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Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Loan Losses Metrics

		Three Months Ended March 31, 2017
(Dollars in millions)		FFELP Loans				Private Education Loans				Other Loans				Total
Allowance for Loan Losses
Beginning balance		$	67			$	1,351			$	15			$	1,433
Provision for loan losses			10				95				2				107
Charge-offs(1)			(13	)			(137	)			(1	)			(151	)
Reclassification of interest reserve(2)			—				2				—				2
Ending balance		$	64			$	1,311			$	16			$	1,391
Allowance:
Ending balance: individually evaluated for impairment		$	—			$	1,176			$	10			$	1,186
Ending balance: collectively evaluated for impairment		$	64			$	135			$	6			$	205
Loans:
Ending balance: individually evaluated for impairment(3)		$	—			$	11,096			$	31			$	11,127
Ending balance: collectively evaluated for impairment(3)		$	84,513			$	13,201			$	152			$	97,866
Charge-offs as a percentage of average loans in repayment (annualized)			.07	%			2.56	%			2.06	%
Allowance coverage of charge-offs (annualized)			1.2				2.4				4.6
Allowance as a percentage of the ending total loan balance			.08	%			5.39	%			9.00	%
Allowance as a percentage of the ending loans in repayment			.09	%			6.13	%			9.00	%
Ending total loans(3)		$	84,513			$	24,297			$	183
Average loans in repayment		$	69,302			$	21,791			$	173
Ending loans in repayment		$	68,095			$	21,367			$	183

⁽¹⁾  Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be recovered and any shortfalls in what was actually recovered in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾  Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾  Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

		Three Months Ended March 31, 2016
(Dollars in millions)		FFELP Loans				Private Education Loans				Other Loans				Total
Allowance for Loan Losses
Beginning balance		$	78			$	1,471			$	15			$	1,564
Provision for loan losses			7				104				—				111
Charge-offs(1)			(16	)			(144	)			—				(160	)
Reclassification of interest reserve(2)			—				3				—				3
Ending balance		$	69			$	1,434			$	15			$	1,518
Allowance:
Ending balance: individually evaluated for impairment		$	—			$	1,185			$	11			$	1,196
Ending balance: collectively evaluated for impairment		$	69			$	249			$	4			$	322
Loans:
Ending balance: individually evaluated for impairment		$	—			$	11,088			$	33			$	11,121
Ending balance: collectively evaluated for impairment		$	93,977			$	16,408			$	50			$	110,435
Charge-offs as a percentage of average loans in repayment (annualized)			.09	%			2.39	%			2.04	%
Allowance coverage of charge-offs (annualized)			1.1				2.5				8.6
Allowance as a percentage of the ending total loan balance			.07	%			5.22	%			17.91	%
Allowance as a percentage of the ending loans in repayment			.09	%			6.03	%			17.91	%
Ending total loans(3)		$	93,977			$	27,496			$	83
Average loans in repayment		$	73,697			$	24,180			$	85
Ending loans in repayment		$	73,630			$	23,786			$	83

⁽¹⁾  Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be collected and any shortfalls in what was actually collected in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾  Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾  Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

Age Analysis of Past Due Loans Delinquencies

The following tables provide information regarding the loan status and aging of past due loans.

		FFELP Loan Delinquencies
		March 31, 2017								December 31, 2016
(Dollars in millions)		Balance				%				Balance				%
Loans in-school/grace/deferment(1)		$	5,791							$	5,871
Loans in forbearance(2)			10,627								10,490
Loans in repayment and percentage of each status:
Loans current			60,310				88.6	%			61,977				87.8	%
Loans delinquent 31-60 days(3)			2,300				3.4				2,820				4.0
Loans delinquent 61-90 days(3)			1,204				1.8				1,325				1.9
Loans delinquent greater than 90 days(3)			4,281				6.2				4,435				6.3
Total FFELP Loans in repayment			68,095				100	%			70,557				100	%
Total FFELP Loans, gross			84,513								86,918
FFELP Loan unamortized premium			835								879
Total FFELP Loans			85,348								87,797
FFELP Loan allowance for losses			(64	)							(67	)
FFELP Loans, net		$	85,284							$	87,730
Percentage of FFELP Loans in repayment							80.6	%							81.2	%
Delinquencies as a percentage of FFELP Loans in repayment							11.4	%							12.2	%
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance							13.5	%							12.9	%

⁽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.

⁽³⁾  The period of delinquency is based on the number of days scheduled payments are contractually past due.

		Traditional Private Education Loan Delinquencies
		March 31, 2017								December 31, 2016
(Dollars in millions)		Balance				%				Balance				%
Loans in-school/grace/deferment(1)		$	1,218							$	1,271
Loans in forbearance(2)			702								700
Loans in repayment and percentage of each status:
Loans current			18,471				93.9	%			19,020				93.3	%
Loans delinquent 31-60 days(3)			362				1.8				444				2.2
Loans delinquent 61-90 days(3)			236				1.2				269				1.3
Loans delinquent greater than 90 days(3)			612				3.1				663				3.2
Total traditional loans in repayment			19,681				100	%			20,396				100	%
Total traditional loans, gross			21,601								22,367
Traditional loans unamortized discount			(381	)							(402	)
Total traditional loans			21,220								21,965
Traditional loans receivable for partially charged-off loans			518								526
Traditional loans allowance for losses			(1,107	)							(1,138	)
Traditional loans, net		$	20,631							$	21,353
Percentage of traditional loans in repayment							91.1	%							91.2	%
Delinquencies as a percentage of traditional loans in repayment							6.1	%							6.7	%
Loans in forbearance as a percentage of loans in repayment and forbearance							3.4	%							3.3	%

⁽¹⁾  Deferment includes customers who have returned to school or are engaged 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.

⁽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, 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.

		Non-Traditional Private Education Loan Delinquencies
		March 31, 2017								December 31, 2016
(Dollars in millions)		Balance				%				Balance				%
Loans in-school/grace/deferment(1)		$	119							$	122
Loans in forbearance(2)			91								90
Loans in repayment and percentage of each status:
Loans current			1,447				85.9	%			1,486				84.8	%
Loans delinquent 31-60 days(3)			62				3.6				78				4.5
Loans delinquent 61-90 days(3)			43				2.5				52				2.9
Loans delinquent greater than 90 days(3)			134				8.0				138				7.8
Total non-traditional loans in repayment			1,686				100	%			1,754				100	%
Total non-traditional loans, gross			1,896								1,966
Non-traditional loans unamortized discount			(53	)							(55	)
Total non-traditional loans			1,843								1,911
Non-traditional loans receivable for partially charged-off loans			282								289
Non-traditional loans allowance for losses			(204	)							(213	)
Non-traditional loans, net		$	1,921							$	1,987
Percentage of non-traditional loans in repayment							88.9	%							89.2	%
Delinquencies as a percentage of non-traditional loans in repayment							14.1	%							15.2	%
Loans in forbearance as a percentage of loans in repayment and forbearance							5.1	%							4.9	%

⁽¹⁾  Deferment includes customers who have returned to school or are engaged 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.

⁽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, 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.

Loans Modified Accounts for TDR

The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.

		TDR Loans
(Dollars in millions)		Recorded Investment(1)				Unpaid Principal Balance				Related Allowance
March 31, 2017
Private Education Loans — Traditional		$	9,336			$	9,376			$	994
Private Education Loans — Non-Traditional			1,348				1,351				182
Total		$	10,684			$	10,727			$	1,176
December 31, 2016
Private Education Loans — Traditional		$	9,386			$	9,429			$	1,003
Private Education Loans — Non-Traditional			1,373				1,376				187
Total		$	10,759			$	10,805			$	1,190

⁽¹⁾  The recorded investment is equal to the unpaid principal balance and accrued interest receivable net of unamortized deferred fees and costs.

Entity Loan Modification Program [Member]

Loans Modified Accounts for TDR

The following table provides the amount of loans modified in the periods 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.

		Three Months Ended March 31,
		2017												2016
(Dollars in millions)		Modified Loans(1)				Charge- Offs(2)				Payment Default				Modified Loans(1)				Charge- Offs(2)				Payment Default
Private Education Loans — Traditional		$	199			$	86			$	47			$	341			$	80			$	62
Private Education Loans — Non-Traditional			16				20				7				27				22				11
Total		$	215			$	106			$	54			$	368			$	102			$	73

⁽¹⁾  Represents period ending balance of loans that have been modified during the period and resulted in a TDR.

⁽²⁾  Represents loans that charged off that were classified as TDRs.

Troubled Debt Restructuring Loans [Member]

Age Analysis of Past Due Loans Delinquencies

The following table provides information regarding the loan status and aging of TDR loans that are past due.

		TDR Loan Delinquencies
		March 31, 2017								December 31, 2016
(Dollars in millions)		Balance				%				Balance				%
Loans in deferment(1)		$	580							$	579
Loans in forbearance(2)			598								588
Loans in repayment and percentage of each status:
Loans current			8,309				87.0	%			8,273				85.8	%
Loans delinquent 31-60 days(3)			346				3.6				412				4.3
Loans delinquent 61-90 days(3)			237				2.5				267				2.8
Loans delinquent greater than 90 days(3)			657				6.9				686				7.1
Total TDR loans in repayment			9,549				100	%			9,638				100	%
Total TDR loans, gross		$	10,727							$	10,805

⁽¹⁾  Deferment includes customers who have returned to school or are engaged 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.

⁽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, 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.

Average Recorded Investment and Interest Income Recognized for TDR

The following table provides the average recorded investment and interest income recognized for our TDR loans.

		Three Months Ended March 31,
		2017								2016
(Dollars in millions)		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized
Private Education Loans — Traditional		$	9,367			$	145			$	9,221			$	138
Private Education Loans — Non-Traditional			1,361				27				1,434				27
Total		$	10,728			$	172			$	10,655			$	165

Private Education Loans [Member]

Private Education Loan Portfolio Stratified by Key Credit Quality Indicators

The following table highlights the principal balance (excluding the receivable for partially charged-off loans) of our Private Education Loan portfolio stratified by the key credit quality indicators.

		Private Education Loans Credit Quality Indicators
		March 31, 2017								December 31, 2016
(Dollars in millions)		Balance(3)				% of Balance				Balance(3)				% of Balance
Credit Quality Indicators
School Type/FICO Scores:
Traditional		$	21,601				92	%		$	22,367				92	%
Non-Traditional(1)			1,896				8				1,966				8
Total		$	23,497				100	%		$	24,333				100	%
Cosigners:
With cosigner		$	15,024				64	%		$	15,610				64	%
Without cosigner			8,473				36				8,723				36
Total		$	23,497				100	%		$	24,333				100	%
Seasoning(2):
1-12 payments		$	1,276				5	%		$	1,340				5	%
13-24 payments			1,130				5				1,271				5
25-36 payments			1,684				7				1,908				8
37-48 payments			2,440				10				2,723				11
More than 48 payments			15,630				67				15,698				65
Not yet in repayment			1,337				6				1,393				6
Total		$	23,497				100	%		$	24,333				100	%

⁽¹⁾  Defined as loans to customers attending for-profit schools (with a FICO score of less than 670 at origination) and customers attending not-for-profit schools (with a FICO score of less than 640 at origination).

⁽²⁾  Number of months in active repayment for which a scheduled payment was received.

⁽³⁾  Balance represents gross Private Education Loans.

Receivable for Partially Charged-Off Private Education Loans

The following table summarizes the activity in the receivable for partially charged-off Private Education Loans.

		Three Months Ended March 31,
(Dollars in millions)		2017				2016
Receivable at beginning of period		$	815			$	881
Expected future recoveries of current period defaults(1)			34				36
Recoveries(2)			(44	)			(47	)
Charge-offs(3)			(5	)			(3	)
Receivable at end of period		$	800			$	867

⁽¹⁾  Represents our estimate of the amount to be collected in the future.

⁽²⁾  Current period cash collections.

⁽³⁾  Represents the current period recovery shortfall – the difference between what was expected to be collected and what was actually collected. These amounts are included in total charge-offs as reported in the “Allowance for Private Education Loan Losses” table.

Accrued Interest Receivable

The following table provides information regarding accrued interest receivable on our Private Education Loans.

(Dollars in millions)		Accrued Interest Receivable				Greater Than 90 Days Past Due				Allowance for Uncollectible Interest
March 31, 2017
Private Education Loans — Traditional		$	326			$	23			$	20
Private Education Loans — Non-Traditional			45				7				6
Total		$	371			$	30			$	26
December 31, 2016
Private Education Loans — Traditional		$	344			$	26			$	23
Private Education Loans — Non-Traditional			47				7				7
Total		$	391			$	33			$	30

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