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Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2025

Financing Receivable Allowance For Credit Losses [Line Items]

Allowance for Credit Losses and Recorded Investments in Loans


	Three Months Ended June 30,
	2025									2024
(Dollars in millions)	FFELP Loans			Private Education Loans			Total			FFELP Loans			Private Education Loans			Total
Allowance at beginning of period	$	182		$	397		$	579		$	206		$	538		$	744
Total provision		8			29			37			(2	)		16			14
Charge-offs:
Gross charge-offs		(8	)		(92	)		(100	)		(10	)		(77	)		(87	)
Expected future recoveries on current period gross charge-offs		—			13			13			—			10			10
Total(1)		(8	)		(79	)		(87	)		(10	)		(67	)		(77	)
Adjustment resulting from the change in charge-off rate(2)		—			(1	)		(1	)		—			—			—
Net charge-offs		(8	)		(80	)		(88	)		(10	)		(67	)		(77	)
Decrease in expected future recoveries on previously fully charged-off loans(3)		—			2			2			—			6			6
Allowance at end of period	$	182		$	348		$	530		$	194		$	493		$	687
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in charge-off rate (annualized)(2)		.14	%		2.06	%					.14	%		1.65	%
Net adjustment resulting from the change in charge -off rate as a percentage of average loans in repayment (annualized)(2)		—	%		.02	%					—	%		—	%
Net charge-offs as a percentage of average loans in repayment (annualized)		.14	%		2.08	%					.14	%		1.65	%
Ending total loans	$	29,800		$	15,878					$	33,134		$	16,731
Average loans in repayment	$	25,133		$	15,375					$	27,509		$	16,271
Ending loans in repayment	$	24,867		$	15,267					$	26,411		$	16,087

(1)

Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.

(2)

Related to increasing the net charge-off rate on defaulted Private Education Loans and the resulting reduction in the balance of expected future recoveries on previously fully charged-off loans.

(3)

At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans


	Three Months Ended June 30,
(Dollars in millions)	2025			2024
Beginning of period expected future recoveries on previously fully charged-off loans	$	174		$	217
Expected future recoveries of current period defaults		13			10
Recoveries (cash collected)		(11	)		(10	)
Charge-offs (as a result of lower recovery expectations)		(4	)		(6	)
End of period expected future recoveries on previously fully charged-off loans	$	172		$	211
Change in balance during period	$	(2	)	$	(6	)


	Six Months Ended June 30,
	2025									2024
(Dollars in millions)	FFELP Loans			Private Education Loans			Total			FFELP Loans			Private Education Loans			Total
Allowance at beginning of period	$	180		$	441		$	621		$	215		$	617		$	832
Total provision		16			51			67			(1	)		27			26
Charge-offs:
Gross charge-offs		(14	)		(173	)		(187	)		(20	)		(187	)		(207	)
Expected future recoveries on current period gross charge-offs		—			23			23			—			21			21
Total(1)		(14	)		(150	)		(164	)		(20	)		(166	)		(186	)
Adjustment resulting from the change in charge-off rate(2)		—			(2	)		(2	)		—			—			—
Net charge-offs		(14	)		(152	)		(166	)		(20	)		(166	)		(186	)
Decrease in expected future recoveries on previously fully charged-off loans(3)		—			8			8			—			15			15
Allowance at end of period	$	182		$	348		$	530		$	194		$	493		$	687
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in charge-off rate (annualized)(2)		.12	%		1.96	%					.14	%		2.03	%
Net adjustment resulting from the change in charge -off rate as a percentage of average loans in repayment (annualized)(2)		—	%		.02	%					—	%		—	%
Net charge-offs as a percentage of average loans in repayment (annualized)		.12	%		1.98	%					.14	%		2.03	%
Ending total loans	$	29,800		$	15,878					$	33,134		$	16,731
Average loans in repayment	$	25,295		$	15,423					$	28,622		$	16,471
Ending loans in repayment	$	24,867		$	15,267					$	26,411		$	16,087

(1)

(2)

Related to increasing the net charge-off rate on defaulted Private Education Loans and the resulting reduction in the balance of expected future recoveries on previously fully charged-off loans.

(3)


	Six Months Ended June 30,
(Dollars in millions)	2025			2024
Beginning of period expected future recoveries on previously fully charged-off loans	$	179		$	226
Expected future recoveries of current period defaults		23			21
Recoveries (cash collected)		(21	)		(21	)
Charge-offs (as a result of lower recovery expectations)		(10	)		(15	)
End of period expected future recoveries on previously fully charged-off loans	$	172		$	211
Change in balance during period	$	(8	)	$	(15	)

Age Analysis of Past Due Loans Delinquencies


	FFELP Loan Delinquencies
	June 30, 2025						December 31, 2024						June 30, 2024
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	1,280					$	1,262					$	1,403
Loans in forbearance(2)		3,653						4,365						5,320
Loans in repayment and percentage of each status:
Loans current		20,145			81.0	%		20,675			81.4	%		22,833			86.5	%
Loans delinquent 31-60 days(3)		1,333			5.4			1,479			5.8			1,041			3.9
Loans delinquent 61-90 days(3)		863			3.5			1,043			4.1			680			2.6
Loans delinquent greater than 90 days(3)		2,526			10.1			2,208			8.7			1,857			7.0
Total FFELP Loans in repayment		24,867			100	%		25,405			100	%		26,411			100	%
Total FFELP Loans		29,800						31,032						33,134
FFELP Loan allowance for losses		(182	)					(180	)					(194	)
FFELP Loans, net	$	29,618					$	30,852					$	32,940
Percentage of FFELP Loans in repayment					83.4	%					81.9	%					79.7	%
Delinquencies as a percentage of FFELP Loans in repayment					19.0	%					18.6	%					13.5	%
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					12.8	%					14.7	%					16.8	%

(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 such as disaster relief 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.


	Private Education Loan Delinquencies
	June 30, 2025						December 31, 2024						June 30, 2024
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	361					$	372					$	350
Loans in forbearance(2)		250						422						294
Loans in repayment and percentage of each status:
Loans current		14,296			93.6	%		14,419			93.9	%		15,250			94.8	%
Loans delinquent 31-60 days(3)		335			2.2			319			2.1			311			1.9
Loans delinquent 61-90 days(3)		177			1.2			206			1.3			175			1.1
Loans delinquent greater than 90 days(3)		459			3.0			419			2.7			351			2.2
Total loans in repayment		15,267			100	%		15,363			100	%		16,087			100	%
Total loans		15,878						16,157						16,731
Allowance for losses		(348	)					(441	)					(493	)
Loans, net	$	15,530					$	15,716					$	16,238
Percentage of loans in repayment					96.2	%					95.1	%					96.2	%
Delinquencies as a percentage of loans in repayment					6.4	%					6.1	%					5.2	%
Loans in forbearance as a percentage of loans in repayment and forbearance					1.6	%					2.7	%					1.8	%

(1)

Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., internship periods, as well as loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.

(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 such as disaster relief 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 Type

Loan type:


(Dollars in millions)	June 30, 2025		June 30, 2024		Change
Stafford Loans	$	9,703	$	10,589	$	(886	)
Consolidation Loans		17,077		19,273		(2,196	)
Rehab Loans		3,020		3,272		(252	)
Total loans, gross	$	29,800	$	33,134	$	(3,334	)

Summary of Amortized Cost Basis of Loans to Borrowers

The following tables show the amortized cost basis as of June 30, 2025 and 2024 of the loans to borrowers experiencing financial difficulty that were modified during the respective period.


	Three Months Ended June 30, 2025
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
(Dollars in millions)	Interest Rate Reductions(1)					More Than an Insignificant Payment Delay (2)					Combination Rate Reduction and Term Extension
Loan Type	Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type
Private Education Loans	$	568		3.6	%	$	295		1.9	%	$	35		.2	%

	Three Months Ended June 30, 2024
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
(Dollars in millions)	Interest Rate Reductions(1)					More Than an Insignificant Payment Delay (2)					Combination Rate Reduction and Term Extension
Loan Type	Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type
Private Education Loans	$	601		3.6	%	$	314		1.9	%	$	39		.2	%

	Six Months Ended June 30, 2025
(Dollars in millions)	Interest Rate Reductions(1)					More Than an Insignificant Payment Delay (2)					Combination Rate Reduction and Term Extension
Loan Type	Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type
Private Education Loans	$	1,171		7.4	%	$	548		3.5	%	$	75		.5	%

	Six Months Ended June 30, 2024
(Dollars in millions)	Interest Rate Reductions(1)					More Than an Insignificant Payment Delay (2)					Combination Rate Reduction and Term Extension
Loan Type	Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type			Amortized Cost		% of Loan Type
Private Education Loans	$	1,143		6.8	%	$	597		3.6	%	$	78		.5	%

(1)

As of June 30, 2025 and 2024, there was $1.0 billion and $1.1 billion, respectively, of loans in the interest rate reduction program.

(2)

More Than an Insignificant Payment Delay includes loans granted more than 3 months of short-term interest only payments or hardship forbearance.

2. Allowance for Loan Losses (Continued)

For those loans modified in the three and six months ended June 30, 2025 and 2024, the following tables show the impact of such modification.


Three Months Ended June 30, 2025
Loan Type	Interest Rate Reductions	More Than an Insignificant Payment Delay	Combination Rate Reduction and Term Extension
Private Education Loans	Reduced the weighted average contractual rate from 12.3% to 5.3%	Added an average 5 months to the remaining life of the loans	Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from 12.1% to 5.4%.

Three Months Ended June 30, 2024
Loan Type	Interest Rate Reductions	More Than an Insignificant Payment Delay	Combination Rate Reduction and Term Extension
Private Education Loans	Reduced the weighted average contractual rate from 13.3% to 5.5%	Added an average 5 months to the remaining life of the loans	Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from 12.7% to 5.3%.

Six Months Ended June 30, 2025
Loan Type	Interest Rate Reductions	More Than an Insignificant Payment Delay	Combination Rate Reduction and Term Extension
Private Education Loans	Reduced the weighted average contractual rate from 12.4% to 5.4%	Added an average 7 months to the remaining life of the loans	Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from 12.0% to 5.4%.

Six Months Ended June 30, 2024
Loan Type	Interest Rate Reductions	More Than an Insignificant Payment Delay	Combination Rate Reduction and Term Extension
Private Education Loans	Reduced the weighted average contractual rate from 13.3% to 5.5%	Added an average 6 months to the remaining life of the loans	Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from 12.8% to 5.3%.

Schedule of Amount of Loans Modified and Payment Default


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2025		2024		2025		2024
Modified loans (amortized cost) (1)	$	109	$	128	$	179	$	163
Payment default (par)	$	111	$	131	$	183	$	167
Charge-offs (par)	$	15	$	10	$	25	$	12

(1)

For the three months ended June 30, 2025 and 2024, the modified loans include $71 million and $101 million, respectively, of Interest Rate Reduction, $5 million and $5 million, respectively, of Combination Rate Reduction and Term Extension, and $33 million and $22 million, respectively, of More Than Insignificant Payment Delay. For the six months ended June 30, 2025 and 2024, the modified loans include $119 million and $121 million, respectively, of Interest Rate Reduction, $8 million and $7 million, respectively, of Combination Rate Reduction and Term Extension, and $52 million and $35 million, respectively, of More Than Insignificant Payment Delay.

Summary of Performance and Related Loan Status of Loans Modified

The following table provides the performance and related loan status of Private Education Loans that have been modified within the 12 months prior to June 30, 2025 and the 12 months prior to December 31, 2024, respectively.


	Payment Status (Amortized Cost)
(Dollars in millions)	Twelve Months Ended
Loan Status	June 30, 2025		December 31, 2024
Loans in school/deferment	$	20	$	21
Loans in forbearance		78		162
Loans current		2,111		2,037
Loans delinquent 31 - 60 days		181		172
Loans delinquent 61 - 90 days		100		117
Loans delinquent greater than 90 days		164		186
Total modified loans	$	2,654	$	2,695

Private Education Loans [Member]

Financing Receivable Allowance For Credit Losses [Line Items]

Private Education Loan Portfolio Stratified by Key Credit Quality Indicators


	Private Education Loan Credit Quality Indicators by Origination Year
	June 30, 2025
(Dollars in millions)	2025		2024			2023			2022			2021			Prior			Total			% of Total
Credit Quality Indicators
FICO Scores:
640 and above	$	940	$	1,146		$	635		$	1,167		$	2,991		$	7,020		$	13,899			88	%
Below 640		14		48			46			102			166			1,603			1,979			12
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
Loan Status:
In-school/grace/ deferment/forbearance	$	29	$	91		$	55		$	51		$	73		$	312		$	611			4	%
Current/90 days or less delinquent		924		1,097			618			1,201			3,063			7,905			14,808			93
Greater than 90 days delinquent		1		6			8			17			21			406			459			3
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
Seasoning(1):
1-12 payments	$	932	$	879		$	28		$	22		$	11		$	30		$	1,902			12	%
13-24 payments		—		238			484			48			37			41			848			6
25-36 payments		—		—			125			524			107			85			841			5
37-48 payments		—		—			—			645			2,182			160			2,987			19
More than 48 payments		—		—			—			—			784			8,155			8,939			56
Loans in-school/ grace/deferment		22		77			44			30			36			152			361			2
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
Certain Loan Modifications(2):
Modified	$	—	$	6		$	27		$	98		$	203		$	5,077		$	5,411			34	%
Non-Modified		954		1,188			654			1,171			2,954			3,546			10,467			66
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
Cosigners:
With cosigner(3)	$	152	$	342		$	225		$	136		$	70		$	4,179		$	5,104			32	%
Without cosigner		802		852			456			1,133			3,087			4,444			10,774			68
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
School Type:
Not-for-profit	$	893	$	1,127		$	643		$	1,201		$	2,971		$	7,489		$	14,324			90	%
For-profit		61		67			38			68			186			1,134			1,554			10
Total	$	954	$	1,194		$	681		$	1,269		$	3,157		$	8,623		$	15,878			100	%
Allowance for loan losses																			(348	)
Total loans, net																		$	15,530

Charge-Offs	$	—	$	(2	)	$	(3	)	$	(6	)	$	(12	)	$	(129	)	$	(152	)

(1)

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

(2)

Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that met that definition after January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.

(3)

Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66% for total loans at June 30, 2025.

2. Allowance for Loan Losses (Continued)


	Private Education Loan Credit Quality Indicators by Origination Year
	June 30, 2024
(Dollars in millions)	2024		2023			2022			2021			2020			Prior			Total			% of Total
Credit Quality Indicators
FICO Scores:
640 and above	$	490	$	841		$	1,453		$	3,591		$	1,119		$	7,513		$	15,007			90	%
Below 640		8		20			75			137			31			1,453			1,724			10
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
Loan Status:
In-school/grace/ deferment/forbearance	$	22	$	69		$	64		$	80		$	19		$	390		$	644			4	%
Current/90 days or less delinquent		476		789			1,454			3,634			1,127			8,256			15,736			94
Greater than 90 days delinquent		—		3			10			14			4			320			351			2
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
Seasoning(1):
1-12 payments	$	479	$	632		$	36		$	24		$	3		$	45		$	1,219			7	%
13-24 payments		—		172			656			82			11			61			982			6
25-36 payments		—		—			791			2,602			28			111			3,532			21
37-48 payments		—		—			—			976			683			206			1,865			11
More than 48 payments		—		—			—			—			416			8,367			8,783			53
Loans in-school/ grace/deferment		19		57			45			44			9			176			350			2
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
Certain Loan Modifications(2):
Modified	$	—	$	3		$	64		$	161		$	53		$	5,538		$	5,819			35	%
Non-Modified		498		858			1,464			3,567			1,097			3,428			10,912			65
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
Cosigners:
With cosigner(3)	$	76	$	264		$	168		$	87		$	21		$	4,808		$	5,424			32	%
Without cosigner		422		597			1,360			3,641			1,129			4,158			11,307			68
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
School Type:
Not-for-profit	$	335	$	814		$	1,447		$	3,511		$	1,099		$	7,674		$	14,880			89	%
For-profit		163		47			81			217			51			1,292			1,851			11
Total	$	498	$	861		$	1,528		$	3,728		$	1,150		$	8,966		$	16,731			100	%
Allowance for loan losses																			(493	)
Total loans, net																		$	16,238

Charge-Offs	$	—	$	(1	)	$	(5	)	$	(9	)	$	(2	)	$	(149	)	$	(166	)

(1)

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

(2)

Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that met that definition after January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the new modification disclosures required under ASU 2022-02.

(3)

Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66% for total loans at June 30, 2024.