Nelnet said Tuesday that it has withdrawn its application to start its own bank.
The Lincoln-based financial company said in a news release that it had withdrawn the June 28 application it made to the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions to establish Nelnet Bank, a Utah-chartered industrial bank.
Nelnet President Tim Tewes said in the release that the company had "constructive dialogue" with the FDIC and Utah Department of Financial Institutions.
"Withdrawing our application is a temporary step back in what we knew could be a long process," Tewes said.
Nelnet spokesman Ben Kiser said the company plans to modify its application and resubmit it "sometime in the future."
Nelnet had said the bank, which would operate as a subsidiary of the company, would mainly serve the private student loan market.
The industrial charter the company was seeking would allow it to own a bank without having to incorporate a separate holding company. It would be chartered at the state level in Utah and still be eligible for FDIC insurance.
Industrial chartered banks have come under criticism recently. In July, the Independent Community Bankers of America sent a letter to the FDIC asking it to reject Nelnet's application and impose a two-year moratorium on other applications. It also called on Congress to close the "loophole" that allows companies to start industrial banks.
Two large financial companies, SoFi and Square, also have recently withdrawn applications to start industrial banks.