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Segment Reporting (Tables) | 3 Months Ended
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Mar. 31, 2017
Segment Results and Reconciliations to GAAP | Segment Results and Reconciliations to GAAP
|  | Three Months Ended March 31, 2017 |
(Dollars in millions) |  | FFELP Loans |  |  | Private Education Loans |  |  | Business Services |  |  | Other |  |  | Eliminations(1) |  |  | Total “Core Earnings” |  |  | Adjustments |  |  | Total GAAP |
|  |  |  |  |  |  | Reclassifications |  |  | Additions/ (Subtractions) |  |  | Total Adjustments(2) |  |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Education loans |  | $ | 623 |  |  | $ | 374 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 997 |  |  | $ | 20 |  |  | $ | (14 | ) |  | $ | 6 |  |  | $ | 1,003 |
Other loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |
Cash and investments |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7 |
Total interest income |  |  | 628 |  |  |  | 374 |  |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 1,009 |  |  |  | 20 |  |  |  | (14 | ) |  |  | 6 |  |  |  | 1,015 |
Total interest expense |  |  | 457 |  |  |  | 187 |  |  |  | — |  |  |  | 31 |  |  |  | — |  |  |  | 675 |  |  |  | 3 |  |  |  | (3 | ) |  |  | — |  |  |  | 675 |
Net interest income (loss) |  |  | 171 |  |  |  | 187 |  |  |  | — |  |  |  | (24 | ) |  |  | — |  |  |  | 334 |  |  |  | 17 |  |  |  | (11 | ) |  |  | 6 |  |  |  | 340 |
Less: provisions for loan losses |  |  | 10 |  |  |  | 95 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 107 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 107 |
Net interest income (loss) after provisions for loan losses |  |  | 161 |  |  |  | 92 |  |  |  | — |  |  |  | (26 | ) |  |  | — |  |  |  | 227 |  |  |  | 17 |  |  |  | (11 | ) |  |  | 6 |  |  |  | 233 |
Other income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicing revenue |  |  | 13 |  |  |  | 4 |  |  |  | 149 |  |  |  | — |  |  |  | (90 | ) |  |  | 76 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 76 |
Asset recovery and business processing revenue |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 100 |
Other income (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 5 |  |  |  | (17 | ) |  |  | (12 | ) |  |  | (29 | ) |  |  | (24 | )
Total other income (loss) |  |  | 13 |  |  |  | 4 |  |  |  | 249 |  |  |  | 5 |  |  |  | (90 | ) |  |  | 181 |  |  |  | (17 | ) |  |  | (12 | ) |  |  | (29 | ) |  |  | 152 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct operating expenses |  |  | 93 |  |  |  | 40 |  |  |  | 126 |  |  |  | 7 |  |  |  | (90 | ) |  |  | 176 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 176 |
Overhead expenses |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62 |  |  |  | — |  |  |  | 62 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62 |
Operating expenses |  |  | 93 |  |  |  | 40 |  |  |  | 126 |  |  |  | 69 |  |  |  | (90 | ) |  |  | 238 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 238 |
Goodwill and acquired intangible asset impairment and amortization |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 6 |  |  |  | 6 |
Total expenses |  |  | 93 |  |  |  | 40 |  |  |  | 126 |  |  |  | 69 |  |  |  | (90 | ) |  |  | 238 |  |  |  | — |  |  |  | 6 |  |  |  | 6 |  |  |  | 244 |
Income (loss) before income tax expense (benefit) |  |  | 81 |  |  |  | 56 |  |  |  | 123 |  |  |  | (90 | ) |  |  | — |  |  |  | 170 |  |  |  | — |  |  |  | (29 | ) |  |  | (29 | ) |  |  | 141 |
Income tax expense (benefit)(3) |  |  | 30 |  |  |  | 21 |  |  |  | 46 |  |  |  | (34 | ) |  |  | — |  |  |  | 63 |  |  |  | — |  |  |  | (10 | ) |  |  | (10 | ) |  |  | 53 |
Net income (loss) |  | $ | 51 |  |  | $ | 35 |  |  | $ | 77 |  |  | $ | (56 | ) |  | $ | — |  |  | $ | 107 |  |  | $ | — |  |  | $ | (19 | ) |  | $ | (19 | ) |  | $ | 88 |
(1) | The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.
(2) | “Core Earnings” adjustments to GAAP:
|  | Three Months Ended March 31, 2017 |
(Dollars in millions) |  | Net Impact of Derivative Accounting |  |  | Net Impact of Goodwill and Acquired Intangible Assets |  |  | Total |
Net interest income (loss) after provisions for loan losses |  | $ | 6 |  |  | $ | — |  |  | $ | 6 |
Total other income (loss) |  |  | (29 | ) |  |  | — |  |  |  | (29 | )
Goodwill and acquired intangible asset impairment and amortization |  |  | — |  |  |  | 6 |  |  |  | 6 |
Total “Core Earnings” adjustments to GAAP |  | $ | (23 | ) |  | $ | (6 | ) |  | $ | (29 | )
Income tax expense (benefit) |  |  |  |  |  |  |  |  |  |  | (10 | )
Net income (loss) |  |  |  |  |  |  |  |  |  | $ | (19 | )
(3) | Income taxes are based on a percentage of net income before tax for the individual reportable segment.
|  | Three Months Ended March 31, 2016 |
(Dollars in millions) |  | FFELP Loans |  |  | Private Education Loans |  |  | Business Services |  |  | Other |  |  | Eliminations(1) |  |  | Total “Core Earnings” |  |  | Adjustments |  |  | Total GAAP |
|  |  |  |  |  |  | Reclassifications |  |  | Additions/ (Subtractions) |  |  | Total Adjustments(2) |  |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Education loans |  | $ | 555 |  |  | $ | 411 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 966 |  |  | $ | 138 |  |  | $ | (59 | ) |  | $ | 79 |  |  | $ | 1,045 |
Other loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |
Cash and investments |  |  | 3 |  |  |  | 1 |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |
Total interest income |  |  | 558 |  |  |  | 412 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 972 |  |  |  | 138 |  |  |  | (59 | ) |  |  | 79 |  |  |  | 1,051 |
Total interest expense |  |  | 358 |  |  |  | 172 |  |  |  | — |  |  |  | 26 |  |  |  | — |  |  |  | 556 |  |  |  | 9 |  |  |  | — |  |  |  | 9 |  |  |  | 565 |
Net interest income (loss) |  |  | 200 |  |  |  | 240 |  |  |  | — |  |  |  | (24 | ) |  |  | — |  |  |  | 416 |  |  |  | 129 |  |  |  | (59 | ) |  |  | 70 |  |  |  | 486 |
Less: provisions for loan losses |  |  | 7 |  |  |  | 104 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 111 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 111 |
Net interest income (loss) after provisions for loan losses |  |  | 193 |  |  |  | 136 |  |  |  | — |  |  |  | (24 | ) |  |  | — |  |  |  | 305 |  |  |  | 129 |  |  |  | (59 | ) |  |  | 70 |  |  |  | 375 |
Other income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicing revenue |  |  | 16 |  |  |  | 4 |  |  |  | 163 |  |  |  | — |  |  |  | (101 | ) |  |  | 82 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 82 |
Asset recovery and business processing revenue |  |  | — |  |  |  | — |  |  |  | 90 |  |  |  | — |  |  |  | — |  |  |  | 90 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 90 |
Other income (loss) |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 3 |  |  |  | — |  |  |  | 4 |  |  |  | (129 | ) |  |  | 113 |  |  |  | (16 | ) |  |  | (12 | )
Total other income (loss) |  |  | 16 |  |  |  | 4 |  |  |  | 254 |  |  |  | 3 |  |  |  | (101 | ) |  |  | 176 |  |  |  | (129 | ) |  |  | 113 |  |  |  | (16 | ) |  |  | 160 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct operating expenses |  |  | 104 |  |  |  | 43 |  |  |  | 134 |  |  |  | 6 |  |  |  | (101 | ) |  |  | 186 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 186 |
Overhead expenses |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 61 |  |  |  | — |  |  |  | 61 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 61 |
Operating expenses |  |  | 104 |  |  |  | 43 |  |  |  | 134 |  |  |  | 67 |  |  |  | (101 | ) |  |  | 247 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 247 |
Goodwill and acquired intangible asset impairment and amortization |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | 4 |
Total expenses |  |  | 104 |  |  |  | 43 |  |  |  | 134 |  |  |  | 67 |  |  |  | (101 | ) |  |  | 247 |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | 251 |
Income (loss) before income tax expense (benefit) |  |  | 105 |  |  |  | 97 |  |  |  | 120 |  |  |  | (88 | ) |  |  | — |  |  |  | 234 |  |  |  | — |  |  |  | 50 |  |  |  | 50 |  |  |  | 284 |
Income tax expense (benefit)(3) |  |  | 39 |  |  |  | 36 |  |  |  | 45 |  |  |  | (33 | ) |  |  | — |  |  |  | 87 |  |  |  | — |  |  |  | 16 |  |  |  | 16 |  |  |  | 103 |
Net income (loss) |  | $ | 66 |  |  | $ | 61 |  |  | $ | 75 |  |  | $ | (55 | ) |  | $ | — |  |  | $ | 147 |  |  | $ | — |  |  | $ | 34 |  |  | $ | 34 |  |  | $ | 181 |
(1) | The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.
(2) | “Core Earnings” adjustments to GAAP:
|  | Three Months Ended March 31, 2016 |
(Dollars in millions) |  | Net Impact of Derivative Accounting |  |  | Net Impact of Goodwill and Acquired Intangible Assets |  |  | Total |
Net interest income (loss) after provisions for loan losses |  | $ | 70 |  |  | $ | — |  |  | $ | 70 |
Total other income (loss) |  |  | (16 | ) |  |  | — |  |  |  | (16 | )
Goodwill and acquired intangible asset impairment and amortization |  |  | — |  |  |  | 4 |  |  |  | 4 |
Total “Core Earnings” adjustments to GAAP |  | $ | 54 |  |  | $ | (4 | ) |  |  | 50 |
Income tax expense (benefit) |  |  |  |  |  |  |  |  |  |  | 16 |
Net income (loss) |  |  |  |  |  |  |  |  |  | $ | 34 |
(3) | Income taxes are based on a percentage of net income before tax for the individual reportable segment.
Core Earnings Adjustments to GAAP | Summary of “Core Earnings” Adjustments to GAAP
|  | Three Months Ended March 31, |
(Dollars in millions) |  | 2017 |  |  | 2016 |
“Core Earnings” adjustments to GAAP: |  |  |  |  |  |  |  |
Net impact of derivative accounting(1) |  | $ | (23 | ) |  | $ | 54 |
Net impact of goodwill and acquired intangibles assets(2) |  |  | (6 | ) |  |  | (4 | )
Net tax effect(3) |  |  | 10 |  |  |  | (16 | )
Total “Core Earnings” adjustments to GAAP |  | $ | (19 | ) |  | $ | 34 |
(1) | Derivative accounting: “Core Earnings” exclude periodic unrealized gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP as well as the periodic unrealized gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. These unrealized gains and losses occur in our FFELP Loans, Private Education Loans and Other business segments. Under GAAP, for our derivatives that are held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0 except for Floor Income Contracts where the cumulative unrealized gain will equal the amount for which we sold the contract. In our “Core Earnings” presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.
(2) | Goodwill and acquired intangible assets: Our “Core Earnings” exclude goodwill and intangible asset impairment and amortization of acquired intangible assets.
(3) | Net tax effect: Such tax effect is based upon our “Core Earnings” effective tax rate for the year.
Assets [Member] | FFELP Loans Segment [Member] |
Asset Information for Loans Segment | The following table includes GAAP basis asset information for our FFELP Loans segment.
(Dollars in millions) |  | March 31, 2017 |  |  | December 31, 2016 |
FFELP Loans, net |  | $ | 85,284 |  |  | $ | 87,730 |
Cash and investments(1) |  |  | 3,265 |  |  |  | 3,212 |
Other |  |  | 1,852 |  |  |  | 1,907 |
Total assets |  | $ | 90,401 |  |  | $ | 92,849 |
(1) | Includes restricted cash and investments.
Assets [Member] | Private Education Loans Segment [Member] |
Asset Information for Loans Segment | The following table includes GAAP basis asset information for our Private Education Loans segment.
(Dollars in millions) |  | March 31, 2017 |  |  | December 31, 2016 |
Private Education Loans, net |  | $ | 22,552 |  |  | $ | 23,340 |
Cash and investments(1) |  |  | 697 |  |  |  | 667 |
Other |  |  | 1,428 |  |  |  | 1,567 |
Total assets |  | $ | 24,677 |  |  | $ | 25,574 |
(1) | Includes restricted cash and investments.

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