Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2012

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Loan Losses Metrics

	Allowance for Loan Losses
	Year Ended December 31, 2012
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	187		$	2,171		$	69		$	2,427
Total provision		72			1,008			—			1,080
Charge-offs(1)		(92	)		(1,037	)		(22	)		(1,151	)
Student loan sales		(8	)		—			—			(8	)
Reclassification of interest reserve(2)		—			29			—			29
Ending Balance	$	159		$	2,171		$	47		$	2,377
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	1,126		$	35		$	1,161
Ending balance: collectively evaluated for impairment	$	159		$	1,045		$	12		$	1,216
Loans:
Ending balance: individually evaluated for impairment	$	—		$	7,560		$	69		$	7,629
Ending balance: collectively evaluated for impairment	$	124,335		$	32,341		$	116		$	156,792
Charge-offs as a percentage of average loans in repayment		.10	%		3.37	%		9.51	%
Charge-offs as a percentage of average loans in repayment and forbearance		.08	%		3.24	%		9.51	%
Allowance as a percentage of the ending total loan balance		.13	%		5.44	%		25.39	%
Allowance as a percentage of the ending loans in repayment		.18	%		6.89	%		25.39	%
Allowance coverage of charge-offs		1.7			2.1			2.1
Ending total loans(3)	$	124,335		$	39,901		$	185
Average loans in repayment	$	91,653		$	30,750		$	231
Ending loans in repayment	$	90,731		$	31,514		$	185

⁽¹⁾  Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be collected and any shortfalls in what was actually collected in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾  Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾  Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

	Allowance for Loan Losses
	Year Ended December 31, 2011
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	189		$	2,022		$	72		$	2,283
Total provision		86			1,179			30			1,295
Charge-offs(1)		(78	)		(1,072	)		(33	)		(1,183	)
Student loan sales		(10	)		—			—			(10	)
Reclassification of interest reserve(2)		—			42			—			42
Ending Balance	$	187		$	2,171		$	69		$	2,427
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	762		$	51		$	813
Ending balance: collectively evaluated for impairment	$	187		$	1,409		$	18		$	1,614
Loans:
Ending balance: individually evaluated for impairment	$	—		$	5,313		$	93		$	5,406
Ending balance: collectively evaluated for impairment	$	136,643		$	34,021		$	170		$	170,834
Charge-offs as a percentage of average loans in repayment		.08	%		3.72	%		11.30	%
Charge-offs as a percentage of average loans in repayment and forbearance		.07	%		3.55	%		11.30	%
Allowance as a percentage of the ending total loan balance		.14	%		5.52	%		26.26	%
Allowance as a percentage of the ending loans in repayment		.20	%		7.19	%		26.26	%
Allowance coverage of charge-offs		2.4			2.0			2.1
Ending total loans(3)	$	136,643		$	39,334		$	263
Average loans in repayment	$	94,359		$	28,790		$	294
Ending loans in repayment	$	94,181		$	30,185		$	263

⁽¹⁾  Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be collected and any shortfalls in what was actually collected in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾  Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾  Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

	Allowance for Loan Losses
	Year Ended December 31, 2010
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	161		$	1,443		$	76		$	1,680
Total provision		98			1,298			23			1,419
Charge-offs(1)		(87	)		(1,291	)		(27	)		(1,405	)
Student loan sales		(8	)		—			—			(8	)
Reclassification of interest reserve(2)		—			48			—			48
Consolidation of securitization trusts(3)		25			524			—			549
Ending Balance	$	189		$	2,022		$	72		$	2,283
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	114		$	59		$	173
Ending balance: collectively evaluated for impairment	$	189		$	1,908		$	13		$	2,110
Loans:
Ending balance: individually evaluated for impairment	$	—		$	444		$	114		$	558
Ending balance: collectively evaluated for impairment	$	146,938		$	38,128		$	228		$	185,294
Charge-offs as a percentage of average loans in repayment		.11	%		5.04	%		6.95	%
Charge-offs as a percentage of average loans in repayment and forbearance		.09	%		4.79	%		6.95	%
Allowance as a percentage of the ending total loan balance		.13	%		5.24	%		21.18	%
Allowance as a percentage of the ending loans in repayment		.20	%		7.26	%		21.18	%
Allowance coverage of charge-offs		2.2			1.6			2.7
Ending total loans(4)	$	146,938		$	38,572		$	342
Average loans in repayment	$	82,255		$	25,596		$	383
Ending loans in repayment	$	96,696		$	27,852		$	342

⁽¹⁾  Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be collected and any shortfalls in what was actually collected in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾  Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾  On January 1, 2010, upon the adoption of the new consolidation accounting guidance all off-balance sheet loans were consolidated on-balance sheet. (See “Note 2 — Significant Accounting Policies — Consolidation.”)

⁽⁴⁾  Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

Private Education Loan Portfolio Stratified by Key Credit Quality Indicators

The following table highlights the principal balance (excluding the receivable for partially charged-off loans) of our Private Education Loan portfolio stratified by the key credit quality indicators.

	Private Education Loans Credit Quality Indicators
	December 31, 2012					December 31, 2011
(Dollars in millions)	Balance(3)		% of Balance			Balance(3)		% of Balance
Credit Quality Indicators
School Type/FICO Scores:
Traditional	$	35,347		92	%	$	34,528		91	%
Non-Traditional(1)		3,207		8			3,565		9
Total	$	38,554		100	%	$	38,093		100	%
Cosigners:
With cosigner	$	24,907		65	%	$	23,507		62	%
Without cosigner		13,647		35			14,586		38
Total	$	38,554		100	%	$	38,093		100	%
Seasoning(2):
1-12 payments	$	7,371		19	%	$	9,246		24	%
13-24 payments		6,137		16			6,837		18
25-36 payments		6,037		16			5,677		15
37-48 payments		4,780		12			3,778		10
More than 48 payments		8,325		22			6,033		16
Not yet in repayment		5,904		15			6,522		17
Total	$	38,554		100	%	$	38,093		100	%

⁽¹⁾  Defined as loans to customers attending for-profit schools (with a FICO score of less than 670 at origination) and customers attending not-for-profit schools (with a FICO score of less than 640 at origination).

⁽²⁾  Number of months in active repayment for which a scheduled payment was due.

⁽³⁾  Balance represents gross Private Education Loans.

Age Analysis of Past Due Loans Delinquencies

The following tables provide information regarding the loan status and aging of past due loans.

	FFELP Loan Delinquencies
	December 31,
	2012						2011						2010
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	17,702					$	22,887					$	28,214
Loans in forbearance(2)		15,902						19,575						22,028
Loans in repayment and percentage of each status:
Loans current		75,499			83.2	%		77,093			81.9	%		80,026			82.8	%
Loans delinquent 31-60 days(3)		4,710			5.2			5,419			5.8			5,500			5.7
Loans delinquent 61-90 days(3)		2,788			3.1			3,438			3.7			3,178			3.3
Loans delinquent greater than 90 days(3)		7,734			8.5			8,231			8.6			7,992			8.2
Total FFELP Loans in repayment		90,731			100	%		94,181			100	%		96,696			100	%
Total FFELP Loans, gross		124,335						136,643						146,938
FFELP Loan unamortized premium		1,436						1,674						1,900
Total FFELP Loans		125,771						138,317						148,838
FFELP Loan allowance for losses		(159	)					(187	)					(189	)
FFELP Loans, net	$	125,612					$	138,130					$	148,649
Percentage of FFELP Loans in repayment					73.0	%					68.9	%					65.8	%
Delinquencies as a percentage of FFELP Loans in repayment					16.8	%					18.1	%					17.2	%
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					14.9	%					17.2	%					18.6	%

⁽¹⁾  Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.

⁽²⁾  Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors.

⁽³⁾  The period of delinquency is based on the number of days scheduled payments are contractually past due.

	Private Education Traditional Loan Delinquencies
	December 31,
	2012						2011						2010
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	5,421					$	5,866					$	7,419
Loans in forbearance(2)		996						1,195						1,156
Loans in repayment and percentage of each status:
Loans current		26,597			91.9	%		25,110			91.4	%		22,850			91.2	%
Loans delinquent 31-60 days(3)		837			2.9			868			3.2			794			3.2
Loans delinquent 61-90 days(3)		375			1.3			393			1.4			340			1.4
Loans delinquent greater than 90 days(3)		1,121			3.9			1,096			4.0			1,060			4.2
Total traditional loans in repayment		28,930			100	%		27,467			100	%		25,044			100	%
Total traditional loans, gross		35,347						34,528						33,619
Traditional loans unamortized discount		(713	)					(792	)					(801	)
Total traditional loans		34,634						33,736						32,818
Traditional loans receivable for partially charged-off loans		797						705						558
Traditional loans allowance for losses		(1,637	)					(1,542	)					(1,231	)
Traditional loans, net	$	33,794					$	32,899					$	32,145
Percentage of traditional loans in repayment					81.9	%					80.0	%					74.5	%
Delinquencies as a percentage of traditional loans in repayment					8.1	%					8.6	%					8.8	%
Loans in forbearance as a percentage of loans in repayment and forbearance					3.3	%					4.2	%					4.4	%

⁽¹⁾  Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾  Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

⁽³⁾  The period of delinquency is based on the number of days scheduled payments are contractually past due.

	Private Education Non-Traditional Loan Delinquencies
	December 31,
	2012						2011						2010
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	483					$	656					$	921
Loans in forbearance(2)		140						191						184
Loans in repayment and percentage of each status:
Loans current		1,978			76.5	%		2,012			74.0	%		2,038			72.6	%
Loans delinquent 31-60 days(3)		175			6.8			208			7.7			217			7.7
Loans delinquent 61-90 days(3)		106			4.1			127			4.7			131			4.7
Loans delinquent greater than 90 days(3)		325			12.6			371			13.6			422			15.0
Total non-traditional loans in repayment		2,584			100	%		2,718			100	%		2,808			100	%
Total non-traditional loans, gross		3,207						3,565						3,913
Non-traditional loans unamortized discount		(83	)					(81	)					(93	)
Total non-traditional loans		3,124						3,484						3,820
Non-traditional loans receivable for partially charged-off loans		550						536						482
Non-traditional loans allowance for losses		(534	)					(629	)					(791	)
Non-traditional loans, net	$	3,140					$	3,391					$	3,511
Percentage of non-traditional loans in repayment					80.6	%					76.2	%					71.8	%
Delinquencies as a percentage of non-traditional loans in repayment					23.4	%					26.0	%					27.4	%
Loans in forbearance as a percentage of loans in repayment and forbearance					5.1	%					6.6	%					6.1	%

⁽¹⁾  Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾  Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

⁽³⁾  The period of delinquency is based on the number of days scheduled payments are contractually past due.

Receivable for Partially Charged-Off Loans

The following table summarizes the activity in the receivable for partially charged-off loans.

	Years Ended December 31,
(Dollars in millions)	2012			2011			2010
Receivable at beginning of period	$	1,241		$	1,040		$	499
Expected future recoveries of current period defaults(1)		351			391			459
Recoveries(2)		(189	)		(155	)		(104	)
Charge-offs(3)		(56	)		(35	)		(43	)
Consolidation of securitization trusts(4)		—			—			229
Receivable at end of period		1,347			1,241			1,040
Allowance for estimated recovery shortfalls(5)		(198	)		(148	)		—
Net receivable at end of period	$	1,149		$	1,093		$	1,040

⁽¹⁾  Represents the difference between the loan balance and our estimate of the amount to be collected in the future.

⁽²⁾  Current period cash collections.

⁽³⁾  Represents the current period recovery shortfall — the difference between what was expected to be collected and what was actually collected. These amounts are included in the Private Education Loan total charge-offs as reported in the “Allowance for Loan Losses Metrics” tables.

⁽⁴⁾  On January 1, 2010, upon the adoption of the new consolidation accounting guidance all off-balance sheet loans were consolidated on-balance sheet.

⁽⁵⁾  The allowance for estimated recovery shortfalls of the receivable for partially charged-off Private Education Loans is a component of the $2.2 billion overall allowance for Private Education Loan losses as of December 31, 2012 and 2011, respectively.

Allowance Related for TDR

The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.

	TDR Loans
(Dollars in millions)	Recorded Investment(1)		Unpaid Principal Balance		Related Allowance
December 31, 2012
Private Education Loans — Traditional	$	5,999	$	6,074	$	844
Private Education Loans — Non-Traditional		1,295		1,303		282
Total	$	7,294	$	7,377	$	1,126
December 31, 2011
Private Education Loans — Traditional	$	4,201	$	4,259	$	546
Private Education Loans — Non-Traditional		1,048		1,054		216
Total	$	5,249	$	5,313	$	762

⁽¹⁾  The recorded investment is equal to the unpaid principal balance and accrued interest receivable net of unamortized deferred fees and costs.

Average Recorded Investment and Interest Income Recognized for TDR

The following table provides the average recorded investment and interest income recognized for our TDR loans.

	Years Ended December 31,
	2012				2011				2010
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Private Education Loans — Traditional	$	5,243	$	333	$	1,960	$	121	$	210	$	6
Private Education Loans — Non-Traditional		1,230		106		560		48		156		7
Total	$	6,473	$	439	$	2,520	$	169	$	366	$	13

Modified Loans Accounts for TDR

The following table provides the amount of modified loans that resulted in a TDR in the periods presented. Additionally, the table summarizes charge-offs occurring in the TDR portfolio, as well as TDRs for which a payment default occurred in the current period within 12 months of the loan first being designated as a TDR. We define payment default as 60 days past due for this disclosure. The majority of our loans that are considered TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan.

	Years Ended December 31,
	2012						2011						2010
(Dollars in millions)	Modified Loans(1)		Charge- Offs(2)		Payment- Default		Modified Loans(1)		Charge- Offs(2)		Payment- Default		Modified Loans(1)		Charge- Offs(2)		Payment- Default
Private Education Loans — Traditional	$	2,375	$	389	$	1,351	$	4,103	$	99	$	1,036	$	171	$	18	$	50
Private Education Loans — Non-Traditional		443		152		420		951		55		414		106		25		39
Total	$	2,818	$	541	$	1,771	$	5,054	$	154	$	1,450	$	277	$	43	$	89

⁽¹⁾  Represents period ending balance of loans that have been modified during the period and resulted in a TDR.

⁽²⁾  Represents loans that charged off that were classified as TDRs.

Accrued Interest Receivable

The allowance for uncollectible interest exceeds the amount of accrued interest on our 90 days past due portfolio for all periods presented.

	Accrued Interest Receivable As of December 31,
(Dollars in millions)	Total		Greater Than 90 Days Past Due		Allowance for Uncollectible Interest
2012
Private Education Loans — Traditional	$	798	$	39	$	45
Private Education Loans — Non-Traditional		106		16		22
Total	$	904	$	55	$	67
2011
Private Education Loans — Traditional	$	870	$	36	$	44
Private Education Loans — Non-Traditional		148		18		28
Total	$	1,018	$	54	$	72
2010
Private Education Loans — Traditional	$	1,062	$	35	$	57
Private Education Loans — Non-Traditional		209		20		37
Total	$	1,271	$	55	$	94

Troubled Debt Restructured Loans [Member]

Age Analysis of Past Due Loans Delinquencies

The following tables provide information regarding the loan status and aging of TDR loans that are past due.

	TDR Loan Delinquencies
	December 31,
	2012					2011					2010
(Dollars in millions)	Balance		%			Balance		%			Balance		%
Loans in deferment(1)	$	574				$	285				$	16
Loans in forbearance(2)		544					696					12
Loans in repayment and percentage of each status:
Loans current		4,619		73.8	%		3,018		69.7	%		281		67.7	%
Loans delinquent 31-60 days(3)		478		7.6			427		9.8			33		7.9
Loans delinquent 61-90 days(3)		254		4.1			215		5.0			24		5.7
Loans delinquent greater than 90 days(3)		908		14.5			672		15.5			78		18.7
Total TDR loans in repayment		6,259		100	%		4,332		100	%		416		100	%
Total TDR loans, gross	$	7,377				$	5,313				$	444

⁽¹⁾  Loans for customers who have requested and qualify for permitted program deferments such as military, unemployment, or economic hardships.

⁽²⁾  Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors.

⁽³⁾  The period of delinquency is based on the number of days scheduled payments are contractually past due.