SLM Corp

Previous wording

References in this Form 10-Q to “we,” “us,” “our,” “Sallie Mae,” “SLM,” and the “Company” refer to SLM Corporation and its subsidiaries, except as otherwise indicated or unless the context otherwise requires.

Current wording

References in this Form 10-Q to “we,” “us,” “our,” “Sallie Mae,” “SLM,” and the “Company” refer to SLM Corporation and/or its subsidiaries, except as otherwise indicated or unless the context otherwise requires.

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 Company’s control, which may cause actual results to differ materially from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be as anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied by, or projected in 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 current federal administration; the 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 related changes in significant accounting estimates, including those regarding the measurement of the Company’s allowance for credit losses and the related provision expense; any adverse outcomes in 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 the Company’s risk management framework and quantitative models; changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws); and changes in the demand for the Company’s deposit products, including changes caused by new or emerging market entrants or technologies. The Company could also be affected by, among other things, changes in funding costs and availability; reductions to credit ratings; cybersecurity incidents, cyberattacks, risks related to artificial intelligence (“AI”), and other failures or breaches of operating systems or infrastructure, including those of third-party vendors; the societal, demographic, business, and legislative/regulatory impacts of pandemics, other public health crises, severe weather events, and/or natural disasters; damage to reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on the business; changes in the demand for higher education, educational financing, or financing preferences of lenders, educational institutions, students, and their families, including changes to the amount …

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 Company’s control, which may cause actual results to differ materially from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be as anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied by, or projected in 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 current federal administration; the 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 related changes in significant accounting estimates, including those regarding the measurement of the Company’s allowance for credit losses and the related provision expense; any adverse outcomes in 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 the Company’s risk management framework and quantitative models; changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws); and changes in the demand for the Company’s deposit products, including changes caused by new or emerging market entrants or technologies. The Company could also be affected by, among other things, changes in funding costs and availability; reductions to credit ratings; cybersecurity incidents, cyberattacks, risks related to artificial intelligence (“AI”), and other failures or breaches of operating systems or infrastructure, including those of third-party vendors; the societal, demographic, business, and legislative/regulatory impacts of pandemics, other public health crises, severe weather events, and/or natural disasters; damage to reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on the business; changes in the demand for higher education, educational financing, or financing preferences of lenders, educational institutions, students, and their families, including changes to the amount …

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 and six months ended June 30, 2026.

Current wording

The following discussion and analysis presents a review of our business and operations as of and for the three and nine months ended September 30, 2026.

Previous wording

For the six months ended June 30, 2026, net income attributable to common stock was $359 million, or $1.85 diluted earnings per common share, compared with net income attributable to common stock of $368 million, or $1.72 diluted earnings per common share, for the six months ended June 30, 2025.

Current wording

For the three months ended September 30, 2026, net loss attributable to common stock was $36 million, or $0.19 loss per common share, compared with net income attributable to common stock of $132 million, or $0.63 diluted earnings per common share, for the three months ended September 30, 2025.

Previous wording

The primary drivers of changes in net income for the current quarter compared with net income in the year-ago quarter are as follows:

Current wording

The primary drivers of changes in net loss for the current quarter compared with net income in the year-ago quarter are as follows:

Previous wording

•Net interest income decreased by $44 million in the current quarter compared with the year-ago quarter primarily due to a $1.4 billion decrease in our average Private Education Loans outstanding and an $866 million increase in the average balance of lower yielding cash and short-term investments compared to the year-ago period. The decline in average loans outstanding was due to the $2.04 billion seasoned loan sale in March 2026. Our net interest margin decreased 56-basis points in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased more than our cost of funds decreased. The yields on our interest-earning assets primarily decreased because the proportion of total interest-earning assets that were Private Education Loans was lower in the current quarter than the year-ago quarter due to the seasoned loan sale in March 2026. Our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago quarter.

Current wording

•Net interest income decreased by $34 million in the current quarter compared with the year-ago quarter primarily due to a 33-basis point decrease in our net interest margin and a $0.6 billion decrease in our average Private Education Loans outstanding. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased more than our cost of funds decreased. The yields on both our interest-earning assets and our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago quarter. Historically, the yields on our 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 the yields on our interest-earning assets decreasing more than the yields on our interest-bearing liabilities.

Previous wording

•Provision for credit losses in the current quarter was $126 million, compared with $149 million of provisions in the year-ago quarter. The year-over-year decrease was primarily due to $11 million in negative provisions recorded in the current quarter, resulting from the $420 million Private Education Loan sale to the strategic partner during the second quarter of 2026 and changes in economic outlook. These drivers were offset by new loan commitments, net of expired commitments. In the year-ago quarter, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in the economic outlook.

Current wording

•Provision for credit losses in the current quarter was $214 million, compared with $179 million of provisions in the year-ago quarter. The year-over-year increase was due to new loan commitments, net of expired commitments, offset by $9 million negative provisions resulting from the $318 million Private Education Loan sales that occurred in the quarter. In the year-ago quarter, the provision for credit losses was primarily affected by $119 million negative provisions resulting from the $1.94 billion Private Education Loan sale during the third quarter of 2025, offset by new loan commitments, net of expired commitments, and changes in the economic outlook.

Previous wording

•Gains on sales of loans, net, were $15 million in the second quarter of 2026, as a result of the $420 million Private Education Loan sale to the strategic partner that occurred in the quarter. There were no gains on sales of loans, net, in the year-ago quarter, as no loans were sold in the second quarter of 2025.

Current wording

•Gains on sales of loans, net, were $4 million in the third quarter of 2026, as a result of the $318 million Private Education Loan sales that occurred in the quarter. There were $136 million in gains on sales, net, in the year-ago quarter, as a result of the $1.94 billion Private Education Loan sale that occurred in the third quarter of 2025.

Previous wording

•Gains (losses) on securities, net, were $8 million in gains in the current quarter compared with $3 million of losses in the year-ago quarter. The change year-over-year was primarily due to changes in mark-to-fair value of our trading investments.

Current wording

•Gains (losses) on securities, net, were $14 million in losses in the current quarter compared with $5 million of losses in the year-ago quarter. The change year-over-year was primarily due to changes in mark-to-fair value of our trading investments.

Previous wording

•Other income was $45 million in the second quarter of 2026, compared with $29 million in the year-ago quarter. Third-party servicing fees in the second quarter of 2026 increased $9 million compared to the year-ago quarter due to an additional $6.22 billion of loan principal balance sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Current wording

•Other income was $46 million in the third quarter of 2026, compared with $32 million in the year-ago quarter. Third-party servicing fees in the third quarter of 2026 increased $6 million compared to the year-ago quarter due to an additional $4.75 billion of loan principal balance sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Previous wording

•Second quarter 2026 total operating expenses were $194 million, up from $166 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased personnel costs, additional marketing spend, and higher spending on information technology initiatives, offset by lower FDIC fees.

Current wording

•Third quarter 2026 total operating expenses were $220 million, up from $180 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased personnel costs, additional marketing spend, and higher spending on information technology initiatives, offset by lower FDIC fees.

Previous wording

•During the second quarter of 2026, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.

Current wording

•During the third quarter of 2026, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.

Previous wording

•Second quarter 2026 income tax expense was $22 million, compared with $16 million income tax expense in the year-ago quarter. Our effective income tax rate increased to 27.3 percent in the second quarter of 2026 from 18.7 percent in the year-ago quarter. The increase in the effective rate for the second quarter of 2026 was primarily due to a non-recurring deferred tax revaluation benefit recognized in the second quarter of 2025.

Current wording

•Third quarter 2026 income tax benefit was $27 million, compared with $50 million income tax expense in the year-ago quarter. Our effective income tax rate increased to 45.2 percent in the third quarter of 2026 from 26.9 percent in the year-ago quarter. The increase in the effective rate for the third quarter of 2026 was primarily due to the tax benefit from the release of an uncertain tax position.

Previous wording

For the three months ended June 30, 2026, net income attributable to common stock was $55 million, or $0.29 diluted earnings per common share, compared with net income attributable to common stock of $67 million, or $0.32 diluted earnings per common share, for the three months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2026, net income attributable to common stock was $323 million, or $1.68 diluted earnings per common share, compared with net income attributable to common stock of $500 million, or $2.35 diluted earnings per common share, for the nine months ended September 30, 2025.

Previous wording

The primary drivers of changes in net income for the first six months of 2026 compared with the first six months of 2025 are as follows:

Current wording

The primary drivers of changes in net income for the first nine months of 2026 compared with the first nine months of 2025 are as follows:

Previous wording

•Net interest income decreased by $44 million in the first six months of 2026 compared with the year-ago period primarily due to a 27-basis point decrease in our net interest margin and a $0.5 billion decrease in our average Private Education Loans compared to 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 more than our cost of funds decreased. The yields on both our interest-earning assets and our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago period. Historically, the yields on our 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 the yields on our interest-earning assets decreasing more than the yields on our interest-bearing liabilities.

Current wording

•Net interest income decreased by $77 million in the first nine months of 2026 compared with the year-ago period primarily due to a 29-basis point decrease in our net interest margin and a $0.5 billion decrease in our average Private Education Loans compared to 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 more than our cost of funds decreased. The yields on both our interest-earning assets and our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago period. Historically, the yields on our 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 the yields on our interest-earning assets decreasing more than the yields on our interest-bearing liabilities.

Previous wording

•Provision for credit losses in the six months ended June 30, 2026 was $114 million compared with $172 million of provisions in the year-ago period. The year-over-year decrease was primarily due to $131 million in negative provisions recorded in the first six months of 2026, resulting from the $3.75 billion in Private Education Loan sales during the first six months of 2026 and changes in economic outlook. These drivers were offset by new loan commitments, net of expired commitments. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in economic outlook, offset by $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sales during the first six months of 2025.

Current wording

•Provision for credit losses in the nine months ended September 30, 2026 was $328 million, compared with $351 million of provisions in the year-ago period. The year-over-year decrease was primarily due to $140 million in negative provisions recorded in the first nine months of 2026, resulting from the $4.07 billion in Private Education Loan sales during the first nine months of 2026, offset by new loan commitments, net of expired commitments. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in economic outlook, offset by $235 million in negative provisions resulting from the $3.94 billion Private Education Loan sales during the first nine months of 2025.

Previous wording

•Gains on sales of loans, net, were $161 million in the six months ended June 30, 2026, as a result of the $3.75 billion Private Education Loan sales that occurred in the period. There were $188 million gains on sales of loans, net, in the year-ago period, as a result of the $2.00 billion in Private Education Loan sales that occurred in the first six months of 2025. Gains on sales of loans, net, in the first six months of 2026 was less than the year-ago period primarily due to the January 2026 and April 2026 loan sales, which included newly originated loans for the strategic partner that were not fully-disbursed, and causing the resulting gain on sale expressed as a percentage to be in the low single-digits. Due to market driven dynamics, pricing in the first quarter 2026 seasoned loan sale was also lower compared to the loan sales in the year-ago period.

Current wording

•Gains on sales of loans, net, were $165 million in the nine months ended September 30, 2026, as a result of the $4.07 billion Private Education Loan sales that occurred in the period. There were $324 million gains on sales of loans, net, in the year-ago period, as a result of the $3.94 billion in Private Education Loan sales that occurred in the first nine months of 2025. Gains on sales of loans, net, in the in the first nine months of 2026 was less than the year-ago quarter primarily due to the January 2026, April 2026, and July 2026 loan sales, which included newly originated loans for the existing strategic partner that were not fully-disbursed, and causing the resulting gain on sale expressed as a percentage to be in the low single digits. Additionally, due to market driven dynamics, pricing in the seasoned loan sales during the first nine months of 2026 were also lower compared to the loan sales in the year-ago period.

Previous wording

•Other income was $86 million in the first six months of 2026, compared with $58 million in the year-ago period. Third-party servicing fees in the first six months of 2026 increased $15 million compared to the year-ago period due to an additional $6.22 billion of loan principal balance sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Current wording

•Other income was $132 million in the first nine months of 2026, compared with $90 million in the year-ago period. Third-party servicing fees in the first nine months of 2026 increased $21 million compared to the year-ago period due to an additional $4.75 billion of loan principal balance sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Previous wording

•First-half 2026 total operating expenses were $365 million, up from $320 million in the year-ago period. The increase in total operating expenses was primarily due to increased personnel costs, additional marketing spend, and higher spending on information technology initiatives, offset by lower FDIC fees.

Current wording

•Total operating expenses for the first nine months of 2026 were $585 million, up from $499 million in the year-ago period. The increase in total operating expenses was primarily due to increased personnel costs, additional marketing spend, and higher spending on information technology initiatives, offset by lower FDIC fees.

Previous wording

•During the first six months of 2026, we recorded $1 million in amortization of acquired intangible assets, compared with $2 million in the year-ago period.

Current wording

•During the first nine months of 2026, 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.

Previous wording

•Income tax expense for the six months ended June 30, 2026 was $114 million, compared with $115 million income tax expense in the year-ago period. Our effective income tax rate increased slightly to 23.8 percent in the first six months of 2026 from 23.4 percent in the year-ago period. The increase in the effective rate for the first six months of 2026 was primarily due to less benefit from stock compensation windfalls.

Current wording

•Income tax expense for the nine months ended September 30, 2026 was $88 million, compared with $165 million income tax expense in the year-ago period. Our effective income tax rate decreased to 20.8 percent in the first nine months of 2026 from 24.4 percent in the year-ago period. The decrease in the effective rate for the first nine months of 2026 was primarily due to the tax benefit from the release of an uncertain tax position.

Previous wording

(1)Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our Secured Borrowing Facility.

Current wording

(1)Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations, our Secured Borrowing Facility and our Secured Warehouse Facility.

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 P&I repayment status. Loans in P&I repayment status include loans in full principal and interest repayment status as well as certain loans in short-term interest-only payment programs (such as loans in a Graduated Repayment Period program and loans in a short-term interest only alternative program). The amount of loans in P&I repayment status in our Private Education Loans held for investment portfolio at June 30, 2026 decreased by 1.7 percent compared with June 30, 2025, and now totals 45.3 percent of our Private Education Loans held for investment portfolio at June 30, 2026. The balance of loans held for investment in P&I repayment status was primarily affected in 2025 and the first six months of 2026 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 P&I repayment status. Loans in P&I repayment status include loans in full principal and interest repayment status as well as certain loans in short-term interest-only payment programs (such as loans in a Graduated Repayment Period program and loans in a short-term interest only alternative program). The amount of loans in P&I repayment status in our Private Education Loans held for investment portfolio at September 30, 2026 increased by 2.9 percent compared with September 30, 2025, and now totals 41.5 percent of our Private Education Loans held for investment portfolio at September 30, 2026. The balance of loans held for investment in P&I repayment status was primarily affected in 2025 and the first nine months of 2026 by loan sales.

Previous wording

“Loan consolidations to third parties” for the three months ended June 30, 2026 total 3.8 percent of our Private Education Loans held for investment portfolio in P&I repayment status at June 30, 2026, or 1.7 percent of our total Private Education Loans held for investment portfolio at June 30, 2026, compared with the year-ago quarter of 2.3 percent of our Private Education Loans held for investment portfolio in P&I 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 quarter is primarily attributable to lower interest rates in 2026. 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 September 30, 2026 total 4.4 percent of our Private Education Loans held for investment portfolio in P&I repayment status at September 30, 2026, or 1.8 percent of our total Private Education Loans held for investment portfolio at September 30, 2026, compared with the year-ago quarter of 2.8 percent of our Private Education Loans held for investment portfolio in P&I repayment status, or 1.1 percent of our total Private Education Loans held for investment portfolio, respectively. The increase in consolidations compared to the year-ago quarter is primarily attributable to a higher volume of borrowers availing themselves of comparatively lower interest rates in 2026 than when their loans were originated. 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 June 30, 2026, the Graduate Loan originations include $3.6 million of Smart Option Loans where the student was in a graduate status. 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 six months ended June 30, 2026, the Graduate Loan originations include $12.3 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.

Current wording

(2) For the three months ended September 30, 2026, the Graduate Loan originations includes $1.0 million of Parent Loans and $13.7 million of Smart Option Loans where the student was in a graduate status. For the three months ended September 30, 2025, the Graduate Loan originations include $9.2 million of Smart Option Loans where the student was in a graduate status. For the nine months ended September 30, 2026, the Graduate Loan originations includes $1.0 million of Parent Loans and $26.0 million of Smart Option Loans where the student was in a graduate status. For the nine months ended September 30, 2025, the Graduate Loan originations include $21.1 million of Smart Option Loans where the student was in a graduate status.

Previous wording

(3)Represents the higher credit score of the cosigner or the borrower.

Current wording

(4)Represents the higher credit score of the cosigner or the borrower.

Previous wording

(2) The following table provides a reconciliation of the provisions for credit losses reported in the consolidated statements of income.

Current wording

(3) The following table provides a reconciliation of the provisions for credit losses reported in the consolidated statements of operations.

Previous wording

Private Education Loans held for investment in P&I repayment status were 45 percent of our total Private Education Loans held for investment portfolio at June 30, 2026, compared with 43 percent at June 30, 2025.

Current wording

Private Education Loans held for investment in P&I repayment status were 42 percent of our total Private Education Loans held for investment portfolio at September 30, 2026, compared with 38 percent at September 30, 2025.

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 $164 million and $154 million at June 30, 2026 and 2025, 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 $181 million and $165 million at September 30, 2026 and 2025, 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 $164 million and $150 million at June 30, 2026 and 2025, 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 $189 million and $166 million at September 30, 2026 and 2025, 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 3.7 percent at June 30, 2026 from 3.5 percent at June 30, 2025. We believe the increase in the delinquency metric is primarily driven by misaligned third-party debt resolution practices affecting a segment of high-ability-to-pay borrowers resulting in their loans progressing straight through delinquency to default. Also impacting the delinquency percentage, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model and the larger size of the recent repayment cohort compared to prior quarters. $172 million of newly originated loans were transferred to held for sale status during the second quarter of 2026 and sold in July 2026 to our strategic partner. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. 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 Modifications as a Private Education Loan Collection Tool” in the 2025 Form 10-K.

Current wording

Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 4.2 percent at September 30, 2026 from 4.0 percent at September 30, 2025. We believe the increase in the delinquency metric is primarily driven by misaligned third-party debt resolution practices affecting a segment of high-ability-to-pay borrowers resulting in their loans progressing straight through delinquency to default. Also impacting the delinquency percentage, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model and the larger size of the recent repayment cohort compared to prior quarters. $0.9 billion of newly originated loans were transferred to held for sale status during the third quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. 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 Modifications as a Private Education Loan Collection Tool” in the 2025 Form 10-K.

Previous wording

The percentage of loans in an extended grace forbearance increased to 1.1 percent at June 30, 2026 from 0.9 percent at June 30, 2025. The increase was primarily due to additional enrollments in extended grace forbearance and the shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $172 million of newly originated loans were transferred to held for sale status during the second quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. The percentage of loans in hardship and other forbearances remained relatively consistent at 1.0 percent and 0.9 percent at June 30, 2026 and June 30, 2025, respectively.

Current wording

The percentage of loans in hardship and other forbearances increased to 1.2 percent from 1.0 percent at September 30, 2026 and September 30, 2025. The increase was primarily due to the size and timing of this year’s repayment cohort compared to prior quarters. Also impacting the percentage of loans in hardship and other forbearances, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $0.9 billion of newly originated loans were transferred to held for sale status during the third quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. The percentage of loans in hardship and other forbearances

Previous wording

(2)See “—Financial Condition— Allowance for Credit Losses— Allowance for Loan Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.

Current wording

(2)See “—Financial Condition— Allowance for Credit Losses— Allowance for Loan Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of operations.

Previous wording

(5)The Total Allowance Percentage of Private Education Loan Exposure is the total allowance for credit losses as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable on Private Education Loans.

Current wording

(6)The Total Allowance Percentage of Private Education Loan Exposure is the total allowance for credit losses as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable on Private Education Loans.

Previous wording

(6)Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $28 million of unfunded loan commitments associated with loans classified as held for sale at June 30, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.

Current wording

(7)Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $672 million of unfunded loan commitments associated with loans classified as held for sale at September 30, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.

Previous wording

Net charge-offs for the three months ended June 30, 2026 were $113 million, compared with $94 million in the three months ended June 30, 2025. Net charge-offs for the six months ended June 30, 2026 were $202 million, compared with $170 million in the six months ended June 30, 2025. The increases were primarily driven by misaligned third-party debt resolution practices affecting a segment of high-ability-to-pay borrowers resulting in their loans progressing straight through delinquency to default, and our resulting shift in recovery strategies, pausing third-party recovery activities while working to establish a more effective, customer-aligned approach to delinquencies, charge-offs, and recoveries.

Current wording

Net charge-offs for the three months ended September 30, 2026 were $90 million, compared with $78 million in the three months ended September 30, 2025. Net charge-offs for the nine months ended September 30, 2026 were $292 million, compared with $248 million in the nine months ended September 30, 2025. The increases were primarily driven by misaligned third-party debt resolution practices affecting a segment of high-ability-to-pay borrowers resulting in their loans progressing straight through delinquency to default, and our resulting shift in recovery strategies, pausing the majority of third-party recovery activities while we continue to develop and implement a more effective, customer-aligned approach to delinquencies, charge-offs, and recoveries.

Previous wording

We offer certain other administrative forbearances (e.g., death and disability, bankruptcy, military service, and in school assistance) that are required by law (such as by the Servicemembers Civil Relief Act), are considered separate from our active loss mitigation programs, or do not exceed the significance threshold. We do not consider borrowers eligible for these other administrative forbearances to be experiencing financial difficulty.

Current wording

We offer certain other administrative forbearances (e.g., death and disability, bankruptcy, and military service) that are required by law (such as by the Servicemembers Civil Relief Act), as well as in school assistance, that are considered separate from our active loss mitigation programs, or do not exceed the significance threshold. We do not consider borrowers eligible for these other administrative forbearances to be experiencing financial difficulty.

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 June 30, 2026, 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 1.5 percent. At June 30, 2026, 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.

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 September 30, 2026, 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 1.7 percent. At September 30, 2026, 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 June 30, 2026 and 2025 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at June 30, 2026 and 2025, relates to $154 million and $159 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 at both June 30, 2026 and 2025) is/was reserved in the allowance for credit losses.

Current wording

(1)The allowance for uncollectible interest at September 30, 2026 and 2025 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at September 30, 2026 and 2025, relates to $156 million and $155 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 at both September 30, 2026 and 2025) is/was reserved in the allowance for credit losses.