Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics

Three Months Ended March 31, 2022 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,077		$	1,158,977		$	2,281		$	1,165,335
Transfer from unfunded commitment liability(1)	—			94,686			—			94,686
Provisions:
Provision for current period	21			48,460			137			48,618
Loan sale reduction to provision	—			(5,247)			—			(5,247)
Total provisions(2)	21			43,213			137			43,371
Net charge-offs:
Charge-offs	(99)			(83,856)			(111)			(84,066)
Recoveries	—			8,033			3			8,036
Net charge-offs	(99)			(75,823)			(108)			(76,030)
Ending Balance	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	682,273		$	21,735,369		$	27,547		$	22,445,189
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.07		%	1.89		%	1.63		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.62		%	8.39		%
Allowance as a percentage of the ending loans in repayment(3)	0.75		%	7.59		%	8.39		%
Allowance coverage of net charge-offs (annualized)	10.10			4.03			5.35
Ending total loans, gross	$	682,273		$	21,735,369		$	27,547
Average loans in repayment(3)	$	543,303		$	16,013,289		$	26,551
Ending loans in repayment(3)	$	535,080		$	16,095,157		$	27,547

(1) See Note 5, “Unfunded Loan Commitments,” for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Three Months Ended March 31, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	43,213
Provisions for unfunded loan commitments	54,679
Total Private Education Loan provisions for credit losses	97,892
Other impacts to the provisions for credit losses:
FFELP Loans	21
Credit Cards	137
Total	158
Provisions for credit losses reported in consolidated statements of income	$	98,050

(3) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period.

Three Months Ended March 31, 2021 (dollars in thousands)	FFELP  Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,378		$	1,355,844		$	1,501		$	1,361,723
Transfer from unfunded commitment liability(1)	—			126,880			—			126,880
Provisions:
Provision for current period	29			(254,942)			(86)			(254,999)
Loan sale reduction to provision	—			(8,858)			—			(8,858)
Loans transferred from held-for-sale	—			1,887			—			1,887
Total provisions(2)	29			(261,913)			(86)			(261,970)
Net charge-offs:
Charge-offs	(89)			(55,139)			(88)			(55,316)
Recoveries	—			7,703			1			7,704
Net charge-offs	(89)			(47,436)			(87)			(47,612)
Ending Balance	$	4,318		$	1,173,375		$	1,328		$	1,179,021
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	95,536		$	—		$	95,536
Ending balance: collectively evaluated for impairment	$	4,318		$	1,077,839		$	1,328		$	1,083,485
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,225,604		$	—		$	1,225,604
Ending balance: collectively evaluated for impairment	$	727,664		$	19,516,236		$	11,309		$	20,255,209
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.06		%	1.29		%	2.92		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.66		%	11.74		%
Allowance as a percentage of the ending loans in repayment(3)	0.80		%	7.94		%	11.74		%
Allowance coverage of net charge-offs (annualized)	12.13			6.18			3.82
Ending total loans, gross	$	727,664		$	20,741,840		$	11,309
Average loans in repayment(3)	$	554,510		$	14,743,508		$	11,909
Ending loans in repayment(3)	$	540,903		$	14,777,939		$	11,309

(1) See Note 5, “Unfunded Loan Commitments,” for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Three Months Ended March 31, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(261,913)
Provisions for unfunded loan commitments	36,203
Total Private Education Loan provisions for credit losses	(225,710)
Other impacts to the provisions for credit losses:
FFELP Loans	29
Credit Cards	(86)
Total	(57)
Provisions for credit losses reported in consolidated statements of income	$	(225,767)

(3) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period.

The tables below summarize the activity in the allowance recorded to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheets, as well as the activity in the unfunded commitments balance.

	2022				2021
Three Months Ended March 31, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	72,713	$	1,776,976	$	110,044	$	1,673,018
Provision/New commitments - net(1)	47,454		968,830		40,197		843,161
Other provision items	7,226		—		(3,994)		—
Transfer - funded loans(2)	(94,686)		(2,184,058)		(126,880)		(2,058,726)
Ending Balance	$	32,707	$	561,748	$	19,367	$	457,453

(1)     Net of expirations of commitments unused.

(2)     When a loan commitment is funded, its related liability for credit losses (which originally was recorded as a provision for unfunded commitments) is transferred to the allowance for credit losses.

Amortized Cost Basis of Financing Receivables

The following table shows the amortized cost basis at the end of the reporting period of the loans to borrowers experiencing financial difficulty that were modified during the period from January 1, 2022 (the effective date of our adoption of ASU No. 2022-02) through the end of the reporting period, disaggregated by class of financing receivable and type of modification. When we approve a Private Education Loan at the beginning of an academic year, we do not always disburse the full amount of the loan at the time of approval, but instead have a commitment to fund a portion of the loan at a later date (usually at the start of the second semester or subsequent trimesters). We consider borrowers to be in financial difficulty after they have exited school and have difficulty making their scheduled principal and interest payments.

	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
At March 31, 2022 (dollars in thousands)	Interest Rate Reduction				Combination - Interest Rate Reduction and Term Extension
Loan Type:	Amortized Cost Basis		% of Total Class of Financing Receivable		Amortized Cost Basis		% of Total Class of Financing Receivable
Private Education Loans	$	7,679	0.04	%	$	79,597	0.37	%
Total	$	7,679	0.04	%	$	79,597	0.37	%

The following table describes the financial effect of the modifications made to loans whose borrowers are experiencing financial difficulty:

Interest Rate Reduction		Combination - Interest Rate Reduction and Term Extension
Loan Type	Financial Effect	Loan Type	Financial Effect
Private Education Loans	Reduced average contractual rate from 10.09% to 4.00%	Private Education Loans	Added a weighted average 10.51 years to the life of loans Reduced average contractual rate from 9.43% to 4.00%

The following table provides the amount of financing receivables whose borrowers were experiencing financial difficulty and had a payment default and were modified during the period from January 1, 2022 (the effective date of our adoption of ASU No. 2022-02) through the end of the reporting period. We define payment default as 60 days past due for purposes of this disclosure.

At March 31, 2022 (dollars in thousands)	Modified Loans(1)		Payment Default
Loan Type:
Private Education Loans	$	290	$	287
Total	$	290	$	287

(1) Represents amortized cost basis of loans that have been modified.

Age Analysis of Past Due Loans Delinquencies

The following table depicts the performance of loans that have been modified during the period from January 1, 2022 (the effective date of our adoption of ASU No. 2022-02) through the end of the reporting period.

	Payment Status (Amortized Cost Basis)
At March 31, 2022 (dollars in thousands)	Deferment(1)		Current(2)(3)		30-59 Days Past Due(2)(3)		60-89 Days Past Due(2)(3)		90 Days or Greater  Past Due(2)(3)
Loan Type:
Private Education Loans	$	649	$	84,992	$	1,295	$	255	$	85
Total	$	649	$	84,992	$	1,295	$	255	$	85

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

(2) Loans in repayment include loans on which borrowers are making full principal and interest payments after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

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

The following tables provide information regarding the loan status of our Private Education Loans held for investment, by year of origination. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the following tables, do not include those loans while they are in forbearance).

	Private Education Loans Held for Investment - Delinquencies by Origination Vintage
As of March 31, 2022 (dollars in thousands)	2022			2021			2020			2019			2018			2017 and Prior			Total
Loans in-school/grace/deferment(1)	$	363,754		$	2,025,385		$	1,195,182		$	717,261		$	394,590		$	709,780		$	5,405,952
Loans in forbearance(2)	441			15,123			37,237			35,259			30,585			115,615			234,260
Loans in repayment:
Loans current	415,657			2,972,685			2,690,157			2,205,417			1,674,303			5,571,861			15,530,080
Loans delinquent 30-59 days(3)	1,760			17,435			28,523			34,956			33,362			144,499			260,535
Loans delinquent 60-89 days(3)	—			6,557			18,618			25,590			23,023			95,272			169,060
Loans 90 days or greater past due(3)	—			3,607			13,889			19,854			18,425			79,707			135,482
Total Private Education Loans in repayment	417,417			3,000,284			2,751,187			2,285,817			1,749,113			5,891,339			16,095,157
Total Private Education Loans, gross	781,612			5,040,792			3,983,606			3,038,337			2,174,288			6,716,734			21,735,369
Private Education Loans deferred origination costs and unamortized premium/(discount)	9,615			20,732			14,883			8,753			5,380			12,544			71,907
Total Private Education Loans	791,227			5,061,524			3,998,489			3,047,090			2,179,668			6,729,278			21,807,276
Private Education Loans allowance for losses	(54,769)			(308,664)			(230,000)			(187,181)			(122,741)			(317,698)			(1,221,053)
Private Education Loans, net	$	736,458		$	4,752,860		$	3,768,489		$	2,859,909		$	2,056,927		$	6,411,580		$	20,586,223
Percentage of Private Education Loans in repayment	53.4		%	59.5		%	69.1		%	75.2		%	80.4		%	87.7		%	74.1		%
Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment	0.4		%	0.9		%	2.2		%	3.5		%	4.3		%	5.4		%	3.5		%
Loans in forbearance as a percentage of loans in repayment and forbearance	0.1		%	0.5		%	1.3		%	1.5		%	1.7		%	1.9		%	1.4		%

(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 Loans Held for Investment - Delinquencies by Origination Vintage
As of December 31, 2021 (dollars in thousands)	2021			2020			2019			2018			2017			2016 and Prior			Total
Loans in-school/grace/deferment(1)	$	1,556,550		$	1,283,523		$	773,320		$	435,657		$	296,008		$	559,356		$	4,904,414
Loans in forbearance(2)	11,951			55,844			52,364			43,613			41,355			96,110			301,237
Loans in repayment:
Loans current	2,234,876			2,786,646			2,321,728			1,772,651			1,570,815			4,319,057			15,005,773
Loans delinquent 30-59 days(3)	15,148			29,146			46,616			43,197			41,695			132,757			308,559
Loans delinquent 60-89 days(3)	3,194			7,441			14,044			14,310			16,425			61,533			116,947
Loans 90 days or greater past due(3)	642			3,683			8,453			10,632			11,935			44,588			79,933
Total Private Education Loans in repayment	2,253,860			2,826,916			2,390,841			1,840,790			1,640,870			4,557,935			15,511,212
Total Private Education Loans, gross	3,822,361			4,166,283			3,216,525			2,320,060			1,978,233			5,213,401			20,716,863
Private Education Loans deferred origination costs and unamortized premium/(discount)	22,169			16,067			9,575			5,918			4,588			9,171			67,488
Total Private Education Loans	3,844,530			4,182,350			3,226,100			2,325,978			1,982,821			5,222,572			20,784,351
Private Education Loans allowance for losses	(248,102)			(239,507)			(195,223)			(129,678)			(99,982)			(246,485)			(1,158,977)
Private Education Loans, net	$	3,596,428		$	3,942,843		$	3,030,877		$	2,196,300		$	1,882,839		$	4,976,087		$	19,625,374
Percentage of Private Education Loans in repayment	59.0		%	67.9		%	74.3		%	79.3		%	82.9		%	87.4		%	74.9		%
Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment	0.8		%	1.4		%	2.9		%	3.7		%	4.3		%	5.2		%	3.3		%
Loans in forbearance as a percentage of loans in repayment and forbearance	0.5		%	1.9		%	2.1		%	2.3		%	2.5		%	2.1		%	1.9		%

(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 Loan Portfolio Stratified by Key Credit Quality Indicators

The following tables highlight the gross principal balance of our Private Education Loan portfolio (held for investment), by year of origination, stratified by key credit quality indicators.

As of March 31, 2022 (dollars in thousands)	Private Education Loans Held for Investment - Credit Quality Indicators
Year of Origination	2022(1)		2021(1)		2020(1)		2019(1)		2018(1)		2017 and Prior(1)		Total(1)		% of Balance
Cosigners:
With cosigner	$	664,611	$	4,368,829	$	3,450,387	$	2,626,952	$	1,898,677	$	6,087,363	$	19,096,819	88	%
Without cosigner	117,001		671,963		533,219		411,385		275,611		629,371		2,638,550		12
Total	$	781,612	$	5,040,792	$	3,983,606	$	3,038,337	$	2,174,288	$	6,716,734	$	21,735,369	100	%
FICO at Origination(2):
Less than 670	$	58,976	$	333,682	$	231,772	$	241,643	$	183,391	$	561,766	$	1,611,230	7	%
670-699	111,251		669,450		543,884		468,705		343,601		1,141,747		3,278,638		15
700-749	251,606		1,591,862		1,290,542		999,922		723,591		2,257,304		7,114,827		33
Greater than or equal to 750	359,779		2,445,798		1,917,408		1,328,067		923,705		2,755,917		9,730,674		45
Total	$	781,612	$	5,040,792	$	3,983,606	$	3,038,337	$	2,174,288	$	6,716,734	$	21,735,369	100	%
FICO Refreshed(2)(3):
Less than 670	$	72,244	$	472,669	$	310,819	$	292,706	$	245,690	$	964,669	$	2,358,797	11	%
670-699	115,446		670,147		453,846		343,831		236,812		738,916		2,558,998		12
700-749	249,052		1,561,528		1,203,084		911,247		631,484		1,855,009		6,411,404		29
Greater than or equal to 750	344,870		2,336,448		2,015,857		1,490,553		1,060,302		3,158,140		10,406,170		48
Total	$	781,612	$	5,040,792	$	3,983,606	$	3,038,337	$	2,174,288	$	6,716,734	$	21,735,369	100	%
Seasoning(4):
1-12 payments	$	417,858	$	3,015,407	$	597,296	$	506,047	$	384,057	$	873,302	$	5,793,967	27	%
13-24 payments	—		—		2,190,940		331,049		188,777		663,245		3,374,011		16
25-36 payments	—		—		188		1,483,980		285,486		613,350		2,383,004		11
37-48 payments	—		—		—		—		921,378		708,204		1,629,582		7
More than 48 payments	—		—		—		—		—		3,148,853		3,148,853		14
Not yet in repayment	363,754		2,025,385		1,195,182		717,261		394,590		709,780		5,405,952		25
Total	$	781,612	$	5,040,792	$	3,983,606	$	3,038,337	$	2,174,288	$	6,716,734	$	21,735,369	100	%
2022 Current period(5) gross charge-offs	$	—	$	(1,618)	$	(7,397)	$	(12,931)	$	(12,579)	$	(49,331)	$	(83,856)
2022 Current period(5) recoveries	—		107		507		989		1,030		5,400		8,033
2022 Current period(5) net charge-offs	$	—	$	(1,511)	$	(6,890)	$	(11,942)	$	(11,549)	$	(43,931)	$	(75,823)
Total accrued interest by origination vintage	$	9,778	$	180,992	$	269,425	$	271,083	$	190,288	$	320,007	$	1,241,573
(1)Balance represents gross Private Education Loans held for investment. (2)Represents the higher credit score of the cosigner or the borrower. (3)Represents the FICO score updated as of the first-quarter 2022. (4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due. (5)Current period refers to period from January 1, 2022 through March 31, 2022.

As of December 31, 2021 (dollars in thousands)	Private Education Loans Held for Investment - Credit Quality Indicators
Year of Origination	2021(1)		2020(1)		2019(1)		2018(1)		2017(1)		2016 and Prior(1)		Total(1)		% of Balance
Cosigners:
With cosigner	$	3,263,892	$	3,604,553	$	2,778,262	$	2,025,463	$	1,765,719	$	4,753,775	$	18,191,664	88	%
Without cosigner	558,469		561,730		438,263		294,597		212,514		459,626		2,525,199		12
Total	$	3,822,361	$	4,166,283	$	3,216,525	$	2,320,060	$	1,978,233	$	5,213,401	$	20,716,863	100	%
FICO at Origination(2):
Less than 670	$	248,368	$	238,005	$	251,157	$	193,123	$	166,048	$	428,416	$	1,525,117	7	%
670-699	508,264		564,497		493,237		363,313		329,807		884,981		3,144,099		15
700-749	1,210,833		1,348,269		1,057,001		770,452		660,270		1,753,709		6,800,534		33
Greater than or equal to 750	1,854,896		2,015,512		1,415,130		993,172		822,108		2,146,295		9,247,113		45
Total	$	3,822,361	$	4,166,283	$	3,216,525	$	2,320,060	$	1,978,233	$	5,213,401	$	20,716,863	100	%
FICO Refreshed(2)(3):
Less than 670	$	326,613	$	279,578	$	273,652	$	235,684	$	233,022	$	739,268	$	2,087,817	10	%
670-699	506,021		475,674		365,133		256,400		209,536		570,605		2,383,369		12
700-749	1,209,493		1,285,015		978,763		682,024		568,766		1,448,692		6,172,753		30
Greater than or equal to 750	1,780,234		2,126,016		1,598,977		1,145,952		966,909		2,454,836		10,072,924		48
Total	$	3,822,361	$	4,166,283	$	3,216,525	$	2,320,060	$	1,978,233	$	5,213,401	$	20,716,863	100	%
Seasoning(4):
1-12 payments	$	2,265,811	$	594,850	$	515,328	$	385,246	$	340,242	$	501,269	$	4,602,746	22	%
13-24 payments	—		2,287,737		362,674		203,674		211,064		479,540		3,544,689		17
25-36 payments	—		173		1,565,203		312,049		164,575		482,369		2,524,369		12
37-48 payments	—		—		—		983,434		295,206		464,563		1,743,203		8
More than 48 payments	—		—		—		—		671,138		2,726,304		3,397,442		16
Not yet in repayment	1,556,550		1,283,523		773,320		435,657		296,008		559,356		4,904,414		25
Total	$	3,822,361	$	4,166,283	$	3,216,525	$	2,320,060	$	1,978,233	$	5,213,401	$	20,716,863	100	%
2021 Current period(5) gross charge-offs	$	(1,183)	$	(8,604)	$	(23,866)	$	(32,741)	$	(37,186)	$	(126,011)	$	(229,591)
2021 Current period(5) recoveries	35		540		2,092		3,693		4,450		18,684		29,494
2021 Current period(5) net charge-offs	$	(1,148)	$	(8,064)	$	(21,774)	$	(29,048)	$	(32,736)	$	(107,327)	$	(200,097)
Total accrued interest by origination vintage	$	109,233	$	247,418	$	270,242	$	198,816	$	131,685	$	229,729	$	1,187,123

(1)Balance represents gross Private Education Loans held for investment.

(2)Represents the higher credit score of the cosigner or the borrower.

(3)Represents the FICO score updated as of the fourth-quarter 2021.

(4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due.

(5)Current period refers to January 1, 2021 through December 31, 2021.

Accrued Interest Receivable

The following table provides information regarding accrued interest receivable on our Private Education Loans. The table also discloses the amount of accrued interest on loans 90 days or greater past due as compared to our allowance for uncollectible interest on loans making full interest payments. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accruing on the loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school. The allowance for this portion of interest is included in our loan loss reserve.

	Private Education Loans
	Accrued Interest Receivable
(Dollars in thousands)	Total Interest Receivable		90 Days or Greater Past Due		Allowance for Uncollectible Interest
March 31, 2022	$	1,241,574	$	6,292	$	5,505
December 31, 2021	$	1,187,123	$	3,635	$	4,937