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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2023

Segment Results and Reconciliations to GAAP


	Year Ended December 31, 2023
				Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP			Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	4,266													$	2,901	$	1,369	$	—	$	—
Cash and investments		153														76		27		—		50
Total interest income		4,419														2,977		1,396		—		50
Total interest expense		3,557														2,497		816		—		164
Net interest income (loss)		862		$	32		$	52		$	84		$	946		480		580		—		(114	)
Less: provisions for loan losses		123												123		56		67		—		—
Net interest income (loss) after provisions for loan losses		739														424		513		—		(114	)
Other income (loss):
Servicing revenue		64														52		12		—		—
Asset recovery and business processing revenue		321														—		—		321		—
Other revenue		32														14		2		—		5
Losses on debt repurchases		(8	)		—			—			—			—		—		—		—		(8	)
Total other income (loss)		409			(32	)		21			(11	)		398		66		14		321		(3	)
Expenses:
Direct operating expenses		508														72		151		285		—
Unallocated shared services expenses		292														—		—		—		292
Operating expenses		800			—			—			—			800		72		151		285		292
Goodwill and acquired intangible asset impairment and amortization		10			—			(10	)		(10	)		—		—		—		—		—
Restructuring/other reorganization expenses		25			—			—			—			25		—		—		—		25
Total expenses		835			—			(10	)		(10	)		825		72		151		285		317
Income (loss) before income tax expense (benefit)		313			—			83			83			396		418		376		36		(434	)
Income tax expense (benefit)(2)		85			—			8			8			93		99		89		8		(103	)
Net income (loss)	$	228		$	—		$	75		$	75		$	303	$	319	$	287	$	28	$	(331	)

(1)

Core Earnings adjustments to GAAP:


	Year Ended December 31, 2023
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	84		$	—		$	84
Total other income (loss)		(11	)		—			(11	)
Goodwill and acquired intangible asset impairment and amortization		—			(10	)		(10	)
Total Core Earnings adjustments to GAAP	$	73		$	10			83
Income tax expense (benefit)								8
Net income (loss)							$	75

(2)

Income taxes are based on a percentage of net income before tax for the individual reportable segment.

15. Segment Reporting (Continued)


	Year Ended December 31, 2022
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	3,161												$	1,955	$	1,195	$	—	$	—
Cash and investments		62													32		10		—		20
Total interest income		3,223													1,987		1,205		—		20
Total interest expense		2,102													1,468		611		—		107
Net interest income (loss)		1,121	$	(15	)	$	(80	)	$	(95	)	$	1,026		519		594		—		(87	)
Less: provisions for loan losses		79											79		—		79		—		—
Net interest income (loss) after provisions for loan losses		1,042													519		515		—		(87	)
Other income (loss):
Servicing revenue		77													65		12		—		—
Asset recovery and business processing revenue		336													6		—		330		—
Other revenue		203													31		1		—		—
Total other income (loss)		616		15			(186	)		(171	)		445		102		13		330		—
Expenses:
Direct operating expenses		534													106		148		280		—
Unallocated shared services expenses		242													—		—		—		242
Operating expenses		776		—			—			—			776		106		148		280		242
Goodwill and acquired intangible asset impairment and amortization		19		—			(19	)		(19	)		—		—		—		—		—
Restructuring/other reorganization expenses		36		—			—			—			36		—		—		—		36
Total expenses		831		—			(19	)		(19	)		812		106		148		280		278
Income (loss) before income tax expense (benefit)		827		—			(247	)		(247	)		580		515		380		50		(365	)
Income tax expense (benefit)(2)		182		—			(60	)		(60	)		122		108		80		10		(76	)
Net income (loss)	$	645	$	—		$	(187	)	$	(187	)	$	458	$	407	$	300	$	40	$	(289	)

(1)

Core Earnings adjustments to GAAP:


	Year Ended December 31, 2022
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	(95	)	$	—		$	(95	)
Total other income (loss)		(171	)		—			(171	)
Goodwill and acquired intangible asset impairment and amortization		—			(19	)		(19	)
Total Core Earnings adjustments to GAAP	$	(266	)	$	19			(247	)
Income tax expense (benefit)								(60	)
Net income (loss)							$	(187	)

(2)

Income taxes are based on a percentage of net income before tax for the individual reportable segment.

15. Segment Reporting (Continued)


	Year Ended December 31, 2021
				Adjustments												Reportable Segments
(Dollars in millions)	Total GAAP			Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings			Federal Education Loans		Consumer Lending			Business Processing		Other
Interest income:
Education loans	$	2,645														$	1,405	$	1,181		$	—	$	—
Cash and investments		3															—		2			—		1
Total interest income		2,648															1,405		1,183			—		1
Total interest expense		1,316															830		541			—		70
Net interest income (loss)		1,332		$	(106	)	$	(78	)	$	(184	)	$	1,148			575		642			—		(69	)
Less: provisions for loan losses		(61	)											(61	)		—		(61	)		—		—
Net interest income (loss) after provisions for loan losses		1,393															575		703			—		(69	)
Other income (loss):
Servicing revenue		168															162		6			—		—
Asset recovery and business processing revenue		539															51		—			488		—
Other revenue		94															25		—			—		5
Gains on sales of loans		78															—		91			—		—
Losses on debt repurchases		(73	)														—		—			—		(73	)
Total other income (loss)		806			106			(157	)		(51	)		755			238		97			488		(68	)
Expenses:
Direct operating expenses		745															223		162			360		—
Unallocated shared services expenses		462															—		—			—		462
Operating expenses		1,207			—			—			—			1,207			223		162			360		462
Goodwill and acquired intangible asset impairment and amortization		30			—			(30	)		(30	)		—			—		—			—		—
Restructuring/other reorganization expenses		26			—			—			—			26			—		—			—		26
Total expenses		1,263			—			(30	)		(30	)		1,233			223		162			360		488
Income (loss) before income tax expense (benefit)		936			—			(205	)		(205	)		731			590		638			128		(625	)
Income tax expense (benefit)(2)		219			—			(39	)		(39	)		180			136		146			29		(131	)
Net income (loss)	$	717		$	—		$	(166	)	$	(166	)	$	551		$	454	$	492		$	99	$	(494	)

(1)

Core Earnings adjustments to GAAP:


	Year Ended December 31, 2021
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	(184	)	$	—		$	(184	)
Total other income (loss)		(51	)		—			(51	)
Goodwill and acquired intangible asset impairment and amortization		—			(30	)		(30	)
Total Core Earnings adjustments to GAAP	$	(235	)	$	30			(205	)
Income tax expense (benefit)								(39	)
Net income (loss)							$	(166	)

(2) 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


	Years Ended December 31,
(Dollars in millions)	2023			2022			2021
GAAP net income	$	228		$	645		$	717
Core Earnings adjustments to GAAP:
Net impact of derivative accounting(1)		73			(266	)		(235	)
Net impact of goodwill and acquired intangible assets(2)		10			19			30
Net income tax effect(3)		(8	)		60			39
Total Core Earnings adjustments to GAAP		75			(187	)		(166	)
Core Earnings net income	$	303		$	458		$	551

(1)

Derivative accounting: Core Earnings exclude periodic 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 mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0 except for Floor Income Contracts where the mark-to-market 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.

Goodwill and acquired intangible assets: Our Core Earnings exclude goodwill and intangible asset impairment and amortization of acquired intangible assets.Net tax effect: Such tax effect is based upon our Core Earnings effective tax rate for the year.

Federal Education Loans [Member]

Asset Information for Loans Segment


	December 31,
(Dollars in millions)	2023		2022
FFELP Loans, net	$	37,925	$	43,525
Cash and investments(1)		1,520		2,746
Other		2,128		2,229
Total assets	$	41,573	$	48,500

(1)

Includes restricted cash and investments.

Consumer Lending [Member]

Asset Information for Loans Segment


	December 31,
(Dollars in millions)	2023		2022
Private Education Loans, net	$	16,902	$	18,725
Cash and investments(1)		497		617
Other		577		453
Total assets	$	17,976	$	19,795

(1)

Includes restricted cash and investments.