Higher education lender Nelnet remains exposed to federal penalties for potential violations of laws against offering financial inducements under the federal Higher Education Act, according to federal securities filings.

Nelnet has signed agreements with state authorities in years past promising to refrain from a variety of incentives to students and school authorities.

The federal issues facing the company now are substantially similar, said Nelnet spokesman Ben Kiser.

Nelnet said it has been cooperating with federal authorities and acknowledged it remained under scrutiny after it settled financial issues with the Department of Education more than two years ago.

Those issues were the way it obtained millions of dollars in federal subsidies on student loans.

A settlement with the U.S. Department of Education in 2007 allowed Nelnet to keep $278 million in disputed profits from the controversial loan subsidy.

Nelnet agreed not to take advantage of the subsidy in the future. In 2006, the department's Office of Inspector General concluded Nelnet got the $278 million improperly and should repay it.

After the settlement in early 2007, the Justice Department opened a civil file on other issues contained in the inspector general's report.

Separately, Nelnet settled with Nebraska Attorney General Jon Bruning and New York Attorney General Andrew Cuomo, who said Nelnet may not have broken the law but acted deceptively and uncompetitively by sponsoring marketing events and paying for school employees to participate.

In addition, Cuomo said, Nelnet paid for school financial aid personnel to attend luncheons, dinners and retreats and gave school employees tickets to sporting events, shows and spa treatments. The company also canceled more than 100 affinity agreements with college alumni associations nationwide after an investigation of the agreements by Cuomo's office.

Nelnet's securities filing said it was asked by federal authorities to supply documents related to its compliance with "prohibited inducement" provisions of the federal Higher Education Act.

In October 2007, Cuomo subpoenaed information from Nelnet regarding two practices: mailings to entice students to call the company's toll-free phone line, and offering $25 gift cards to students who persuade fellow students to take out loans.

Cuomo called the first tactic deceptive but alleged the second violates the anti-inducement provisions of the federal Higher Education Act.

In its latest securities filing, Nelnet said the company received in May the Department of Education's preliminary program review report, covering the period from Oct. 1, 2002 to Sept. 30, 2007.

The report contained "certain initial findings of noncompliance with the Higher Education Act's prohibited inducement provisions" and required the company to explain itself, the SEC filing said.

Depending upon a final report, additional action could include fines, penalties or the limitation, suspension, and termination of the company's participation in the main student lending program, Nelnet said in the filing.

"While the company is unable to predict the ultimate outcome of these reviews, the company believes its practices complied with applicable law," Nelnet said in its filing.

Kiser said Nelnet doesn't know when the final report will be released.

In June, Nelnet announced that it is one of four companies that has been awarded a contract by the U.S. Department of Education to service federal student loans.

Reach Richard Piersol at 473-7241 or at dpiersol@journalstar.com