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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2025

Segment Results and Reconciliations to GAAP


	Three Months Ended June 30, 2025
			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	$	756												$	483		$	273	$	—	$	—
Cash and investments		22													10			5		—		7
Total interest income		778													493			278		—		7
Total interest expense		650													438			183		—		26
Net interest income (loss)		128	$	5		$	(2	)	$	3		$	131		55			95		—		(19	)
Less: provisions for loan losses		37											37		8			29		—		—
Net interest income (loss) after provisions for loan losses		91													47			66		—		(19	)
Other income (loss):
Servicing revenue		14													11			3		—		—
Asset recovery and business processing revenue		—													—			—		—		—
Other revenue (loss)		14													(1	)		—		—		20
Total other income		28		(5	)		10			5			33		10			3		—		20
Expenses:
Direct operating expenses		53													17			36		—		—
Unallocated shared services expenses		47													—			—		—		47
Operating expenses(2)		100		—			—			—			100		17			36		—		47
Goodwill and acquired intangible asset impairment and amortization		1		—			(1	)		(1	)		—		—			—		—		—
Restructuring/other reorganization expenses		—		—			—			—			—		—			—		—		—
Total expenses		101		—			(1	)		(1	)		100		17			36		—		47
Income (loss) before income tax expense (benefit)		18		—			9			9			27		40			33		—		(46	)
Income tax expense (benefit)(3)		4		—			2			2			6		10			7		—		(11	)
Net income (loss)	$	14	$	—		$	7		$	7		$	21	$	30		$	26	$	—	$	(35	)

(1)

Core Earnings adjustments to GAAP:


	Three Months Ended June 30, 2025
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	3	$	—		$	3
Total other income (loss)		5		—			5
Goodwill and acquired intangible asset impairment and amortization		—		(1	)		(1	)
Total Core Earnings adjustments to GAAP	$	8	$	1			9
Income tax expense (benefit)							2
Net income (loss)						$	7

(2)

Reportable segment significant operating expenses are comprised of:


	Three Months Ended June 30, 2025
(Dollars in millions)	Federal Education Loans		Consumer Lending		Business Processing		Other		Total
Servicing expenses	$	16	$	14	$	—	$	2	$	32
Information technology expenses		—		8		—		20		28
Corporate expenses		—		1		—		19		20
Other/remaining expenses		1		13		—		6		20
Operating expenses	$	17	$	36	$	—	$	47	$	100

(3)

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

11. Segment Reporting (Continued)


	Three Months Ended June 30, 2024
			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	$	925												$	608		$	317	$	—	$	—
Cash and investments		48													28			7		—		13
Total interest income		973													636			324		—		13
Total interest expense		843													603			198		—		36
Net interest income (loss)		130	$	9		$	(3	)	$	6		$	136		33			126		—		(23	)
Less: provisions for loan losses		14											14		(2	)		16		—		—
Net interest income (loss) after provisions for loan losses		116													35			110		—		(23	)
Other income (loss):
Servicing revenue		18													15			3		—		—
Asset recovery and business processing revenue		81													—			—		81		—
Other revenue		18													2			—		—		2
Total other income		117		(9	)		(5	)		(14	)		103		17			3		81		2
Expenses:
Direct operating expenses		112													16			34		62		—
Unallocated shared services expenses		54													—			—		—		54
Operating expenses(2)		166		—			—			—			166		16			34		62		54
Goodwill and acquired intangible asset impairment and amortization		3		—			(3	)		(3	)		—		—			—		—		—
Restructuring/other reorganization expenses		16		—			—			—			16		—			—		—		16
Total expenses		185		—			(3	)		(3	)		182		16			34		62		70
Income (loss) before income tax expense (benefit)		48		—			(5	)		(5	)		43		36			79		19		(91	)
Income tax expense (benefit)(3)		12		—			(2	)		(2	)		10		8			19		4		(21	)
Net income (loss)	$	36	$	—		$	(3	)	$	(3	)	$	33	$	28		$	60	$	15	$	(70	)

(1)

Core Earnings adjustments to GAAP:


	Three Months Ended June 30, 2024
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Goodwill and Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	6		$	—		$	6
Total other income (loss)		(14	)		—			(14	)
Goodwill and acquired intangible asset impairment and amortization		—			(3	)		(3	)
Total Core Earnings adjustments to GAAP	$	(8	)	$	3			(5	)
Income tax expense (benefit)								(2	)
Net income (loss)							$	(3	)

(2)

Reportable segment significant operating expenses are comprised of:


	Three Months Ended June 30, 2024
(Dollars in millions)	Federal Education Loans		Consumer Lending		Business Processing		Other		Total
Servicing expenses	$	10	$	13	$	—	$	—	$	23
Information technology expenses		3		7		4		20		34
Corporate expenses		1		1		1		21		24
Other/remaining expenses		2		13		57		13		85
Operating expenses	$	16	$	34	$	62	$	54	$	166

(3)

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

11. Segment Reporting (Continued)


	Six Months Ended June 30, 2025
			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	$	1,537												$	975		$	562	$	—	$	—
Cash and investments		43													20			10		—		13
Total interest income		1,580													995			572		—		13
Total interest expense		1,322													892			364		—		49
Net interest income (loss)		258	$	11		$	6		$	17		$	275		103			208		—		(36	)
Less: provisions for loan losses		67											67		16			51		—		—
Net interest income (loss) after provisions for loan losses		191													87			157		—		(36	)
Other income (loss):
Servicing revenue		27													21			6		—		—
Asset recovery and business processing revenue		23													—			—		23		—
Other revenue		3													(1	)		—		—		34
Total other income (loss)		53		(11	)		41			30			83		20			6		23		34
Expenses:
Direct operating expenses		127													37			70		20		—
Unallocated shared services expenses		100													—			—		—		100
Operating expenses(2)		227		—			—			—			227		37			70		20		100
Goodwill and acquired intangible asset impairment and amortization		2		—			(2	)		(2	)		—		—			—		—		—
Restructuring/other reorganization expenses		3		—			—			—			3		—			—		—		3
Total expenses		232		—			(2	)		(2	)		230		37			70		20		103
Income (loss) before income tax expense (benefit)		12		—			49			49			61		70			93		3		(105	)
Income tax expense (benefit)(3)		1		—			13			13			14		16			21		1		(24	)
Net income (loss)	$	11	$	—		$	36		$	36		$	47	$	54		$	72	$	2	$	(81	)

(1)

Core Earnings adjustments to GAAP:


	Six Months Ended June 30, 2025
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	17	$	—		$	17
Total other income (loss)		30		—			30
Goodwill and acquired intangible asset impairment and amortization		—		(2	)		(2	)
Total Core Earnings adjustments to GAAP	$	47	$	2			49
Income tax expense (benefit)							13
Net income (loss)						$	36

(2)

Reportable segment significant operating expenses are comprised of:


	Six Months Ended June 30, 2025
(Dollars in millions)	Federal Education Loans		Consumer Lending		Business Processing		Other		Total
Servicing expenses	$	34	$	28	$	—	$	5	$	67
Information technology expenses		—		17		1		41		59
Corporate expenses		1		1		—		43		45
Other/remaining expenses		2		24		19		11		56
Operating expenses	$	37	$	70	$	20	$	100	$	227

(3)

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

11. Segment Reporting (Continued)


	Six Months Ended June 30, 2024
			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	$	1,914												$	1,269		$	645	$	—	$	—
Cash and investments		86													51			14		—		21
Total interest income		2,000													1,320			659		—		21
Total interest expense		1,718													1,233			400		—		68
Net interest income (loss)		282	$	19		$	(2	)	$	17		$	299		87			259		—		(47	)
Less: provisions for loan losses		26											26		(1	)		27		—		—
Net interest income (loss) after provisions for loan losses		256													88			232		—		(47	)
Other income (loss):
Servicing revenue		35													28			7		—		—
Asset recovery and business processing revenue		158													—			—		158		—
Other revenue		59													5			1		—		7
Total other income (loss)		252		(19	)		(27	)		(46	)		206		33			8		158		7
Expenses:
Direct operating expenses		231													33			67		131		—
Unallocated shared services expenses		119													—			—		—		119
Operating expenses(2)		350		—			—			—			350		33			67		131		119
Goodwill and acquired intangible asset impairment and amortization		5		—			(5	)		(5	)		—		—			—		—		—
Restructuring/other reorganization expenses		17		—			—			—			17		—			—		—		17
Total expenses		372		—			(5	)		(5	)		367		33			67		131		136
Income (loss) before income tax expense (benefit)		136		—			(24	)		(24	)		112		88			173		27		(176	)
Income tax expense (benefit)(3)		27		—			(1	)		(1	)		26		20			40		6		(40	)
Net income (loss)	$	109	$	—		$	(23	)	$	(23	)	$	86	$	68		$	133	$	21	$	(136	)

(1)

Core Earnings adjustments to GAAP:


	Six Months Ended June 30, 2024
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Goodwill and Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	17		$	—		$	17
Total other income (loss)		(46	)		—			(46	)
Goodwill and acquired intangible asset impairment and amortization		—			(5	)		(5	)
Total Core Earnings adjustments to GAAP	$	(29	)	$	5			(24	)
Income tax expense (benefit)								(1	)
Net income (loss)							$	(23	)

(2)

Reportable segment significant operating expenses are comprised of:


	Six Months Ended June 30, 2024
(Dollars in millions)	Federal Education Loans		Consumer Lending		Business Processing		Other		Total
Servicing expenses	$	22	$	26	$	—	$	—	$	48
Information technology expenses		6		14		9		42		71
Corporate expenses		2		2		2		49		55
Other/remaining expenses		3		25		120		28		176
Operating expenses	$	33	$	67	$	131	$	119	$	350

(3)

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


	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
GAAP net income (loss)	$	14		$	36		$	11		$	109
Core Earnings adjustments to GAAP:
Net impact of derivative accounting(1)		8			(8	)		47			(29	)
Net impact of goodwill and acquired intangible assets(2)		1			3			2			5
Net tax effect(3)		(2	)		2			(13	)		1
Total Core Earnings adjustments to GAAP		7			(3	)		36			(23	)
Core Earnings net income	$	21		$	33		$	47		$	86

(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. 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.

(2)

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

The following table includes asset information for our Federal Education Loans segment.


(Dollars in millions)	June 30, 2025		December 31, 2024
FFELP Loans, net	$	29,618	$	30,852
Cash and investments(1)		938		955
Other		1,832		1,818
Total assets	$	32,388	$	33,625

(1)

Includes restricted cash and investments.

Consumer Lending [Member]

Asset Information for Loans Segment

The following table includes asset information for our Consumer Lending segment.


(Dollars in millions)	June 30, 2025		December 31, 2024
Private Education Loans, net	$	15,530	$	15,716
Cash and investments(1)		532		524
Other		540		569
Total assets	$	16,602	$	16,809

(1)

Includes restricted cash and investments.