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Loans Held for Investment | 12 Months Ended
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Dec. 31, 2024
Receivables [Abstract] |
Loans Held for Investment | Loans Held for Investment Loans held for investment consist solely of Private Education Loans as of December 31, 2024. During the third quarter of 2024, we transferred our remaining FFELP Loan portfolio to loans held for sale and subsequently sold the FFELP Loan portfolio to an unaffiliated third party during the fourth quarter of 2024. We wrote down the FFELP Loan portfolio to its estimated fair value through an adjustment to the allowance for credit losses of $8 million in 2024. We use “Credit Cards” to refer to the suite of Credit Card loans that we previously held. At September 30, 2022, we transferred our Credit Card portfolio to loans held for sale and subsequently sold the Credit Card portfolio to a third party in May 2023. We recorded a loss of $4 million on the sale of the Credit Card portfolio in 2023. Our Private Education Loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, government loans, and customers’ resources. Private Education Loans bear the full credit risk of the customer. We manage this risk through risk-performance underwriting strategies and qualified cosigners. Private Education Loans may be fixed-rate or may carry a variable interest rate indexed to SOFR, the Secured Overnight Financing Rate. As of December 31, 2024 and December 31, 2023, 23 percent and 33 percent, respectively, of all our Private Education Loans were indexed to SOFR. We provide incentives for customers to include a cosigner on the loan, and the vast majority of Private Education Loans in our portfolio are cosigned. We also encourage customers to make payments while in school. The following table summarizes our Private Education Loan sales to unaffiliated third parties for the periods presented.
Years Ended December 31, (dollars in millions) |  | 2024 |  | 2023 |  | 2022
Loan principal |  | $ | 3,418 |  |  | $ | 2,927 |  |  | $ | 3,126 |
Capitalized interest |  | 274 |  |  | 226 |  |  | 217 |
Total Private Education Loans sold |  | $ | 3,692 |  |  | $ | 3,153 |  |  | $ | 3,343 |
Gain on sale of loans, net |  | $ | 255 |  |  | $ | 164 |  |  | $ | 328 |
There were VIEs created in the execution of certain of these loan sales; however, based on our consolidation analysis, we are not the primary beneficiary of these VIEs. These transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information, see Note 10, “Borrowings — Unconsolidated Funding Vehicles” in this Form 10-K. Loans held for investment are summarized as follows:
As of December 31, (dollars in thousands) |  | 2024 |  | 2023
Private Education Loans: |  |  |  |
Fixed-rate |  | $ | 17,093,382 |  |  | $ | 13,985,791 |
Variable-rate |  | 5,141,626 |  |  | 7,040,053 |
Total Private Education Loans, gross |  | 22,235,008 |  |  | 21,025,844 |
Deferred origination costs and unamortized premium/ (discount) |  | 103,070 |  |  | 81,554 |
Allowance for loan losses |  | (1,435,920) |  |  | (1,335,105) |
Total Private Education Loans, net |  | 20,902,158 |  |  | 19,772,293 |
FFELP Loans(1) |  | — |  |  | 537,401 |
Deferred origination costs and unamortized premium/ (discount) |  | — |  |  | 1,330 |
Allowance for loan losses |  | — |  |  | (4,667) |
Total FFELP Loans, net |  | — |  |  | 534,064 |
Loans held for investment, net |  | $ | 20,902,158 |  |  | $ | 20,306,357 |
(1) FFELP Loans were transferred to loans held for sale during the third quarter of 2024 and subsequently sold to a third party during the fourth quarter of 2024. The estimated weighted average life of education loans in our portfolio was approximately 5.6 years and 5.0 years at December 31, 2024 and 2023, respectively. The average balance (net of unamortized premium/(discount)) and the respective weighted average interest rates of loans in our portfolio are summarized as follows:
|  | 2024 |  | 2023 |  | 2022
Years Ended December 31, (dollars in thousands) |  | Average Balance |  | Weighted Average Interest Rate |  | Average Balance |  | Weighted Average Interest Rate |  | Average Balance |  | Weighted Average Interest Rate
Private Education Loans |  | $ | 21,121,545 |  |  | 10.81 | % |  | $ | 21,039,701 |  |  | 10.86 | % |  | $ | 20,576,737 |  |  | 9.14 | %
FFELP Loans |  | 413,338 |  |  | 7.45 |  |  | 574,218 |  |  | 7.19 |  |  | 662,194 |  |  | 4.62 |
Total portfolio |  | $ | 21,534,883 |  |  |  |  | $ | 21,613,919 |  |  |  |  | $ | 21,238,931 |  |  |
Certain Collection Tools — Private Education Loans Over the course of the last few years, we have made significant changes to our credit administration practices, enhancing our loss mitigation programs through both our forbearance and loan modification offerings. We adjust the terms of loans for certain borrowers when we believe such changes will help our borrowers manage their student loan obligations and achieve better student outcomes, and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term, and/or a short-term extended repayment or interest-only alternative. Forbearance allows a borrower to not make scheduled payments for a specified period of time. Our forbearance policies and practices vary depending upon whether a borrower is current or delinquent at the time forbearance is requested, generally with stricter requirements for delinquent borrowers. Using forbearance extends the original term of the loan by the term of forbearance taken. Forbearance does not grant any reduction in the total principal or interest repayment obligation. While a loan is in forbearance status, interest continues to accrue and is capitalized (added to principal) at the end of the forbearance. Interest will not capitalize at the end of certain types of forbearance, such as disaster forbearance, however. During the first six months following a borrower’s grace period, the borrower may be eligible for extended grace forbearance, which provides temporary payment relief to give the borrower additional time to be in a position to make regular principal and interest payments. Hardship forbearance may be granted in order to provide temporary payment relief to borrowers who are either current in their payments but demonstrate a need for relief, or who are delinquent in their payments but demonstrate an ability and willingness to repay their obligation. In these circumstances, a borrower’s loan is placed into a forbearance status in limited monthly increments and is reflected in the forbearance status at month-end during this time. At the end of the forbearance period, for borrowers who were current when they entered forbearance, or those who were delinquent but met specific payment requirements curing their delinquency, the borrower will enter repayment status as current. In all instances, the borrowers are expected to begin making scheduled monthly payments at the end of their forbearance periods. This strategy is aimed at assisting borrowers while mitigating the risks of delinquency and default as well as encouraging resolution of delinquent loans. Disaster forbearance is used to assist borrowers affected by material events, typically federally-declared disasters, including hurricanes, wildfires, floods, and pandemics. We typically grant disaster forbearance to affected borrowers in increments of up to three months at a time, but the disaster forbearance granted generally does not apply toward the 12-month forbearance limit described below. Currently, we generally grant forbearance in increments of one to two months at a time, for up to 12 months over the life of the loan, although extended grace forbearance is typically granted in one six-month increment and disaster forbearance and certain other limited instances do not apply toward the 12-month limit. We also currently require 12 months of positive payment performance by a borrower (meaning the borrower must make payment in a cumulative amount equivalent to 12 monthly required payments under the loan) between successive grants of forbearance and between forbearance grants and certain other repayment alternatives. This required period of positive payment performance does not apply, however, to extended grace forbearances and is not required for a borrower to receive a contractual interest rate reduction. In addition, we currently limit the participation of delinquent borrowers in certain short-term extended or interest-only repayment alternatives to once in 12 months and twice in five years. We also now count the number of months a borrower receives a short-term extended repayment alternative toward the 12-month forbearance limit described above. For borrowers experiencing more severe hardship, following evaluation of their ability and willingness to repay, we currently use modification programs tailored to the financial condition of the individual borrower. Pursuant to our modification programs, we may reduce the contractual interest rate on a loan to a rate between 2 percent and 8 percent for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan. For borrowers experiencing the most severe financial conditions, we may permanently reduce the contractual interest rate on a loan to 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Following modification, borrowers who are delinquent but meet specific payment requirements curing their delinquency will be brought current. We currently limit the granting of a permanent extension of the final maturity date of a loan to once over the life of the loan, and the number of interest rate reductions to twice over the life of the loan. We continually monitor our credit administration practices and may modify them further from time to time based upon performance, industry conventions, and/or regulatory feedback. The period of delinquency for loans is based on the number of days scheduled payments are contractually past due. As of December 31, 2024 and 2023, we had $142 million and $151 million, respectively, of Private Education Loans held for investment that were more than 90 days delinquent and continue to accrue interest. As of December 31, 2023, $45 million of FFELP Loans held for investment were more than 90 days delinquent that continued to accrue interest. We sold the FFELP Loan portfolio to an unaffiliated third party during the fourth quarter of 2024. At December 31, 2024 and December 31, 2023, we had an immaterial amount of loans in nonaccrual status. Borrower-in-Custody Arrangements We maintain Borrower-in-Custody arrangements with the FRB. Under these arrangements, we can pledge FFELP Loans or Private Education Loans to the FRB to secure any advances and accrued interest generated under the Primary Credit program at the FRB. As of December 31, 2024 and 2023, we had $2.3 billion and $1.4 billion, respectively, of Private Education Loans pledged to this borrowing facility, as discussed further in Note 10, “Borrowings” in this Form 10-K. We did not have any FFELP Loans pledged at December 31, 2024 or 2023. Loans Held for Investment by Region At December 31, 2024 and 2023, 43.8 percent and 43.5 percent, respectively, of total education loans were concentrated in the following states:
As of December 31, |  | 2024 |  | 2023
California |  | 10.2 | % |  | 10.1 | %
New York |  | 9.0 |  |  | 9.0 |
Pennsylvania |  | 7.1 |  |  | 7.2 |
Texas |  | 6.6 |  |  | 6.3 |
New Jersey |  | 5.6 |  |  | 5.6 |
Florida |  | 5.3 |  |  | 5.3 |
|  | 43.8 | % |  | 43.5 | %
No other state had a concentration of total education loans in excess of 5 percent of the aggregate outstanding education loans held for investment.

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- Definition The entire disclosure for claims held for amounts due to entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/310-10/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 + Details
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