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Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2023

Financing Receivable Allowance For Credit Losses [Line Items]

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Loan Losses Rollforward


	Year Ended December 31, 2023
(Dollars in millions)	FFELP Loans			Private Education Loans			Total
Beginning balance	$	222		$	800		$	1,022
Total provision		56			67			123
Charge-offs:
Gross charge-offs		(63	)		(320	)		(383	)
Expected future recoveries on current period gross charge-offs		—			47			47
Total(1)		(63	)		(273	)		(336	)
Adjustment resulting from the change in charge-off rate(2)		—			(25	)		(25	)
Net charge-offs		(63	)		(298	)		(361	)
Decrease in expected future recoveries on previously fully charged-off loans(3)		—			48			48
Allowance at end of period	$	215		$	617		$	832
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in charge-off rate (annualized)(2)		.19	%		1.54	%
Net adjustment resulting from the change in charge-off rate as a percentage of average loans in repayment (annualized)(2)		—	%		.14	%
Net charge-offs as a percentage of average loans in repayment (annualized)		.19	%		1.68	%
Ending total loans	$	38,140		$	17,519
Average loans in repayment	$	33,047		$	17,749
Ending loans in repayment	$	30,436		$	16,796

(1)

Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.

(2)

An increase in the net charge-off rate on defaulted Private Education Loans in 2023 resulted in a $25 million reduction in the balance of expected future recoveries on previously fully charged-off loans.

(3)

At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:


	Year Ended December 31,
(Dollars in millions)	2023
Beginning of period expected future recoveries on previously fully charged-off loans	$	274
Expected future recoveries of current period defaults		47
Recoveries (cash collected)		(46	)
Charge-offs (as a result of lower recovery expectations)		(49	)
End of period expected future recoveries on previously fully charged-off loans	$	226
Change in balance during period	$	(48	)

4. Allowance for Loan Losses (Continued)


	Year Ended December 31, 2022
(Dollars in millions)	FFELP Loans			Private Education Loans			Total
Beginning balance	$	262		$	1,009		$	1,271
Total provision		—			79			79
Charge-offs:
Gross charge-offs		(40	)		(370	)		(410	)
Expected future recoveries on current period gross charge-offs		—			57			57
Total(1)		(40	)		(313	)		(353	)
Adjustment resulting from the change in charge-off rate(2)		—			(30	)		(30	)
Net charge-offs		(40	)		(343	)		(383	)
Decrease in expected future recoveries on previously fully charged-off loans(3)		—			55			55
Allowance at end of period	$	222		$	800		$	1,022
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in charge-off rate (annualized)(2)		.10	%		1.59	%
Net adjustment resulting from the change in charge-off rate as a percentage of average loans in repayment (annualized)(2)		—	%		.15	%
Net charge-offs as a percentage of average loans in repayment (annualized)		.10	%		1.74	%
Ending total loans	$	43,747		$	19,525
Average loans in repayment	$	40,332		$	19,796
Ending loans in repayment	$	34,372		$	18,770

(1)

(2)

An increase in the net charge-off rate on defaulted Private Education Loans in 2022 resulted in a $30 million reduction in the balance of expected future recoveries on previously fully charged-off loans.

(3)


	Year Ended December 31,
(Dollars in millions)	2022
Beginning of period expected future recoveries on previously fully charged-off loans	$	329
Expected future recoveries of current period defaults		57
Recoveries (cash collected)		(56	)
Charge-offs (as a result of lower recovery expectations)		(56	)
End of period expected future recoveries on previously fully charged-off loans	$	274
Change in balance during period	$	(55	)

4. Allowance for Loan Losses (Continued)


	Year Ended December 31, 2021
(Dollars in millions)	FFELP Loans			Private Education Loans			Total
Allowance at beginning of period	$	288		$	1,089		$	1,377
Provision:
Reversal of allowance related to loan sales(1)		—			(107	)		(107	)
Remaining provision		—			46			46
Total provision		—			(61	)		(61	)
Charge-offs:
Gross charge-offs		(26	)		(175	)		(201	)
Expected future recoveries on current period gross charge-offs		—			22			22
Total(2)		(26	)		(153	)		(179	)
Adjustment resulting from the change in charge-off rate(3)		—			(16	)		(16	)
Net charge-offs		(26	)		(169	)		(195	)
Decrease in expected future recoveries on previously fully charged-off loans(4)		—			150			150
Allowance at end of period	$	262		$	1,009		$	1,271
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in charge-off rate(3)		.06	%		.76	%
Net adjustment resulting from the change in charge-off rate as a percentage of average loans in repayment(3)		—	%		.08	%
Net charge-offs as a percentage of average loans in repayment		.06	%		.84	%
Ending total loans	$	52,903		$	21,180
Average loans in repayment	$	45,781		$	20,150
Ending loans in repayment	$	44,390		$	20,284

(1)

In connection with the sale of approximately $1.6 billion of Private Education Loans in 2021.

(2)

Charge-offs are reported net of expected recoveries. For Private Education Loans we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” For FFELP Loans, the recovery is received at the time of charge-off.

(3)

An increase in the net charge-off rate on defaulted Private Education Loans in 2021 resulted in a $16 million reduction in the balance of expected future recoveries on previously fully charged-off loans.

(4)


	Year Ended December 31,
(Dollars in millions)	2021
Beginning of period expected future recoveries on previously fully charged-off loans	$	479
Expected future recoveries of current period defaults		22
Recoveries (cash collected)		(87	)
Charge-offs (as a result of lower recovery expectations)		(35	)
Reduction in expected recoveries related to regulatory settlement(5)		(50	)
End of period expected future recoveries on previously fully charged-off loans	$	329
Change in balance during period	$	(150	)

(5)

Related to the resolution of previously disclosed litigation.

Age Analysis of Past Due Loans Delinquencies


	FFELP Loan Delinquencies
	December 31, 2023						December 31, 2022
(Dollars in millions)	Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	1,557					$	1,772
Loans in forbearance(2)		6,147						7,603
Loans in repayment and percentage of each status:
Loans current		26,204			86.1	%		29,004			84.4	%
Loans delinquent 31-60 days(3)		1,193			3.9			1,247			3.6
Loans delinquent 61-90 days(3)		746			2.5			833			2.4
Loans delinquent greater than 90 days(3)		2,293			7.5			3,288			9.6
Total FFELP Loans in repayment		30,436			100	%		34,372			100	%
Total FFELP Loans		38,140						43,747
FFELP Loan allowance for losses		(215	)					(222	)
FFELP Loans, net	$	37,925					$	43,525
Percentage of FFELP Loans in repayment					79.8	%					78.6	%
Delinquencies as a percentage of FFELP Loans in repayment					13.9	%					15.6	%
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					16.8	%					18.1	%

(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 their 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 such as disaster relief, including COVID-19 relief programs, 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 Delinquencies
	December 31, 2023						December 31, 2022
(Dollars in millions)	Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	360					$	354
Loans in forbearance(2)		363						401
Loans in repayment and percentage of each status:
Loans current		15,935			94.9	%		17,838			95.0	%
Loans delinquent 31-60 days(3)		308			1.8			335			1.8
Loans delinquent 61-90 days(3)		173			1.0			186			1.0
Loans delinquent greater than 90 days(3)		380			2.3			411			2.2
Total loans in repayment		16,796			100	%		18,770			100	%
Total loans		17,519						19,525
Allowance for losses		(617	)					(800	)
Loans, net	$	16,902					$	18,725
Percentage of loans in repayment					95.9	%					96.1	%
Delinquencies as a percentage of loans in repayment					5.1	%					5.0	%
Loans in forbearance as a percentage of loans in repayment and forbearance					2.1	%					2.1	%

(1)

Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., internship periods, as well as loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.

(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 such as disaster relief, including COVID-19 relief programs, consistent with established loan program servicing policies and procedures.

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

Loans Type

Loan type:


(Dollars in millions)	December 31, 2023		December 31, 2022		Change
Stafford Loans	$	12,171	$	14,019	$	(1,848	)
Consolidation Loans		22,272		25,522		(3,250	)
Rehab Loans		3,697		4,206		(509	)
Total loans, gross	$	38,140	$	43,747	$	(5,607	)

Schedule of Amount of Loans Modified and Payment Default


(Dollars in millions)
	Year Ended December 31, 2023
Loan Type	Modified Loans (Amortized Cost)		Payment Default (Par)
Private Education Loans(1)	$	272	$	278

For the year ended December 31, 2023, the modified loans include $175 million of Interest Rate Reduction, $14 million of Combination Rate Reduction and Term Extension, and $83 million of More Than Insignificant Payment Delay.

Summary of Performance and Related Loan Status of Loans Modified

The following table provides the performance and related loan status as of December 31, 2023 of loans that were modified in 2023.


(Dollars in millions)
Loan Type:
Private Education Loans	Status	Payment status (Amortized Cost)
	Loans in School/Deferment	$	22
	Loans in Forbearance		93
	Loans current		2,199
	Loans delinquent 31 - 60 days		160
	Loans delinquent 61 - 90 days		96
	Loans delinquent greater than 90 days		159
	Total Modified Loans	$	2,729

(1)

For the year ended December 31, 2023, $15 million of loans modified during the period were charged off.

Summary of Amortized Cost Basis of Loans to Borrowers

The following table shows the amortized cost basis as of December 31, 2023 of the loans to borrowers experiencing financial difficulty that were modified in 2023.


	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Year Ended December 31, 2023
(Dollars in millions)	Interest Rate Reductions(1)					More Than an Insignificant Payment Delay (2)					Combination Rate Reduction and Term Extension
Loan Type	Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type
Private Education Loans	$	1,668		9.5	%	$	923		5.3	%	$	138		.8	%

(1)

As of December 31, 2023, there was $1.2 billion of loans in the interest rate reduction program.

(2)

More Than an Insignificant Payment Delay includes loans granted more than 3 months of short-term interest only payments or hardship forbearance.

For those loans modified in 2023, the following table shows the impact of such modification.


Year Ended December 31, 2023
Loan Type	Interest Rate Reductions	More Than an Insignificant Payment Delay	Combination Rate Reduction and Term Extension
Private Education Loans	Reduced the weighted average contractual rate from 13.2% to 5.3%	Added an average 7 months to the remaining life of the loans	Added an average 8 years to the remaining life of the loans and reduced the weighted average contractual rate from 12.7% to 5.2%.

Loans Modified Accounts for TDR

The following table provides the amount of loans modified in the period presented that resulted in a TDR. 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.


	Years Ended December 31,
(Dollars in millions)	2022		2021
Modified loans	$	250	$	149
Charge-offs	$	280	$	124
Payment default	$	46	$	21

Private Education Loans [Member]

Financing Receivable Allowance For Credit Losses [Line Items]

Private Education Loan Portfolio Stratified by Key Credit Quality Indicators


	Private Education Loan Credit Quality Indicators by Origination Year
	December 31, 2023
(Dollars in millions)	2023		2022			2021			2020			2019			Prior			Total			% of Total
Credit Quality Indicators
FICO Scores:
640 and above	$	815	$	1,575		$	3,898		$	1,240		$	1,162		$	7,132		$	15,822			90	%
Below 640		11		67			122			29			49			1,419			1,697			10
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
Loan Status:
In-school/grace/ deferment/forbearance	$	51	$	79		$	87		$	21		$	27		$	458		$	723			4	%
Current/90 days or less delinquent		774		1,554			3,917			1,244			1,177			7,750			16,416			94
Greater than 90 days delinquent		1		9			16			4			7			343			380			2
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
Seasoning(1):
1-12 payments	$	781	$	130		$	28		$	7		$	4		$	54		$	1,004			6	%
13-24 payments		—		1,453			812			12			13			62			2,352			13
25-36 payments		—		—			3,127			142			35			113			3,417			20
37-48 payments		—		—			—			1,097			388			179			1,664			9
More than 48 payments		—		—			—			—			759			7,963			8,722			50
Loans in-school/ grace/deferment		45		59			53			11			12			180			360			2
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
Certain Loan Modifications(2):
Modified	$	—	$	41		$	130		$	46		$	82		$	5,775		$	6,074			35	%
Non-Modified		826		1,601			3,890			1,223			1,129			2,776			11,445			65
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
Cosigners:
With cosigner(3)	$	202	$	179		$	93		$	23		$	9		$	5,206		$	5,712			33	%
Without cosigner		624		1,463			3,927			1,246			1,202			3,345			11,807			67
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
School Type:
Not-for-profit	$	777	$	1,555		$	3,786		$	1,213		$	1,126		$	7,225		$	15,682			90	%
For-profit		49		87			234			56			85			1,326			1,837			10
Total	$	826	$	1,642		$	4,020		$	1,269		$	1,211		$	8,551		$	17,519			100	%
Allowance for loan losses																			(617	)
Total loans, net																		$	16,902

Charge-Offs	$	—	$	(7	)	$	(10	)	$	(5	)	$	(7	)	$	(269	)	$	(298	)		100	%

(1)

Number of months in active repayment for which a scheduled payment was received.

(2)

Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition in 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the new modification disclosures required under ASU No. 2022-02.

(3)

Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 65% for total loans at December 31, 2023.

4. Allowance for Loan Losses (Continued)


	Private Education Loan Credit Quality Indicators by Origination Year
	December 31, 2022
(Dollars in millions)	2022		2021		2020		2019		2018		Prior		Total			% of Total
Credit Quality Indicators
FICO Scores:
640 and above	$	1,721	$	4,529	$	1,515	$	1,426	$	529	$	8,107	$	17,827			91	%
Below 640		35		85		23		41		19		1,495		1,698			9
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
Loan Status:
In-school/grace/ deferment/forbearance	$	56	$	91	$	29	$	33	$	13	$	533	$	755			4	%
Current/90 days or less delinquent		1,697		4,514		1,506		1,428		533		8,681		18,359			94
Greater than 90 days delinquent		3		9		3		6		2		388		411			2
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
Seasoning(1):
1-12 payments	$	1,714	$	860	$	10	$	9	$	1	$	83	$	2,677			14	%
13-24 payments		—		3,699		147		31		6		91		3,974			20
25-36 payments		—		—		1,365		452		15		161		1,993			10
37-48 payments		—		—		—		957		132		260		1,349			7
More than 48 payments		—		—		—		—		388		8,790		9,178			47
Loans in-school/ grace/deferment		42		55		16		18		6		217		354			2
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
Certain Loan Modifications(2):
Modified	$	11	$	71	$	34	$	68	$	37	$	6,447	$	6,668			34	%
Non-Modified		1,745		4,543		1,504		1,399		511		3,155		12,857			66
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
Cosigners:
With cosigner(3)	$	122	$	106	$	27	$	10	$	—	$	6,184	$	6,449			33	%
Without cosigner		1,634		4,508		1,511		1,457		548		3,418		13,076			67
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
School Type:
Not-for-profit	$	1,655	$	4,347	$	1,470	$	1,366	$	503	$	8,026	$	17,367			89	%
For-profit		101		267		68		101		45		1,576		2,158			11
Total	$	1,756	$	4,614	$	1,538	$	1,467	$	548	$	9,602	$	19,525			100	%
Allowance for loan losses														(800	)
Total loans, net													$	18,725

(1)

Number of months in active repayment for which a scheduled payment was received.

(2)

Loan Modifications represents the historical definition of a TDR prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition in 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the new modification disclosures required under ASU No. 2022-02.

(3)

Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 65% for total loans at December 31, 2022.