Nebraska Attorney General Jon Bruning did an about-face Friday and announced Nelnet will contribute $1 million to student loan assistance programs in Nebraska.

In an April agreement between Bruning and Nelnet, the Lincoln student loan company had agreed to contribute $1 million to a national fund to educate parents and students about financing college.

But after Nelnet settled with New York Attorney General Andrew Cuomo last month and agreed to pay $2 million into the same fund, Bruning said he would not require Nelnet to pay the $1 million, saying at the time, “it doesn’t make sense to create two funds for the same purpose.”

That brought criticism from a higher education watchdog group.

In an entry in its blog titled “friends with benefits,” The New America Foundation suggested Bruning went easy on Nelnet because the company and Union Bank, which is owned by the family of Nelnet CEO Mike Dunlap, have donated more than $16,000 to his Senate campaign.

Bruning was also criticized by University Nebraska Regent Chuck Hassebrook and the Nebraska Democratic Party.

In media interviews this week, Bruning lashed out at critics and the New York Attorney General’s Office and admitted the settlement with Nelnet was in part aimed at mollifying Cuomo.

On Friday, he sounded a less defiant tone.

He said in a statement that he reapproached Nelnet “out of an abundance of caution” about fulfilling the original agreement.

“Defending Nebraska’s taxpayers is my foremost priority,” Bruning said. “If there has been a misunderstanding by anyone about the nature of the state’s agreement with Nelnet, I want to fix that.”

Nelnet President Jeff Noordhoek said the company was happy to make a “contribution that fulfills the commitment we made in our voluntary agreement with the state of Nebraska.”

“Our mission has always been about helping students and families plan and pay for their education with our products and services.”  

Half of the money will be placed in the already existing Nebraska State Grant fund for need-based scholarships, which is distributed by the Nebraska Coordinating Commission for Postsecondary Education. The other $500,000 will be placed in a trust fund established on behalf of Legal Aid of Nebraska at the Omaha Community Foundation. The interest from the trust will fund a loan repayment assistance program to enhance recruitment and retention of Legal Aid attorneys who serve indigent Nebraskans.

While Nelnet has put most of its legal troubles behind it, the company revealed in a Securities and Exchange Commission filing Thursday that it is under review by the U.S. Department of Education regarding its practices relating to the Federal Family Education Loan Program.

Nelnet spokesman Ben Kiser said the review deals with “some of the same subject matter” as the New York Attorney General’s investigation.

But Kiser termed the review routine and noted that Nelnet is one of more than two dozen lenders under review by the department.

Department of Education officials could not be reached for comment late Friday.

Reach Matt Olberding at 473-2647 or molberding@journalstar.com.