SLM Corp

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, 2024.

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, 2024.

Previous wording

During the first six months of 2024, we made the following progress on the above corporate strategic imperatives.

Current wording

During the first nine months of 2024, we made the following progress on the above corporate strategic imperatives.

Previous wording

In the first six months of 2024, we recognized $255 million in gains from the sale of approximately $3.69 billion of Private Education Loans, including $3.42 billion of principal and $274 million in capitalized interest, to unaffiliated third parties. The transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 3, “Loans Held for Investment” and Note 8, “Borrowings - Unconsolidated VIEs” in this Form 10-Q.

Current wording

In the first nine months of 2024, we recognized $255 million in gains from the sale of approximately $3.69 billion of Private Education Loans, including $3.42 billion of principal and $274 million in capitalized interest, to unaffiliated third parties. The transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 3, “Loans Held for Investment” and Note 9, “Borrowings - Unconsolidated VIEs” in this Form 10-Q.

Previous wording

During the six months ended June 30, 2024, we repurchased 4.2 million shares of our common stock at a total cost of $89 million under Rule 10b5-1 trading plans authorized under our 2024 Share Repurchase Program.

Current wording

During the nine months ended September 30, 2024, we repurchased 9.6 million shares of our common stock at a total cost of $204 million under Rule 10b5-1 trading plans authorized under our 2024 Share Repurchase Program.

Previous wording

GAAP Consolidated Statements of Income (Unaudited)

Current wording

GAAP Consolidated Statements of Operations (Unaudited)

Previous wording

For the six months ended June 30, 2024, net income attributable to common stock was $533 million, or $2.39 diluted earnings per common share, compared with net income attributable to common stock of $375 million, or $1.56 diluted earnings per common share, for the six months ended June 30, 2023.

Current wording

For the three months ended September 30, 2024, net loss attributable to common stock was $50 million, or $0.23 loss per common share, compared with net income attributable to common stock of $25 million, or $0.11 diluted earnings per common share, for the three months ended September 30, 2023.

Previous wording

The primary drivers of changes in net income for the current quarter compared with 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 $14 million in the current quarter compared with the year-ago quarter primarily due to a 16-basis point decrease in our net interest margin and a $308 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurs because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin.

Current wording

•Net interest income decreased by $26 million in the current quarter compared with the year-ago quarter primarily due to a 43-basis point decrease in our net interest margin and a $238 million decrease in our average Private Education Loans and FFELP 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 but our cost of funds increased. This occurred primarily because the mix of our fixed-rate and variable-rate loans resulted in a higher proportion of fixed-rate loans in the current quarter. In a rising interest rate environment, as we experienced in 2022 and the beginning of 2023, our variable-rate loans repriced at higher rates than our fixed-rate loans. The impacts of the rising interest rate environment on our interest-bearing liabilities are delayed, resulting in a higher cost of funds in the current quarter. Additionally, the average cash and other short-term investments held in the current quarter is $939 million higher than in the year-ago quarter.

Previous wording

•Provision for credit losses in the current quarter was $17 million, compared with $18 million in the year-ago quarter. During the second quarter of 2024, the provision for credit losses was primarily affected by $103 million negative provisions resulting from the $1.59 billion Private Education Loan sales during the quarter and an improved economic outlook, offset by new loan commitments, net of expired commitments. In the year-ago quarter, the provision for credit losses was primarily affected by negative provisions resulting from the Private Education Loan sales during the year-ago quarter, and an increase in estimated recovery rates, which were offset by new loan commitments, net of expired commitments, changes in economic outlook, and management overlays.

Current wording

•Provision for credit losses in the current quarter was $271 million, compared with $198 million in the year-ago quarter. During the third quarter of 2024, the increase in the provision for credit losses was primarily affected 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, slower prepayment rates, management overlays, and changes in economic outlook.

Previous wording

•Gains (losses) on securities, net, were $2 million of gains in the current quarter compared with $1 million in losses in the year-ago quarter. The change quarter-over-quarter was due to the change in mark-to-fair value of our trading investments.

Current wording

•Gains (losses) on securities, net, were $4 million of losses in the current quarter compared with $1 million in gains in the year-ago quarter. The change quarter-over-quarter was due to the change in mark-to-fair value of our trading investments.

Previous wording

•Other income was $28 million in the second quarter of 2024, compared with $20 million in the year-ago quarter. The increase was primarily driven by a $6 million increase in third-party servicing fees compared to the year-ago quarter. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans.

Current wording

•Other income was $28 million in the third quarter of 2024, compared with $23 million in the year-ago quarter. The increase was primarily driven by a $6 million increase in third-party servicing fees compared to the year-ago quarter. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans.

Previous wording

•Second-quarter 2024 total operating expenses were $157 million, compared with $154 million in the year-ago quarter. The increase in total operating expenses was primarily driven by higher personnel costs and higher FDIC fees.

Current wording

•Third-quarter 2024 total operating expenses were $171 million, compared with $167 million in the year-ago quarter. The increase in total operating expenses was primarily driven by higher marketing costs and personnel costs, which were partially offset by reduced vendor costs associated with initiative spending.

Previous wording

•During the second quarter of 2024, we recorded $1 million in amortization of acquired intangible assets, down from $2 million in the year-ago quarter. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 6, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.

Current wording

•During the third quarter of 2024, we recorded $1 million in amortization of acquired intangible assets, down from $3 million in the year-ago quarter. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 7, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.

Previous wording

•Second-quarter 2024 income tax expense was $87 million, compared with $92 million in the year-ago quarter. Our effective income tax rate decreased slightly to 25.6 percent in the second quarter of 2024 from 25.7 percent in the year-ago quarter. The decrease in the effective rate for the second quarter of 2024 was primarily due to a decrease in state income taxes.

Current wording

•Third-quarter 2024 income tax benefit was $14 million, compared with $11 million income tax expense in the year-ago quarter. Our effective income tax rate decreased to 24.2 percent in the third quarter of 2024 from 27.7 percent in the year-ago quarter. The decrease in the effective rate for the third quarter of 2024 was primarily due to a decrease in state income taxes.

Previous wording

For the three months ended June 30, 2024, net income attributable to common stock was $247 million, or $1.11 diluted earnings per common share, compared with net income attributable to common stock of $261 million, or $1.10 diluted earnings per common share, for the three months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, net income attributable to common stock was $483 million, or $2.18 diluted earnings per common share, compared with net income attributable to common stock of $400 million, or $1.69 diluted earnings per common share, for the nine months ended September 30, 2023.

Previous wording

The primary drivers of changes in net income for the first six months of 2024 compared with the first six months of 2023 are as follows:

Current wording

The primary drivers of changes in net income for the first nine months of 2024 compared with the first nine months of 2023 are as follows:

Previous wording

•Net interest income decreased by $33 million in the first six months of 2024 compared with the year-ago period primarily due to an 18-basis point decrease in our net interest margin and a $345 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current period from the year-ago period primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurs because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin.

Current wording

•Net interest income decreased by $57 million in the first nine months of 2024 compared with the year-ago period primarily due to a 27-basis point decrease in our net interest margin and a $308 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current period from the year-ago period primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurred because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin.

Previous wording

•Provision for credit losses in the six months ended June 30, 2024 was $29 million, compared with $132 million in the year-ago period. During the first six months of 2024, the provision for credit losses was primarily affected by $236 million negative provisions resulting from the $3.69 billion Private Education Loan sales during the period, 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. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, and changes in economic outlook, which were offset by negative provisions recorded as a result of Private Education Loan sales during the first six months of 2023 and an increase in recovery rates.

Current wording

•Provision for credit losses in the nine months ended September 30, 2024 was $300 million, compared with $330 million in the year-ago period. During the first nine months of 2024, the decrease in the provision for credit losses was primarily affected by $236 million negative provisions resulting from the $3.69 billion Private Education Loan sales during the period, 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. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, and management overlays, which were offset by negative provisions recorded as a result of Private Education Loan sales during the first nine months of 2023 and an increase in recovery rates.

Previous wording

•Gains on sales of loans, net, were $255 million in the six months ended June 30, 2024, compared with $125 million in the year-ago period. The increase in gains on sales of loans was primarily the result of selling $3.69 billion of Private Education Loans in the first six months of 2024, compared with the sale of $2.10 billion of Private Education Loans in the first six months of 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $3.5 million loss on the sale in the six months ended June 30, 2023.

Current wording

•Gains on sales of loans, net, were $255 million in the nine months ended September 30, 2024, compared with $125 million in the year-ago period. The increase in gains on sales of loans was primarily the result of selling $3.69 billion of Private Education Loans in the first nine months of 2024, compared with the sale of $2.10 billion of Private Education Loans in the first nine months of 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $3.5 million loss on the sale in the nine months ended September 30, 2023.

Previous wording

•Gains (losses) on securities, net, were $4 million of gains in the first six months of 2024 compared with less than $1 million in gains in the year-ago period. The increase from the year-ago period was due to the change in mark-to-fair value of our trading investments.

Current wording

•Gains (losses) on securities, net, were less than $1 million of gains in the first nine months of 2024 compared with $2 million in gains in the year-ago period. The decrease from the year-ago period was due to the change in mark-to-fair value of our trading investments.

Previous wording

•Other income was $57 million in the first six months of 2024, compared with $40 million in the year-ago period. In the first six months of 2024, there was an $11 million increase in third-party servicing fees from the year-ago period. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans. There was also a $3 million increase in early withdrawal penalty fee income compared with 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 $85 million in the first nine months of 2024, compared with $63 million in the year-ago period. In the first nine months of 2024, there was a $17 million increase in third-party servicing fees from the year-ago period. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans. There was also a $3 million increase in early withdrawal penalty fee income compared with 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.

Previous wording

•First-half 2024 total operating expenses were $318 million, compared with $309 million in the year-ago period. The increase in total operating expenses was primarily driven by higher personnel costs, higher initiative spending, and higher FDIC fees.

Current wording

•Total operating expenses for the first nine months of 2024 were $488 million, compared with $476 million in the year-ago period. The increase in total operating expenses was primarily driven by higher personnel costs, higher marketing costs, and higher FDIC fees.

Previous wording

•During the first six months of 2024, we recorded $3 million in amortization of acquired intangible assets, down from $5 million in the year-ago period. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 6, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.

Current wording

•During the first nine months of 2024, we recorded $4 million in amortization of acquired intangible assets, down from $7 million in the year-ago period. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 7, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.

Previous wording

•Income tax expense for the six months ending June 30, 2024 was $184 million, compared with $129 million in the year-ago period. Our effective income tax rate increased to 25.4 percent in the first six months of 2024 from 25.1 percent in the year-ago period. The increase in the effective rate for the first six months of 2024 was was primarily due to an increase in state income taxes.

Current wording

•Income tax expense for the nine months ending September 30, 2024 was $170 million, compared with $140 million in the year-ago period. Our effective income tax rate increased slightly to 25.5 percent in the first nine months of 2024 from 25.3 percent in the year-ago period. The increase in the effective rate for the first nine months of 2024 was primarily due to an increase in state income taxes.

Previous wording

Ending Loans Held for Investment Balances, net

Current wording

Ending Loans Held for Investment Balances, net (FFELP Loans were transferred to loans held for sale at September 30, 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 June 30, 2024 decreased by 2.6 percent compared with June 30, 2023, totaling 42 percent of our Private Education Loans held for investment portfolio at June 30, 2024. The balance of loans held for investment in full principal and interest repayment status was affected in 2023 and in the first six months of 2024 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 September 30, 2024 decreased by 0.8 percent compared with September 30, 2023, totaling 38 percent of our Private Education Loans held for investment portfolio at September 30, 2024. The balance of loans held for investment in full principal and interest repayment status was affected in 2023 and in the first nine months of 2024 by loan sales.

Previous wording

“Loan consolidations to third parties” for the three months ended June 30, 2024 total 2.3 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at June 30, 2024, or 1.0 percent of our total Private Education Loans held for investment portfolio at June 30, 2024, compared with the year-ago period of 2.7 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.1 percent of our total Private Education Loans held for investment portfolio, respectively. The decrease in consolidations is attributable to higher interest rates in 2024 that made it less competitive for consolidators. 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, 2024 total 2.5 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at September 30, 2024, or 0.9 percent of our total Private Education Loans held for investment portfolio at September 30, 2024, compared with the year-ago period of 3.0 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.2 percent of our total Private Education Loans held for investment portfolio, respectively. The decrease in consolidations is attributable to higher interest rates in 2024 that made it less competitive for consolidators. 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, 2024, the Graduate Loan originations include $6.6 million of Smart Option Loans where the student was in a graduate status. For the three months ended June 30, 2023, the Graduate Loan originations include $4.5 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. For the six months ended June 30, 2023, the Graduate Loan originations include $14.9 million of Smart Option Loans where the student was in a graduate status.

Current wording

(2) For the three months ended September 30, 2024, the Graduate Loan originations include $10.0 million of Smart Option Loans where the student was in a graduate status. For the three months ended September 30, 2023, the Graduate Loan originations include $9.5 million of Smart Option Loans where the student was in a graduate status. For the nine months ended September 30, 2024, the Graduate Loan originations include $28.3 million of Smart Option Loans where the student was in a graduate status. For the nine months ended September 30, 2023, the Graduate Loan originations include $24.4 million of Smart Option Loans where the student was in a graduate status.

Previous wording

(2) Below is a reconciliation of the provision for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Current wording

(3) Below is a reconciliation of the provision for credit losses reported in the consolidated statements of operations. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Previous wording

(2) Below is a reconciliation of the provision for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Current wording

(3) Below is a reconciliation of the provision for credit losses reported in the consolidated statements of operations. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Previous wording

Private Education Loans held for investment in full principal and interest repayment status were 42 percent of our total Private Education Loans held for investment portfolio at June 30, 2024, compared with 43 percent at June 30, 2023.

Current wording

Private Education Loans held for investment in full principal and interest repayment status were 38 percent of our total Private Education Loans held for investment portfolio at both September 30, 2024 and September 30, 2023.

Previous wording

The table below presents our Private Education Loans held for investment portfolio delinquency trends. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and

Current wording

The table below presents our Private Education Loans held for investment portfolio delinquency trends. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the following table, do not include those loans while they are in forbearance).

Previous wording

(5)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 $115 million and $30 million at June 30, 2024 and 2023, 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 $143 million and $30 million at September 30, 2024 and 2023, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Previous wording

(6)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) 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) were approximately $145 million and $154 million at June 30, 2024 and 2023, 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) 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) were approximately $159 million and $183 million at September 30, 2024 and 2023, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Previous wording

(3)Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest payment status after any applicable grace period (but, for purposes of the table, does not include the interest on those loans while they are in forbearance).

Current wording

(3)Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include the interest on those loans while they are in forbearance).

Previous wording

SLM CORPORATION 73 currently may reduce the contractual interest rate on a loan to as low as 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Other borrowers experiencing severe hardship may not require as much assistance, however, given their circumstances. In those instances, we may reduce the contractual interest rate on a loan to a rate greater than 2 percent, and up to 8 percent, for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan.

Current wording

We also offer rate and term modifications to customers experiencing more severe hardship. In the fourth quarter of 2023, we developed additional modification programs tailored to the financial condition of individual borrowers. Pursuant to these additional modification programs, for our borrowers experiencing the most severe financial conditions, we currently may reduce the contractual interest rate on a loan to as low as 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Other borrowers experiencing severe hardship may not require as much assistance, however, given their circumstances. In those instances, we may reduce the contractual interest rate on a loan to a rate greater than 2 percent, and up to 8 percent, for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan.

Previous wording

When we give a borrower facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, as of the end of the reporting period, the borrower was required to make three consecutive monthly payments at the reduced payment amount in order to qualify for enrollment in a modification program and, if applicable, for the loan to re-age. Any loan that has received a previous rate reduction or permanent extension is generally not re-age eligible following a modification. In that case, following the modification, the loan will remain in delinquency unless and until all past due amounts are paid and the loan is brought current.

Current wording

When we give a borrower facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. Prior to the third quarter of 2024, as part of demonstrating the ability and willingness to pay, the borrower was required to make three consecutive monthly payments at the reduced payment amount in order to qualify for enrollment in a modification program and, if applicable, for the loan to re-age and be brought current. Beginning in the third quarter of 2024, we refined our practices in this area and, after we determine the borrower’s ability to pay and they agree to the modification, the loan is modified immediately. Following the modification, the borrower is still required to make three consecutive monthly payments at the reduced payment amount in order for the loan to re-age and be brought current, if eligible. It continues to be our practice that any loan that has received a previous rate reduction or permanent extension is generally not re-age eligible following a modification. In that case, following the modification, the loan will remain in delinquency unless and until all past due amounts are paid and the loan is brought current.

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, 2024, for Private Education Loans (held for investment) that have been in active repayment status for fewer than 25 months, loans in forbearance status as a percentage of all loans in repayment and forbearance were 1.3 percent. At June 30, 2024, approximately 74 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status 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, 2024, for Private Education Loans (held for investment) that have been in active repayment status for fewer than 25 months, loans in forbearance status as a percentage of all loans in repayment and forbearance were 1.5 percent. At September 30, 2024, approximately 76 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status fewer than 25 months.

Previous wording

The following table provides information regarding accrued interest receivable on our Private Education Loans held for investment. The table also discloses the amount of accrued interest on loans 90 days or greater past due as compared to our allowance for uncollectible interest. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accruing on that loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school, and the current expected credit losses on accrued interest that will be capitalized is included in our allowance for credit losses.

Current wording

The following table provides information regarding accrued interest receivable on our Private Education Loans held for investment. The table also discloses the amount of accrued interest on loans 90 days or greater past due as compared to our allowance for uncollectible interest. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accruing on the loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school, and the current expected credit losses on accrued interest that will be capitalized is included in our allowance for credit losses.

Previous wording

(1)The allowance for uncollectible interest at June 30, 2024 and 2023 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at June 30, 2024 and 2023, relates to $136 million and $139 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 ($1.2 billion and $1.1 billion, at June 30, 2024 and 2023, respectively) is reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $5.8 million and $6.5 million of accrued interest receivable on those loans that are in repayment that is/was not expected to be capitalized and $0.8 million and $0.5 million that is/was expected to be capitalized, at June 30, 2024 and 2023, respectively.

Current wording

(1)The allowance for uncollectible interest at September 30, 2024 and 2023 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at September 30, 2024 and 2023, relates to $139 million and $146 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 $1.3 billion, at September 30, 2024 and 2023, respectively) is reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $4.6 million and $6.3 million of accrued interest receivable on those loans that are in repayment that is/was not expected to be capitalized and $0.9 million and $0.5 million that is/was expected to be capitalized, at September 30, 2024 and 2023, respectively.