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Fair Value Measurements (Tables) | 6 Months Ended
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Jun. 30, 2025
Fair Value Disclosures [Abstract] |
Valuation of Financial Instruments that are Marked-to-Market on Recurring Basis | The following table summarizes the valuation of our financial instruments that are marked-to-market on a recurring basis. During the second-quarters of 2025 and 2024, there were no significant transfers of financial instruments between levels.
|  | Fair Value Measurements on a Recurring Basis |
|  | June 30, 2025 |  |  | December 31, 2024 |
(Dollars in millions) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments:(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | 43 |  |  | $ | — |  |  | $ | 43 |  |  | $ | — |  |  | $ | 25 |  |  | $ | — |  |  | $ | 25 |
Cross currency interest rate swaps |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total derivative assets(2) |  |  | — |  |  |  | 43 |  |  |  | 4 |  |  |  | 47 |  |  |  | — |  |  |  | 25 |  |  |  | — |  |  |  | 25 |
Total |  | $ | — |  |  | $ | 43 |  |  | $ | 4 |  |  | $ | 47 |  |  | $ | — |  |  | $ | 25 |  |  | $ | — |  |  | $ | 25 |
Liabilities(3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cross-currency interest rate swaps |  |  | — |  |  |  | — |  |  |  | (79 | ) |  |  | (79 | ) |  |  | — |  |  |  | — |  |  |  | (244 | ) |  |  | (244 | )
Total derivative liabilities(2) |  |  | — |  |  |  | — |  |  |  | (79 | ) |  |  | (79 | ) |  |  | — |  |  |  | — |  |  |  | (244 | ) |  |  | (244 | )
Total |  | $ | — |  |  | $ | — |  |  | $ | (79 | ) |  | $ | (79 | ) |  | $ | — |  |  | $ | — |  |  | $ | (244 | ) |  | $ | (244 | )
(1) Fair value of derivative instruments excludes accrued interest and the value of collateral. (2) See "Note 5 – Derivative Financial Instruments" for a reconciliation of gross positions without the impact of master netting agreements to the balance sheet classification. (3) Borrowings which are the hedged item in a fair value hedge relationship and which are adjusted for changes in value due to benchmark interest rates only are not carried at full fair value and not reflected in this table.
Change in Balance Sheet Carrying Value Associated with Level 3 Financial Instruments Carried at Fair Value on Recurring Basis | The following tables summarize the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.
|  | Three Months Ended June 30, |
|  | 2025 |  |  | 2024 |
|  | Derivative instruments |  |  | Derivative instruments |
(Dollars in millions) |  | Interest Rate Swaps |  |  | Cross Currency Interest Rate Swaps |  |  | Other |  |  | Total Derivative Instruments |  |  | Interest Rate Swaps |  |  | Cross Currency Interest Rate Swaps |  |  | Other |  |  | Total Derivative Instruments |
Balance, beginning of period |  | $ | — |  |  | $ | (190 | ) |  | $ | — |  |  | $ | (190 | ) |  | $ | (1 | ) |  | $ | (223 | ) |  | $ | — |  |  | $ | (224 | )
Total gains/(losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings(1) |  |  | — |  |  |  | 107 |  |  |  | — |  |  |  | 107 |  |  |  | — |  |  |  | (9 | ) |  |  | — |  |  |  | (9 | )
Included in other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | 10 |  |  |  | — |  |  |  | 10 |
Transfers in and/or out of level 3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance, end of period |  | $ | — |  |  | $ | (75 | ) |  | $ | — |  |  | $ | (75 | ) |  | $ | (1 | ) |  | $ | (222 | ) |  | $ | — |  |  | $ | (223 | )
Change in mark-to- market gains/ (losses) relating to instruments still held at the reporting date(2) |  | $ | — |  |  | $ | 115 |  |  | $ | — |  |  | $ | 115 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
|  | Six Months Ended June 30, |
|  | 2025 |  |  | 2024 |
|  | Derivative instruments |  |  | Derivative instruments |
(Dollars in millions) |  | Interest Rate Swaps |  |  | Cross Currency Interest Rate Swaps |  |  | Other |  |  | Total Derivative Instruments |  |  | Interest Rate Swaps |  |  | Cross Currency Interest Rate Swaps |  |  | Other |  |  | Total Derivative Instruments |
Balance, beginning of period |  | $ | — |  |  | $ | (244 | ) |  | $ | — |  |  | $ | (244 | ) |  | $ | (1 | ) |  | $ | (189 | ) |  | $ | — |  |  | $ | (190 | )
Total gains/(losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings(1) |  |  | — |  |  |  | 152 |  |  |  | — |  |  |  | 152 |  |  |  | — |  |  |  | (53 | ) |  |  | — |  |  |  | (53 | )
Included in other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | — |  |  |  | 17 |  |  |  | — |  |  |  | 17 |  |  |  | — |  |  |  | 20 |  |  |  | — |  |  |  | 20 |
Transfers in and/or out of level 3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance, end of period |  | $ | — |  |  | $ | (75 | ) |  | $ | — |  |  | $ | (75 | ) |  | $ | (1 | ) |  | $ | (222 | ) |  | $ | — |  |  | $ | (223 | )
Change in mark-to- market gains/ (losses) relating to instruments still held at the reporting date(2) |  | $ | — |  |  | $ | 169 |  |  | $ | — |  |  | $ | 169 |  |  | $ | — |  |  | $ | (33 | ) |  | $ | — |  |  | $ | (33 | )
(1) “Included in earnings” is comprised of the following amounts recorded in the specified line item in the consolidated statements of income:
Included in Earnings |
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
(Dollars in millions) |  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Gains (losses) on derivative and hedging activities, net |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest expense |  |  | 107 |  |  |  | (9 | ) |  |  | 152 |  |  |  | (53 | )
Total |  | $ | 107 |  |  | $ | (9 | ) |  | $ | 152 |  |  | $ | (53 | )
(2) Recorded in “gains (losses) on derivative and hedging activities, net” in the consolidated statements of income for interest rate swaps. Recorded in interest expense for cross-currency interest rate swaps in fair value hedges.
Unobservable Data Used in Recurring Valuations of Level 3 | The following table presents the significant inputs that are unobservable or from inactive markets used in the recurring valuations of the level 3 financial instruments detailed above.
(Dollars in millions) |  | Fair Value at June 30, 2025 |  |  | Valuation Technique |  | Input |  | Range and Weighted Average
Derivatives |  |  |  |  |  |  |  |  |
Cross-currency interest rate swaps |  | $ | (75 | ) |  | Discounted cash flow |  | Constant Prepayment Rate |  | 5%
Total |  |  | (75 | ) |  |  |  |  |  |
Fair Values of Financial Assets and Liabilities, Including Derivative Financial Instruments | The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.
|  | June 30, 2025 |  |  | December 31, 2024 |
(Dollars in millions) |  | Fair Value |  |  | Carrying Value |  |  | Difference |  |  | Fair Value |  |  | Carrying Value |  |  | Difference |
Earning assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FFELP Loans |  | $ | 29,261 |  |  | $ | 29,618 |  |  | $ | (357 | ) |  | $ | 30,766 |  |  | $ | 30,852 |  |  | $ | (86 | )
Private Education Loans |  |  | 15,216 |  |  |  | 15,530 |  |  |  | (314 | ) |  |  | 15,367 |  |  |  | 15,716 |  |  |  | (349 | )
Cash and investments |  |  | 2,212 |  |  |  | 2,212 |  |  |  | — |  |  |  | 2,246 |  |  |  | 2,246 |  |  |  | — |
Total earning assets |  |  | 46,689 |  |  |  | 47,360 |  |  |  | (671 | ) |  |  | 48,379 |  |  |  | 48,814 |  |  |  | (435 | )
Interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term borrowings |  |  | 4,764 |  |  |  | 4,752 |  |  |  | (12 | ) |  |  | 5,144 |  |  |  | 5,134 |  |  |  | (10 | )
Long-term borrowings |  |  | 41,672 |  |  |  | 42,345 |  |  |  | 673 |  |  |  | 42,361 |  |  |  | 43,184 |  |  |  | 823 |
Total interest-bearing liabilities |  |  | 46,436 |  |  |  | 47,097 |  |  |  | 661 |  |  |  | 47,505 |  |  |  | 48,318 |  |  |  | 813 |
Derivative financial instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 43 |  |  |  | 43 |  |  |  | — |  |  |  | 25 |  |  |  | 25 |  |  |  | — |
Cross-currency interest rate swaps |  |  | (75 | ) |  |  | (75 | ) |  |  | — |  |  |  | (244 | ) |  |  | (244 | ) |  |  | — |
Excess of net asset fair value over carrying value |  |  |  |  |  |  |  | $ | (10 | ) |  |  |  |  |  |  |  | $ | 378 |

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- Definition Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 + Details
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