Unfunded Loan Commitments (Tables)

9 Months Ended

Sep. 30, 2024

Credit Loss [Abstract]

Schedule of Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics

Three Months Ended September 30, 2024 (dollars in thousands)	FFELP Loans			Private Education Loans			Total
Allowance for Credit Losses
Beginning balance	$	4,060		$	1,265,592		$	1,269,652
Transfer from unfunded commitment liability(1)	—			115,421			115,421
Provisions:
Provision for current period	4,368			109,196			113,564
Total provisions(2)	4,368			109,196			113,564
Net charge-offs:
Charge-offs	(131)			(87,737)			(87,868)
Recoveries	—			11,149			11,149
Net charge-offs	(131)			(76,588)			(76,719)
Write-downs arising from transfer of loans to held for sale(3)	(8,297)			—			(8,297)
Ending Balance	$	—		$	1,413,621		$	1,413,621
Allowance(4):
Ending balance: collectively evaluated for impairment	$	—		$	1,413,621		$	1,413,621
Loans(4):
Ending balance: collectively evaluated for impairment	$	—		$	21,777,466		$	21,777,466
Accrued interest to be capitalized(4):
Ending balance: collectively evaluated for impairment	$	—		$	1,390,774		$	1,390,774
Net charge-offs as a percentage of average loans in repayment (annualized)(5)	—		%	2.08		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(6)	—		%	6.10		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(5)(6)	—		%	8.91		%
Allowance coverage of net charge-offs (annualized)	—			4.61
Ending total loans, gross	$	—		$	21,777,466
Average loans in repayment(5)	$	—		$	14,708,205
Ending loans in repayment(5)	$	—		$	15,360,255
Accrued interest to be capitalized on loans in repayment(7)	$	—		$	513,121

(1) See Note 6, “Unfunded Loan Commitments,” in this Form 10-Q 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 operations. 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 Operations Provisions for Credit Losses Reconciliation
Three Months Ended September 30, 2024 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	109,196
Provisions for unfunded loan commitments	157,901
Total Private Education Loan provisions for credit losses	267,097
Other impacts to the provisions for credit losses:
FFELP Loans	4,368
Total	4,368
Provisions for credit losses reported in consolidated statements of operations	$	271,465

(3) Represents fair value adjustments on loans transferred to held for sale.

(4) For the three months ended September 30, 2024, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(5) 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 table, do not include those loans while they are in forbearance).

(6) Accrued interest to be capitalized on Private Education Loans only.

(7) 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).

Three Months Ended September 30, 2023 (dollars in thousands)	FFELP  Loans			Private  Education Loans			Total
Allowance for Credit Losses
Beginning balance	$	4,422		$	1,360,294		$	1,364,716
Transfer from unfunded commitment liability(1)	—			101,687			101,687
Provisions:
Provision for current period	666			44,423			45,089
Total provisions(2)	666			44,423			45,089
Net charge-offs:
Charge-offs	(272)			(104,865)			(105,137)
Recoveries	—			9,693			9,693
Net charge-offs	(272)			(95,172)			(95,444)
Ending Balance	$	4,816		$	1,411,232		$	1,416,048
Allowance(3):
Ending balance: collectively evaluated for impairment	$	4,816		$	1,411,232		$	1,416,048
Loans(3):
Ending balance: collectively evaluated for impairment	$	554,309		$	21,680,867		$	22,235,176
Accrued interest to be capitalized(3):
Ending balance: collectively evaluated for impairment	$	—		$	1,283,388		$	1,283,388
Net charge-offs as a percentage of average loans in repayment (annualized)(4)	0.25		%	2.53		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(5)	0.87		%	6.15		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(4)(5)	1.15		%	8.84		%
Allowance coverage of net charge-offs (annualized)	4.43			3.71
Ending total loans, gross	$	554,309		$	21,680,867
Average loans in repayment(4)	$	428,028		$	15,023,993
Ending loans in repayment(4)	$	418,022		$	15,505,145
Accrued interest to be capitalized on loans in repayment(6)	$	—		$	464,807

(1) See Note 6, “Unfunded Loan Commitments,” in this Form 10-Q 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 operations. 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 Operations Provisions for Credit Losses Reconciliation
Three Months Ended September 30, 2023 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	44,423
Provisions for unfunded loan commitments	152,934
Total Private Education Loan provisions for credit losses	197,357
Other impacts to the provisions for credit losses:
FFELP Loans	666
Total	666
Provisions for credit losses reported in consolidated statements of operations	$	198,023

(3) For the three months ended September 30, 2023, 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 (but, for purposes of the table, do not include those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(6) 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).

l

Nine Months Ended September 30, 2024 (dollars in thousands)	FFELP Loans			Private Education Loans			Total
Allowance for Credit Losses
Beginning balance	$	4,667		$	1,335,105		$	1,339,772
Transfer from unfunded commitment liability(1)	—			276,750			276,750
Provisions:
Provision for current period	4,010			276,534			280,544
Loan sale reduction to provision	—			(235,955)			(235,955)
Total provisions(2)	4,010			40,579			44,589
Net charge-offs:
Charge-offs	(380)			(272,653)			(273,033)
Recoveries	—			33,840			33,840
Net charge-offs	(380)			(238,813)			(239,193)
Write-downs arising from transfer of loans to held for sale(3)	(8,297)			—			(8,297)
Ending Balance	$	—		$	1,413,621		$	1,413,621
Allowance(4):
Ending balance: collectively evaluated for impairment	$	—		$	1,413,621		$	1,413,621
Loans(4):
Ending balance: collectively evaluated for impairment	$	—		$	21,777,466		$	21,777,466
Accrued interest to be capitalized(4):
Ending balance: collectively evaluated for impairment	$	—		$	1,390,774		$	1,390,774
Net charge-offs as a percentage of average loans in repayment (annualized)(5)	—		%	2.13		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(6)	—		%	6.10		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(5)(6)	—		%	8.91		%
Allowance coverage of net charge-offs (annualized)	—			4.44
Ending total loans, gross	$	—		$	21,777,466
Average loans in repayment(5)	$	—		$	14,944,421
Ending loans in repayment(5)	$	—		$	15,360,255
Accrued interest to be capitalized on loans in repayment(7)	$	—		$	513,121

(1) See Note 6, “Unfunded Loan Commitments,” in this Form 10-Q 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 operations. 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 Operations Provisions for Credit Losses Reconciliation
Nine Months Ended September 30, 2024 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	40,579
Provisions for unfunded loan commitments	255,747
Total Private Education Loan provisions for credit losses	296,326
Other impacts to the provisions for credit losses:
FFELP Loans	4,010
Total	4,010
Provisions for credit losses reported in consolidated statements of operations	$	300,336

(3) Represents fair value adjustments on loans transferred to held for sale.

(4) For the nine months ended September 30, 2024, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(5) 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 table, do not include those loans while they are in forbearance).

(6) Accrued interest to be capitalized on Private Education Loans only.

(7) 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).

Nine Months Ended September 30, 2023 (dollars in thousands)	FFELP  Loans			Private  Education Loans			Total
Allowance for Credit Losses
Beginning balance	$	3,444		$	1,353,631		$	1,357,075
Transfer from unfunded commitment liability(1)	—			278,388			278,388
Provisions:
Provision for current period	2,225			196,859			199,084
Loan sale reduction to provision	—			(136,531)			(136,531)
Total provisions(2)	2,225			60,328			62,553
Net charge-offs:
Charge-offs	(853)			(314,500)			(315,353)
Recoveries	—			33,385			33,385
Net charge-offs	(853)			(281,115)			(281,968)
Ending Balance	$	4,816		$	1,411,232		$	1,416,048
Allowance(3):
Ending balance: collectively evaluated for impairment	$	4,816		$	1,411,232		$	1,416,048
Loans(3):
Ending balance: collectively evaluated for impairment	$	554,309		$	21,680,867		$	22,235,176
Accrued interest to be capitalized(3):
Ending balance: collectively evaluated for impairment	$	—		$	1,283,388		$	1,283,388
Net charge-offs as a percentage of average loans in repayment (annualized)(4)	0.26		%	2.44		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(5)	0.87		%	6.15		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(4)(5)	1.15		%	8.84		%
Allowance coverage of net charge-offs (annualized)	4.23			3.77
Ending total loans, gross	$	554,309		$	21,680,867
Average loans in repayment(4)	$	440,716		$	15,358,596
Ending loans in repayment(4)	$	418,022		$	15,505,145
Accrued interest to be capitalized on loans in repayment(6)	$	—		$	464,807

(1) See Note 6, “Unfunded Loan Commitments,” in this Form 10-Q 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 operations. 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 Operations Provisions for Credit Losses Reconciliation
Nine Months Ended September 30, 2023 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	60,328
Provisions for unfunded loan commitments	267,311
Total Private Education Loan provisions for credit losses	327,639
Other impacts to the provisions for credit losses:
FFELP Loans	$	2,225
Total	2,225
Provisions for credit losses reported in consolidated statements of operations	$	329,864

(3) For the nine months ended September 30, 2023, 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 (but, for purposes of the table, do not include those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(6) 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).

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.

	2024				2023
Three Months Ended September 30, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	49,479	$	1,300,393	$	62,600	$	1,562,856
Provision/New commitments - net(1)	157,901		3,934,921		152,934		3,258,234
Transfer - funded loans(2)	(115,421)		(2,758,529)		(101,687)		(2,451,203)
Ending Balance	$	91,959	$	2,476,785	$	113,847	$	2,369,887

	2024				2023
Nine Months Ended September 30, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	112,962	$	2,221,077	$	124,924	$	1,995,808
Provision/New commitments - net(1)	255,747		6,287,149		267,311		5,912,418
Transfer - funded loans(2)	(276,750)		(6,031,441)		(278,388)		(5,538,339)
Ending Balance	$	91,959	$	2,476,785	$	113,847	$	2,369,887

(1)     Net of expirations of commitments unused. Also includes incremental provision for new commitments and changes to provision for existing commitments.

(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.