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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Reconciliations of Statutory U.S. Federal Income Tax Rates to Our Effective Tax Rate for Continuing Operations | Reconciliations of the statutory U.S. federal income tax rates to our effective tax rate for continuing operations follow:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Non-deductible regulatory-related expenses (1) |  |  | — |  |  |  | — |  |  |  | 1.4 |
Unrecognized tax benefits, state, net of federal benefit |  |  | .8 |  |  |  | (1.3 | ) |  |  | .2 |
Valuation allowance on disallowed interest expense carryovers, state, net of federal benefit |  |  | 6.6 |  |  |  | 1.0 |  |  |  | .7 |
State tax, net of federal benefit |  |  | (1.9 | ) |  |  | 1.2 |  |  |  | .2 |
Other, net |  |  | .6 |  |  |  | .1 |  |  |  | (.1 | )
Effective tax rate |  |  | 27.1 | % |  |  | 22.0 | % |  |  | 23.4 | %
(1) Regulatory expenses for 2021 include $205 million related to the resolution of State Attorneys General litigation and investigations, of which approximately $50.7 million is non-deductible for income tax purposes. See "Note 12 — Commitments, Contingencies and Guarantees" for further discussion.
Components of Provision for Income Tax Expense (Benefit) | Income tax expense consists of:
|  | December 31, |
(Dollars in millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Current provision/(benefit): |  |  |  |  |  |  |  |  |
Federal |  | $ | 63 |  |  | $ | (2 | ) |  | $ | 147 |
State |  |  | 24 |  |  |  | (25 | ) |  |  | 19 |
Foreign |  |  | — |  |  |  | 1 |  |  |  | — |
Total current provision/(benefit) |  |  | 87 |  |  |  | (26 | ) |  |  | 166 |
Deferred provision/(benefit): |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | 173 |  |  |  | 56 |
State |  |  | (2 | ) |  |  | 35 |  |  |  | (3 | )
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Total deferred provision/(benefit) |  |  | (2 | ) |  |  | 208 |  |  |  | 53 |
Provision for income tax expense/(benefit) |  | $ | 85 |  |  | $ | 182 |  |  | $ | 219 |
Schedule of Deferred Tax Assets and Liabilities | The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:
|  | December 31, |
(Dollars in millions) |  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Loan reserves |  | $ | 237 |  |  | $ | 297 |
Accrued expenses not currently deductible |  |  | 39 |  |  |  | 33 |
Education loan premiums and discounts, net |  |  | 32 |  |  |  | 41 |
Operating loss and credit carryovers |  |  | 11 |  |  |  | 12 |
Stock-based compensation plans |  |  | 5 |  |  |  | 5 |
Other |  |  | 18 |  |  |  | 19 |
Total deferred tax assets |  |  | 342 |  |  |  | 407 |
Deferred tax liabilities: |  |  |  |  |  |
Market value adjustments on education loans, investments and derivatives |  |  | 114 |  |  |  | 201 |
Acquired intangible assets |  |  | 23 |  |  |  | 22 |
Original issue discount on borrowings |  |  | 13 |  |  |  | 13 |
Other |  |  | 7 |  |  |  | 11 |
Total deferred tax liabilities |  |  | 157 |  |  |  | 247 |
Net deferred tax assets |  | $ | 185 |  |  | $ | 160 |
Summary of Operating Loss and Credit Carryovers | The operating loss and credit carryovers consist of:
|  | December 31, 2023 |
(Dollars in millions) |  | Gross |  | Tax-Effected |  | Expiration | Corresponding Valuation Allowance(1) |  | Operating Loss and Credit Carryovers |
Federal operating loss carryovers |  | $ | 34 |  | $ | 7 |  | Begins in 2032 | $ | 1 |  | $ | 6 |
State operating loss carryovers |  |  | 559 |  |  | 37 |  | Began in 2023 |  | 32 |  |  | 5 |
State IRC § 163(j) disallowed interest expense carryovers |  |  | 4,173 |  |  | 65 |  | Indefinite |  | 65 |  |  | — |
|  |  |  | $ | 109 |  |  | $ | 98 |  | $ | 11 |
(1) The valuation allowance attributable to deferred tax assets for federal and state net operating loss carryovers, and state IRC § 163(j) disallowed interest expense carryovers, are amounts that management believes more likely than not will expire prior to being realized.
Summary of Changes in Unrecognized Tax Benefits | The following table summarizes changes in unrecognized tax benefits:
|  | December 31, |
(Dollars in millions) |  | 2023 |  |  | 2022 |  |  | 2021 |
Unrecognized tax benefits at beginning of year |  | $ | 50.7 |  |  | $ | 58.8 |  |  | $ | 57.9 |
Increases resulting from tax positions taken during a prior period |  |  | 3.8 |  |  |  | 10.8 |  |  |  | 6.4 |
Decreases resulting from tax positions taken during a prior period |  |  | (4.5 | ) |  |  | (18.6 | ) |  |  | (4.2 | )
Increases resulting from tax positions taken during the current period |  |  | 7.4 |  |  |  | 6.7 |  |  |  | 6.4 |
Decreases related to settlements with taxing authorities |  |  | (3.8 | ) |  |  | (1.0 | ) |  |  | (.3 | )
Increases related to settlements with taxing authorities |  |  | — |  |  |  | — |  |  |  | — |
Reductions related to the lapse of statute of limitations |  |  | (5.1 | ) |  |  | (6.0 | ) |  |  | (7.4 | )
Unrecognized tax benefits at end of year (1) |  | $ | 48.5 |  |  | $ | 50.7 |  |  | $ | 58.8 |
(1) Included in the $48.5 million of gross unrecognized tax benefits at December 31, 2023 are $38.3 million of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate.

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