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, 2001
                                              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 Financia l Services-1, Inc.)

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

           121 South 13th Street, Suite 301
                 Lincoln, Nebraska                             68508
        (Address of principal executive offices)             (Zip Code)

                                 (402) 475-7272
              (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, 2001: NONE

        THE NUMBER OF SHARES  OUTSTANDING  OF  REGISTRANT'S  COMMON  STOCK AS OF
APRIL 1, 2002 WAS 1,000.

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

                                      None


<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.....................................................13
   ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................14
   ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND FINANCIAL DISCLOSURE........................................14

PART III
   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............15
   ITEM 11.  EXECUTIVE COMPENSATION..........................................16
   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..17
   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................17

PART IV
   ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
             FORM 8-K........................................................18

SIGNATURES...................................................................21


                                       1
<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.

                                     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.  ("NELnet") and a wholly owned indirect
subsidiary of Nelnet Loan Services,  Inc. (formerly UNIPAC Service Corporation),
a privately held Nebraska 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  eligible  lenders  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").

               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
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").

                                       2
<PAGE>

               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  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").  Nelnet Loan
Services,  Inc. acts as a subservicer  (the  "Subservicer")  and custodian  (the
"Custodian")  of the Eligible Loans in accordance with  Subservicing  Agreements
(the "Subservicing  Agreements") between NELnet and Nelnet Loan Services,  Inc.,
respectively.  The Company may  appoint  other  entities to act as a servicer or
subservicer if approved by the rating agencies which rate the Notes. Nelnet Loan
Services, Inc. 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.


                                       3
<PAGE>

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.
Provided  below  is  selected  information  as of  December  31,  2001  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.

               The principal  balance of Eligible  Loans as of December 31, 2001
was  $1,313,207,332.  Set  forth in Table A below is the  aggregate  outstanding
principal amount of Notes of each Class as of December 31, 2001.

<TABLE>
<CAPTION>

                                     TABLE A
            ORIGINAL PRINCIPAL AMOUNT OF NOTES ISSUED BY THE COMPANY
            AND THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT PER CLASS
                               (DECEMBER 31, 2001)

Series     Class    Date Issued        Maturity Dates        Original       Principal Outstanding
                                                         Principal Amount  as of December 31, 2001
<C>          <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           28,200,000
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       $1,398,400,000
                                                             ==============       ==============
</TABLE>

(*) 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.



                                       4
<PAGE>

               Set  forth  in  Table B  below  is the  interest  rate  for  each
outstanding  Class of Notes as of  December  31,  2001,  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. The term "Auction Rate" refers
to the rate of  interest  per annum  that  results  from  implementation  of the
auction procedures as described in the Indenture.  The term "LIBOR" Rate" refers
to the rate of  interest  per annum as  determined  by  reference  to the London
Interbank  Offered Rate as described in the indenture.  The term "Treasury Rate"
refers to the rate of interest  per annum as  determined  by reference to United
States Treasury securities as described in the indenture.


                                     TABLE B
                     APPLICABLE INTEREST RATE PER CLASS
                          (as of December 31, 2001)
                   CLASS                     CALCULATION METHOD
                   -----                     ------------------
                                                AUCTION RATE
                    A-1                            2.100%
                    A-2                            2.300%
                    A-3                            2.150%
                    A-4                            2.110%
                    A-6                            2.150%
                    A-10                           2.149%
                    A-11                           2.150%
                    A-12                           2.280%
                    A-13                           2.270%
                    A-14                           2.080%
                    A-15                           2.070%
                    A-16                           2.100%
                    B-5                            2.200%

                                              TREASURY RATE (1)
                    A-5                             2.31%

                                               LIBOR RATE (1)
                    B-3                           2.59875%
                    B-4                           2.56875%

                                                 FIXED RATE
                    A-7                             5.48%
                    A-8                             5.50%
                    A-9                             5.73%

                 --------------------
                (1) Treasury Bill 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,  2001.  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.

                                     TABLE C
                       COMPOSITION OF THE ELIGIBLE LOANS &
                            DISTRIBUTION BY LOAN TYPE
                            (as of December 31, 2001)


                                              Outstanding  Percent of Loans
                                               Principal    By Outstanding
           Loan Types                           Balance         Balance
           ----------                           -------         -------

Consolidated                                  $494,622,172         37.67%
PLUS                                            25,725,603          1.96
SLS                                             11,752,670           .89
Stafford-Subsidized                            470,536,227         35.83
Stafford-Unsubsidized                          310,570,660         23.65
                                               -----------         -----

      Total                                 $1,313,207,332        100.00%
                                            ==============        ======


Number of Borrowers                                169,969
Average Outstanding Principal
       Balance Per Borrower                         $7,726
Number of Loans                                    317,593
Average Outstanding Principal
       Balance Per Loan                             $4,135
Approximate Weighted Average
       Remaining Term (Months)                         150


                                       6
<PAGE>

                                     TABLE D
               DISTRIBUTION OF THE ELIGIBLE LOANS BY INTEREST RATE
                            (as of December 31, 2001)



                                      Outstanding         Percent of Loans
                                       Principal          By Outstanding
        Interest Rate Range             Balance               Balance
        -------------------             -------               -------
         Less than 7.50%             $918,206,000              69.92%
         7.50% to 7.99%                40,338,227               3.07
         8.00% to 8.49%               140,612,649              10.71
         8.50% to 8.99%                    14,206                .00
         9.00% to 9.49%               207,353,358              15.79
         9.50% or greater               6,682,892                .51
                                        ---------                ---

              Total                $1,313,207,332             100.00%
                                   ==============             ======



                                     TABLE E
               DISTRIBUTION OF THE ELIGIBLE LOANS BY SCHOOL TYPES
                            (as of December 31, 2001)


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

      2-Year                                  $81,557,059        6.21%
      4-Year                                  673,507,347       51.45
      Proprietary                              59,877,608        4.56
      Unknown                                   3,643,146         .11
      Consolidation                           494,622,172       37.67
                                              -----------       -----

              Total                        $1,313,207,332      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>

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

               There were no matters submitted to  a  vote  of  security holders
during the fourth quarter of the fiscal year ended December 31, 2001.

                                     PART II

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

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

               As of April 1,  2002,  NELnet was the only  record  holder of the
Company's  outstanding  shares of  common  stock.  The  Company  pays  dividends
annually. On December 30, 1999, dividends were paid in the amount of $4,275,000,
on December 28, 2000,  dividends were paid in the amount of  $3,850,000,  and on
December 31, 2001, dividends were paid in the amount of $5,800,000.

                                       8
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

               The following table sets forth the Company's  selected  financial
data as of December 31, 2001,  2000,  1999,  1998, and 1997, and for each of the
fiscal  years  ended  December  31,  2001,  2000,  1999,  1998,  and 1997.  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     Year Ended     Year Ended
STATEMENT OF INCOME DATA:                   December 31,   December 31,   December 31,   December 31,   December 31,
                                                2001           2000           1999           1998           1997
                                                ----           ----           ----           ----           ----
<S>                                           <C>           <C>            <C>            <C>             <C>
Revenues:
    Loan interest.........................    $99,719,778   $123,888,615   $106,179,544   $ 43,428,726    $41,671,560
    Investment interest...................      2,330,722      3,050,187      3,424,139      1,962,767      2,268,878
    Other.................................        662,340        752,981        587,699         86,366        195,084
                                              -----------    -----------    -----------    -----------    -----------
            Total revenues................    102,712,840    127,691,783    110,191,382     45,477,859     44,135,522
                                              -----------    -----------    -----------     ----------     ----------
Expenses:
    Interest on notes payable.............     66,165,762     96,106,454     78,821,125     34,076,786     32,782,396
    Loan servicing fees to related party .     12,575,217     13,235,227     12,733,854      5,475,146      4,917,318
    Financing fees to parent .............             --             --             --             --        423,112
    Trustee and broker fees...............      2,771,301      2,817,983      2,415,554        950,018        915,380
    Amortization of debt issuance costs...      1,135,009      1,307,783      1,259,135        558,734        494,106
    Amortization of loan premiums and
    lender fees...........................      6,821,677      5,355,203      4,767,963      2,008,889      1,441,526
    Provision for loan losses.............        750,000        590,000      1,150,000        600,000        133,408
    Other general and administrative .....      2,560,614      2,707,349      3,487,853      1,344,895      1,021,474
                                              -----------  -------------  -------------  --  ---------  --  ---------
            Total expenses................     92,779,580    122,119,999    104,635,484     45,014,468     42,128,720
                                              -----------    -----------    -----------     ----------     ----------
            Income before income tax
            expense.......................      9,933,260      5,571,784      5,555,898        463,391      2,006,802

Income tax expense........................      3,575,974      2,005,842      2,075,128        169,138        710,717
                                               ----------     ----------     ----------    -----------     ----------
            Net income....................    $ 6,357,286    $ 3,565,942    $ 3,480,770    $    294,253    $ 1,296,085
                                               ==========     ==========     ==========    ============    ===========

Ratio of earnings to fixed charges........         1.15%          1.06%          1.07%       1.01%          1.06%

BALANCE SHEET DATA:
Cash and cash equivalents ................  $     148,025  $      29,268  $      41,727  $          --   $         --
Restricted cash - held by trustee ........     56,372,239     51,432,752     49,889,363    664,815,085     39,542,382
Student loans receivable, net ............  1,328,694,086  1,417,193,283  1,492,739,182    639,740,073    525,005,954
Total assets..............................  1,420,761,493  1,506,580,171  1,580,406,364  1,322,564,317    575,292,144
Notes payable ............................  1,398,400,000  1,491,100,000  1,567,300,000  1,316,500,000    571,500,000
Total liabilities.........................  1,405,827,999  1,497,752,050  1,573,928,114  1,321,511,837    574,533,917
Stockholder's equity......................     14,933,494      8,828,121      6,478,250      1,052,480        758,227
</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  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, 2001,  the Company held  approximately  $1.313  billion in Eligible
Loans.  Throughout 2001, the Company purchased portfolios of Eligible Loans from
various financial institutions and related parties.

SIGNIFICANT ACCOUNTING POLICIES

               The notes to the  financial  statements  contain a summary of the
Company's  significant  accounting  policies.  Certain  of  these  policies  are
considered  to  be  important  to  the  portrayal  of  the  Company's  financial
condition,  since they may  require  management  to make  difficult,  complex or
subjective  judgments,  some of which may relate to matters that are  inherently
uncertain.  The Company's significant accounting policy is determining the level
of the allowance for loan losses.  Additional  information about this policy can
be found in Note 1 to the financial statements.

ALLOWANCE FOR LOAN LOSSES

               The allowance for loan losses represents management's estimate of
probable  losses on Eligible  Loans in the Trust Estate and pledged to repay the
Notes. This evaluation  process is subject to numerous  estimates and judgments.
In making such estimates and judgments,  management considers such things as the
value and character of loans outstanding,  past loan loss experience and general
economic conditions. The allowance for credit losses is determined via a process
that begins with  estimates  of  probable  losses on Eligible  Loans held in the
Trust Estates, based upon a statistical analysis.  Historical  delinquencies and
credit  loss  experience  is  applied  to the  current  aging of the  portfolio,
together with analyses that reflect current trends and conditions.

               The allowance for loan losses reflects  assumptions and estimates
the Company believes are reasonable in light of historical loan losses and known
trends with respect to Eligible Loans held in the Trust Estate.  However,  these
estimates and assumptions are inherently uncertain and there can be no guarantee
that  management's  estimates  and  assumptions  will  prove  correct  in future
periods.  Management  continually measures expected losses against actual losses
and assumptions are revised accordingly.  Moreover, changes in the estimates and
assumptions management uses to estimate the allowance for loan losses could have
a direct  impact on the  amount of the  allowance  and the  Company's  financial
condition in future periods.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

               REVENUES. Revenues for the year ended December 31, 2001 consisted
primarily of interest on Eligible Loans, which totaled $99,719,778,  compared to
$123,888,615  for the year ended  December 31,  2000, a decrease of 19.51%.  The
decrease in revenues is  attributable to a declining  interest rate  environment
during fiscal year 2001 along with a reduced  investment in student  loans.  The
amount of interest  reported  for the year ended  December  31, 2001 was derived
from Eligible Loans in an aggregate  principal amount, net of allowance for loan
losses and  unamortized  premiums,  of  $1,328,694,086  at  December  31,  2001,
compared to  $1,417,193,283  at December 31,  2000.  The  Company's  average net
investment  in  Eligible  Loans  during the year  ended  December  31,  2001 was
$1,336,873,961 (excluding funds held by the Trustee), compared to $1,426,498,815
for the year ended December 31, 2000, and the average  effective annual interest
rate of interest income on Eligible Loans was approximately  7.46%,  compared to
8.64% for the year ended December 31, 2000. The reduction in student loan assets
is directly related to the proceeds being used to redeem bonds. The Company also
received  investment  interest and other income for the year ended  December 31,
2001 in the  amounts of  $2,330,722  and  $662,340,  respectively,  compared  to
$3,050,187 and $752,981, respectively, for the year ended December 31, 2000. The
decrease  in  investment  interest  was a result of the  restricted  cash  being
utilized to acquire student loans along with lower interest rates on investments
in fiscal year 2001 and a declining Reserve Fund balance.

                                       10
<PAGE>
               EXPENSES. Expenses for the year ended December 31, 2001 consisted
primarily  of  interest  on  the  Company's   outstanding  Notes  which  totaled
$66,165,762,  compared to  $96,106,454  for the year ended  December 31, 2000, a
decrease of 31.15%.  The amount of interest expense  reported depends  primarily
upon the amount of Notes outstanding  during the years and the interest rates on
such Notes.  The decrease in interest  expense was  attributable  primarily to a
decrease in interest rates and redemptions on the Notes.  The Company's  average
debt outstanding was  approximately  $1,440,850,000  for the year ended December
31, 2001,  compared to $1,530,417,000  for the year ended December 31, 2000, and
the average annual cost of borrowings was approximately 4.59% for the year ended
December 31, 2001,  compared to approximately  6.28% for the year ended December
31, 2000.  The  decrease in the average  annual cost of  borrowings  is a direct
result of a declining interest rate environment.  The Company also incurred loan
servicing  fees to a related  party in the  amount of  $12,575,217  for the year
ended December 31, 2001, compared to $13,235,227 for the year ended December 31,
2000.  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 paid.  Loan  servicing  fees to a related  party
decreased in 2001 because the Company held,  on average,  fewer student loans in
2001.  Trustee  and  broker  fees,  amortization  of  debt  issuance  costs  and
amortization  of loan  premiums and lender fees for the year ended  December 31,
2001 amounted to $2,771,301, $1,135,009 and $6,821,677,  respectively,  compared
to  $2,817,983,  $1,307,783  and  $5,355,203  respectively,  for the year  ended
December 31, 2000.  The change in the  amortization  of loan premiums and lender
fees  from  2000  to  2001  is  attributable  to an  increase  in  the  rate  of
amortization  due to an increase in principal  payments on the loans.  Increased
principal  payments  are a result of the fact that a greater  percentage  of the
Company's loan portfolio is in repayment  status.  Provision for loan losses for
the year ended December 31, 2001 amounted to $750,000,  compared to $590,000 for
the year  ended  December  31,  2000.  Additional  amounts  were  recognized  as
provision for loan losses in order to reflect the appropriate  allowance amounts
in  comparison  to the  estimated  defaults.  Other  general and  administrative
expenses for the year ended December 31, 2001 amounted to  $2,560,614,  compared
to $2,707,349 for the year ended  December 31, 2000.  This reduction is due to a
decline in administrative fees incurred to the parent as the average outstanding
student loan balances are decreased in 2001.

               INCOME TAX EXPENSE. The Company has recognized income tax expense
of $3,575,974 for the year ended  December 31, 2001,  compared to $2,005,842 for
the year ended  December  31,  2000.  The  increase  in income tax expense was a
result of a higher net income  before  income tax  expense  for the fiscal  year
ended  December  31, 2001.  The  effective  tax rate  utilized by the Company to
recognize income tax expense was 36%. The effective tax rate will be adjusted in
the future for changes to the corporate tax regulations.

               NET INCOME. The Company had net income of $6,357,286 for the year
ended  December 31, 2001 compared to $3,565,942  for the year ended December 31,
2000. The increase in net income is attributable to higher net interest  margins
on student  loans due to the  declining  interest  rates on the Notes during the
period while the "floor rate" on student loan assets is  determined  annually on
July 1. Consequently,  in a declining interest rate environment the net interest
margin increases and in a rising interest rate environment it decreases. The net
interest  margin  increased by $5,771,855  from  $27,782,161  for the year ended
December 31, 2000 to $33,554,016 for the year ended December 31, 2001.

               For the year ended  December 31,  2001,  there were no unusual or
infrequent  events or  transactions  or any  significant  economic  dangers that
materially affected the amount of reported income.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

               REVENUES. Revenues for the year ended December 31, 2000 consisted
primarily of interest on Eligible Loans, which totaled $123,888,615, compared to
$106,179,544  for the year ended  December 31, 1999, an increase of 16.69%.  The
amount of interest  reported  for the year ended  December  31, 2000 was derived
from Eligible Loans in an aggregate  principal amount, net of allowance for loan
losses and  unamortized  premiums,  of  $1,417,193,283  at  December  31,  2000,
compared to  $1,492,739,182  at December 31,  1999.  The  Company's  average net
investment  in  Eligible  Loans  during the year  ended  December  31,  2000 was
$1,426,498,815 (excluding funds held by the Trustee), compared to $1,332,494,385
for the year ended December 31, 1999, and the average  effective annual interest
rate of interest income on Eligible Loans was approximately  8.64%,  compared to
7.97% for the year ended December 31, 1999. The Company also received investment
interest and other income for the year ended December 31, 2000 in the amounts of
$3,050,187  and  $752,981,  respectively,  compared to  $3,424,139  and $587,699
respectively,  for the year ended  December 31, 1999. The decrease in investment
interest was a result of the cash being utilized to acquire student loans.

                                       11
<PAGE>
               EXPENSES. Expenses for the year ended December 31, 2000 consisted
primarily  of  interest  on  the  Company's   outstanding  Notes  which  totaled
$96,106,454,  compared to  $78,821,125  for the year ended December 31, 1999, an
increase of 21.93%.  The amount of interest expense  reported depends  primarily
upon the amount of Notes outstanding  during the years 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  $278,700,000 on July 1, 1999 and
an increase in interest  rates.  The  Company's  average  debt  outstanding  was
approximately  $1,530,417,000 for the year ended December 31, 2000,  compared to
$1,446,050,000 for the year ended December 31, 1999, and the average annual cost
of  borrowings  was  approximately  6.28% for the year ended  December 31, 2000,
compared  to  approximately  5.45% for the year ended  December  31,  1999.  The
Company also  incurred loan  servicing  fees to a related party in the amount of
$13,235,227  for the year ended December 31, 2000,  compared to $12,733,854  for
the year ended  December  31,  1999.  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 to a related  party  incurred by the Company were higher in 2000
because the Company  held, on average,  more student loans in 2000.  Trustee and
broker  fees,  amortization  of debt  issuance  costs and  amortization  of loan
premiums  and lender  fees for the year ended  December  31,  2000  amounted  to
$2,817,983,  $1,307,783  and  $5,355,203  respectively,  compared to $2,415,554,
$1,259,135  and $4,767,963  respectively,  for the year ended December 31, 1999.
The change in the  amortization  of loan  premiums  and lender fees from 1999 to
2000 is  attributable  to an  increase  in the  rate of  amortization  due to an
increase in principal  payments on the loans.  Provision for loan losses for the
year ended  December 31, 2000 amounted to $590,000,  compared to $1,150,000  for
the year ended December 31, 1999. The reduction in the provision for loan losses
in 2000 is a result of  additional  amounts that were incurred for the provision
of loan  losses  during  1999 to reflect the  appropriate  allowance  amounts in
comparison  to the  estimated  defaults at December 31, 1999.  Other general and
administrative  expenses  for the year  ended  December  31,  2000  amounted  to
$2,707,349,  compared to $3,487,853 for the year ended  December 31, 1999.  This
reduction  is due to a decline in  administrative  fees  incurred to the parent.
Administrative  fees to the parent in 1999 were higher than amounts in 2000 as a
result of  additional  amounts  reimbursed to the parent in 1999 as permitted by
the trust indenture.

               INCOME  TAX  EXPENSE:  Income  tax  expense  for the  year  ended
December 31, 2000 amounted to  $2,005,842,  compared to $2,075,128  for the year
ended December 31, 1999. The decrease in income tax expense is due to a decrease
in the effective  income tax rate used in arriving at the income tax expense for
2000.  The  reduction  in the  income  tax rate was a result of  reflecting  the
overall effective income tax rate on a consolidated basis.

               NET INCOME. The Company had net income of $3,565,942 for the year
ended  December 31, 2000 compared to $3,480,770  for the year ended December 31,
1999. The increase in net income is attributable to higher net interest  margins
on student  loans due to the  declining  interest  rates on the debt  during the
period while the "floor rate" on student  assets is determined  annually on July
1.  Consequently,  in a declining  interest  rate  environment  the net interest
margin increases and in a rising interest rate environment it decreases. The net
interest  margin  increased  by  $423,742  from  $27,358,419  for the year ended
December 31, 1999 to $27,782,161 for the year ended December 31, 2000.

               For the year ended  December 31,  2000,  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 of 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
obligations on its outstanding Notes.

               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, 2005.  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.

               The  following  table  summarizes  the  maturity  profile  of the
Company's contractual long-term debt payments at December 31, 2001:

               2002                                    $96,500,000
               2003                                    113,400,000
               2004                                    103,200,000
               2005                                     90,100,000
               2006                                             --
               2007 and thereafter                     995,200,000
                                                       -----------
                                                    $1,398,400,000

                                       12
<PAGE>
               For the year ended December 31, 2001, the Company  generated cash
flows  provided  by  operating   activities  of  $17.1   million.   Management's
expectations are that future cash flows provided by operating activities will be
sufficient to meet the Company's contractual obligations. For further discussion
of  the  above  contractual  obligations,  refer  to  Note  5 of  the  financial
statements.

               On April 3, 2001,  $57,500,000  of NELNET  Student Loan  Interest
Margin  Securities - 2001  ("SLIMS")  were issued by NELnet Group Trust - I (the
"Trust") under the terms of a Trust Agreement dated April 1, 2001. In connection
with that  transaction,  the Company assigned to the Trust its rights to receive
the residual cash flows that exist on the student  loans  financed by the Notes.
Another  affiliated  entity of the Company  made  similar  contributions  to the
Trust.  On a  semiannual  basis,  the  residual  interest  that exists above the
minimum parity requirements as specified by the terms of the Company's Indenture
are required to be  withdrawn  from the trust  estate  created by the  Company's
Indenture and deposited within the Trust.  Additionally,  funds  representing an
administrative  fee permitted to be withdrawn  from the trust estate  created by
the Company's  Indenture are also required to be deposited within the Trust. The
transfer  of the rights to future  excess  residual  cash flows and the right to
receive  future  administrative  fees  will not have an  adverse  effect  on the
holders of the Notes as these payments  represent  amounts  available  after all
debt  service  and other  requirements  associated  with the  outstanding  Notes
existing  under the Company's  Indenture are met.  These funds are then utilized
for the payment of a portion of the outstanding  SLIMS on a semiannual basis. As
of December 31, 2001, only funds  representing the  administrative fee described
above have been withdrawn from the Company's Trust Estate.

IMPACT OF INFLATION

               For the year ended  December  31,  2001,  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).
                                       13
<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 Bill Rate. Thus, the Company's analysis of the
effect of  different  interest  rates on its cash  flows was  prepared  assuming
spreads of 10, 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").

<TABLE>
<CAPTION>

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

               ------------ ------------ ------------- ------------- -------------- -------------
<S> <C>            <C>          <C>          <C>            <C>           <C>           <C>
    7.00%          1.03%        .89%         .81%           .67%          .53%          .39%
               ------------ ------------ ------------- ------------- -------------- -------------
    6.00%          .73%         .59%         .52%           .37%          .23%          .09%
               ------------ ------------ ------------- ------------- -------------- -------------
    5.00%          .78%         .64%         .57%           .43%          .28%          .14%
               ------------ ------------ ------------- ------------- -------------- -------------
    4.00%          1.00%        .86%         .79%           .65%          .51%          .36%
               ------------ ------------ ------------- ------------- -------------- -------------
    3.00%          1.25%        1.10%        1.03%          .89%          .75%          .61%
               ------------ ------------ ------------- ------------- -------------- -------------
    2.00%          1.50%        1.36%        1.28%         1.14%         1.00%          .86%
               ------------ ------------ ------------- ------------- -------------- -------------

-------------- ------------------------- ------------- ------------- -------------- -------------
  NELNET-1
TED SPREAD**       10           30            40             60            80            100

-------------- ------------------------- ------------- ------------- -------------- -------------
</TABLE>
*       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, 2002 the
1 Month LIBOR rate was 1.884% and the 91-day Treasury Bill Rate was 1.80%. Thus,
the NELNET-1 Ted Spread was  approximately  eight basis points  (1.884-1.80) and
the  NELNET-1 Net Spread was  approximately  150 basis  points.  If, at the same
interest  rate  (approximately  2.00%),  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 86 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.
                                       14
<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      38   6801 S. 27th Street    Chief           February  Present
Dunlap                                 P.O. Box 82529         Executive       1996
                                       Lincoln, Nebraska      Officer of
                                       68501                  Union Bank
                                                              and Trust
                                                              Company;
                                                              President,
                                                              Farmers &
                                                              Merchants
                                                              Investment,
                                                              Inc.;
                                                              Chairman,
                                                              NELnet, Inc.

Stephen F.          President     49   6991 East Camelback    Vice-Chairman,  February  Present
Butterfield                            Road, Suite B290       NELnet, Inc.;   1996
                                       Scottsdale, Arizona    President,
                                       85251 Union            Financial
                                                              Services, Inc.

Jeffery R.            Vice        36   3015 S. Parker Road    Senior Vice     November  Present
Noordhoek          President,          Suite 400              President,      2001
                    Treasurer          Aurora, CO 80014       Capital
                  and Secretary                               Markets - NELnet

Ross Wilcox            --         59   4732 Calvert Street    Chairman of     February  Present
                                       Lincoln, Nebraska      the Board of    1996
                                       68506                  Union Bank
                                                              and Trust
                                                              Company

Dr. Paul R. Hoff       --         67   Hernia Hill, Rural     Retired         February  Present
                                       Route 1                Physician       1996
                                       Seward, Nebraska
                                       68434
</TABLE>
------------------
    (*) 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, 2003.

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 co-founder and chairman of
the board of both NELnet and Union Financial Services,  Inc. ("UFS"), Mr. Dunlap
is  responsible  for the overall  strategy and direction of the  companies.  Mr.
Dunlap is also the chief executive officer of Union Bank and Trust Company,  and
president of Farmers & Merchants Investment,  Inc. (the parent of Union Bank and
Trust Company).  Mr. Dunlap has been an employee of Union Bank and Trust Company
for  approximately  20  years  and  is  a  member  of  the  Nebraska  State  Bar
Association.  Mr. Dunlap  received his B.S. degree in finance and accounting and
his law degree from the University of Nebraska.

                                       15
<PAGE>

        STEPHEN F. BUTTERFIELD,  PRESIDENT AND DIRECTOR.  Stephen F. Butterfield
serves as the vice chairman of NELnet  assisting in the  executive  direction of
the company and managing its capital  market  relationships.  As co-founder  and
president of UFS, Mr.  Butterfield  directs the overall management and direction
of the company, including asset 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 second as president  of the Student Loan  Acquisition
Authority of Arizona, a non-profit  secondary  marketing facility in Scottsdale,
Arizona.  Prior to his work in the student loan industry,  Mr. Butterfield spent
15 years as an  investment  banker for  Boettcher  and Company  specializing  in
municipal  finance.  Mr.  Butterfield  received  his  B.S.  degree  in  business
administration from Arizona State University.

        JEFFERY R.  NOORDHOEK,  VICE  PRESIDENT,  TREASURER AND SECRETARY.  As a
Senior Vice President in the capital  markets area of NELnet,  Jeff Noordhoek is
responsible  for leading the company in its  securitization  and capital markets
funding efforts.  Mr. Noordhoek's  primary function is to raise low cost capital
and to design creative methods to finance the company's  student loan portfolios
through warehouse lines of credit, long-term  securitizations,  and private debt
arrangements. Mr. Noordhoek has been in the capital markets area of NELnet since
1996.  Prior to joining NELnet,  Mr.  Noordhoek served as a senior associate for
State  Street  Capital  Corporation  where he assisted in the  establishment  of
Clipper  Receivables  Commercial  Paper Conduit and the Clipper Blue  Tax-Exempt
financing  vehicles.  While at State Street, Mr. Noordhoek worked at its offices
in   Luxembourg,   Toronto,   and   Boston   where  he   successfully   executed
securitizations  in numerous asset classes.  Mr. Noordhoek  received his B.S. in
business  administration  from the  University  of Nebraska and his M.B.A.  from
Boston University.

        ROSS  WILCOX,  DIRECTOR.  Ross Wilcox has been with Union Bank and Trust
Company since 1966 and serves as chairman of its Board of Directors.  Mr. Wilcox
is the  chairman  of the  Lincoln  Chamber of  Commerce.  A graduate of Nebraska
Wesleyan University,  Mr. Wilcox now serves as a trustee for the University. Mr.
Wilcox also serves as trustee for Lighthouse (a youth intervention program), the
Lincoln Public Schools  Foundation,  and Bryan LGH Medical Center. Mr. Wilcox is
also on the Board of Directors for the Lincoln Country Club.

        DR.  R. PAUL  HOFF,  DIRECTOR.  Dr. R. Paul Hoff has  worked as a family
practice physician in Seward, NE for 35 years. In addition,  Dr. Hoff has served
as a past member of Admissions  Board of University of Nebraska  Medical  School
and the Deans  Advisory  Board.  Dr. Hoff  currently  acts as a board member for
Stratus  Mutual Fund and  Security  Home Bank,  and as a past board  member for:
Hawkeye Bank Corp., NEBHELP and Nelnet Loan Services, Inc.

               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 2001

               The Company has not issued any options.

LONG-TERM INCENTIVE PLAN AWARDS IN 2001

               The Company has no long-term incentive plan.

                                       16
<PAGE>

DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE IN 2001

               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 2001, the Board held three regular meetings.

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 April 1, 2002,  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 on the first day of each calendar
month an amount equal to 0.015% of the average  outstanding balance of the Loans
during the  preceding  month.  In  accordance  with the second  amendment to the

                                       17
<PAGE>
Administrative  Services  Agreement  the  amount  paid by the  Company  has been
pledged to the NELnet Group Trust - I (the "Trust"). These funds are required to
be  deposited  within the Trust and are utilized for the payment of a portion of
the outstanding  NELNET Student Loan Interest Margin Securities - 2001 ("SLIMS")
on a  semiannual  basis.  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.  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  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.

               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.   NELnet  entered  into
subservicing  agreements  with Nelnet Loan  Services,  Inc.  (the  "Subservicing
Agreement") dated as of July 1, 1999. Under the Subservicing  Agreement,  Nelnet
Loan Services, Inc., as Subservicer,  assumes substantially all of the duties of
the  Servicer  under  the  Servicing  Agreement  for the  term of the  Servicing
Agreement.  The Company  believes that the terms and conditions of the Servicing
Agreement (and the subservicing  arrangement) 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 and related parties
including,  but not limited to, Union Bank and Trust Company,  Nelnet  Marketing
Solutions, Inc. (formerly InTuition Holdings, Inc.), NHELP-I, Inc., MELMAC, LLC,
NHELP-III,  Inc., and NEBHELP,  Inc. pursuant to which the Company has purchased
Eligible Loans. NHELP-I,  Inc., MELMAC, LLC, NHELP-III,  Inc., and NEBHELP, Inc.
are subsidiary  corporations  of NELnet.  Certain of the  shareholders of NELnet
also hold an interest in the bank holding  company that owns and controls  Union
Bank and Trust Company, and certain of the officers and directors of the Company
are also officers and directors of Union Bank and Trust Company.  Although Union
Bank and Trust Company, Nelnet Marketing Solutions, Inc., NHELP-I, Inc., MELMAC,
LLC, NHELP-III,  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.

               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.)

                                     18
<PAGE>

          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).)

         10.2  Trust  Agreement  dated  as of  April 1,  2001,  amount  NELNET
               Student Loan Corporation-1, MELMAC LLC, NELnet, Inc., The Chase
               Manhattan Bank and Wilmington  Trust Company  (Incorporated  by
               reference herein to the Company's Quarterly Report on Form 10-Q
               dated June 30, 2001).

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.


                                       19
<PAGE>



                          INDEX TO FINANCIAL STATEMENTS


FINANCIAL STATEMENTS OF NELNET STUDENT LOAN CORPORATION-1

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

Balance Sheets as of December 31, 2001 and 2000..............................F-2

Statements of Income for the years ended December 31, 2001, 2000 and 1999....F-3

Statements of Stockholder's Equity for the years ended December 31, 2001,
2000 and 1999................................................................F-4

Statements of Cash Flows for the years ended December 31, 2001, 2000 and
1999.........................................................................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.


                                       20
<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)


                                     Date:  April 1, 2002



                                     By: /s/ Jeffrey R. Noordhoek
                                        ----------------------------
                                        Jeffrey R. Noordhoek, Vice President
                                        (Principal Financial and Accounting
                                        Officer)


                                     Date:  March 29, 2002


               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        April 1, 2002
    --------------------------   (Principal Executive
    Michael S. Dunlap            Officer)


By: /s/ Stephen F. Butterfield   President and Director       March 29, 2002
    --------------------------
    Stephen F. Butterfield


By: /s/ Jeffery R. Noordhoek     Vice-President, Secretary,   March 29, 2002
    --------------------------   Treasurer and Director
    Jeffery R. Noordhoek         (Principal Financial and
                                 Accounting Officer)


By:                              Director
    ---------------------------
      Ross Wilcox


By: /s/  Dr. Paul Hoff           Director                     March 29, 2002
    ---------------------------
      Dr. Paul Hoff




                                       21
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                              Financial Statements

                           December 31, 2001 and 2000

                   (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,  (a wholly owned subsidiary of NELnet,  Inc.), as of December 31,
2001 and 2000, 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,
2001.  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 auditing standards generally accepted
in the  United  States of  America.  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 as of December 31, 2001 and 2000 and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 2001, in conformity with  accounting  principles  generally  accepted in the
United States of America.


/s/ KPMG LLP



March 8, 2002
Lincoln, Nebraska


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

                                 NELNET STUDENT LOAN CORPORATION-1
                            (a wholly owned subsidiary of NELnet, Inc.)
                                          Balance Sheets
                                    December 31, 2001 and 2000


                             ASSETS                                      2001              2000
                                                                    ---------------   ---------------
<S>                                                                <C>                        <C>
Cash and cash equivalents                                          $       148,025            29,268
Student loans receivable, net of allowance of $1,327,072 in 2001
    and $1,208,929 in 2000                                           1,328,694,086     1,417,193,283
Accrued interest receivable                                             30,277,046        31,653,602
Restricted cash - held by trustee                                       56,372,239        51,432,752
Debt issuance costs, net of accumulated amortization of $4,096,571
    in 2001 and $2,961,562 in 2000                                       4,806,290         5,941,299
Deferred tax asset                                                         463,807           329,967
                                                                    ---------------   ---------------
              Total assets                                         $ 1,420,761,493     1,506,580,171
                                                                    ===============   ===============
              LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
    Notes payable                                                  $ 1,398,400,000     1,491,100,000
    Accrued interest payable                                             2,894,609         4,835,359
    Other liabilities                                                    2,700,356         1,682,848
    Due to affiliates                                                    1,833,034           133,843
                                                                    ---------------   ---------------
               Total liabilities                                      1,405,827,999     1,497,752,050
                                                                    ---------------   ---------------
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                                          14,375,208         8,827,121
    Retained earnings                                                      557,286                --
                                                                    ---------------   ---------------
              Total stockholder's equity                                14,933,494         8,828,121
Commitments and contingencies
                                                                    ---------------   ---------------
              Total liabilities and stockholder's equity           $ 1,420,761,493     1,506,580,171
                                                                    ===============   ===============
See accompanying notes to financial statements.
</TABLE>


                                     F-2
<PAGE>
<TABLE>
<CAPTION>

                                 NELNET STUDENT LOAN CORPORATION-1
                            (a wholly owned subsidiary of NELnet, Inc.)
                                       Statements of Income
                           Years ended December 31, 2001, 2000, and 1999

                                                       2001              2000              1999
                                                  ---------------   ---------------   ---------------
<S>                                               <C>                  <C>               <C>
Revenues:
    Loan interest                                 $   99,719,778       123,888,615       106,179,544
    Investment interest                                2,330,722         3,050,187         3,424,139
    Other                                                662,340           752,981           587,699
                                                  ---------------   ---------------   ---------------
              Total revenues                         102,712,840       127,691,783       110,191,382
                                                  ---------------   ---------------   ---------------
Expenses:
    Interest on notes payable                         66,165,762        96,106,454        78,821,125
    Loan servicing fees to related party              12,575,217        13,235,227        12,733,854
    Trustee and broker fees                            2,771,301         2,817,983         2,415,554
    Amortization of debt issuance costs                1,135,009         1,307,783         1,259,135
    Amortization of loan premiums and lender fees      6,821,677         5,355,203         4,767,963
    Provision for loan losses                            750,000           590,000         1,150,000
    Other general and administrative                   2,560,614         2,707,349         3,487,853
                                                  ---------------   ---------------   ---------------
              Total expenses                          92,779,580       122,119,999       104,635,484
                                                  ---------------   ---------------   ---------------
              Income before income tax expense         9,933,260         5,571,784         5,555,898
Income tax expense                                     3,575,974         2,005,842         2,075,128
                                                  ---------------   ---------------   ---------------
              Net income                          $    6,357,286         3,565,942         3,480,770
                                                  ===============   ===============   ===============

See accompanying notes to financial statements.
</TABLE>


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

                                NELNET STUDENT LOAN CORPORATION-1
                           (a wholly owned subsidiary of NELnet, Inc.)
                               Statements of Stockholder's Equity
                          Years ended December 31, 2001, 2000, and 1999

                                                           Additional                       Total
                                              Common         paid-in       Retained      stockholder's
                                               stock         capital       earnings         equity
                                            ------------   ------------   ------------   -------------
<S>                                         <C>             <C>            <C>             <C>
Balance at December 31, 1998                $     1,000             --      1,051,480       1,052,480

Net income                                           --             --      3,480,770       3,480,770
Capital contribution from parent                     --      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
Net income                                           --             --      3,565,942       3,565,942
Capital contribution from parent                     --      3,885,000             --       3,885,000
Return of capital to parent                          --     (1,251,071)            --      (1,251,071)
Dividends paid - $3,850 per share                    --        (26,808)    (3,823,192)     (3,850,000)
                                            ------------   ------------   ------------   -------------
Balance at December 31, 2000                      1,000      8,827,121             --       8,828,121
Net income                                           --             --      6,357,286       6,357,286
Capital contribution from parent                     --      6,288,087             --       6,288,087
Return of capital to parent                          --       (740,000)            --        (740,000)
Dividends paid - $5,800 per share                    --             --     (5,800,000)     (5,800,000)
                                            ------------   ------------   ------------   -------------
Balance at December 31, 2001                $     1,000     14,375,208        557,286      14,933,494
                                            ============   ============   ============   =============


See accompanying notes to financial statements.
</TABLE>

                                     F-4
<PAGE>
<TABLE>
<CAPTION>

                                NELNET STUDENT LOAN CORPORATION-1
                           (a wholly owned subsidiary of NELnet, Inc.)
                                    Statements of Cash Flows
                          Years ended December 31, 2001, 2000, and 1999

                                                             2001            2000           1999
                                                         -------------   -------------  --------------
<S>                                                      <C>                <C>             <C>
Net income                                               $  6,357,286       3,565,942       3,480,770
Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Amortization of loan premiums, lender fees and
        debt issuance costs                                 7,956,686       6,662,986       6,027,098
      Deferred income tax benefit                            (133,840)         (5,723)       (171,112)
      Provision for loan losses                               750,000         590,000       1,150,000
      Decrease (increase) in accrued interest receivable    1,376,556      (1,490,836)    (19,051,958)
      Decrease in other assets                                     --              --          46,374
      (Decrease) increase in accrued interest payable      (1,940,750)         33,819       1,075,918
      Increase (decrease) in other liabilities              1,017,508         (51,217)        594,120
      Increase (decrease) in due to affiliates              1,699,191          41,334         (53,761)
                                                         -------------   -------------  --------------
             Net cash provided by (used in)
               operating activities                        17,082,637       9,346,305      (6,902,551)
                                                         -------------   -------------  --------------
Cash flows from investing activities:
    Purchases of student loans, including premiums       (425,047,382)   (174,371,620)  (1,081,832,346)
    Proceeds from sales of student loans                  307,494,235     101,408,534      16,850,114
    Net proceeds from student loan principal payments
      and loan consolidations                             198,480,667     142,563,782     206,065,160
    (Increase) decrease in restricted cash - held
         by trustee                                        (4,939,487)     (1,543,389)    614,925,722
                                                         -------------   -------------  --------------
             Net cash provided by (used in)
               investing activities                        75,988,033      68,057,307    (243,991,350)
                                                         -------------   -------------  --------------
Cash flows from financing activities:
    Proceeds from issuance of notes payable                        --              --     278,700,000
    Payment on notes payable                              (92,700,000)    (76,200,000)    (27,900,000)
    Payment for debt issuance costs                                --              --      (1,809,372)
    Return of capital to parent                              (740,000)     (1,251,071)             --
    Capital contribution from parent                        6,288,087       3,885,000       6,220,000
    Dividends paid                                         (5,800,000)     (3,850,000)     (4,275,000)
                                                         -------------   -------------  --------------
             Net cash (used in) provided by
               financing activities                       (92,951,913)    (77,416,071)    250,935,628
                                                         -------------   -------------  --------------
             Net increase (decrease) in cash and
               cash equivalents                               118,757         (12,459)         41,727
Cash and cash equivalents, beginning of year                   29,268          41,727              --
                                                         -------------   -------------  --------------
Cash and cash equivalents, end of year                   $    148,025          29,268          41,727
                                                         =============   =============  ==============
Supplemental disclosures of cash flow information:
    Interest paid                                        $ 68,106,512      96,072,635      77,745,207
                                                         =============   =============  ==============
    Income taxes paid to parent                          $  2,010,623       1,877,722       2,300,000
                                                         =============   =============  ==============

See accompanying notes to financial statements.
</TABLE>

                                     F-5
<PAGE>


                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

           DESCRIPTION OF BUSINESS

           NELNET  Student  Loan  Corporation-1  (the  Company),  a wholly owned
           subsidiary of NELnet, Inc. (the Parent or NELnet), 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 student loans is held by an
           eligible lender trustee under the Act for the benefit of the Company.
           The financed  eligible  student  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

           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 AND ALLOWANCE FOR LOAN LOSSES

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

           The allowance for loan losses is estimated and established  through a
           provision  charged  to  expense.   Losses  are  charged  against  the
           allowance when  management  believes that the  collectibility  of the
           loan principal is unlikely.  Recovery of amounts  previously  charged
           off is  credited  to the  allowance  for loan  losses.  The charge to
           operations is estimated and based on  management's  evaluation of the
           loan portfolio, including such factors as the volume and character of
           loans  outstanding,  past loan loss experience,  and general economic
           conditions.

           Management  believes  that the allowance for loan losses is adequate.
           While  management used available  information to recognize  losses on
           loans,  future  additions  to the  allowance  for loan  losses may be
           necessary based on changes in economic conditions.

                                     F-6

                                                                    (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


           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 60 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.

           DEBT ISSUANCE COSTS

           Debt  issuance  costs are amortized  over the  estimated  life of the
           related debt, ranging from 5 to 30 years.

           INCOME TAXES

           The Company files a consolidated  Federal tax return with Nelnet Loan
           Services, Inc. (formerly UNIPAC Service Corporation) (NLS), the legal
           parent of NELnet.  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
           accounting  principles  generally  accepted  in the United  States of
           America  requires  management  to  make a  number  of  estimates  and
           assumptions   that  affect  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.


                                                                     (Continued)
                                    F-7
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


(2)   RESTRICTED CASH - HELD BY TRUSTEE

      The Company's  restricted cash is held by the trustee in various  accounts
      subject to use  restrictions,  imposed by the  indenture  of trust.  These
      trustee  funds  include:  the  recycling  account  fund  which  is used to
      maintain  excess  funds for future  operating  needs,  if  necessary,  and
      purchases  of eligible  student  loans;  the reserve fund which is used to
      cure any  deficiencies in the debt service  requirement;  the revenue fund
      which is used for the  receipt of interest  payments  on eligible  student
      loans and  investment  securities  and to pay fees and  expenses  incurred
      under the  indenture;  the interest  fund which is used for the payment of
      debt service  requirements;  and the senior note  redemption fund which is
      used to redeem senior notes.

(3)   STUDENT LOANS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

      Guaranteed  loans may be made under the insured  student  loan  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 20
      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 5% to 12% 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.

      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 student 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.  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  87% and  91% of the  student  loans  at
      December 31, 2001 and 2000, respectively) are insured up to 98%.


                                     F-8
                                                                     (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


      The Company has provided for an allowance for loan losses 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, 2001, 2000, and
      1999 is shown below.

                                                2001        2000         1999
                                            -----------  ----------  -----------
      Beginning balance                    $ 1,208,929   1,336,294      416,801
      Provision for loan losses                750,000     590,000    1,150,000
      Loans charged off, net of recoveries    (631,857)   (717,365)    (230,507)
                                            -----------  ----------  -----------

      Ending balance                       $ 1,327,072   1,208,929    1,336,294
                                            ===========  ==========  ===========


(4)   STUDENT LOAN INTEREST MARGIN SECURITIES TRANSACTION

      Effective  April 3, 2001,  NELnet Group Trust-I (the Trust) issued student
      loan interest margin securities. In connection with that transaction,  the
      Company  transferred  to the Trust its  rights to  receive  future  excess
      residual cash flows and the  administrative  fees that are permitted to be
      withdrawn  from the  Company's  trust estate  created  under the Company's
      trust  indenture.   Those  revenues,  along  with  revenues  from  similar
      transfers  made by an affiliate of the Company,  will be used by the Trust
      to make payments of principal and interest due on the Trust's  securities.
      NELnet is the sole  beneficial  owner of the Trust.  The proceeds from the
      issuance of the Trust's  securities  which were attributed to the transfer
      to the Trust made by the Company  were paid to NELnet.  The future  excess
      residual cash flows of the Company's  trust estate  represent  funds which
      would normally be available for the payment of dividends by the Company to
      NELnet.  After the obligations of the Trust are satisfied in full,  NELnet
      will receive any remaining  excess cash flows as the sole beneficial owner
      of the Trust which will be reflected as dividends from the Company. NELnet
      has  agreed  to  provide  the   administrative   services   necessary  for
      administration of the Company's trust estate. The Trust securities are not
      obligations of the Company or NELnet.

(5)   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.

                                     F-9
                                                                     (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


      The table below summarizes  outstanding notes payable at December 31, 2001
and 2000 by issue.
<TABLE>
<CAPTION>

                                                           2001                         2000
                                                 -------------------------    -------------------------
                                                                Interest                     Interest
                                       Final       Carrying       rate          Carrying       rate
 2001                                maturity       amount        range          amount        range
-----------------------------------  ----------  -------------  ----------    -------------  ----------
<C>                                    <C>          <C>         <C>             <C>          <C>
1996A Senior Auction Rate Notes,
   Class A-1 and A-2                  7/1/2014  $  96,600,000   2.10 - 2.30%  $ 96,600,000  6.85 - 6.90%
1996B Senior Auction Rate Notes,
   Class A-3 and A-4                  7/1/2014    128,000,000   2.11 - 2.15    128,000,000     6.95
1996C Senior Treasury Rate Notes,
   Class A-5                          7/1/2005     28,200,000     2.31         120,900,000     6.42
1996C Senior Auction Rate Notes,
   Class A-6                          7/1/2014     75,500,000     2.15          75,500,000     6.95
1996C Subordinate LIBOR Rate Notes,
   Class B-3                          7/1/2025     15,600,000     2.60          15,600,000     7.30
1997A Subordinate LIBOR Rate Notes,
   Class B-4                          7/1/2030     30,800,000     2.57          30,800,000     7.27
1998A Senior Fixed Rate Notes,
   Class A-7                          8/1/2005    125,000,000     5.48         125,000,000     5.48
1998A Senior Fixed Rate Notes,
   Class A-8                          9/1/2005    125,000,000     5.50         125,000,000     5.50
1998A Senior Fixed Rate Notes,
   Class A-9                         12/1/2005    125,000,000     5.73         125,000,000     5.73
1998A Senior Auction Rate Notes,
   Class A-10                        10/1/2032    100,000,000     2.15         100,000,000     6.95
1998A Senior Auction Rate Notes,
   Class A-11                        11/1/2032    100,000,000     2.15         100,000,000     6.84
1998A Senior Auction Rate Notes,
   Class A-12                        12/1/2032    100,000,000     2.28         100,000,000     6.85
1998B Subordinate Auction Rate Notes,
   Class B-5                         12/1/2032     70,000,000     2.20          70,000,000     6.98
1999A Senior Auction Rate Notes,
   Class A-13, A-14, A-15 and A-16   12/1/2032    278,700,000   2.07 - 2.27    278,700,000   6.84 - 7.02
                                                 -------------                -------------

                                               $1,398,400,000               $1,491,100,000
                                               ===============              ===============
</TABLE>


                                     F-10
                                                                     (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


      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.  The Company redeemed $92.7 million and $76.2 million
      in 2001 and 2000,  respectively,  of the Series 1996C Senior Treasury Rate
      Notes,  Class A-5.  The Company  has signed an  irrevocable  issuer  order
      whereby  the  Company has agreed to  mandatorily  redeem the Series  1996C
      Senior  Treasury  Rate Notes,  Class A-5 and the Series 1998A Senior Fixed
      Rate Notes,  Classes A-7, A-8 and A-9. As a result,  at December 31, 2001,
      the notes payable are due in varying amounts as shown below:


               2002                          $    96,500,000
               2003                              113,400,000
               2004                              103,200,000
               2005                               90,100,000
               2006                                        -
               2007 and thereafter               995,200,000
                                              --------------

                                             $ 1,398,400,000
                                              ==============

      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, 2001 and 2000.

(6)   INCOME TAXES

      Components  of income tax  expense  (benefit)  in 2001,  2000 and 1999 are
shown below.
                                 2001         2000        1999
                              ----------  -----------  ----------
            Current:
               Federal      $ 3,351,584    1,843,960   2,051,990
               State            358,230      167,605     194,250
                              ----------  -----------  ----------
                              3,709,814    2,011,565   2,246,240
                              ----------  -----------  ----------

            Deferred:
               Federal         (123,274)      (5,272)   (157,603)
               State            (10,566)        (451)    (13,509)
                             -----------  -----------  ----------
                               (133,840)      (5,723)   (171,112)
                             -----------  -----------  ----------
                            $ 3,575,974    2,005,842   2,075,128
                             ===========  ===========  ==========


                                     F-11
                                                                     (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


      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 tax expense for 2001, 2000, and 1999, as shown below.
<TABLE>
<CAPTION>
                                                             2001        2000         1999
                                                          -----------  ----------  -----------
<S>                                                      <C>           <C>          <C>
      Computed "expected" income tax expense             $ 3,377,308   1,894,407    1,889,005
      Increase in income tax expense resulting from:
         State taxes, net of Federal income tax benefit      229,458     110,322      119,289
         Other                                               (30,792)      1,113       66,834
                                                          -----------  ----------  -----------

                 Actual income tax expense               $ 3,575,974   2,005,842    2,075,128
                                                          ===========  ==========  ===========
</TABLE>

      The  Company's  deferred tax assets at December 31, 2001 and 2000 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 to fully recover deferred tax assets recognized and, therefore,  no
      valuation allowance is required.

(7)   FAIR VALUE OF FINANCIAL INSTRUMENTS

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

           CASH AND CASH EQUIVALENTS, RESTRICTED CASH - HELD BY TRUSTEE
           AND ACCRUED INTEREST RECEIVABLE/PAYABLE

           The carrying amount  approximates fair value due to the variable rate
           of interest and/or the short maturities of these instruments.

           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.

           NOTES PAYABLE

           The fair  value of the notes  payable  is based on market  prices for
           securities that possess similar credit risk and interest rate risk at
           or near December 31, 2001. The terms of the arrangements specify that
           the outstanding debt is callable at par at specified interest payment
           dates.  The estimated fair value of the notes payable at December 31,
           2001 is approximately $1,412,576,000.

           LIMITATIONS

           Fair value  estimates are made at a specific point in time,  based on
           relevant  market  information  and  information  about the  financial
           instrument.  These  estimates  are  subjective  in nature and involve
           uncertainties  and matters of  significant  judgment and,  therefore,
           cannot be determined  with  precision.  Changes in assumptions  could
           significantly affect the estimates.

                                     F-12
                                                                     (Continued)
<PAGE>
                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


 (8)  GUARANTEE AGENCIES

      As of December  31, 2001 and 2000,  Iowa College  Student Aid  Commission,
      Nebraska  Student Loan  Program,  Inc.,  Florida  Department  of Education
      Office of Student Financial Assistance,  and the United Student Aid Funds,
      Inc. were the primary guarantors,  guaranteeing approximately 82% and 88%,
      respectively,  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.

 (9)  RELATED PARTIES

      Certain  shareholders  and  directors of the Parent are also  officers and
      directors of Union Bank & Trust  Company  (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 contracted all loan servicing
      through UB&T through June 30, 1999.  NLS was  contracted as a sub-servicer
      by UB&T.  Fees paid to UB&T were  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 who  contracts  NLS as a  sub-servicer.  The fees
      amounted to approximately $12.6 million,  $13.2 million, and $12.7 million
      in 2001,  2000,  and 1999,  respectively.  At December  31, 2001 and 2000,
      approximately $2.1 million and $1.1 million,  respectively, was payable to
      the Parent and NLS for loan servicing and is included in other liabilities
      on the accompanying balance sheets.

      During  2001  and  2000,  the  Company  purchased  student  loans  in  the
      approximate  amounts,  from the following wholly owned subsidiaries of the
      Parent.  Premiums paid on these loans,  not included in the amounts below,
      totaled  approximately  $5.2  million  and $0.6  million in 2001 and 2000,
      respectively.


                                           2001             2000
                                      ---------------  ---------------
             NEBHELP, Inc.            $  158,800,000       27,400,000
             InTuition, Inc.              35,500,000        5,300,000
             MELMAC, LLC                   5,500,000                -
             NHELP-I, Inc.                56,800,000                -
             NHELP-III, Inc.              94,200,000                -
                                      ===============  ===============


                                     F-13
                                                                     (Continued)
<PAGE>

                        NELNET STUDENT LOAN CORPORATION-1
                   (A WHOLLY OWNED SUBSIDIARY OF NELNET, INC.)

                          Notes to Financial Statements

                        December 31, 2001, 2000, and 1999


      During  2001  and  2000,  the  Company  sold  student   loans,   including
      unamortized  premiums,  to the following wholly owned  subsidiaries of the
      Parent. No gains or losses were recognized,  as sales between wholly owned
      subsidiaries of the Parent are made at amortized cost.

                                                   2001             2000
                                              ---------------  ---------------
           NELNET Student Loan Corporation-2  $  228,700,000      101,400,000
           NEBHELP, Inc.                          78,800,000                -
                                              ===============  ===============

      During 2001 and 2000, the Company purchased student loans of approximately
      $67 million and $141 million,  respectively,  from UB&T.  Premiums paid on
      these  loans  totaled   approximately   $0.8  million  and  $1.3  million,
      respectively.

      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 on the  accompanying  statements  of
      income,  amounted to approximately  $2.4 million,  $2.6 million,  and $3.3
      million in 2001, 2000, and 1999, respectively.


                                     F-14