SLM Corp
For the period ended Jun 30, 2025. Filed Jul 24, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 24, 2025
SLM$16.94-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-24.
0001628280-25-019704
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-24.
0001032033-25-000012
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 171 previous paragraphs and 189 current paragraphs.
129 unchanged; 40 reworded; 14 added; 2 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 25 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Recent Developments
Current report
On July 4, 2025, H.R.1(the “Bill”) was enacted into law. The Bill implements significant reforms to the federal student loan program, including:
Current report
•Limiting Parent PLUS loans to $20,000 per student, per year, with an aggregate, per student limit of $65,000;
Current report
•Eliminating Graduate PLUS loans, which previously allowed graduate students to borrow up to the full cost of attendance; and
Current report
•Limiting the amount graduate students can borrow to $20,500 per year with a $100,000 lifetime limit, and the amount professional graduate students can borrow to $50,000 per year with a $200,000 lifetime limit through the Unsubsidized Stafford loan program (these amounts are in addition to the amount borrowed for undergraduate education).
Current report
All federal student loan program changes are to be effective for new borrowers beginning July 1, 2026, and will not apply to borrowers who begin borrowing prior to that date.
Current report
We anticipate that these changes to the federal student loan program will present opportunities for a gradual and positive impact on our overall Private Student Loan originations volume in the coming years.
Current report
The Bill also provides for significant U.S. tax law changes and modifications including, but not limited to, reinstating and making permanent the ability to expense research and development costs. We are currently evaluating the tax impact of the Bill’s changes and modifications.
Current report
•Provision for credit losses in the current quarter was $149 million, compared with $17 million in the year-ago quarter. The year-over-year increase was primarily due to the $103 million negative provisions recorded in the year-ago period, resulting from the $1.59 billion Private Education Loan sale during the second quarter of 2024. Additionally, the increase was affected by new loan commitments, net of expired commitments, and changes in the economic outlook.
Current report
Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024
Current report
•First-half 2025 total operating expenses were $320 million, an increase from $318 million in the year-ago period. The increase in total operating expenses was primarily due to increased marketing spend and higher spending on strategic initiatives, offset by lower personnel costs and reduced FDIC fees.
Current report
•During the first six months of 2025, we recorded $2 million in amortization of acquired intangible assets, compared with $3 million in the year-ago period. The decrease was a result of an increase in amortization recorded on our customer relationships in the year-ago period in accordance with the accelerated amortization method, and the impairment write-down of the Scholly partner relationships intangible asset in the fourth quarter of 2024 which resulted in no amortization on that intangible asset in the current period.
Current report
•Income tax expense for the six months ended June 30, 2025 was $115 million, compared with $184 million in the year-ago period. Our effective income tax rate decreased to 23.4 percent in the first six months of 2025 from 25.4 percent in the year-ago period. The decrease in the effective rate for the first six months of 2025 was primarily due to a decrease in state income taxes.
Current report
We obtain forecasts for our expected loss model from an external economic analyst who provides us with a range of economic forecasts and projected near-term growth scenarios with various likelihoods of occurrence. Management reviews and weighs the economic forecasts for each of these inputs to calculate our allowance for credit losses. Our forecasting process reflects management’s continuous review of forecasting assumptions and model inputs and is consistent with our internal governance, risk management framework and CECL methodologies. Management continues to review both the scenarios and their respective weightings each quarter in determining the allowance for credit losses. The most recent adjustment to scenario weightings occurred in the first quarter of 2025.
Removed paragraphs (2)
Previous report
We obtain forecasts for these inputs from Moody’s Analytics. Moody’s Analytics provides a range of forecasts for each of these inputs with various likelihoods of occurrence. We determine which forecasts we will include in our estimation of allowance for credit losses and the associated weightings for each of these inputs. We use the Baseline (50th percentile likelihood of occurring)/S1 (stronger near-term growth scenario - 10 percent likelihood of occurring)/S3 (unfavorable (or downside) scenario - 10 percent likelihood of occurring) scenarios. At December 31, 2024 and March 31, 2024, we weighted them 40 percent, 30 percent, and 30 percent, respectively. During the first quarter of 2025, we revised the Baseline scenario, S1 stronger near-term growth scenario, and S3 unfavorable scenario weightings to be 60 percent, 20 percent, and 20 percent, respectively. This change reflects our ongoing review of forecasting assumptions and model inputs and is consistent with our internal governance and risk management framework. The adjustment supports a more balanced view of potential scenario outcomes and remains in accordance with our CECL methodology. The revision resulted in an approximately $17 million decrease to provision for credit losses for the three months ended March 31, 2025. Management continues to review both the scenarios and their respective weightings each quarter in determining the allowance for credit losses.
Previous report
To demonstrate the sensitivity of the allowance for credit losses for our Private Education Loan portfolio to a more pessimistic forecast of expected economic outcomes, we considered what our allowance for credit losses would be if we applied a 100 percent probability weighting to the S3 unfavorable (or downside/90th percentile) scenario (with a concurrent 0 percent weighting for both the Baseline and S1 stronger near-term growth scenarios) under the range of scenarios noted above. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our allowance for credit losses as of March 31, 2025 of $192 million or 13.0 percent. In addition, we also considered a 100 percent probability weighting to the S4 unfavorable (or downside/96th percentile) scenario (with a concurrent 0 percent weighting for both the Baseline and S1 stronger near-term growth scenarios) under the range of scenarios noted above. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our allowance for credit losses as of March 31, 2025 of $285 million or 19.2 percent. These scenarios do not reflect our current expectations as of March 31, 2025, nor do they capture other qualitative adjustments or all the potential unknown variables that could arise in the forecast periods, but they provide an approximation of possible outcomes under hypothetical pessimistic conditions. The estimated impacts were calculated for the two-year reasonable and supportable periods, but were not calculated for the remaining periods since long-term assumptions used to calculate the allowance for the remaining periods are based on longer term averages and only change when we determine there is a fundamental change that will affect the long-term rate.
Reworded paragraphs (40)
Previous wording
Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors, many of which are difficult to predict and generally beyond the control of the Company, which may cause actual results to be materially different from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A. “Risk Factors” and elsewhere in the Company’s most recently filed Annual Report on Form 10-K and subsequent filings with the SEC; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking, and other laws or regulations; changes in laws, regulations, and supervisory expectations, especially in light of the goals of the new Trump administration; our ability to timely develop new products and services and the acceptance of those products and services by potential and existing customers; changes in accounting standards and the impact of related changes in significant accounting estimates, including any regarding the measurement of our allowance for credit losses and the related provision expense; any adverse outcomes in any significant litigation to which the Company is a party; credit risk associated with the Company’s exposure to third parties, including counterparties to the Company’s derivative transactions; the effectiveness of our risk management framework and quantitative models; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our funding costs and availability; reductions to our credit ratings; cybersecurity incidents, cyberattacks, and other failures or breaches of our operating systems or infrastructure, including those of third-party vendors; the societal, business, and legislative/regulatory impact of pandemics, other public health crises, and/or natural disasters; damage to our reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on our business; changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families, including changes as a result of new limits on, or reductions in, funding that certain educational institutions receive from the Federal government; changes in law and regulations with respect to the student lending business and financial instituti…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors, many of which are difficult to predict and generally beyond the control of the Company, which may cause actual results to be materially different from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A. “Risk Factors” and elsewhere in the Company’s most recently filed Annual Report on Form 10-K and subsequent filings with the SEC; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking, and other laws or regulations; changes in laws, regulations, and supervisory expectations, especially in light of the goals of the Trump administration; our ability to timely develop new products and services and the acceptance of those products and services by potential and existing customers; changes in accounting standards and the impact of related changes in significant accounting estimates, including any regarding the measurement of our allowance for credit losses and the related provision expense; any adverse outcomes in any significant litigation to which the Company is a party; credit risk associated with the Company’s exposure to third parties, including counterparties to the Company’s derivative transactions; the effectiveness of our risk management framework and quantitative models; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our funding costs and availability; reductions to our credit ratings; cybersecurity incidents, cyberattacks, and other failures or breaches of our operating systems or infrastructure, including those of third-party vendors; the societal, demographic, business, and legislative/regulatory impacts of pandemics, other public health crises, sever weather events, and/or natural disasters; damage to our reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on our business; changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families, including changes as a result of new limits on, or reductions in, funding that certain educational institutions receive from the Federal government; changes in law and regulations with respect to the student lending …
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The following discussion and analysis presents a review of our business and operations as of and for the three months ended March 31, 2025.
Current wording
The following discussion and analysis presents a review of our business and operations as of and for the three and six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2025, net income attributable to common stock was $301 million, or $1.40 diluted earnings per common share, compared with net income attributable to common stock of $285 million, or $1.27 diluted earnings per common share, for the three months ended March 31, 2024.
Current wording
For the three months ended June 30, 2025, net income attributable to common stock was $67 million, or $0.32 diluted earnings per common share, compared with net income attributable to common stock of $247 million, or $1.11 diluted earnings per common share, for the three months ended June 30, 2024.
Previous wording
•First-quarter 2025 total operating expenses were $154 million, down from $161 million in the year-ago quarter. The decrease in total operating expenses was primarily driven by lower personnel costs and lower initiative spending.
Current wording
•Second quarter 2025 total operating expenses were $166 million, up from $157 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased marketing spend offset by lower FDIC fees.
Previous wording
•During the first quarter of 2025, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.
Current wording
•During the second quarter of 2025, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.
Previous wording
•First-quarter 2025 income tax expense was $99 million, compared with $97 million income tax expense in the year-ago quarter. Our effective income tax rate decreased to 24.5 percent in the first quarter of 2025 from 25.2 percent in the year-ago quarter. The decrease in the effective rate for the first quarter of 2025 was primarily due to an increase in the tax benefit related to employee stock compensation.
Current wording
•Second quarter 2025 income tax expense was $16 million, compared with $87 million income tax expense in the year-ago quarter. Our effective income tax rate decreased to 18.7 percent in the second quarter of 2025 from 25.6 percent in the year-ago quarter. The decrease in the effective rate for the second quarter of 2025 was primarily due to a decrease in state income taxes.
Previous wording
•Net interest income decreased by $12 million in the current quarter compared with the year-ago quarter primarily due to a 22-basis point decrease in our net interest margin and a $527 million decrease in FFELP Loans as a result of the sale of that loan portfolio in the fourth quarter of 2024, offset by a $1.5 billion increase in our average Private Education Loans compared with the year-ago period. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased but our cost of funds increased. The yields on our interest-earning assets decreased due to the decline in the 30-day average SOFR compared to the year-ago quarter. Historically, the yields on interest-earning assets reprice more quickly than our cost of funds. As such, the impacts of the declining interest rate environment on our interest-bearing liabilities were delayed, resulting in a higher cost of funds in the current quarter than the year-ago quarter.
Current wording
•Net interest income decreased by $7 million in the first six months of 2025 compared with the year-ago period primarily due to a 14-basis point decrease in our net interest margin, offset by a $1.8 billion increase in our average Private Education Loans compared with the year-ago period. Our net interest margin decreased in the current period from the year-ago period primarily because the yields on our interest-earning assets decreased but our cost of funds increased. The yields on our interest-earning assets decreased due to the decline in the 30-day average SOFR compared to the year-ago period. Historically, the yields on interest-earning assets reprice more quickly than our cost of funds. As such, the impacts of the declining interest rate environment on our interest-bearing liabilities were delayed when compared to our interest-earning assets, resulting in a higher cost of funds in the current period compared with the year-ago period.
Previous wording
•Provision for credit losses in the current quarter was $23 million, compared with $12 million in the year-ago quarter. During the first quarter of 2025, the increase in the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in the economic outlook, offset by $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sale during the quarter and adjustments to the weightings of our economic forecast scenarios. In the year-ago quarter, the provision for credit losses was primarily affected by $133 million negative provisions resulting from the $2.10 billion Private Education Loan sale during the quarter, an improved economic outlook, and changes in management overlays and recovery rates, offset by new loan commitments, net of expired commitments, and increases to the provision as a result of decreases in our estimates of the historical long-term average prepayment speeds used after the two-year reasonable and supportable period.
Current wording
•Provision for credit losses in the six months ended June 30, 2025 was $172 million, compared with $29 million in the year-ago period. During the first six months of 2025, the increase in the provision for credit losses was primarily due to $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sale during the first six months of 2025 compared with $236 million in negative provisions resulting from the $3.69 billion Private Education Loan sales in the year-ago period. The increase was also affected by new loan commitments, net of expired commitments, and changes in the economic outlook. In the year-ago period, the provision for credit losses was primarily affected by negative provisions resulting from Private Education Loan sales during the first six months ended June 30, 2024, an improved economic outlook, and changes in management overlays and recovery rates, offset by new loan commitments, net of expired commitments, and increases to the provision as a result of decreases in our estimates of the historical long-term average prepayment speeds used after the two-year reasonable and supportable period.
Previous wording
•Gains on sales of loans, net, were $188 million in the first quarter of 2025, as a result of the $2.00 billion Private Education Loan sale that occurred in the quarter. There were $143 million in gains on sales, net, in the year-ago quarter, as a result of the $2.10 billion in Private Education Loan sale that occurred in the first quarter of 2024.
Current wording
•Gains (losses) on sales of loans, net, were $188 million in the six months ended June 30, 2025, as a result of the $2.00 billion Private Education Loan sale that occurred in the period. There were $255 million in gains (losses) on sales, net, in the year-ago period, as a result of the $3.69 billion in Private Education Loan sales that occurred in the first six months of 2024.
Previous wording
•Gains (losses) on securities, net, were $10 million of losses in the current quarter compared with $2 million in gains in the year-ago quarter. The change compared to the year-ago quarter was primarily due to an impairment recorded in the first quarter of 2025 on certain of our non-marketable equity securities, and the change in mark-to-fair value of our trading investments.
Current wording
•Gains (losses) on securities, net, were $13 million of losses in the first six months of 2025 compared with $4 million in gains in the year-ago period. The change year-over-year was primarily due to an impairment recorded in the first quarter of 2025 on certain of our non-marketable equity securities, and the change in mark-to-fair value of our trading investments.
Previous wording
•Other income was $29 million in both the first quarter of 2025 and the year-ago quarter. Third-party servicing fees in the first quarter of 2025 increased $3 million compared to the year-ago quarter. The increase in third-party servicing fees was due to an additional $3.6 billion of loans that we sold during the past year that we continue to service on behalf of the owners of the loans. The increase in third-party servicing fees was offset by a $3 million decrease in early withdrawal penalty fee income compared to the year-ago period, which was related to a health savings account provider who redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024.
Current wording
•Other income was $58 million in the first six months of 2025, compared with $57 million in the year-ago period. Third-party servicing fees in the first six months of 2025 increased $5 million compared to the year-ago period due to an additional $2.0 billion of loans that we sold during the past year that we continue to service on behalf of the owners of the loans. The increase in third-party servicing fees was offset by a $3 million decrease in early withdrawal penalty fee income compared to the year-ago period, which was related to a health savings account provider that redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024.
Previous wording
“Loan consolidations to third parties” and “Repayments and other” are both significantly affected by the volume of loans in our held for investment portfolio in full principal and interest repayment status. The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at March 31, 2025 increased by 4.5 percent compared with March 31, 2024, and now totals 39 percent of our Private Education Loans held for investment portfolio at March 31, 2025. The balance of loans held for investment in full principal and interest repayment status was affected in 2024 and in the first three months of 2025 by loan sales.
Current wording
“Loan consolidations to third parties” and “Repayments and other” are both significantly affected by the volume of loans in our held for investment portfolio in full principal and interest repayment status. The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at June 30, 2025 increased by 10.3 percent compared with June 30, 2024, and now totals 40 percent of our Private Education Loans held for investment portfolio at June 30, 2025. The balance of loans held for investment in full principal and interest repayment status was affected in 2024 and in the first six months of 2025 by loan sales.
Previous wording
“Loan consolidations to third parties” for the three months ended March 31, 2025 total 2.8 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at March 31, 2025, or 1.1 percent of our total Private Education Loans held for investment portfolio at March 31, 2025, compared with the year-ago period of 2.6 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.0 percent of our total Private Education Loans held for investment portfolio, respectively. The increase in consolidations compared to the year-ago period is primarily attributable to lower interest rates in 2025. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time.
Current wording
“Loan consolidations to third parties” for the three months ended June 30, 2025 total 2.4 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at June 30, 2025, or 1.0 percent of our total Private Education Loans held for investment portfolio at June 30, 2025, compared with the year-ago period of 2.3 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.0 percent of our total Private Education Loans held for investment portfolio, respectively. The small increase in consolidations compared to the year-ago period is primarily attributable to lower interest rates in 2025. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time.
Previous wording
(2) For the three months ended March 31, 2025, the Graduate Loan originations include $8.7 million of Smart Option Loans where the student was in a graduate status. For the three months ended March 31, 2024, the Graduate Loan originations include $11.7 million of Smart Option Loans where the student was in a graduate status.
Current wording
(2) For the three months ended June 30, 2025, the Graduate Loan originations include $3.2 million of Smart Option Loans where the student was in a graduate status. For the three months ended June 30, 2024, the Graduate Loan originations include $6.6 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2025, the Graduate Loan originations include $11.9 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2024, the Graduate Loan originations include $18.3 million of Smart Option Loans where the student was in a graduate status.
Previous wording
Private Education Loans held for investment in full principal and interest repayment status were 39 percent of our total Private Education Loans held for investment portfolio at March 31, 2025, compared with 40 percent at March 31, 2024.
Current wording
Private Education Loans held for investment in full principal and interest repayment status were 40 percent of our total Private Education Loans held for investment portfolio at June 30, 2025, compared with 42 percent at June 30, 2024.
Previous wording
(4)We calculate the percentage of loans in an extended grace period as the ratio of (a) Private Education Loans in forbearance in an extended grace period numerator to (b) Private Education Loans in repayment and forbearance denominator. An extended grace period aligns with The Office of the Comptroller of the Currency definition of an additional, consecutive, one-time period during which no payment is required for up to six months after the initial grace period. We typically grant this extended grace period to customers who may be having difficulty finding employment before the full principal and interest repayment period starts or once it has begun. Loans in forbearance in an extended grace period were approximately $314 million and $243 million at March 31, 2025 and 2024, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Current wording
(4)We calculate the percentage of loans in an extended grace period as the ratio of (a) Private Education Loans in forbearance in an extended grace period numerator to (b) Private Education Loans in repayment and forbearance denominator. An extended grace period aligns with The Office of the Comptroller of the Currency definition of an additional, consecutive, one-time period during which no payment is required for up to six months after the initial grace period. We typically grant this extended grace period to customers who may be having difficulty finding employment before the full principal and interest repayment period starts or once it has begun. Loans in forbearance in an extended grace period were approximately $154 million and $115 million at June 30, 2025 and 2024, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Previous wording
(5)We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) were approximately $151 million and $145 million at March 31, 2025 and 2024, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Current wording
(5)We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) were approximately $150 million and $145 million at June 30, 2025 and 2024, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Previous wording
Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 3.6 percent at March 31, 2025 from 3.4 percent at March 31, 2024. The increase in the delinquency metric is primarily attributable to refinements to the loan modification programs that were made in the later half of 2024. See additional discussion related to collections activity in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” in the 2024 Form 10-K.
Current wording
Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 3.5 percent at June 30, 2025 from 3.3 percent at June 30, 2024. The increase in the delinquency metric is primarily attributable to changes and refinements to our loss mitigation programs in 2023 and 2024. See additional discussion related to collections activity in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” in the 2024 Form 10-K.
Previous wording
The percentage of loans in an extended grace forbearance increased to 1.9 percent at March 31, 2025 from 1.5 percent at March 31, 2024. The increase was primarily due to borrowers being eligible to receive up to six months of extended grace forbearance in one increment instead of multiple instances of two-month increments, coupled with our continued efforts to better match our available program offerings to the financial needs of our borrowers. The percentage of loans in hardship and other forbearances remained relatively consistent at 0.9 percent and 1.0 percent at March 31, 2025 and March 31, 2024, respectively.
Current wording
The percentage of loans in an extended grace forbearance remained relatively consistent at 0.9 percent and 0.8 percent at June 30, 2025 and June 30, 2024, respectively. The percentage of loans in hardship and other forbearances also remained relatively consistent at 0.9 percent and 1.0 percent at June 30, 2025 and June 30, 2024, respectively.
Previous wording
In recent years, we have made significant changes to our credit administration practices, enhancing our loss mitigation programs through both our forbearance and loan modification offerings. We adjust the terms of loans for certain borrowers when we believe such changes will help our borrowers manage their student loan obligations and achieve better student outcomes, and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term, and/or a short-term extended repayment or interest-only alternative.
Current wording
In recent years, we have made significant changes to our credit administration practices, enhancing our loss mitigation programs through both our forbearance and loan modification offerings. We adjust the terms of loans for certain borrowers when we believe such changes will help our borrowers manage their student loan obligations, achieve better student outcomes and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term and/or a short-term extended repayment or interest-only alternative.
Previous wording
The tables below show the composition and status of the Private Education Loan portfolio held for investment aged by number of months in active repayment status (months for which a scheduled monthly payment was due). Active repayment status includes loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period. Our experience shows that the percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status. At March 31, 2025, Private Education Loans (held for investment) in forbearance that have been in active repayment status for fewer than 25 months as a percentage of all loans in repayment and forbearance were 2.2 percent. At March 31, 2025, approximately 76 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status for fewer than 25 months.
Current wording
The tables below show the composition and status of the Private Education Loan portfolio held for investment aged by number of months in active repayment status (months for which a scheduled monthly payment was due). Active repayment status includes loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period. Our experience shows that the percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status. At June 30, 2025, Private Education Loans (held for investment) in forbearance that have been in active repayment status for fewer than 25 months as a percentage of all loans in repayment and forbearance were 1.4 percent. At June 30, 2025, approximately 74 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status for fewer than 25 months.
Previous wording
(1)The allowance for uncollectible interest at March 31, 2025 and 2024 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at March 31, 2025 and 2024, relates to $156 million and $141 million, respectively, of accrued interest receivable) that is/was not expected to be capitalized. The accrued interest receivable that is/was expected to be capitalized ($1.4 billion and $1.2 billion, at March 31, 2025 and 2024, respectively) is/was reserved in the allowance for credit losses.
Current wording
(1)The allowance for uncollectible interest at June 30, 2025 and 2024 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at June 30, 2025 and 2024, relates to $159 million and $136 million, respectively, of accrued interest receivable) that is/was not expected to be capitalized. The accrued interest receivable that is/was expected to be capitalized ($1.5 billion and $1.2 billion, at June 30, 2025 and 2024, respectively) is/was reserved in the allowance for credit losses.
Previous wording
At March 31, 2025 and December 31, 2024, our sources of liquidity included liquid investments with unrealized losses of $88.5 million and $105.8 million, respectively. It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan or liquid investment sales under all but the most dire emergency conditions. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed in the Asset and Liability Committee, a management-level committee. These policies take into account the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines.
Current wording
At June 30, 2025 and December 31, 2024, our sources of liquidity included liquid investments with unrealized losses of $83.2 million and $105.8 million, respectively. It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan or liquid investment sales under all but the most dire conditions. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed in the Asset and Liability Committee, a management-level committee. These policies take into account the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines.
Previous wording
Key risks associated with our liquidity relate to our ability to access the capital markets and the markets for bank deposits at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the marketplace. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses as well as specific stresses that test the resiliency of our balance sheet. We hold a significant liquidity buffer of cash and securities, which we expect to maintain through 2025. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.
Current wording
Key risks associated with our liquidity relate to our ability to access the capital markets and the markets for bank deposits at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the marketplace. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses as well as specific stresses that test the resiliency of our balance sheet. We hold a significant liquidity buffer of cash and liquid investments, which we expect to maintain through 2025. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.
Previous wording
Our total deposits of $20.1 billion were comprised of $8.7 billion in brokered deposits and $11.4 billion in retail and other deposits at March 31, 2025, compared with total deposits of $21.1 billion, which were comprised of $9.5 billion in brokered deposits and $11.6 billion in retail and other deposits, at December 31, 2024.
Current wording
Our total deposits of $20.5 billion were comprised of $8.6 billion in brokered deposits and $11.9 billion in retail and other deposits at June 30, 2025, compared with total deposits of $21.1 billion, which were comprised of $9.5 billion in brokered deposits and $11.6 billion in retail and other deposits, at December 31, 2024.
Previous wording
Interest-bearing deposits as of March 31, 2025 and December 31, 2024 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.8 billion and $7.0 billion of our deposit total as of March 31, 2025 and December 31, 2024, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
Current wording
Interest-bearing deposits as of June 30, 2025 and December 31, 2024 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $7.2 billion and $7.0 billion of our deposit total as of June 30, 2025 and December 31, 2024, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
Previous wording
Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 million and $3 million in the three months ended March 31, 2025 and 2024, respectively. There were no fees paid to third-party brokers related to brokered CDs for either the three months ended March 31, 2025 or March 31, 2024.
Current wording
Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 million and $2 million in the three months ended June 30, 2025 and 2024, respectively and placement fee expense of $4 million and $5 million in the six months ended June 30, 2025 and 2024, respectively. There were no fees paid to third-party brokers related to brokered CDs for either the three or six months ended June 30, 2025 or the three or six months ended June 30, 2024.
Previous wording
As of March 31, 2025 and December 31, 2024, there were $551 million and $567 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $60 million and $92 million at March 31, 2025 and December 31, 2024, respectively.
Current wording
As of June 30, 2025 and December 31, 2024, there were $541 million and $567 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $82 million and $92 million at June 30, 2025 and December 31, 2024, respectively.
Previous wording
Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of March 31, 2025, $570 million notional of our derivative contracts were cleared on the CME and $53 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 91.6 percent and 8.4 percent, respectively, of our total notional derivative contracts of $623 million at March 31, 2025.
Current wording
Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of June 30, 2025, $566 million notional of our derivative contracts were cleared on the CME and $36 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 94.1 percent and 5.9 percent, respectively, of our total notional derivative contracts of $602 million at June 30, 2025.
Previous wording
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of March 31, 2025 was $(16) million and $(1) million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).
Current wording
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of June 30, 2025 was $(11.6) million and $(0.3) million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).
Previous wording
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At March 31, 2025 and December 31, 2024, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $3 million and $5 million, respectively.
Current wording
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At June 30, 2025 and December 31, 2024, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $2 million and $5 million, respectively.
Previous wording
In July 2023, the federal banking agencies proposed a rule to implement significant changes to the U.S. Basel Ill regulatory capital requirements. The proposed changes to the regulatory capital requirements generally would amend or introduce approaches and methodologies that would apply to banking organizations with total consolidated assets of $100 billion or more or to banking organizations with significant trading activity. The proposed rule therefore would not affect the Bank's capital requirements or the calculation of its capital ratios.
Current wording
In July 2023, the federal banking agencies proposed a rule to implement significant changes to the U.S. Basel Ill regulatory capital requirements. The proposed changes to the regulatory capital requirements generally would amend or introduce approaches and methodologies that would apply to banking organizations with total consolidated assets of $100 billion or more or to banking organizations with significant trading activity. The proposed rule therefore would not affect the Bank's capital requirements or the calculation of its capital ratios. It is uncertain if and when a final rule will be adopted, and if so, whether and to what extent it will differ from the proposed rule.
Previous wording
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital. At March 31, 2025 and December 31, 2024, the unrealized loss on available-for-sale investments included in other comprehensive income totaled $68 million and $83 million, net of tax of $22 million and $27 million, respectively. The capital ratios would remain above the well capitalized thresholds, including applicable capital conservation buffers, if the unrealized loss became fully recognized into capital.
Current wording
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital. At June 30, 2025 and December 31, 2024, the unrealized loss on available-for-sale investments included in other comprehensive income totaled $69 million and $83 million, net of tax of $23 million and $27 million, respectively. The capital ratios would remain above the well capitalized thresholds, including applicable capital conservation buffers, if the unrealized loss became fully recognized into capital.
Previous wording
The Bank is chartered under the laws of the State of Utah and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $100 million and $160 million in dividends to the Company for the three months ended March 31, 2025 and 2024, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs.
Current wording
The Bank is chartered under the laws of the State of Utah and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $94 million and $194 million in dividends to the Company for the three and six months ended June 30, 2025, respectively, and $138 million and $298 million in dividends to the Company for the three and six months ended June 30, 2024, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs.
Previous wording
On June 14, 2024, we amended our $2 billion maximum financing Secured Borrowing Facility to extend the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 13, 2025. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 13, 2026 (or earlier, if certain material adverse events occur). The one-year revolving period plus the one-year amortization period results in a contractual maturity that is two years from the date of inception or renewal; however, we classify advances under our Secured Borrowing Facility as short-term borrowings because it is our intention to repay those advances within one year. At both March 31, 2025, and December 31, 2024, there were no outstanding short-term borrowings under the Secured Borrowing Facility.
Current wording
On June 13, 2025, we amended our Secured Borrowing Facility to increase the amount to be borrowed under the facility from $2 billion to $2.5 billion and extended the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility Trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 12, 2026. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 12, 2027 (or earlier, if certain material adverse events occur). The one-year revolving period plus the one-year amortization period results in a contractual maturity that is two years from the date of inception or renewal; however, we classify advances under our Secured Borrowing Facility as short-term borrowings because it is our intention to repay those advances within one year. At both June 30, 2025, and December 31, 2024, there were no outstanding short-term borrowings under the Secured Borrowing Facility.
Previous wording
We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at March 31, 2025. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing, and is payable daily. We did not utilize these lines of credit in the three months ended March 31, 2025, nor in the year ended December 31, 2024.
Current wording
We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at June 30, 2025. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing, and is payable daily. We did not utilize these lines of credit in the six months ended June 30, 2025, nor in the year ended December 31, 2024.
Previous wording
We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Window. The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At March 31, 2025 and December 31, 2024, the value of our pledged collateral at the FRB totaled $2.5 billion and $2.2 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the three months ended March 31, 2025, nor in the year ended December 31, 2024.
Current wording
We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Window. The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At June 30, 2025 and December 31, 2024, the value of our pledged collateral at the FRB totaled $2.5 billion and $2.2 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the six months ended June 30, 2025, nor in the year ended December 31, 2024.
Previous wording
When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval, but instead have a commitment to fund a portion of the loan at a later date (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At March 31, 2025, we had $584 million of outstanding contractual loan commitments that we expect to fund during the remainder of the 2024/2025 academic year. At March 31, 2025, we had a $24 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2024 Form 10-K and Note 4, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for additional information.
Current wording
When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval, but instead have a commitment to fund a portion of the loan at a later date (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At June 30, 2025, we had $1.4 billion of outstanding contractual loan commitments that we expect to fund during the remainder of the 2025/2026 academic year. At June 30, 2025, we had a $53 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2024 Form 10-K and Note 4, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for additional information.
Previous wording
In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses, which could result in management overlays (increases or decreases to the allowance for credit losses). These management overlays can encompass a broad array of factors not captured by model inputs, including, but not limited to, changes in lending policies and procedures, including changes in underwriting standards, changes in servicing policies and collection administration practices, including changes we have implemented to our loan modification program, state law changes that could impact servicing and collection practices, charge-offs, recoveries not already included in the analysis, the effect of other external factors such as legal and regulatory requirements on the level of estimated current expected credit losses, the performance of the model over time versus actual losses, and any other operational or regulatory changes that could affect our estimate of future losses.
Current wording
In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses, which could result in management overlays (increases or decreases to the allowance for credit losses). These management overlays can encompass a broad array of factors not captured by model inputs, including, but not limited to, changes in lending policies and procedures, including changes in underwriting standards, changes in servicing policies and collection administration practices, including changes we have implemented to our loan modification programs, state law changes that could impact servicing and collection practices, charge-offs, recoveries not already included in the analysis, the effect of other external factors such as legal and regulatory requirements on the level of estimated current expected credit losses, the performance of the model over time versus actual losses, and any other operational or regulatory changes that could affect our estimate of future losses.
Previous wording
In the second quarter of 2024, we implemented a loan-level future default rate model that includes current portfolio characteristics and forecasts of real gross domestic product and college graduate unemployment. In the second quarter of 2024, we also implemented a future prepayment speeds model to include forecasts of real gross domestic product, retail sales, SOFR, and the U.S. 10-year treasury rate. These models reduce the reliance on certain qualitative overlays compared to the previous default rate and prepayment speeds models. Prior to these changes, our default rate and prepayment speeds models used forecasts of college graduate unemployment, retail sales, home price index, and median family income. Both the future default rate model and the future prepayment speeds model are used in determining the adequacy of the allowance for credit losses. The combined impact upon implementation of these model enhancements and the changes in the related qualitative overlays did not have a material impact on the overall level of our allowance for credit losses.
Current wording
In the second quarter of 2024, we implemented a loan-level future default rate model that includes current portfolio characteristics and forecasts of real gross domestic product and college graduate unemployment. In the second quarter of 2024, we also implemented a future prepayment speeds model to include forecasts of real gross domestic product, retail sales, SOFR, and the U.S. 10-year treasury rate. These models reduce the reliance on certain qualitative overlays compared to the previous default rate and prepayment speeds models. Prior to these changes, our default rate and prepayment speeds models used forecasts of college graduate unemployment, retail sales, home price index, and median family income. Both the future default rate model and the future prepayment speeds model are used in determining the adequacy of the allowance for credit losses.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
•Net interest income increased by $5 million in the current quarter compared with the year-ago quarter primarily due to a $2.1 billion increase in our average Private Education Loans, offset by a 5-basis point decrease in our net interest margin compared to the year-ago period. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because our cost of funds increased but the yields on our interest-earning assets were unchanged. Historically, the yields on interest-earning assets reprice more quickly than our cost of funds. As such, impacts of the declining interest rate environment on our interest-bearing liabilities were delayed when compared to our interest-earning assets, resulting in a higher cost of funds in the current quarter compared with the year-ago quarter.
Current report — wording carried from elsewhere
•There were no gains on sales of loans, net, in the current quarter, as no loans were sold in the second quarter of 2025. There were $112 million in gains on sales, net, in the year-ago quarter, as a result of the $1.59 billion in Private Education Loan sale that occurred in the second quarter of 2024.
Current report — wording carried from elsewhere
•Gains (losses) on securities, net, were $3 million of losses in the current quarter compared with $2 million in gains in the year-ago quarter. The change year-over-year was due to the change in mark-to-fair value of our trading investments.
Current report — wording carried from elsewhere
•Other income was $29 million in the second quarter of 2025, compared with $28 million in the year-ago quarter. Third-party servicing fees in the second quarter of 2025 increased $2 million compared to the year-ago quarter due to an additional $2.0 billion of loans that we sold during the past year that we continue to service on behalf of the owners of the loans.
Current report — wording carried from elsewhere
For the six months ended June 30, 2025, net income attributable to common stock was $368 million, or $1.72 diluted earnings per common share, compared with net income attributable to common stock of $533 million, or $2.39 diluted earnings per common share, for the six months ended June 30, 2024.
Current report — wording carried from elsewhere
The primary drivers of changes in net income for the first six months of 2025 compared with the first six months of 2024 are as follows: