Unfunded Loan Commitments (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics


Year Ended December 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)	—			344,310			—			344,310
Provisions:
Provision for current period	(20)			410,254			3,301			413,535
Loan sale reduction to provision	—			(174,231)			—			(174,231)
Loans transferred to held-for-sale	—			—			(2,372)			(2,372)
Total provisions(2)	(20)			236,023			929			236,932
Net charge-offs:
Charge-offs	(613)			(427,416)			(3,215)			(431,244)
Recoveries	—			41,737			5			41,742
Net charge-offs	(613)			(385,679)			(3,210)			(389,502)

Ending Balance	$	3,444		$	1,353,631		$	—		$	1,357,075
Allowance(3):

Ending balance: collectively evaluated for impairment	$	3,444		$	1,353,631		$	—		$	1,357,075
Loans(3):

Ending balance: collectively evaluated for impairment	$	609,050		$	20,303,688		$	—		$	20,912,738
Accrued interest to be capitalized(3):

Ending balance: collectively evaluated for impairment	$	—		$	936,837		$	—		$	936,837
Net charge-offs as a percentage of average loans in repayment(4)	0.12		%	2.55		%	—		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized	0.57		%	6.37		%	—		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(4)	0.76		%	8.76		%	—		%
Allowance coverage of net charge-offs	5.62			3.51			—
Ending total loans, gross	$	609,050		$	20,303,688		$	—
Average loans in repayment(4)	$	517,139		$	15,103,123		$	—
Ending loans in repayment(4)	$	453,915		$	15,129,550		$	—
Accrued interest to be capitalized on loans in repayment(5)	$	—		$	324,384		$	—

(1) See Note 8, “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
Year Ended December 31, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	236,023
Provisions for unfunded loan commitments	396,521
Total Private Education Loan provisions for credit losses	632,544

Other impacts to the provisions for credit losses:
FFELP Loans	(20)
Credit Cards	929
Total	909
Provisions for credit losses reported in consolidated statements of income	$	633,453

(3) For the year ended December 31, 2022, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(4) 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.

(5) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include the interest on those loans while they are in forbearance).


Year Ended December 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)	—			301,655			—			301,655
Provisions:
Provision for current period	20			(233,852)			1,124			(232,708)
Loan sale reduction to provision	—			(66,460)			—			(66,460)
Loans transferred to held-for-sale	—			1,887			—			1,887
Total provisions(2)	20			(298,425)			1,124			(297,281)
Net charge-offs:
Charge-offs	(321)			(229,591)			(356)			(230,268)
Recoveries	—			29,494			12			29,506
Net charge-offs	(321)			(200,097)			(344)			(200,762)

Ending Balance	$	4,077		$	1,158,977		$	2,281		$	1,165,335
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	47,712		$	—		$	47,712
Ending balance: collectively evaluated for impairment	$	4,077		$	1,111,265		$	2,281		$	1,117,623
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,057,665		$	—		$	1,057,665
Ending balance: collectively evaluated for impairment	$	695,216		$	19,659,198		$	25,014		$	20,379,428
Accrued interest to be capitalized:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	—		$	947,391		$	—		$	947,391
Net charge-offs as a percentage of average loans in repayment(3)	0.06		%	1.33		%	2.24		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized	0.59		%	5.35		%	9.12		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(3)	0.74		%	7.32		%	9.12		%
Allowance coverage of net charge-offs	12.70			5.79			6.63
Ending total loans, gross	$	695,216		$	20,716,863		$	25,014
Average loans in repayment(3)	$	545,689		$	15,019,869		$	15,343
Ending loans in repayment(3)	$	553,980		$	15,511,212		$	25,014
Accrued interest to be capitalized on loans in repayment(4)	$	—		$	312,537		$	—

(1) See Note 8, “Unfunded Loan Commitments,” for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.


Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Year Ended December 31, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(298,425)
Provisions for unfunded loan commitments	264,324
Total Private Education Loan provisions for credit losses	(34,101)

Other impacts to the provisions for credit losses:

FFELP Loans	20
Credit Cards	1,124
Total	1,144
Provisions for credit losses reported in consolidated statements of income	$	(32,957)

(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.

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include interest on those loans while they are in forbearance).


Year Ended December 31, 2020 (dollars in thousands)	FFELP Loans			Private Education Loans			Personal Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	1,633		$	374,300		$	65,877		$	102		$	441,912
Day 1 adjustment for the adoption of CECL	2,852			1,060,830			79,183			188			1,143,053
Balance at January 1, 2020	4,485			1,435,130			145,060			290			1,584,965
Transfer from unfunded commitment liability(1)	—			320,808			—			—			320,808
Provisions:
Provision for current period	412			148,673			40,485			1,328			190,898
Loan sale reduction to provision	—			(161,793)			(42,916)			—			(204,709)
Loans transferred to held-for-sale	—			(205,669)			—			—			(205,669)
Total provisions(2)	412			(218,789)			(2,431)			1,328			(219,480)
Net charge-offs:
Charge-offs	(519)			(205,326)			(39,079)			(119)			(245,043)
Recoveries	—			24,021			4,984			2			29,007
Net charge-offs	(519)			(181,305)			(34,095)			(117)			(216,036)
Loan sales	—			—			(108,534)			—			(108,534)
Ending Balance	$	4,378		$	1,355,844		$	—		$	1,501		$	1,361,723
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	104,265		$	—		$	—		$	104,265
Ending balance: collectively evaluated for impairment	$	4,378		$	1,251,579		$	—		$	1,501		$	1,257,458
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,274,590		$	—		$	—		$	1,274,590
Ending balance: collectively evaluated for impairment	$	737,593		$	18,454,747		$	—		$	12,238		$	19,204,578
Accrued interest to be capitalized:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	—		$	973,201		$	—		$	—		$	973,201
Net charge-offs as a percentage of average loans in repayment(3)	0.09		%	1.17		%	—		%	1.26		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized	0.59		%	6.55		%	—		%	12.27		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(3)	0.76		%	9.28		%	—		%	12.27		%
Allowance coverage of net charge-offs	8.44			7.48			—			12.83
Ending total loans, gross	$	737,593		$	19,729,337		$	—		$	12,238
Average loans in repayment(3)	$	549,584		$	15,518,851		$	—		$	9,286
Ending loans in repayment(3)	$	573,361		$	14,304,821		$	—		$	12,238
Accrued interest to be capitalized on loans in repayment(4)	$	—		$	308,655		$	—		$	—

(1) See Note 8, “Unfunded Loan Commitments,” for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.


Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Year Ended December 31, 2020 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(218,789)
Provisions for unfunded loan commitments	312,613
Total Private Education Loan provisions for credit losses	93,824
Other impacts to the provisions for credit losses:
Personal Loans	(2,431)
FFELP Loans	412
Credit Cards	1,328
Total	(691)
Provisions for credit losses reported in consolidated statements of income	$	93,133

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest payment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

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.


Years ended December 31, (dollars in thousands)	2022				2021				2020
	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments		Allowance		Unfunded Commitments

Beginning Balance	$	72,713	$	1,776,976	$	110,044	$	1,673,018	$	2,481	$	1,910,603
Day 1 adjustment for the adoption of CECL	—		—		—		—		115,758		—
Balance at January 1	72,713		1,776,976		110,044		1,673,018		118,239		1,910,603
Provision/New commitments - net(1)	365,359		6,180,805		232,822		5,512,841		311,659		5,070,175
Other provision items	31,162		—		31,502		—		954		—
Transfer - funded loans(2)	(344,310)		(5,961,973)		(301,655)		(5,408,883)		(320,808)		(5,307,760)
Ending Balance	$	124,924	$	1,995,808	$	72,713	$	1,776,976	$	110,044	$	1,673,018

(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.