a
privately held corporation.

BUSINESS OF COMPANY

               GENERAL.  The Company is a special purpose  corporation formed to
engage in the business of purchasing,  financing, holding and selling guaranteed
educational loans made to students and to parents of students ("Eligible Loans")
under the Higher Education Act of 1965, as amended (the "Higher Education Act").
Eligible  Loans are  purchased by the Company from  qualified  leaders under the
Higher Education Act pursuant to the terms and subject to the conditions  stated
in student loan purchase agreements. The proceeds of the Eligible Loans are used
by the borrowers to pay the costs  associated with attendance at  post-secondary
educational institutions.

               The Company  finances its purchases of Eligible Loans through the
issuance of its Taxable Student Loan Asset-Backed Notes (the "Notes"). The Notes
have been  issued in several  series.  Repayment  of the Notes is secured by the
pledge of a revolving pool of Eligible Loans and certain other property held for
the benefit of the owners of the Notes (the "Trust Estate"). The Trust Estate is
held by a trustee  (the  "Trustee")  pursuant to the terms of the  Indenture  of
Trust governing the issuance of the Notes (the "Indenture").

               RECENT   REGISTRATION  AND  ISSUANCE  OF  NOTES.  A  registration
statement  on  Form  S-3,   Registration   No.   333-28551  (the   "Registration
Statement"),  was filed with the Securities and Exchange  Commission (the "SEC")
by the Company under the  Securities  Act of 1933,  as amended (the  "Securities
Act"),  for  $500,000,000 of Notes,  and was declared  effective by order of the
Securities  and Exchange  Commission  ("SEC") in October  1997.  A  registration
statement on Form S-3, Registration No. 333-68611, was filed with the SEC by the
Company under the  Securities  Act for  $170,660,000  of additional  Notes which
became  effective  in  December,  1998.  A  registration  statement on Form S-3,
Registration  No.  333-75693,  was filed with the SEC by the  Company  under the
Securities  Act for $1  million  of  additional  Notes on April  5,  1999.  This
registration  statement has not been declared  effective and the Company intends
to withdraw it from filing with the SEC.

               In July,  1999,  the  Company  issued its  Taxable  Student  Loan
Asset-Backed  Notes,  Series 1999 (the  "Series  1999  Notes") in the  aggregate
principal  amount  of  $278,700,000,  pursuant  to  its  effective  registration
statement.  The Series 1999 Notes consisted of (i) Senior Class 1999 A-13 Notes,
Auction Rate  Securities  (the "Class A-13 Notes"),  (ii) Senior Class 1999 A-14
Notes, Auction Rate Securities (the "Class A-14 Notes"), (iii) Senior Class 1999
A-15 Notes,  Auction Rate Securities  (the "Class A-15 Notes"),  and (iv) Senior
Class 1999 A-16 Notes, Auction Rate Securities (the "Class A-16 Notes").

               Further  information  regarding  the  issuance  of  Notes  by the
Company since its inception is provided in Table A.

               THE FEDERAL FAMILY  EDUCATION LOAN PROGRAM.  The Higher Education
Act  provides  for a program  of  direct  federal  insurance  of  student  loans
("FISLP")  and  reinsurance  of student  loans  guaranteed or insured by a state
agency  or  private  non-profit  corporation   (collectively,   "Federal  Family
Education  Loans," with such program  referred to herein as the "Federal  Family
Education  Loan  Program").  Several types of loans are currently  authorized as
Federal Family  Education  Loans  pursuant to the Federal Family  Education Loan
Program.  These include: (a) loans to students with respect to which the federal

                                      2
<PAGE>

government  makes interest  payments  available to reduce student  interest cost
during periods of enrollment ("Subsidized Federal Stafford Loans"); (b) loans to
students  with  respect  to which  the  federal  government  does not make  such
interest payments  ("Unsubsidized Federal Stafford Loans" and, collectively with
Subsidized Federal Stafford Loans,  "Federal Stafford Loans");  (c) supplemental
loans to parents of dependent students ("Federal PLUS Loans");  and (d) loans to
fund  payment  and  consolidation  of  certain  of  the  borrower's  obligations
("Federal  Consolidation  Loans").  Prior to July 1, 1994,  the  Federal  Family
Education  Loan  Program also  included a separate  type of loan to graduate and
professional students and independent  undergraduate students and, under certain
circumstances,  dependent  undergraduate  students, to supplement their Stafford
Loans ("Federal Supplemental Loans for Students" or "Federal SLS Loans").

               GUARANTEE  AGENCIES.  Each  Eligible Loan is guaranteed as to the
payment of  principal  and interest by a state or private  non-profit  guarantor
(each, a "Guarantee Agency"). Eligible Loans originated prior to October 1, 1993
are  fully  guaranteed  as to the  principal  amount of such  loans and  accrued
interest by the applicable  Guarantee  Agency.  Eligible Loans  originated on or
after October 1, 1993 are  guaranteed as to 98% of the principal  amount of such
loans and  accrued  interest by the  applicable  Guarantee  Agency.  Each of the
Guarantee  Agencies has a reinsurance  contract with the Department of Education
(the "Department").  The Department reimburses the Guarantee Agencies for claims
paid by the  Guarantee  Agencies.  The  amount of such  reinsurance  payment  is
calculated  annually  and is subject to reduction  based upon the annual  claims
rate of the  Guarantee  Agency  to the  Department.  Regardless  of the level of
reinsurance  that the applicable  Guarantee Agency receives from the Department,
the Trustee will  continue to be entitled to  reimbursement  for the  applicable
guaranteed  portion of an Eligible Loan (either 98% or 100%, as applicable) from
such Guarantee Agency.  The obligations of each of the Guarantee Agencies to the
holders of Eligible  Loans  reinsured by the Department  (the "Federal  Loans"),
such as the  Trustee,  are payable  from the  general  funds  available  to such
Guarantee Agency,  including cash on deposit therewith,  reimbursements received
from the  Department and reserve funds  maintained by such  Guarantee  Agency as
required by the Higher  Education  Act. The Higher  Education Act provides that,
subject to the provisions thereof including the proper origination and servicing
of Eligible Loans,  the full faith and credit of the United States is pledged to
the  reinsurance  payments  by the  Department  to the  Guarantee  Agencies.  In
addition,  the Higher  Education Act provides that if the Secretary of Education
has  determined  that a Guarantee  Agency is unable to meet its  obligations  to
holders of Federal Loans, such as the Trustee, then the holders of Federal Loans
may submit  guarantee  claims  directly to the  Department and the Department is
required to pay to the holders the full  insurance  obligation of such Guarantee
Agency until such time as the obligations are transferred by the Department to a
new Guarantee  Agency  capable of meeting such  obligations or until a qualified
successor Guarantee Agency assumes such obligations. Certain delays in receiving
reimbursement  could occur if a Guarantee  Agency fails to meet its obligations.
In addition, failure to properly originate or service an Eligible Loan can cause
an Eligible Loan to lose its guarantee.

               SERVICING OF ELIGIBLE  LOANS.  NelNet,  Inc.  ("NelNet")  acts as
servicer (the  "Servicer") of the Company's  Eligible Loans in accordance with a
Servicing  Agreement,  dated as of July 1,  1999  (the  "Servicing  Agreement").
UNIPAC  and  InTuition,   Inc.,  a  Florida  corporation  ("InTuition")  act  as
subservicers  (the  "Subservicers")  and custodians  (the  "Custodians")  of the
Eligible Loans in accordance with  Subservicing  Agreements  (the  "Subservicing
Agreements") between NelNet and UNIPAC and InTuition  respectively.  The Company
may appoint other  entities to act as a servicer or  subservicer  if approved by
the rating  agencies  which  rate the Notes.  UNIPAC  began its  education  loan
servicing  operations on January 1, 1978, and provides education loan servicing,
time sharing,  administration  and other services to lenders,  secondary  market
purchasers  and  Guarantee  Agencies  throughout  the  United  States.  UNIPAC's
corporate  headquarters  is  located  in Aurora,  Colorado.  InTuition  provides
student loan  servicing for clients  throughout the country under both timeshare
and full-service  agreements.  InTuition's corporate  headquarters is located in
Jacksonville, Florida.



INFORMATION ON THE NOTES AND ELIGIBLE LOANS

               In  accordance  with the  Indenture,  the  Company is required to
provide information periodically to the Trustee regarding the Notes and Eligible
Loans,  which information is then forwarded to registered  holders of the Notes.

                                      3
<PAGE>

Provided  below  is  selected  information  as of  December  31,  1999  that was
previously  provided to holders of the Notes,  as well as additional  components
not previously  reported.  Although the information set forth below has not been
independently  verified by third parties, the Company believes it to be accurate
to the best of its knowledge. Undefined capitalized terms used in the Tables and
narrative  herein  have the  meanings  set forth in the  Company's  Registration
Statement.

               The principal  balance of Eligible  Loans as of December 31, 1999
was  $1,467,192,574.  Set  forth in Table A below is the  aggregate  outstanding
principal amount of Notes of each Class as of December 31, 1999.

<TABLE>
<CAPTION>

                                     TABLE A
            ORIGINAL PRINCIPAL AMOUNT OF NOTES ISSUED BY THE COMPANY
            AND THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT PER CLASS
                               (DECEMBER 31, 1999)

  Series    Class       Date Issued      Maturity Dates         Original        Principal
                                                             Principal Amount   Outstanding at
                                                                               December 31, 1999

<S>           <C>           <C>               <C>              <C>                <C>
1996A       A-1       March 8, 1996      July 1, 2014          $48,300,000        $48,300,000
1996A       A-2       March 8, 1996      July 1, 2014           48,300,000         48,300,000
1996A       B-1(*)    March 8, 1996      July 1, 2014           11,100,000         ----------
1996B       A-3       June 18, 1996      July 1, 2014           73,700,000         73,700,000
1996B       A-4       June 18, 1996      July 1, 2014           54,300,000         54,300,000
1996B       B-2(*)    June 18, 1996      July 1, 2014           14,200,000         ----------
1996C       A-5       October 31, 1996   July 1, 2005          225,000,000        197,100,000
1996C       A-6       October 31, 1996   July 1, 2014           75,500,000         75,500,000
1996C       B-3       October 31, 1996   July 1, 2025           15,600,000         15,600,000
1997A       B-4       March 20, 1997     July 1, 2030           30,800,000         30,800,000
1998A       A-7       December 22, 1998  August 1, 2005        125,000,000        125,000,000
1998A       A-8       December 22, 1998  September 1, 2005     125,000,000        125,000,000
1998A       A-9       December 22, 1998  December 1, 2005      125,000,000        125,000,000
1998A       A-10      December 22, 1998  October 1, 2032       100,000,000        100,000,000
1998A       A-11      December 22, 1998  November 1, 2032      100,000,000        100,000,000
1998A       A-12      December 22, 1998  December 1, 2032      100,000,000        100,000,000
1998A       B-5       December 22, 1998  December 1, 2032       70,000,000         70,000,000
1999A       A-13      July 1, 1999       December 1, 2032       70,000,000         70,000,000
1999A       A-14      July 1, 1999       December 1, 2032       70,000,000         70,000,000
1999A       A-15      July 1, 1999       December 1, 2032       70,000,000         70,000,000
1999A       A-16      July 1, 1999       December 1, 2032       68,700,000         68,700,000
                                                                ----------         ----------
                                                            $1,620,500,000     $1,567,300,000
                                                            ==============     ==============

(*) These Notes were defeased with the proceeds of the Series 1997A Notes and as
of March 20, 1997 are no longer deemed to be outstanding under the Indenture.
</TABLE>


                                       4
<PAGE>

               Set  forth  in  Table B  below  is the  interest  rate  for  each
outstanding Class of Notes,  indicating whether the interest rate is fixed or is
calculated  based on the applicable  Auction Rate, LIBOR Rate, or Treasury Rate,
as the case may be.

                                     TABLE B
                       APPLICABLE INTEREST RATE PER CLASS
                               (December 31, 1999)
               CLASS                     CALCULATION METHOD
               -----                     ------------------
                                            AUCTION RATE
                A-1                            6.9500%
                A-2                            6.6000%
                A-3                            7.0000%
                A-4                            7.0000%
                A-6                            7.0000%
                A-10                           7.1000%
                A-11                           6.3000%
                A-12                           6.5500%
                A-13                           6.6570%
                A-14                           6.7000%
                A-15                           6.8500%
                A-16                           5.9670%
                B-5                            7.3500%

                                          TREASURY RATE (1)
                A-5                            6.0220%

                                           LIBOR RATE (1)
                B-3                            6.9563%
                B-4                            6.9263%

                                             FIXED RATE
                A-7                             5.48%
                A-8                             5.50%
                A-9                             5.73%
--------------------
(1)                  Treasury  Bill Rate  based on  average  rate and LIBOR Rate
                     based on the Smith Barney stated rate.

                                       5
<PAGE>


               Set forth in the tables below are the characteristics of Eligible
Loans held in the Trust  Estate on December 31,  1999.  Although  the  unaudited
information  set  forth  below  has not  been  independently  verified  by third
parties, the Company believes it to be accurate to the best of its knowledge.

                                     TABLE C
                       COMPOSITION OF THE ELIGIBLE LOANS &
                            DISTRIBUTION BY LOAN TYPE
                               (December 31, 1999)



                                            Outstanding     Percent of Loans
                                             Principal       By Outstanding
           Loan Types                         Balance            Balance
           ----------                        ---------         -----------
Consolidated                                  $694,406,091              47.33  %
PLUS                                            34,069,388               2.32
SLS                                             16,287,992               1.11
Stafford-Subsidized                            500,437,189              34.11
Stafford-Unsubsidized                          221,991,914              15.13
                                               -----------              -----

      Total                                 $1,467,192,574             100.00  %
                                            ==============             ======


Number of Borrowers                                148,099
Average Outstanding Principal
       Balance Per Borrower                         $9,907
Number of Loans                                    250,144
Average Outstanding Principal
       Balance Per Loan                             $5,865
Approximate Weighted Average                           142
       Remaining Term (months)
       (does not include school,
         grace, deferment or
         forebearance)


                                       6
<PAGE>



                                     TABLE D
               DISTRIBUTION OF THE ELIGIBLE LOANS BY INTEREST RATE
                               (December 31, 1999)

                                         Outstanding          Percent of Loans
                                          Principal            By Outstanding
         Interest Rate Range               Balance                 Balance
        ---------------------              -------                 -------

      Less than 7.50%                     $144,402,202                 9.84  %
      7.50% to 7.99%                       677,024,079                46.14
      8.00% to 8.49%                       210,463,192                14.35
      9.00% to 9.49%                       423,621,631                28.87
      9.50% or greater                      11,681,470                  .80
                                           -----------                -----

              Total                     $1,467,192,574               100.00  %
                                        ==============               ======



                                     TABLE E
               DISTRIBUTION OF THE ELIGIBLE LOANS BY SCHOOL TYPES
                               (December 31, 1999)

                                           Outstanding          Percent of Loans
                                            Principal            By Outstanding
            School Type                      Balance                 Balance
            -----------                      -------                 -------

      2-Year                              $122,235,822                 8.33  %
      4-Year                               622,119,987                42.40
      Proprietary                           28,186,209                 1.92
      Unknown                                  244,465                  .02
      Consolidation                        694,406,091                47.33
                                           -----------                -----

              Total                     $1,467,192,574               100.00  %
                                        ==============               ======


COMPETITION

               The  Company  experiences  competition  from  banks  and  savings
associations  and other  private  companies,  non-profit  companies,  trusts and
financial  firms  issuing  debt  securities  the  proceeds  of which are used to
purchase pools of student loans. Many of these entities have greater  financial,
technical,  management and other  resources  than does the Company.  The Company
believes  that key  factors in its  ability to  compete  will be its  ability to
purchase  Eligible Loans and its ability to structure notes or other  securities
in a manner which will be competitive with securities offered by competitors.

EMPLOYEES

               The Company does not employ any employees. The Company and NelNet
have  entered  into an  Administrative  Services  Agreement  which is more fully
described in ITEM 13 hereof.  The Company does not plan to hire any employees in
the next fiscal year.


                                       7
<PAGE>



FORWARD LOOKING STATEMENTS

               Statements regarding the Company's expectations as to its ability
to purchase Eligible Loans, to structure and issue competitive securities and to
compete  generally,  and certain of the  information  presented  in this report,
constitute  forward  looking  statements  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. Although the Company believes that its
expectations  are  based on  reasonable  assumptions  within  the  bounds of its
knowledge of its business and operations,  there can be no assurance that actual
results will not differ materially from its expectations.


ITEM 2. PROPERTIES

               The Company has no materially important physical properties.

ITEM 3. LEGAL PROCEEDINGS

               None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               None



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

               The  Company is a wholly  owned  indirect  subsidiary  of UNIPAC.
There is no public trading market for the Company's common stock.

               As of March 15, 2000,  NelNet,  a subsidiary  of UNIPAC,  was the
only record  holder of the  Company's  outstanding  shares of common  stock.  On
12/30/99, dividends were paid in the amount of $4,275,000.

                                       8
<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

               The following table sets forth the Company's  selected  financial
data as of December 31, 1999,  1998, 1997 and 1996, for each of the fiscal years
ended  December 31, 1999,  1998,  and 1997 and for the period ended December 31,
1996.  This  information  has been derived from the financial  statements of the
Company  which have been  audited by KPMG LLP. The  information  below should be
read in conjunction  with the Financial  Statements and notes thereto  appearing
elsewhere in this document.

<TABLE>
<CAPTION>

                        NELNET STUDENT LOAN CORPORATION-1
                             SELECTED FINANCIAL DATA

                                                Year Ended      Year Ended     Year Ended    Period Ended
STATEMENT OF INCOME DATA:                      December 31,    December 31,   December 31,   December 31,
                                                   1999           1998           1997            1996 (1)
                                                   ----           ----           ----            --------
<S>                                              <C>            <C>              <C>            <C>
Revenues:
    Loan interest..........................      $106,179,544   $ 43,428,726     $41,671,560    $ 15,636,042
    Investment interest....................         3,424,139      1,962,767       2,268,878       1,373,140
    Other..................................           587,699         86,366         195,084          17,449
                                                  -----------     ----------      ----------      ----------
            Total revenues.................       110,191,382     45,477,859      44,135,522      17,026,631
                                                  -----------     ----------      ----------      ----------
Expenses:
    Interest on Notes......................        78,821,125     34,076,786      32,782,396      11,987,255
    Loan Servicing ........................        12,733,854      5,475,146       4,917,318       2,255,564
    Financing fees to parent ..............                --             --         423,112       1,919,207
    Trustee and broker fees................         2,415,554        950,018         915,380         550,899
    Amortization of debt issuance costs....         1,259,135        558,734         494,106         250,992
    Amortization of loan premiums..........         4,767,963      2,008,889       1,441,526         438,584
    Other general and administrative ......         4,637,853      1,944,895       1,154,882         437,956
                                                  -----------     ----------      ----------      ----------
            Total expenses                        104,635,484     45,014,468      42,128,720      17,840,457
                                                  -----------     ----------      ----------      ----------
            Income (loss) before income taxes       5,555,898        463,391       2,006,802       (813,826)

Income tax expense (benefit) ..............         2,075,128        169,138         710,717       (274,968)
                                                  -----------     ----------      ----------      ----------
            Net income (loss) .............      $  3,480,770    $   294,253     $ 1,296,085     $ (538,858)
                                                  ===========     ==========      ==========      ==========

Ratio of earnings to fixed charges.........           1.07%         1.01%           1.06%            .93% (2)

BALANCE SHEET DATA:
Cash and cash equivalents .................    $   49,931,090 $  664,815,085    $ 39,542,382    $ 65,402,585
Student loans receivable, including premiums    1,492,739,182    639,740,073     525,005,954     491,046,915
Total Assets...............................     1,580,406,364  1,322,564,317     575,292,144     568,171,986
Notes payable .............................     1,567,300,000  1,316,500,000     571,500,000     566,000,000
Total liabilities..........................     1,573,928,114  1,321,511,837     574,533,917     568,709,844
Shareholders' equity (deficit).............         6,478,250      1,052,480         758,227       (537,858)

(1) The Company was incorporated on February 28, 1996.  Accordingly,
           selected financial data for prior fiscal years is not applicable.
(2) Earnings were inadequate to cover fixed charges by $813,826.
</TABLE>

                                       9
<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

               The  following   discussion  and  analysis   should  be  read  in
conjunction  with the  information  set forth under the caption  entitled  "ITEM
6.--SELECTED  FINANCIAL  DATA" and the  financial  statements  and notes thereto
included  elsewhere herein.  Moreover,  any forward looking statements should be
read in conjunction  with  information  set forth in "ITEM 1 -- Forward  Looking
Statements."

GENERAL

               The  Company  was  formed on  February  28,  1996  solely for the
purpose of acquiring,  from time to time, Eligible Loans and issuing notes, such
as the Notes,  secured by such Eligible Loans. Since its inception,  the Company
has issued six (6) series of Notes  consisting of twenty-one  (21) classes.  The
Notes shown in the audited financial statements of the Company represent limited
obligations of the Company secured solely by the Eligible Loans and other assets
in the Trust Estate.

               The assets of the Company consist primarily of Eligible Loans. At
December 31, 1999,  the Company held  approximately  $1.467  billion in Eligible
Loans.  Throughout 1999, the Company purchased portfolios of Eligible Loans from
various  financial  institutions.  On  January 4, 1999,  the  Company  purchased
approximately  $622 million of Eligible  Loans from a related  party,  including
approximately  $8.7  million of  purchased  interest  and $14.9  million of loan
premiums.  In July 1999,  the Company  purchased  approximately  $283 million of
Eligible Loans,  including  approximately $5.7 million of purchased interest and
$6.7 million of loan  premiums.  The majority of these loans were purchased from
related parties at prices equivalent to those available in the market.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

               REVENUES. Revenues for the year ended December 31, 1999 consisted
primarily of interest on Eligible Loans, which totaled $111,903,600, compared to
$44,800,871  for the year ended  December 31, 1998, an increase of 149.78%.  The
amount of interest  reported  for the year ended  December  31, 1999 was derived
from Eligible Loans in an aggregate principal amount of $1,492,739,182, compared
to $639,740,073 for the year ended December 31, 1998. The Company's  average net
investment  in  Eligible  Loans  during the year  ended  December  31,  1999 was
approximately  $1,332,494,385 (excluding funds held by the Trustee), compared to
$539,082,229  for the year ended  December 31, 1998,  and the average  effective
annual  interest  rate of interest  income on Eligible  Loans was  approximately
8.40%,  compared to 8.31% for the year ended December 31, 1998. The Company also
received investment income and other income for the year ended December 31, 1999
in the amounts of $3,424,139 and $587,699, respectively,  compared to $1,962,767
and $86,366  respectively,  for the year ended December 31, 1998.  This increase
was attributable  primarily to the investment of funds for a period of time as a
result of the additional issuance of Notes .

               EXPENSES. Expenses for the year ended December 31, 1999 consisted
primarily  of  interest  on  the  Company's   outstanding  Notes  which  totaled
$78,821,125,  compared to  $34,076,786  for the year ended December 31, 1998, an
increase of 131.30%.  The amount of interest  expense  reported  during the year
ended December 31, 1999 depended  primarily upon the amount of Notes outstanding
during  that  period and the  interest  rates on such  Notes.  The  increase  in
interest expense was attributable  primarily to the issuance of additional notes
in the  amount of $278.7  million on July 1, 1999 and $745  million in  December
1998. The Company's  average debt outstanding was  approximately  $1,446,050,000
for the year ended  December 31,  1999,  compared to  $633,583,333  for the year
ended  December  31,  1998,  and  the  average  annual  cost of  borrowings  was
approximately   5.45%  for  the  year  ended  December  31,  1999,  compared  to
approximately  5.38% for the year ended  December  31,  1998.  The Company  also
incurred loan  servicing  fees in the amount of  $12,733,854  for the year ended
December 31, 1999,  compared to $5,475,146 for the year ended December 31, 1998.
See "ITEM 13--CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS" for a description
of the Servicing  Agreement and  Administrative  Services  Agreement pursuant to
which such fees are owed. Loan servicing fees paid by the Company were higher in
1999  because the Company held more  student  loans in 1999.  Trustee and broker
fees,  amortization of debt issuance costs and amortization of loan premiums for
the year  ended  December  31,  1999  amounted  to  $2,415,554,  $1,259,135  and
$4,767,963   respectively,   compared  to  $950,018,   $558,734  and  $2,008,889
respectively,   for  the  year  ended  December  31,  1998.  Other  general  and
administrative  expenses  for the year  ended  December  31,  1999  amounted  to
$10,361,909,  compared to $3,317,040  for the year ended  December 31, 1998. The

                                      10
<PAGE>

increase in the Company's  general and  administrative  expense was attributable
primarily  to an  increase  in the  provision  for loan  losses,  the payment of
origination   fees  on  Federal   Consolidation   Loans,  and  the  increase  in
administrative  expenses as a result of the increase in Eligible  Loans.  Income
tax  expense  for the year ended  December  31,  1999  amounted  to  $2,075,128,
compared to an income tax  expense in the amount of $169,138  for the year ended
December 31, 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

               REVENUES. Revenues for the year ended December 31, 1998 consisted
primarily of interest on Eligible Loans, which totaled $44,800,871,  compared to
$42,757,006  for the year ended  December  31, 1997,  an increase of 4.80%.  The
amount of interest  reported  for the year ended  December  31, 1998 was derived
from Eligible Loans in an aggregate  principal amount of $639,740,073,  compared
to $525,005,954 for the year ended December 31, 1997. The Company's  average net
investment  in  Eligible  Loans  during the year  ended  December  31,  1998 was
approximately  $539,082,229  (excluding funds held by the Trustee),  compared to
$509,142,849  for the year ended  December 31, 1997,  and the average  effective
annual  interest  rate of interest  income on Eligible  Loans was  approximately
8.31%,  compared to 8.40% for the year ended December 31, 1997. The Company also
received investment income and other income for the year ended December 31, 1998
in the amounts of $1,962,767 and $86,366,  respectively,  compared to $2,268,878
and $195,084 respectively, for the year ended December 31, 1997.

               EXPENSES. Expenses for the year ended December 31, 1998 consisted
primarily  of  interest  on  the  Company's   outstanding  Notes  which  totaled
$34,076,786,  compared to  $32,782,396  for the year ended December 31, 1997, an
increase of 3.95%. The amount of interest expense reported during the year ended
December 31, 1998 depended primarily upon the amount of Notes outstanding during
that  period and the  interest  rates on such  Notes.  The  increase in interest
expense  was  attributable  primarily  to an  increase  in the London  InterBank
Offered Rate of interest which is an index used by the Company to set the amount
of  interest  it pays on its  LIBOR  Rate  Notes.  The  Company's  average  debt
outstanding was  approximately  $633,583,333,  compared to $525,737,324  for the
year ended  December 31, 1997,  and the average  annual cost of  borrowings  was
approximately 5.38%, compared to approximately 6.24% for the year ended December
31, 1997.  The average  annual cost of borrowing was lower in 1998 than in 1997,
even though the amount of debt  outstanding  at year end in 1998 was higher than
in 1997, because the Company issued $745 million of its Notes in December, 1998.
The Company also incurred loan  servicing  fees and financing fees in the amount
of  $5,475,146  and $0,  respectively,  compared  to  $4,917,318  and  $423,112,
respectively,  for the year  ended  December  31,  1997.  See "ITEM  13--CERTAIN
RELATIONSHIPS  AND RELATED  TRANSACTIONS"  for a  description  of the  Servicing
Agreement and Administrative  Services Agreement pursuant to which such fees are
owed.  Loan  servicing  fees paid by the Company were higher in 1998 because the
Company held more student loans in 1998.  Trustee and broker fees,  amortization
of debt  issuance  costs and  amortization  of loan  premiums for the year ended
December 31, 1998 amounted to $950,018,  $558,734 and  $2,008,889  respectively,
compared to $915,380,  $494,106 and $1,441,526 respectively,  for the year ended
December 31, 1997. Other general and administrative  expenses for the year ended
December 31, 1998 amounted to  $3,317,040,  compared to $2,240,328  for the year
ended   December  31,  1997.   The  increase  in  the   Company's   general  and
administrative expense was attributable primarily to the creation of a loan loss
allowance and payment of origination fees on Federal Consolidation Loans. Income
tax expense for the year ended December 31, 1998 amounted to $169,138,  compared
to an income tax expense in the amount of $710,717  for the year ended  December
31, 1997.

               For the year ended  December 31,  1999,  there were no unusual or
infrequent  events or  transactions  or any  significant  economic  dangers that
materially affected the amount of reported income.

LIQUIDITY AND CAPITAL RESOURCES

               Eligible  Loans held by the Company are pledged as collateral for
the Notes,  the terms of which provide for the  retirement of all Notes from the
proceeds of the Eligible Loans.  Cash flows from payments on the Eligible Loans,
together with proceeds of reinvestment  income earned on the Eligible Loans, are
intended to provide cash  sufficient to make all required  payments of principal
and interest on each outstanding  series of Notes. The Indenture under which the
Notes were issued also  creates a Reserve  Fund from which money can be drawn to
make payments or interest and principal on the Notes.  The Reserve Fund is fully
funded under the terms of the  Indenture and the Company  anticipates  that cash
flows  generated  from  its  Eligible  Loans  will be  sufficient  to  meet  the
obligation on its outstanding Notes.

                                       11
<PAGE>

               It is  anticipated  that regular  payments under the terms of the
Eligible Loans, as well as early prepayment,  will reduce the number of Eligible
Loans held in the Trust Estate. The Company is authorized under the Indenture to
use principal receipts from Eligible Loans to purchase additional Eligible Loans
until April 1, 2002.  The Company  began  redeeming  monthly a percentage of the
Class 1996-A5 Notes on May 1, 1999 with principal  receipts from Eligible Loans.
The Company plans to continue to do so monthly in the future, in accordance with
an Issuer Order delivered to the Trustee.  The remaining principal receipts from
Eligible Loans have been used to purchase  Eligible  Loans.  On July 1, 1999 and
December 22, 1998,  respectively,  the Company  issued  additional  Notes in the
amount of $278.7 million and $745 million,  respectively,  the proceeds of which
were used to acquire Eligible Loans.

IMPACT OF INFLATION

               For the year ended  December  31,  1999,  cost  increases  to the
Company were not materially impacted by inflation.


ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

               The Company's  assets consist  almost  entirely of student loans.
Those student loans are subject to market risk in that the cash flows  generated
by the student loans can be affected by changes in interest  rates.  The student
loans  generally  bear  interest at a rate equal to the average bond  equivalent
rates of weekly  auctions of 91-day  Treasury  bills (the "91 day Treasury  Bill
Rate") plus a margin  specified for each student loan.  Thus, if interest  rates
generally  increase,  the Company  would expect to earn greater  interest on its
student  loans,  and if interest  rates  generally  decrease,  the Company would
expect the interest  that it earns to be reduced.  The Company does not hold any
of its assets for trading purposes.

               The Company  attempts to manage its interest rate risk by funding
its portfolio of student loans with variable rate debt instruments. The majority
of the Notes  bear  interest  at a rate that is reset  periodically  by means of
auction  procedures,  or by  reference  to the  London  Interbank  Offered  Rate
("LIBOR") or a specified Treasury rate plus an applicable margin. By funding its
student  loans with  variable  rate Notes,  the  Company  attempts to maintain a
positive  "spread"  between the  interest  earned on its  student  loans and its
interest  payment  obligations  under the  Notes.  Thus,  in an  environment  of
generally declining interest rates, the Company should earn less interest on its
student loans, but the interest expense on the Notes should also be lower.

               The interest  rates on each series of Auction Rate Notes is based
generally on the outcome of each  auction of such series of Notes.  The interest
rates on each  series of LIBOR  Rate  Notes  and  Treasury  Rate  Notes is based
generally on the LIBOR Rate or Treasury  Rate then in effect for the  applicable
interest rate period. The student loans, however, generally bear interest at the
91-day  Treasury Bill Rate plus margins  specified for such student loans.  As a
result of the  differences  between the indices used to  determine  the interest
rates on  student  loans and the  interest  rates on the Notes,  there  could be
periods  of time when the rates on  student  loans are  inadequate  to  generate
sufficient  cash  flow to cover  the  interest  on the  Notes  and the  expenses
required to be paid under the Indenture.  In a period of rapidly rising interest
rates,  LIBOR or auction  rates may rise more quickly  than the 91-day  Treasury
Bill  Rate.  If there is a decline  in the  rates on  student  loans,  the funds
deposited  into the trust estate created under the Indenture may be reduced and,
even if there is a similar  reduction in the variable  interest rates applicable
to any series of Notes,  there may not necessarily be a similar reduction in the
other  amounts  required  to be paid out of such funds  (such as  administrative
expenses).

                                       12
<PAGE>

        As shown by the chart  below,  the Company has  conducted a  sensitivity
analysis to determine  what effect  different  changes in the interest  rates on
student  loans  and the Notes  would  have on its cash  flows and its  resulting
ability to pay the  principal and interest due on the Notes.  Historically,  the
majority of the Company's Notes have borne interest at a rate that  approximates
1 Month LIBOR. Generally,  student loans bear interest at a rate based on the 91
Day  Treasury  Rate.  Thus,  the  Company's  analysis of the effect of different
interest rates on its cash flows was prepared assuming spreads of 30, 40, 60, 80
and 100 basis  points  between  91 Day  Treasury  Bills and 1 Month  LIBOR  (the
"NelNet-1 Ted Spread").  The NelNet-1 Ted Spreads were then applied at different
rates of interest to determine their effect on the "spread" between the interest
the Company  earns on its student  loans and its  interest  payment  obligations
under the notes (the "NelNet-1 Net Spread").


--------------------------------------------------------------------------------
     T-BILL*                         NELNET-1  NET SPREAD

                    ---------- ---------- ---------- ---------- ----------
      7.00%           .76%       .70%       .58%       .45%       .32%
                    ---------- ---------- ---------- ---------- ----------
      6.50%           .65%       .59%       .47%       .34%       .22%
                    ---------- ---------- ---------- ---------- ----------
      6.00%           .53%       .47%       .35%       .22%       .10%
                    ---------- ---------- ---------- ---------- ----------
      5.50%           .52%       .47%       .34%       .22%       .09%
                    ---------- ---------- ---------- ---------- ----------
      5.00%           .56%       .51%       .38%       .26%       .13%
                    ---------- ---------- ---------- ---------- ----------
      4.50%           .67%       .61%       .48%       .36%       .23%
                    ---------- ---------- ---------- ---------- ----------
--------------------------------------------------------------------------------
     NELNET-1
   TED SPREAD**        30         40         60         80         100

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

*       91 Day T-Bill (Yield)
**      1 Month LIBOR vs. 91 Day T-Bill (Yield)


               Generally,  increases in the NelNet-1 Ted Spread and decreases in
interest  rates  have the  effect of  reducing  the  NelNet-1  Net  Spread,  and
correspondingly, the Company's cash flows. For example, as of March 27, 2000 the
1 Month LIBOR rate was 6.13125%  and the 91 Day  Treasury  Bill Rate was 5.844%.
Thus, the NelNet-1 Ted Spread was approximately 29 basis points  (6.13125-5.844)
and the NelNet-1 Net Spread was  approximately 52 basis points.  If, at the same
interest  rate  (approximately  6.00%),  the NelNet-1 Ted Spread is increased to
100,  the  Company's  cash flows are  significantly  reduced,  as evidenced by a
NelNet-1 Net Spread of ten basis points. The Company,  however,  believes that a
NelNet-1 Ted Spread of 100 is unlikely to occur.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               The  financial   statements  and  supplementary   financial  data
required  by this  ITEM 8 are set  forth  in ITEM  14 of  this  Form  10-K.  All
information which has been omitted is either inapplicable or not required.


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

               There were no adverse  opinions or  disclaimers  of opinion,  nor
were there any  modifications  as to  uncertainty,  audit scope,  or  accounting
principles rendered by the independent accountants.  There were no disagreements
with the  current  accounting  firm on any matter of  accounting  principles  or
practices, financial statement disclosure, or auditing scope or procedure. There
are no  changes  in or  disagreements  on  accounting  and  financial  statement
disclosure.

                                       13
<PAGE>

                                    PART III

ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

               The  Company  is  governed  by a Board  of  Directors,  which  is
required by the Company's  Articles of  Incorporation  to include at least three
directors.  Directors  are required to be elected at each annual  meeting of the
shareholders.   The  present   directors  and  their   addresses  and  principal
occupations or affiliations are as follows:

<TABLE>
<CAPTION>

                                                                Principal       Officers and
                      Other                                     Occupation     Directors Term
Name of Director  Offices Held   Age          Address         or Affiliation      From   To*
----------------  ------------   ---          -------         --------------      ----   --
<S>                  <C>          <C>   <C>                    <C>               <C>      <C>
Michael S.          Chairman      36   4732 Calvert Street    Executive Vice   February  Present
Dunlap                                 Lincoln, Nebraska      President of       1996
                                       68506                  Union Bank and
                                                              Trust Company;
                                                              President, Farmers &
                                                              Merchants Investment,
                                                              Inc.; Chairman,
                                                              NelNet, Inc.

Stephen F.          President     47   6991 East Camelback    Vice-Chairman,  February  Present
Butterfield                            Road, Suite B290       NelNet, Inc.    1996
                                       Scottsdale, Arizona
                                       85251

Ronald W. Page        Vice        51   1801 California        Senior Vice     February  Present
                   President,          Street                 President of    1996
                    Treasurer          Suite 3920             Union Financial
                  and Secretary        Denver, CO 80202       Services, Inc.

Ross Wilcox            --         57   4732 Calvert Street    Chief           February  Present
                                       Lincoln, Nebraska      Executive       1996
                                       68506                  Officer of
                                                              Union Bank
                                                              and Trust
                                                              Company

Dr. Paul R. Hoff       --         65   Hernia Hill, Rural     Retired         February  Present
                                       Route 1                Physician       1996
                                       Seward, Nebraska
                                       68434
-------------
(*)     Each director holds office until the next annual meeting of shareholders
        following his or her election  until such  director's  successors  shall
        have been elected and  qualified.  The Company's  next annual meeting is
        scheduled for March, 2001.
</TABLE>

EXECUTIVE MANAGEMENT

        The  Board of  Directors  and  executive  officers  described  below are
responsible for overall  management of the Company.  The Company's  officers and
directors are  shareholders,  officers and  directors of business  entities that
have engaged in the business of purchasing, holding and selling student loans.

     MICHAEL S. DUNLAP,  CHAIRMAN OF THE BOARD.  As the Chairman of the Board of
Directors, Mr. Dunlap is responsible for the executive direction of the Company.
Mr. Dunlap is also Executive Vice President of Union Bank and Trust Company, and
President  of Farmers &  Merchants  Investment  Inc.  He has been an employee of
Union Bank and Trust Company for  approximately  16 years.  Mr. Dunlap is also a
director of Stratus Fund, Inc., NHELP-II, Inc., Union Bank and Trust Company and
other  affiliated  banks,  Union Financial  Services,  Inc.,  UNIPAC,  InTuition
Holdings,  Inc. and Farmers & Merchants  Investment,  Inc. Mr. Dunlap received a
Bachelor of Science  degree in finance and  accounting and a Juris Doctor degree
from the University of Nebraska.
                                       14
<PAGE>


        STEPHEN F.  BUTTERFIELD,  PRESIDENT  AND  DIRECTOR.  As  President,  Mr.
Butterfield  is  responsible  for the overall  management  and  direction of the
Company.  Included in his  responsibilities  are loan  purchasing,  marketing of
corporate  services and coordination of the Company's capital market activities.
Mr.  Butterfield  has been a member of the student loan  industry  since January
1989,  first as  President  of a for-profit  student  loan  secondary  marketing
facility  located  in  Scottsdale,  Arizona  and  currently  as  President  of a
non-profit  student loan secondary  marketing  facility in Scottsdale,  Arizona.
Prior to his work in the student loan industry,  Mr.  Butterfield spent 15 years
as an investment banker specializing in municipal finance.  Mr. Butterfield is a
director of Outdoor Systems, Inc. and NHELP-II,  Inc. Mr. Butterfield received a
Bachelor of Science degree in Business from Arizona State University.

     RONALD W. PAGE, VICE PRESIDENT,  TREASURER, SECRETARY AND DIRECTOR. As Vice
President,  Treasurer and Secretary,  Mr. Page is responsible  for the financial
operations and record keeping of the Company.  Included in his  responsibilities
are financial planning and capital market operations. Mr. Page spent 20 years as
an  investment  banker  specializing  in  tax-exempt  and  taxable  asset-backed
finance,  with a specialty in the securitization of student loans. Mr. Page is a
director of Union Financial Services,  Inc., and Ref-Chem Corporation.  Mr. Page
received  a Bachelor  of  Science  degree in  Business  Administration  from the
University   of   Colorado,   Boulder,   Colorado,   and  a  Masters  of  Public
Administration   in  Public  Policy  Analysis  from  the  American   University,
Washington, DC.

     ROSS WILCOX,  DIRECTOR.  Mr.  Wilcox is the Chief  Executive  Officer and a
Director  of Union Bank and Trust  Company and has been  employed or  affiliated
with Union Bank and Trust Company for over 30 years.  Mr. Wilcox is the Chairman
of the Board for Mills County  State Bank and is on the Board of  Directors  for
UNIPAC, Union Financial Services, Inc. and Union Insurance Agency.

     DR. R. PAUL HOFF, DIRECTOR. Dr. Hoff is a medical doctor who practiced as a
family  physician in Seward,  Nebraska  for  approximately  30 years,  until his
retirement  three  years  ago.  Dr.  Hoff also  serves as member of the Board of
Directors of Packers Service Group,  Inc. Dr. Hoff has been involved in a number
of business  enterprises over the years and currently owns and operates a retail
antique store in Ennis, Montana.

               The  Company's  executive  officers  are elected  annually by the
Board of  Directors  and serve at the  discretion  of the Board.  The  Company's
directors  hold office until the next annual meeting of  stockholders  and until
their successors have been duly elected and qualified.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

               Section  16(a)  of the  Securities  Exchange  Act of  1934 is not
applicable to the Company, because the Company has no class of equity securities
registered pursuant to Section 12 thereof.


ITEM 11.       EXECUTIVE COMPENSATION


               The  Company's  executive  officers  are not  compensated  by the
Company for services rendered by them,  although some of the Company's  officers
are compensated by NelNet, which receives remuneration from the Company pursuant
to an Administrative Services Agreement by and between NelNet and the Company. A
detailed  description of the  Administrative  Services Agreement is set forth in
ITEM 13 of this Form 10-K.

AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES IN 1999

               The Company has not issued any options.

LONG-TERM INCENTIVE PLAN -- AWARDS IN 1999

               The Company has no long-term incentive plan.

                                       15
<PAGE>


DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE IN 1999

               The Company has no such benefit plans.

EMPLOYMENT AGREEMENTS

               The Company has not entered into any employment agreements.
DIRECTOR COMPENSATION

               Directors of the Company are not  compensated  as directors,  but
may  receive   reimbursement  of  out-of-pocket   expenses  in  connection  with
attendance at Board meetings.

OFFICER COMPENSATION

               The Company has not adopted a compensation plan for officers.

BOARD MEETINGS

               During  fiscal year 1999,  the Board held four regular  meetings.
All Directors attended all of the meetings of the Board.

COMMITTEES OF THE BOARD

               The Board of Directors has not  established an Audit Committee or
a Compensation Committee.

ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

               As of March 15, 2000,  there were 1,000  shares of the  Company's
common stock, no par value,  outstanding,  all of which were held by NelNet.  No
director or  executive  officer  owns any shares of the Company and there are no
other beneficial owners.

CHANGES IN CONTROL.

               The Company knows of no arrangement,  including the pledge by any
person of  securities of the Company,  which may at a subsequent  date result in
change of control of the Company.


ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

               ADMINISTRATIVE  SERVICES  AGREEMENT.  The Company and NelNet, the
Company's parent corporation,  entered into an Administrative Services Agreement
(the  "Agreement")  dated as of August 1,  1996.  Under  the  Agreement,  NelNet
agreed:  (i) to assist the  Company in  developing  and  implementing  financing
transactions to enable the Company to purchase loans made to borrowers under the
Federal Family Education Loan Program (the "Loans"); (ii) to monitor, and to the
extent  required,  direct the Servicer in  connection  with its servicing of the
Loans; (iii) to respond to inquiries and requests made by borrowers, educational
institutions, Guarantee Agencies, the Trustee, and other parties with respect to
the Loans and respond to  requests by the  Company's  independent  auditors  for
information  concerning  the  Company's  financial  affairs;  (iv)  to  maintain
financial records  concerning the Loans and, if furnished  adequate  information
with respect to financial affairs not related to the Loans, prepare and maintain
a general  ledger and financial  statements  for the Company;  (v) to furnish or
cause to be furnished to the Company or the Trustee  copies of reports  received
with respect to the Loans,  and prepare such additional  reports with respect to
the Loans as the  Company or the  Trustee may  reasonably  request  from time to
time;  (vi) to prepare for and furnish to the Company  estimates of  Maintenance
and  Operating  Expenses  (as  defined in the  Indenture)  and such  statistical
reports and cash flow  projections  as may be required  under the  Indenture  or
requested by the Company;  and (vii) to provide such other services with respect
to  administration  of its program as the Company may  reasonably  request.  The
Agreement  expires  upon the stated  maturity  of the  Notes.  In return for the
services provided by NelNet, the Company pays to NelNet on the first day of each
calendar month an amount equal to 0.015% of the average  outstanding  balance of

                                     16
<PAGE>

the Loans during the preceding  month. The obligation of the Company to pay fees
under  the  Agreement  is a  limited  obligation  to be  satisfied  solely  from
distributions  made  by the  Trustee  to the  Company  under  the  terms  of the
Indenture. Although the Company is obligated to pay to NelNet the full amount of
all accrued fees, such payments are made exclusively  from amounts  deposited in
the  Operating  Fund for  payment of the  Company's  Maintenance  and  Operating
Expenses  (as defined in the  Indenture).  If the Company does not have funds on
hand to cover the full amount of the fees due under the Agreement,  then payment
of the unpaid  balance is deferred until there are  sufficient  funds  available
from such sources to satisfy  part,  or all, of the  outstanding  debt.  The fee
payable to NelNet  under the  Agreement  may be revised on each January 1 during
the term of the Agreement.  To alter the fee, NelNet must provide written notice
of the  proposed  new fee to the  Company  ninety  (90)  days  prior to the next
January 1. If NelNet and the Company cannot reach an agreement within sixty (60)
days of the receipt of the notice, either party may terminate the Agreement upon
thirty (30) day's written notice to the other party. The Administrative Services
Agreement has been filed as an Exhibit to this Form 10-K.

               SERVICING  AGREEMENT.  The  Company  and  NelNet  entered  into a
Servicing Agreement (the "Servicing  Agreement") dated as of July 1, 1999. Under
the Servicing Agreement,  NelNet services the Eligible Loans. NelNet owns all of
the issued and outstanding stock of the Company and is a wholly-owned subsidiary
of  UNIPAC.  NelNet  entered  into  subservicing   agreements  with  UNIPAC  and
InTuitition (the "Subservicing  Agreements") dated as of July 1, 1999. Under the
Subservicing   Agreements,   UNIPAC  and  InTuition,  as  Subservicers,   assume
substantially  all of the duties of the Servicer  under the Servicing  Agreement
for the term of the Servicing Agreement. UNIPAC has the right to vote 50% of the
voting stock of the parent  corporation of InTuition.  The Company believes that
the  terms and  conditions  of the  Servicing  Agreement  (and the  subservicing
arrangements)  are  comparable  to those  offered by or  available  to unrelated
parties.  The servicing fee to NelNet is calculated using an annual  asset-based
charge  that  ranges from 0.60 to 1.25  percent of the  student  loan  principal
balance, depending on the type of loan, calculated monthly.

               STUDENT LOAN  PURCHASE  AGREEMENTS.  The Company has entered into
Student Loan Purchase Agreements with various financial institutions  including,
but not limited to, Union Bank,  InTuition Holdings,  Inc.,  NHELP-I,  Inc., and
NEBHELP,  INC.  pursuant  to which the  Company has  purchased  Eligible  Loans.
NHELP-I, Inc. and NEBHELP, Inc. are subsidiary  corporations of NelNet.  Certain
of the  shareholders of UNIPAC also hold an interest in the bank holding company
that owns and controls  Union Bank, and certain of the officers and directors of
the Company are also officers and directors of Union Bank.  Although Union Bank,
InTuition Holdings,  Inc., NHELP-I,  Inc., and NEBHELP,  INC. are related to the
Company as described in the paragraph above, the Company believes that the terms
and  conditions of the Student Loan Purchase  Agreements are comparable to those
offered by or available to unrelated parties.



                                     PART IV

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

FINANCIAL STATEMENTS

               The financial statements and financial statement  information and
schedules  required by this Item are included in this report  commencing on page
F-1. The Independent  Auditors'  Report appears on page F-1 of this report.  All
other schedules have been omitted because they are  inapplicable,  not required,
or the  information is included  elsewhere in the financial  statements or notes
thereto.

EXHIBITS
               All exhibits listed hereunder,  unless otherwise indicated,  have
previously  been  filed as  exhibits  to the  Company's  Registration  Statement
declared  effective  in October  1997.  Such  exhibits  have been filed with the
Commission  pursuant  to  the  requirements  of  the  Acts  administered  by the
Commission. Such exhibits are incorporated herein by reference under Rule 12b-23
of the Securities Exchange Act of 1934.

                                     17
<PAGE>

        The  following  is a  complete  list of  exhibits  filed  as part of the
Company's  Registration Statement and this Form 10-K. Exhibit numbers correspond
to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

Exhibit No.                       Description

            3.1  Articles  of  Incorporation  of the  Company  (Incorporated  by
                 reference  herein to the  Company's  Annual Report on Form 10-K
                 for the fiscal year ended December 31, 1996.)

            3.2  Certificate of Amendment to the Articles of Incorporation of
                 Union Financial Services-1, Inc. (Incorporated by reference to
                 the Company's Quarterly Report on Form 10-Q dated September 30,
                 1999.)

            3.3  Bylaws of the Company (Incorporated by reference herein to the
                 Company's  Annual Report on Form 10-K for the fiscal year ended
                 December 31, 1996.)

            4.1  Second  Amended and  Restated  Indenture  by  and  between  the
                 Company  and  Norwest  Bank  Minnesota,  N.A. (Incorporated  by
                 reference  herein  to the Company's current report on Form 8-K,
                 filed January 7, 1997.)

            4.2  Series 1996C Supplemental Indenture by and between the Company
                 and Norwest  Bank  Minnesota,  N.A.  (Incorporated by reference
                 herein to the  Company's  current  report  on  Form  8-K, filed
                 January 7, 1997.)

          4.2.1  1998  Supplemental  Indenture  by and  between  the Company and
                 Zions First National Bank  (Incorporated by reference herein to
                 the  Company's  current  report  on Form 8-K,  filed  January 6
                 1999.)

          4.2.2  Series 1999 Supplemental Indenture of Trust by and between  the
                 Company  and  Zions  First  National  Bank   (Incorporated  by
                 reference herein to the Company's   current report on Form 8-K,
                 filed July 8, 1999.)

           10.1  Servicing  Agreement,  dated as of July 1, 1999, by and between
                 the  Company  and   National   Education   Loan   Network  Inc.
                 (Incorporated by reference herein to the Company's Registration
                 Statement on Form S-3 (File No. 333-75693).)

           27.1  Financial Data Schedule (Filed herewith.)


REPORTS ON FORM 8-K

               The  Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.



                                       18
<PAGE>



                          INDEX TO FINANCIAL STATEMENTS


FINANCIAL STATEMENTS OF NELNET STUDENT LOAN CORPORATION-1

Independent Auditors' Report..............................................   F-1

Balance Sheets as of December 31, 1999 and 1998...........................   F-2

Statements of Income for the years ended December 31, 1999, 1998
and 1997..................................................................   F-3

Statements of Stockholder's Equity(Deficit) for the years ended
December 31, 1999, 1998 and 1997..........................................   F-4

Statements of Cash Flows for the years ended December 31, 1999, 1998
and 1997..................................................................   F-5

Notes to Financial Statements.............................................   F-6

All other  schedules  are  omitted as they are not  applicable  or the  required
information is shown in the financial statements or notes thereto.


                                       19
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                              Financial Statements

                           December 31, 1999 and 1998

                   (With Independent Auditors' Report Thereon)


<PAGE>

                          INDEPENDENT AUDITORS' REPORT



    The Board of Directors
    NELNET Student Loan Corporation-1:


    We have  audited the  accompanying  balance  sheets of NELNET  Student  Loan
    Corporation-1  (formerly known as Union Financial  Services - 1, Inc.) as of
    December  31,  1999  and  1998  and  the  related   statements   of  income,
    stockholder's  equity and cash flows for each of the years in the three-year
    period  ended  December  31,  1999.  These  financial   statements  are  the
    responsibility of the Company's management. Our responsibility is to express
    an opinion on these financial statements based on our audits.

    We conducted  our audits in  accordance  with  generally  accepted  auditing
    standards.  These  standards  require  that we plan and perform the audit to
    obtain reasonable  assurance about whether the financial statements are free
    of material  misstatement.  An audit  includes  examining,  on a test basis,
    evidence supporting the amounts and disclosures in the financial statements.
    An  audit  also  includes  assessing  the  accounting  principles  used  and
    significant estimates made by management,  as well as evaluating the overall
    financial  statement  presentation.  We believe  that our  audits  provide a
    reasonable basis for our opinion.

    In our opinion,  the financial  statements referred to above present fairly,
    in all material  respects,  the  financial  position of NELNET  Student Loan
    Corporation-1  (formerly  known as Union  Financial  Services  - 1, Inc.) at
    December  31, 1999 and 1998 and the results of its  operations  and its cash
    flows for each of the years in the  three-year  period  ended  December  31,
    1999, in conformity with generally accepted accounting principles.

                              /S/ KPMG PEAT MARWICK LLP

    March 24, 2000
    Lincoln, Nebraska


                                       F-1
<PAGE>
<TABLE>
<CAPTION>

                        NELNET STUDENT LOAN CORPORATION-1
             (formerly known as Union Financial Services - 1, Inc.)

                                 Balance Sheets

                           December 31, 1999 and 1998




                            Assets                                     1999             1998
                                                                  ---------------  ---------------
<S>                                                             <C>                   <C>
Cash and cash equivalents                                       $     49,931,090      664,815,085
Student loans receivable, net of allowance of $1,336,294 in 1999
   and  $416,801 in 1998                                           1,492,739,182      639,740,073
Accrued interest receivable                                           30,162,766       11,110,808
Debt issue costs, net of accumulated amortization of $2,533,121
   in 1999 and $1,273,986 in 1998                                      7,249,082        6,698,845
Deferred tax asset                                                       324,244          153,132
Other assets                                                                  --           46,374
                                                                  ---------------  ---------------

          Total assets                                          $  1,580,406,364    1,322,564,317
                                                                  ===============  ===============

             Liabilities and Stockholder's Equity

Liabilities:
   Notes payable                                                $  1,567,300,000    1,316,500,000
   Accrued interest payable                                            4,801,540        3,725,622
   Other liabilities                                                   1,734,065        1,139,945
   Income taxes payable to parent                                         92,509          146,270
                                                                  ---------------  ---------------

          Total liabilities                                        1,573,928,114    1,321,511,837
                                                                  ---------------  ---------------

Stockholder's equity:
   Common stock, no par value, authorized 1,000 shares;
     issued and outstanding 1,000 shares                                   1,000            1,000
   Additional paid-in capital                                          6,220,000               --
   Retained earnings                                                     257,250        1,051,480
                                                                  ---------------  ---------------

          Total stockholder's equity                                   6,478,250        1,052,480

Commitments and contingencies
                                                                  ---------------  ---------------

          Total liabilities and stockholder's equity            $  1,580,406,364    1,322,564,317
                                                                  ===============  ===============

</TABLE>

See accompanying notes to financial statements.

                                       F-2
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (formerly known as Union Financial Services - 1, Inc.)

                              Statements of Income

                  Years ended December 31, 1999, 1998 and 1997




                                              1999          1998        1997
                                           ------------  ----------- -----------
 Revenues:
   Loan interest                         $ 106,179,544   43,428,726   41,671,560
   Investment interest                       3,424,139    1,962,767    2,268,878
   Other                                       587,699       86,366      195,084
                                           ------------  ----------- -----------

          Total revenues                   110,191,382   45,477,859   44,135,522
                                           ------------  ----------- -----------

Expenses:
   Interest on notes                        78,821,125   34,076,786   32,782,396
   Loan servicing fees to related party     12,733,854    5,475,146    4,917,318
   Financing fees to parent                         --           --      423,112
   Trustee and broker fees                   2,415,554      950,018      915,380
   Amortization of debt issuance costs       1,259,135      558,734      494,106
   Amortization of loan premiums             4,767,963    2,008,889    1,441,526
   Other general and administrative          4,637,853    1,944,895    1,154,882
                                           ------------  ----------- -----------

          Total expenses                   104,635,484   45,014,468   42,128,720
                                           ------------  ----------- -----------

          Income before income taxes         5,555,898      463,391    2,006,802

Income tax expense                           2,075,128      169,138      710,717
                                           ------------  ----------- -----------

          Net income                     $   3,480,770      294,253    1,296,085
                                           ============  =========== ===========


See accompanying notes to financial statements.

                                       F-3
<PAGE>
<TABLE>
<CAPTION>

                        NELNET STUDENT LOAN CORPORATION-1
             (formerly known as Union Financial Services - 1, Inc.)

                  Statements of Stockholder's Equity (Deficit)

                  Years ended December 31, 1999, 1998 and 1997




                                                                             Total
                                                  Additional  Retained     stockholders'
                                        Common    paid-in     earnings       equity
                                       stock      capital     (deficit)    (deficit)
                                       -------   ----------   ---------   -------------
<S>                                     <C>         <C>          <C>            <C>
Balance at December 31, 1996         $  1,000           --    (538,858)      (537,858)

Net income                                 --           --   1,296,085      1,296,085
                                       -------   ----------   ---------    -----------

Balance at December 31, 1997            1,000           --     757,227        758,227

Net income                                 --           --     294,253        294,253
                                       -------   ----------   ---------    -----------

Balance at December 31, 1998            1,000           --   1,051,480      1,052,480

Net income                                 --           --   3,480,770      3,480,770
Capital contributions                      --    6,220,000          --      6,220,000
Dividends paid - $4,275 per share          --           --  (4,275,000)    (4,275,000)
                                       -------   ----------   ---------    -----------

Balance at December 31, 1999         $  1,000    6,220,000     257,250      6,478,250
                                       =======   ==========   =========    ===========

</TABLE>

See accompanying notes to financial statements.

                                        F-4
<PAGE>

<PAGE>
<TABLE>
<CAPTION>

                        NELNET STUDENT LOAN CORPORATION-1
             (formerly known as Union Financial Services - 1, Inc.)

                            Statements of Cash Flows

                  Years ended December 31, 1999, 1998 and 1997

                                                           1999          1998          1997
                                                       -------------- ------------ ------------
<S>                                                   <C>                 <C>        <C>
 Net income                                           $    3,480,770      294,253    1,296,085
Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
     Amortization                                          6,027,098    2,567,623    1,935,632
     Deferred tax expense (benefit)                         (171,112)    (153,132)     274,968
     Provision for loan losses                             1,150,000      600,000           --
     (Increase) decrease in accrued interest receivable  (19,051,958)  (3,375,516)     515,533
     (Increase) decrease in other assets                      46,374      (35,374)       2,888
     Increase in accrued interest payable                  1,075,918    2,118,272      114,209
     (Decrease) increase in other liabilities                594,120      150,126     (226,884)
     Increase (decrease) in income taxes payable to parent   (53,761)    (290,478)     436,748
                                                       -------------- ------------ ------------

          Net cash provided by (used in)
            operating activities                          (6,902,551)   1,875,774    4,349,179
                                                       -------------- ------------ ------------

Cash flows used in investing activities:
   Purchase of student loans, including premiums      (1,081,832,346)(178,538,396)(101,061,642)
   Proceeds from sale of student loans                    16,850,114    2,056,884    6,139,464
   Net proceeds from student loan principal payments
     and loan consolidations                             206,065,160   59,138,505   59,491,767
                                                       -------------- ------------ ------------

          Net cash used in investing activities         (858,917,072)(117,343,007) (35,430,411)
                                                       -------------- ------------ ------------

Cash flows provided by financing activities:
   Proceeds from issuance of notes payable               278,700,000  745,000,000   30,800,000
   Repayment of notes payable                            (27,900,000)          --           --
   Payment for debt issuance costs                        (1,809,372)  (4,260,064)    (278,971)
   Dividends paid                                         (4,275,000)          --           --
   Capital contributions                                   6,220,000           --           --
   Payment to defease notes payable                               --           --  (25,300,000)
                                                       -------------- ------------ ------------

          Net cash provided by financing activities      250,935,628  740,739,936    5,221,029
                                                       -------------- ------------ ------------

          Net increase (decrease) in cash and
            cash equivalents                            (614,883,995) 625,272,703  (25,860,203)

Cash and cash equivalents, beginning of year             664,815,085   39,542,382   65,402,585
                                                       -------------- ------------ ------------

Cash and cash equivalents, end of year               $    49,931,090  664,815,085   39,542,382
                                                       ============== ============ ============
Supplemental disclosures:
   Interest paid                                     $    77,745,207   31,958,514   32,668,187
                                                       ============== ============ ============

   Income taxes paid to parent                       $     2,300,000      611,748           --
                                                       ============== ============ ============

</TABLE>

See accompanying notes to financial statements.

                                       F-5
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997


 (1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

       DESCRIPTION OF BUSINESS

       NELNET  Student Loan  Corporation-1  (formerly  known as Union  Financial
       Services - 1, Inc.) (the Company), a wholly-owned  subsidiary of National
       Education Loan Network, Inc. (formerly known as Union Financial Services,
       Inc.) (the Parent) is a C Corporation  which invests in eligible  student
       loans  issued  under  Title IV of the Higher  Education  Act of 1965,  as
       amended  (the  Act).  Student  loans  beneficially  owned by the  Company
       include  those  originated  under the Stafford  Loan Program  (SLP),  the
       Parent Loan  Program  for  Undergraduate  Students  (PLUS)  program,  the
       Supplemental Loans for Students (SLS) program and loans which consolidate
       certain borrower obligations (Consolidation).  Title to the loans is held
       by an  eligible  lender  trustee  under  the Act for the  benefit  of the
       Company. The financed eligible loan borrowers are geographically  located
       throughout  the  United  States and the  majority  are in school or their
       first year of repayment.

       The notes payable  outstanding  are payable  primarily  from interest and
       principal payments on the student loans receivable.

       The Parent is a holding company organized for the purpose of establishing
       and  owning the stock of  corporations  like the  Company  engaged in the
       securitization of financial assets.  The parent also provides  managerial
       and administrative support to the Company.

       CASH EQUIVALENTS

       Cash equivalents  consist of marketable  short-term  investment trust and
       lockbox receivables in transit,  carried at cost, which approximates fair
       market value.  For purposes of the statements of cash flows,  the Company
       considers all  investments  with  original  maturities of three months or
       less to be cash equivalents.

       STUDENT LOANS RECEIVABLE

       Investments in student loans,  including premiums,  are recorded at cost,
       net of premium  amortization.  Premiums are amortized  over the estimated
       principal life of the related loans.

       INTEREST ON STUDENT LOANS

       Interest  on student  loans is accrued  when earned and is either paid by
       the  Department  of Education or the borrower  depending on the status of
       the loan at the time of accrual. In addition, the Department of Education
       makes quarterly  interest subsidy payments on certain  qualified Title IV
       loans until the student is required  under the  provisions  of the Act to
       begin  repayment.  Repayment on guaranteed  student loans normally begins
       within six months  after  completion  of their  course of study,  leaving
       school  or  ceasing  to carry  at least  one-half  the  normal  full-time
       academic load as determined by the educational institution.  Repayment of
       PLUS  loans  normally  begins  within  sixty  days  from the date of loan
       disbursement  and  repayment of SLS loans  begins  within one month after
       completion of course study,  leaving  school or ceasing to carry at least
       the normal  full-time  academic  load as  determined  by the  educational
       institution.

                                           F-6                       (Continued)
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997


       DEBT ISSUE COSTS

       Debt issue costs are  amortized  over the  estimated  life of the related
       debt, ranging from five to fifteen years.

       INCOME TAXES

       The Company and its Parent file a  consolidated  federal tax return.  The
       financial  statements  reflect  income  taxes  computed as if the Company
       filed a separate tax return.  Current income tax payments are made by the
       Company  to its  Parent as if the  Company  were a  separate  tax  paying
       entity.

       Income  taxes are  accounted  for under the asset and  liability  method.
       Deferred tax assets and  liabilities  are  recognized  for the future tax
       consequences  attributable to differences between the financial statement
       carrying  amounts of existing assets and liabilities and their respective
       tax bases. Deferred tax assets and liabilities are measured using enacted
       tax rates expected to apply to taxable income in the years in which those
       temporary differences are expected to be recovered or settled. The effect
       on  deferred  tax  assets  and  liabilities  of a change  in tax rates is
       recognized in income in the period that includes the enactment date.

       USE OF ESTIMATES

       The preparation of the financial  statements in conformity with generally
       accepted  accounting  principles  requires management to make a number of
       estimates and assumptions  that effect the reported amounts of assets and
       liabilities,  reported  amounts  of  revenues  and  expenses,  and  other
       disclosures. Actual results could differ from those estimates.

       COMPREHENSIVE INCOME

       The Company has no sources of other comprehensive income.  Therefore, the
       Company's comprehensive income consists solely of its net income.

       RECLASSIFICATIONS

       Certain amounts have been  reclassified for  comparability  with the 1999
       presentation.

 (2)   CASH AND CASH EQUIVALENTS

       The Company's cash and cash equivalents at December 31, 1999 and 1998 are
       held by the  trustee in  various  accounts  subject to use  restrictions,
       imposed by the indenture of trust, as shown on the following page.


                                        F-7                          (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                                                      1999          1998
                                                                   -----------  -------------

<S>                                                                  <C>         <C>
Loan Account 98A Fund - Established for the purpose of
   purchasing eligible student loans with proceeds of the borrowing $      --    619,999,565
Recycling Account Fund - Established to maintain excess funds
   for future operating needs, if necessary, and purchases of
   eligible student loans                                          16,167,612     14,164,858
Reserve Fund - Established to cure any deficiencies in the debt
   service requirements                                            25,154,002     26,330,011
Cost of Issuance Fund - Established to pay administrative and
   issuance costs incurred with the issuance of Company debt               --        975,926
Revenue Fund - Established for the receipt of interest payments
   on eligible student loans and investment securities and to
   pay fees and expenses incurred under the indenture                 285,569      1,305,941
Interest Fund - Established for the payment of debt service
   interest requirements                                            3,013,092             --
Restricted Cash 97A Escrow - Excess funds required for
   potential interest payments on defeased debt (see note 4)               --      1,154,529
Senior Note Redemption Fund - Established to redeem
   Senior Notes                                                     4,200,000             --
Operating cash and cash equivalents                                 1,110,815        884,255
                                                                   -----------  -------------

           Total cash and cash equivalents                       $ 49,931,090    664,815,085
                                                                   ===========  =============
</TABLE>

 (3)   STUDENT LOANS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

       Student  loans are  recorded  at cost,  including  unamortized  premiums.
       Guaranteed  loans may be made  under this  program by certain  lenders as
       defined by the Act. These loans,  including related accrued interest, are
       guaranteed  at  their  maximum  level  permitted  under  the  Act  by  an
       authorized  guarantee agency which has a contract of reinsurance with the
       Department  of  Education.  The  terms  of the  loans,  which  vary on an
       individual basis, generally provide for repayment in monthly installments
       of principal and interest  over a period of up to twenty years.  Interest
       rates on  loans  may be fixed or  variable,  and will  vary  based on the
       average of the 91-day U. S. Treasury bill rate, and currently  range from
       7% to 10%  dependent  upon  type,  terms of loan  agreements  and date of
       origination.  For Title IV loans,  the Company  has entered  into a trust
       agreement in which an unrelated  financial  institution will serve as the
       eligible  lender trustee.  As an eligible  lender trustee,  the financial
       institution  acts as the eligible  lender in acquiring  certain  eligible
       student loans as an  accommodation  to the Company who holds a beneficial
       interest in the student loan assets as the beneficiary of such trust.


                                        F-8                          (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997


       Substantially all student loan principal and related accrued interest are
       guaranteed as defined by the Act.  These  guarantees  are made subject to
       the  performance  of certain  loan  servicing  procedures  stipulated  by
       applicable  regulations.  If these procedures are not met, affected loans
       may not be covered by the  guarantees  should the borrower  default.  The
       Company retains and enforces  recourse  provisions  against servicers and
       lenders under certain  circumstances.  Should loans lose their guaranteed
       status and recourse  provisions  prove  unenforceable,  the  unguaranteed
       portion has been reserved in a trustee account (Reserve Fund). Such loans
       are subject to "cure" procedures and reinstatement of the guarantee under
       certain  circumstances.  Also, in accordance with Student Loan Reform Act
       of 1993,  loans  disbursed prior to October 1, 1993 are fully insured and
       loans disbursed  subsequent to October 1, 1993  (approximately 83% of the
       student loans at December 31, 1999) are insured up to 98%.

       The Company has provided for an allowance  for loan loss related to those
       loans only guaranteed up to 98% for principal and interest. The provision
       is based upon  historical  default rates for such loans.  Activity in the
       allowance for loan losses for the years ended  December 31, 1999 and 1998
       is shown below:

                                                     1999        1998
                                                  ----------  ----------

           Beginning balance                     $   416,801          --
           Provision for loan losses               1,150,000     600,000
           Loans charged off, net of recoveries     (230,507)   (183,199)
                                                  ----------  ----------

           Ending balance                        $ 1,336,294     416,801
                                                  ==========  ==========

 (4)   NOTES PAYABLE

       The Company  periodically  issues taxable student loan asset-backed notes
       to finance the  acquisition  of student  loans.  All notes are  primarily
       secured by the student loans receivable,  related accrued  interest,  and
       other  property  and funds held in trust.  The  majority of the notes are
       variable rate notes with  interest  rates reset  periodically  based upon
       auction rates and national indices.

       The table on the following page summarizes  outstanding  notes payable at
       December 31, 1999 and 1998 by issue.

                                        F-9                          (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>


                                                          Final       Carrying          Interest
                        1999                            maturity       amount          rate range
----------------------------------------------------    ----------  --------------  -----------------
<S>                                                         <C>          <C>            <C>
1996A Senior Auction Rate Notes, Class A-1 and A-2         7/1/14 $    96,600,000    6.60% - 6.95%
1996B Senior Auction Rate Notes, Class A-3 and A-4         7/1/14     128,000,000        7.00%
1996C Senior Treasury Rate Notes, Class A-5                7/1/05     197,100,000        6.02%
1996C Senior Auction Rate Notes, Class A-6                 7/1/14      75,500,000        7.00%
1996C Subordinate LIBOR Rate Notes, Class B-3              7/1/25      15,600,000        6.96%
1997A Subordinate LIBOR Rate Notes, Class B-4              7/1/30      30,800,000        6.93%
1998A Senior Fixed Rate Notes, Class A-7                   8/1/05     125,000,000        5.48%
1998A Senior Fixed Rate Notes, Class A-8                   9/1/05     125,000,000        5.50%
1998A Senior Fixed Rate Notes, Class A-9                  12/1/05     125,000,000        5.73%
1998A Senior Auction Rate Notes, Class A-10               10/1/32     100,000,000        7.10%
1998A Senior Auction Rate Notes, Class A-11               11/1/32     100,000,000        6.30%
1998A Senior Auction Rate Notes ,Class A-12               12/1/32     100,000,000        6.55%
1998B Subordinate Auction Rate Notes, Class B-5           12/1/32      70,000,000        7.35%
1999A Senior Auction Rate Notes,  Class A-13, A-14,
   A-15 and A-16                                          12/1/32     278,700,000    5.97% - 6.85%
                                                                    --------------
                                                                  $ 1,567,300,000
                                                                    ==============

                                                          Final       Carrying          Interest
                        1998                             maturity       amount          rate range
----------------------------------------------------    ----------  --------------  -----------------
1996A Senior Auction Rate Notes, Class A-1 and A-2         7/1/14 $    96,600,000    5.59% - 5.60%
1996B Senior Auction Rate Notes, Class A-3 and A-4         7/1/14     128,000,000    5.56% - 5.60%
1996C Senior Treasury Rate Notes, Class A-5                7/1/05     225,000,000        6.07%
1996C Senior Auction Rate Notes, Class A-6                 7/1/14      75,500,000        5.58%
1996C Subordinate LIBOR Rate Notes, Class B-3              7/1/25      15,600,000        6.11%
1997A Subordinate LIBOR Rate Notes, Class B-4              7/1/30      30,800,000        5.98%
1998A Senior Fixed Rate Notes, Class A-7                   8/1/05     125,000,000        5.48%
1998A Senior Fixed Rate Notes, Class A-8                   9/1/05     125,000,000        5.50%
1998A Senior Fixed Rate Notes, Class A-9                  12/1/05     125,000,000        5.73%
1998A Senior Auction Rate Notes, Class A-10               10/1/32     100,000,000        5.80%
1998A Senior Auction Rate Notes, Class A-11               11/1/32     100,000,000        5.75%
1998A Senior Auction Rate Notes, Class A-12               12/1/32     100,000,000        5.75%
1998B Subordinate Auction Rate Notes, Class B-5           12/1/32      70,000,000        6.15%
                                                                    --------------
                                                                  $ 1,316,500,000
                                                                    ==============
</TABLE>

       Generally,  the notes can be redeemed on any interest payment date at par
       plus accrued interest.  Subject to note provisions, all notes are subject
       to redemption  prior to maturity at the option of the Company,  without a
       prepayment penalty.  During 1999, the Company redeemed $27,900,000 of the
       Series 1996C Senior Treasury Rate Notes, Class A-5.


                                         F-10                        (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997



       In July 1999, the Company  issued  $278,700,000  of Taxable  Student Loan
       Asset-Backed Notes, Series 1999A, due December 1, 2032, at varying rates.
       The proceeds were used to purchase eligible student loans.

       In December 1998, the Company issued $745,000,000 of Taxable Student Loan
       Asset-Backed  Notes,  Series 1998A, due in maturities from August 1, 2005
       to December 1, 2032, at varying  rates.  The proceeds were deposited into
       the Loan Account Fund 98A and eligible  student  loans were  purchased in
       January 1999.

       In March 1997, the Company  issued $30.8 million of Taxable  Student Loan
       Asset-Backed  Notes,  Series 1997A,  due July 1, 2030.  The proceeds were
       deposited  in an escrow fund to provide for the  defeasance  of the $11.1
       million of the Series 1996A Class B  Subordinate  Notes and $14.2 million
       of the Series 1996B Class B-2  Subordinate  Notes,  respectively,  in May
       1999.  As  a  result  of  the  transaction,  the  Company  recognized  an
       accounting loss of approximately $145,000 on the defeasance in 1997.

       The  indenture of trust  contains,  among other  requirements,  covenants
       related to the  restriction  of funds to be maintained in a reserve fund.
       Management  believes the Company is in  compliance  with all covenants of
       the note agreements at December 31, 1999.

(5)        INCOME TAXES

       Components of income tax expense in 1999, 1998 and 1997 are shown below.

                               1999          1998        1997
                            ----------   ----------- -----------

            Current:      $ 2,051,990       300,265     395,099
             Federal          194,250        22,005      40,650
                            ----------   ----------- -----------
             State
                            2,246,240       322,270     435,749
                            ----------   ----------- -----------


           Deferred:         (157,603)     (142,712)    256,693
             Federal          (13,509)      (10,420)     18,275
                            ----------   ----------- -----------
             State
                             (171,112)     (153,132)    274,968
                            ----------   ----------- -----------

                          $ 2,075,128       169,138     710,717
                            ==========   =========== ===========

       The actual  income tax expense  differs  from the  "expected"  income tax
       expense,  computed by applying the federal statutory  corporate tax rates
       to income  before  income taxes for 1999,  1998 and 1997, as shown on the
       following page.


                                        F-11                         (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                                        1999        1998        1997
                                                      ----------- ----------- -----------

<S>                                                 <C>              <C>         <C>
Computed "expected" income tax expense              $  1,889,005     157,553     682,313
Increase in income taxes resulting from:
   State taxes, net of federal income tax benefit        119,289       7,646      26,829
   Other                                                  66,834       3,939       1,575
                                                      ----------- ----------- -----------

           Actual income tax expense                $  2,075,128     169,138     710,717
                                                      =========== =========== ===========
</TABLE>

       The Company's  deferred tax assets at December 31, 1999 and 1998 resulted
       from the  future  tax  benefit  of the  allowance  for loan  losses,  not
       currently  deductible  for tax purposes.  Management  believes that it is
       more likely than not that the Company  will  generate  sufficient  future
       taxable  income and capital  gains to fully  recover  deferred tax assets
       recognized and, therefore, no valuation allowance is required.

 (6)   FAIR VALUE OF FINANCIAL INSTRUMENTS

       Fair value estimates, methods and assumptions are set forth below:

o         ACCRUED   INTEREST   RECEIVABLE/PAYABLE,   OTHER   ASSETS   AND  OTHER
          LIABILITIES  - The  carrying  value of  certain  asset  and  liability
          accounts including accrued interest receivable,  other assets, accrued
          interest payable and other  liabilities  approximate fair value due to
          their short maturities.

o         STUDENT LOANS  RECEIVABLE - The fair value of student loans receivable
          is  estimated at amounts  recently  paid by the Company to acquire the
          loans in the market.  The fair value of the student  loans  receivable
          approximates carrying value.

o         NOTES  PAYABLE  - The fair  value of the  notes  payable  approximates
          carrying  value due to the nature of the  financing  arrangement.  The
          terms of the arrangement specify that the outstanding debt is callable
          at par at specified interest payment dates.

 (7)   GUARANTEE AGENCIES

       As of December 31, 1999,  National  Student Loan Program,  Inc.,  Florida
       Department of Education Office of Student Financial  Assistance,  and the
       United  Student  Aid  Fund  were  the  primary  guarantors,  guaranteeing
       approximately  79% of the total student loans  beneficially  owned by the
       Company.  As of December  31, 1998 Iowa College  Student Aid  Commission,
       Nebraska  Student  Loan  Program,  Inc.  and  Kentucky  Higher  Education
       Assistance  Authority  and the United  Student  Aid Fund were the primary
       guarantors,  guaranteeing  approximately  88% of the total  student loans
       beneficially owned by the Company.  Management  periodically  reviews the
       financial  condition of its  guarantors and does not believe the level of
       concentration  creates  an  unusual  or  unanticipated  credit  risk.  In
       addition,   management  believes  that  based  on  the  Higher  Education
       Amendments of 1998,  the security for and payment of any of the Company's
       obligations  would not be  materially  adversely  affected as a result of
       legislative  action or other failure to perform on its obligations on the
       part of any guarantee agency. The Company,  however, offers no assurances
       to that effect.


                                       F-12                          (Continued)

<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
             (FORMERLY KNOWN AS UNION FINANCIAL SERVICES - 1, INC.)

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997


 (8)   RECENT STUDENT LOAN LEGISLATION

       The Company was organized  pursuant to provisions of the Act and as such,
       may be subject to  legislative  changes.  Legislative  changes  affecting
       competition,  loan asset  characteristics,  debt structure provisions and
       regulatory  compliance may from time to time affect the operations of the
       Company. The Act expired September 1998 and was reauthorized with certain
       amendments  effective October 1, 1998. These amendments  included certain
       provisions for changes in the existing  Federal Family Loan Program which
       included  changes to  interest  rates,  special  allowance  payments  and
       guarantee  fees  that  could  have a  material  effect  on the  financial
       statements.

 (9)   RELATED PARTIES

       Certain  shareholders  and  directors of the Parent are also officers and
       directors of UB&T. A majority of the loans  currently held were purchased
       from UB&T and other wholly-owned subsidiaries of the Parent.

       Under the terms of an agreement, the Company contracts all loan servicing
       through  UB&T.  UNIPAC  Service  Corporation  (UNIPAC)  is related to the
       Company  through  common  ownership.  UNIPAC  has  been  contracted  as a
       sub-servicer  by UB&T.  Fees paid to UB&T are calculated  using an annual
       asset-based  charge  ranging  from  .60% to  1.25%  of the  student  loan
       principal balance,  calculated  monthly.  On June 30, 1999, UB&T assigned
       this   servicing   agreement  to  the  Parent.   The  fees   amounted  to
       approximately  $12,734,000,  $5,475,000, and $4,917,000 in 1999, 1998 and
       1997,  respectively.  At December 31, 1999, $1,143,925 was payable to the
       Parent  for loan  servicing  and is  included  in other  liabilities.  At
       December 31, 1998, $506,274 was payable to UB&T for loan servicing and is
       included  in  other   liabilities.   In  1998,   the  Company  also  paid
       approximately  $385,000 to UB&T for services  provided in connection with
       the purchase of eligible student loans.

       During 1999,  the Company  entered  into loan  purchase  agreements  with
       NHELP-I, Inc. and NEBHELP, Inc., wholly-owned subsidiaries of the Parent,
       and purchased  student loans of approximately  $143 million from NHELP-I,
       Inc. and $279 million from NEBHELP, Inc. Premiums paid on these purchased
       loans  totaled  approximately  $3 million and $6  million,  respectively.
       During 1999,  the Company also purchased  student loans of  approximately
       $481  million from  Intuition,  Inc., a company  related  through  common
       ownership.  Premiums paid on these purchased loans totaled  approximately
       $12.4 million.  These  purchases were made on terms similar to those made
       with unrelated entities.

       During 1999, the Company sold approximately $5.6 million of student loans
       to  UB&T.   During  1999,   the  Company   purchased   student  loans  of
       approximately  $10.9  million  from UB&T.  Premiums  paid on these  loans
       totaled approximately $201,000.

       The Company incurred fees to the Parent for managerial and administrative
       support for the  operations of the Company  based on a service  agreement
       that requires  .015% of the average  outstanding  loan balance to be paid
       monthly. In addition,  the Parent has provided additional services to the
       Company on an  as-needed  transactional  basis.  These fees,  included in
       other  general and  administrative  expenses,  amounted to  approximately
       $3,301,000,   $953,000,   and   $1,330,000   in  1999,   1998  and  1997,
       respectively.

                                       F-13

<PAGE>


                                   SIGNATURES


               Pursuant  to the  requirements  of  Section  13 or  15(d)  of the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                    NELNET STUDENT LOAN CORPORATION-1




                                    By:/s/ Michael S. Dunlap
                                    --------------------------------------
                                       Michael S. Dunlap, Chairman of the Board
                                       (Principal Executive Officer)




                                    By:/s/ Ronald W. Page
                                    --------------------------------------
                                       Ronald W. Page, Vice President (Principal
                                       Financial and Accounting Officer)


                                   Date:  March 30, 2000

               Pursuant to the  requirements  of the Securities  Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the registrant and in the capacities and on the dates indicated.

                 Signature                 Title                   Date
                 ---------                 -----                   ----

By:   /s/ Michael S. Dunlap        Chairman of the Board         March 30, 2000
      -------------------------    (Principal Executive
      Michael S. Dunlap            Officer)


By:   /s/ Stephen F. Butterfield   President and Director        March 30, 2000
      -------------------------
      Stephen F. Butterfield

By:   /s/ Ronald W. Page           Vice-President, Secretary,    March 30, 2000
      -------------------------    Treasurer and Director
      Ronald W. Page               (Principal Financial and
                                   Accounting Officer)


By:   /s/ Ross Wilcox              Director                      March 30, 2000
      -------------------------
      Ross Wilcox

By:   /s/ Dr. Paul Hoff            Director                      March 30, 2000
      -------------------------
          Dr. Paul Hoff

                                     20