UPDATE 2-Nelnet Q3 profit tops estimates, reinstates div

* Q3 EPS $1.01 vs est $0.75

* Net interest income rises 16 pct

* Reinstates div, to pay 7 cents/shr in Q4

* Says lawsuit may affect adversely

* Shares up 2 pct (Adds details; updates share movement)

Nov 9 (Reuters) - Nelnet Inc (NNI.N), a consolidator of student loans, posted a third-quarter profit above Wall Street expectations, helped by lower expenses and a rise in its fee-based revenue, and said it would pay a fourth-quarter dividend of 7 cents a share.

Nelnet said in a regulatory filing, it was served with a summons and third amended complaint on Nov. 4, naming the company as one of three defendants in an unrelated qui tam action, which could have a material adverse impact on its results and financial condition.

A qui tam case is a civil lawsuit brought by one or more individuals on behalf of the federal government for an alleged submission to the government of a false claim for payment.

The complaint alleges that Nelnet offered prohibited inducements to student loan borrowers to increase its loan holdings and submitted false claims to the Department of Education to obtain special allowance payments and default claim payments on such loans.

For the quarter ended Sept. 30, the company earned $46.4 million, or 93 cents a share, compared with $23.8 million, or 48 cents a share, a year earlier.

Excluding discontinued operations and restructuring charges, the company earned $1.01 a share.

Analysts on average were expecting the company to earn 75 cents a share, excluding special items, according to Thomson Reuters I/B/E/S.

"The low interest rate environment and improving capital markets have allowed us to reduce our debt and improve the spread we earn on our student loan portfolio," Chief Executive Mike Dunlap said in a statement.

Net interest income rose 16 percent to $69.2 million while fee-based revenue from its tuition payment plan, campus commerce, and certain enrollment services businesses increased 17 percent to $36.6 million.

Total operating expenses fell to $92.7 million, compared with $103.7 million last year.

Nelnet reported a gain of $9.7 million on the sale of $428 million of federal student loans to the Department of Education and $5.2 million from its repurchase of debt.

The company, which had suspended dividend payment in the second quarter of 2008, said it will pay a fourth-quarter cash dividend of 7 cents a share to its class A and class B common stockholders on Dec. 15.

Shares of the Lincoln, Nebraska-based company were trading up 2 percent at $14.95 Monday morning on Nasdaq. (Reporting by Abhinav Sharma in Bangalore; Editing by Pradeep Kurup)