v3.26.1
Allowance for Loan Losses - Education Loans
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
Allowance for Loan Losses - Education Loans

2. Allowance for Loan Losses – Education Loans

Allowance for Loan Losses Roll Forward

 

 

Three Months Ended June 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

Beginning balance

 

$

314

 

 

$

165

 

 

$

479

 

 

$

397

 

 

$

182

 

 

$

579

 

Total provision

 

 

17

 

 

 

8

 

 

 

25

 

 

 

29

 

 

 

8

 

 

 

37

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(82

)

 

 

(10

)

 

 

(92

)

 

 

(93

)

 

 

(8

)

 

 

(101

)

   Expected future recoveries on current period
      gross charge-offs

 

 

11

 

 

 

—

 

 

 

11

 

 

 

13

 

 

 

—

 

 

 

13

 

Net charge-offs(1)

 

 

(71

)

 

 

(10

)

 

 

(81

)

 

 

(80

)

 

 

(8

)

 

 

(88

)

Decrease in expected future recoveries on
  previously fully charged-off loans(2)

 

 

3

 

 

 

—

 

 

 

3

 

 

 

2

 

 

 

—

 

 

 

2

 

Allowance at end of period

 

$

263

 

 

$

163

 

 

$

426

 

 

$

348

 

 

$

182

 

 

$

530

 

Net charge-offs as a percentage of average loans
  in repayment(3)

 

 

1.84

%

 

 

.18

%

 

 

 

 

 

2.08

%

 

 

.14

%

 

 

 

Ending total loans(3)

 

$

15,409

 

 

$

26,738

 

 

 

 

 

$

15,878

 

 

$

29,800

 

 

 

 

Average loans in repayment(3)

 

$

14,803

 

 

$

22,478

 

 

 

 

 

$

15,375

 

 

$

25,133

 

 

 

 

Ending loans in repayment (3)

 

$

14,781

 

 

$

22,324

 

 

 

 

 

$

15,267

 

 

$

24,867

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(2)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans.

 

 

Three Months Ended June 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

Beginning of period expected future recoveries on
   previously fully charged-off loans

 

$

166

 

 

$

174

 

Expected future recoveries of current period defaults

 

 

11

 

 

 

13

 

Recoveries (cash collected)

 

 

(10

)

 

 

(11

)

Charge-offs (as a result of lower recovery expectations)

 

 

(4

)

 

 

(4

)

End of period expected future recoveries on previously
   fully charged-off loans

 

$

163

 

 

$

172

 

Change in balance during period

 

$

(3

)

 

$

(2

)
(3)
Second-quarter 2026 excludes $528 million of loans, and the corresponding charge-offs, that were classified as held for sale as of June 30, 2026.

 

 

2. Allowance for Loan Losses – Education Loans (Continued)

Allowance for Loan Losses Roll Forward

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

Beginning balance

 

$

364

 

 

$

173

 

 

$

537

 

 

$

441

 

 

$

180

 

 

$

621

 

Total provision

 

 

35

 

 

 

17

 

 

 

52

 

 

 

51

 

 

 

16

 

 

 

67

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(165

)

 

 

(27

)

 

 

(192

)

 

 

(175

)

 

 

(14

)

 

 

(189

)

   Expected future recoveries on current period
      gross charge-offs

 

 

22

 

 

 

—

 

 

 

22

 

 

 

23

 

 

 

—

 

 

 

23

 

Net charge-offs(1)

 

 

(143

)

 

 

(27

)

 

 

(170

)

 

 

(152

)

 

 

(14

)

 

 

(166

)

Decrease in expected future recoveries on
  previously fully charged-off loans(2)

 

 

7

 

 

 

—

 

 

 

7

 

 

 

8

 

 

 

—

 

 

 

8

 

Allowance at end of period

 

$

263

 

 

$

163

 

 

$

426

 

 

$

348

 

 

$

182

 

 

$

530

 

Net charge-offs as a percentage of average loans
  in repayment(3)

 

 

1.87

%

 

 

.24

%

 

 

 

 

 

1.98

%

 

 

.12

%

 

 

 

Ending total loans(3)

 

$

15,409

 

 

$

26,738

 

 

 

 

 

$

15,878

 

 

$

29,800

 

 

 

 

Average loans in repayment(3)

 

$

14,792

 

 

$

22,850

 

 

 

 

 

$

15,423

 

 

$

25,295

 

 

 

 

Ending loans in repayment(3)

 

$

14,781

 

 

$

22,324

 

 

 

 

 

$

15,267

 

 

$

24,867

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(2)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans.

 

 

 

Six Months Ended June 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

Beginning of period expected future recoveries on
   previously fully charged-off loans

 

$

170

 

 

$

179

 

Expected future recoveries of current period defaults

 

 

22

 

 

 

23

 

Recoveries (cash collected)

 

 

(20

)

 

 

(21

)

Charge-offs (as a result of lower recovery expectations)

 

 

(9

)

 

 

(10

)

End of period expected future recoveries on previously
   fully charged-off loans

 

$

163

 

 

$

172

 

Change in balance during period

 

$

(7

)

 

$

(8

)
(3)
Six months ended June 30, 2026 excludes $528 million of loans, and the corresponding charge-offs, that were classified as held for sale as of June 30, 2026.

2. Allowance for Loan Losses – Education Loans (Continued)

Private Education Loans

The key credit quality indicators are credit scores (FICO scores), loan status, loan seasoning, certain loan modifications, the existence of a cosigner and school type. The FICO score is the higher of the borrower or co-borrower score and is updated at least every six months while school type is assessed at origination. The other Private Education Loan key quality indicators are updated quarterly.

 

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

June 30, 2026

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

1,522

 

 

$

1,947

 

 

$

869

 

 

$

472

 

 

$

936

 

 

$

7,884

 

 

$

13,630

 

 

 

88

%

Below 640

 

 

9

 

 

 

45

 

 

 

58

 

 

 

47

 

 

 

99

 

 

 

1,521

 

 

 

1,779

 

 

 

12

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

38

 

 

$

99

 

 

$

81

 

 

$

41

 

 

$

43

 

 

$

326

 

 

$

628

 

 

 

4

%

Current/90 days or
   less delinquent

 

 

1,493

 

 

 

1,885

 

 

 

838

 

 

 

469

 

 

 

977

 

 

 

8,770

 

 

 

14,432

 

 

 

94

 

Greater than 90 days
   delinquent

 

 

—

 

 

 

8

 

 

 

8

 

 

 

9

 

 

 

15

 

 

 

309

 

 

 

349

 

 

 

2

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

1,503

 

 

$

1,462

 

 

$

36

 

 

$

19

 

 

$

10

 

 

$

24

 

 

$

3,054

 

 

 

20

%

13-24 payments

 

 

—

 

 

 

455

 

 

 

664

 

 

 

31

 

 

 

23

 

 

 

40

 

 

 

1,213

 

 

 

8

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

166

 

 

 

351

 

 

 

56

 

 

 

93

 

 

 

666

 

 

 

4

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

89

 

 

 

412

 

 

 

209

 

 

 

710

 

 

 

5

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

512

 

 

 

8,897

 

 

 

9,409

 

 

 

61

 

Loans in-school/
   grace/deferment

 

 

28

 

 

 

75

 

 

 

61

 

 

 

29

 

 

 

22

 

 

 

142

 

 

 

357

 

 

 

2

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

13

 

 

$

41

 

 

$

50

 

 

$

126

 

 

$

4,648

 

 

$

4,878

 

 

 

32

%

Non-Modified

 

 

1,531

 

 

 

1,979

 

 

 

886

 

 

 

469

 

 

 

909

 

 

 

4,757

 

 

 

10,531

 

 

 

68

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

204

 

 

$

473

 

 

$

281

 

 

$

172

 

 

$

105

 

 

$

3,263

 

 

$

4,498

 

 

 

29

%

Without cosigner

 

 

1,327

 

 

 

1,519

 

 

 

646

 

 

 

347

 

 

 

930

 

 

 

6,142

 

 

 

10,911

 

 

 

71

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

1,531

 

 

$

1,992

 

 

$

917

 

 

$

506

 

 

$

1,017

 

 

$

8,546

 

 

$

14,509

 

 

 

94

%

For-profit

 

 

—

 

 

 

—

 

 

 

10

 

 

 

13

 

 

 

18

 

 

 

859

 

 

 

900

 

 

 

6

 

Total

 

$

1,531

 

 

$

1,992

 

 

$

927

 

 

$

519

 

 

$

1,035

 

 

$

9,405

 

 

$

15,409

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(263

)

 

 

 

Total loans, net(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(3

)

 

$

(4

)

 

$

(5

)

 

$

(7

)

 

$

(124

)

 

$

(143

)

 

 

 

 

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition subsequent to January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.
(3)
Excluding Private Education Refinance Loans, the cosigner rate was 66% for total loans at June 30, 2026.
(4)
Excludes $528 million of loans classified as held for sale as of June 30, 2026.

2. Allowance for Loan Losses – Education Loans (Continued)

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

June 30, 2025

 

(Dollars in millions)

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

940

 

 

$

1,146

 

 

$

635

 

 

$

1,167

 

 

$

2,991

 

 

$

7,020

 

 

$

13,899

 

 

 

88

%

Below 640

 

 

14

 

 

 

48

 

 

 

46

 

 

 

102

 

 

 

166

 

 

 

1,603

 

 

 

1,979

 

 

 

12

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

29

 

 

$

91

 

 

$

55

 

 

$

51

 

 

$

73

 

 

$

312

 

 

$

611

 

 

 

4

%

Current/90 days or
   less delinquent

 

 

924

 

 

 

1,097

 

 

 

618

 

 

 

1,201

 

 

 

3,063

 

 

 

7,905

 

 

 

14,808

 

 

 

93

 

Greater than 90 days
   delinquent

 

 

1

 

 

 

6

 

 

 

8

 

 

 

17

 

 

 

21

 

 

 

406

 

 

 

459

 

 

 

3

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

932

 

 

$

879

 

 

$

28

 

 

$

22

 

 

$

11

 

 

$

30

 

 

$

1,902

 

 

 

12

%

13-24 payments

 

 

—

 

 

 

238

 

 

 

484

 

 

 

48

 

 

 

37

 

 

 

41

 

 

 

848

 

 

 

6

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

125

 

 

 

524

 

 

 

107

 

 

 

85

 

 

 

841

 

 

 

5

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

645

 

 

 

2,182

 

 

 

160

 

 

 

2,987

 

 

 

19

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

784

 

 

 

8,155

 

 

 

8,939

 

 

 

56

 

Loans in-school/
   grace/deferment

 

 

22

 

 

 

77

 

 

 

44

 

 

 

30

 

 

 

36

 

 

 

152

 

 

 

361

 

 

 

2

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

6

 

 

$

27

 

 

$

98

 

 

$

203

 

 

$

5,077

 

 

$

5,411

 

 

 

34

%

Non-Modified

 

 

954

 

 

 

1,188

 

 

 

654

 

 

 

1,171

 

 

 

2,954

 

 

 

3,546

 

 

 

10,467

 

 

 

66

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

152

 

 

$

342

 

 

$

225

 

 

$

136

 

 

$

70

 

 

$

4,179

 

 

$

5,104

 

 

 

32

%

Without cosigner

 

 

802

 

 

 

852

 

 

 

456

 

 

 

1,133

 

 

 

3,087

 

 

 

4,444

 

 

 

10,774

 

 

 

68

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

893

 

 

$

1,127

 

 

$

643

 

 

$

1,201

 

 

$

2,971

 

 

$

7,489

 

 

$

14,324

 

 

 

90

%

For-profit

 

 

61

 

 

 

67

 

 

 

38

 

 

 

68

 

 

 

186

 

 

 

1,134

 

 

 

1,554

 

 

 

10

 

Total

 

$

954

 

 

$

1,194

 

 

$

681

 

 

$

1,269

 

 

$

3,157

 

 

$

8,623

 

 

$

15,878

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(348

)

 

 

 

Total loans, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(2

)

 

$

(3

)

 

$

(6

)

 

$

(12

)

 

$

(129

)

 

$

(152

)

 

 

 

 

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition subsequent to January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.
(3)
Excluding Private Education Refinance Loans, the cosigner rate was 66% for total loans at June 30, 2025.

 

 

 

2. Allowance for Loan Losses – Education Loans (Continued)

 

 

Private Education Loan Delinquencies

 

 

 

June 30, 2026

 

 

December 31, 2025

 

 

June 30, 2025

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

357

 

 

 

 

 

$

395

 

 

 

 

 

$

361

 

 

 

 

Loans in forbearance(2)

 

 

271

 

 

 

 

 

 

236

 

 

 

 

 

 

250

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

13,985

 

 

 

94.6

%

 

 

14,230

 

 

 

93.7

%

 

 

14,296

 

 

 

93.6

%

Loans delinquent 31-60 days(3)

 

 

279

 

 

 

1.9

 

 

 

326

 

 

 

2.1

 

 

 

335

 

 

 

2.2

 

Loans delinquent 61-90 days(3)

 

 

168

 

 

 

1.1

 

 

 

194

 

 

 

1.3

 

 

 

177

 

 

 

1.2

 

Loans delinquent greater than 90 days(3)

 

 

349

 

 

 

2.4

 

 

 

434

 

 

 

2.9

 

 

 

459

 

 

 

3.0

 

Total loans in repayment

 

 

14,781

 

 

 

100

%

 

 

15,184

 

 

 

100

%

 

 

15,267

 

 

 

100

%

Total loans(4)

 

 

15,409

 

 

 

 

 

 

15,815

 

 

 

 

 

 

15,878

 

 

 

 

Allowance for losses

 

 

(263

)

 

 

 

 

 

(364

)

 

 

 

 

 

(348

)

 

 

 

Loans, net

 

$

15,146

 

 

 

 

 

$

15,451

 

 

 

 

 

$

15,530

 

 

 

 

Percentage of loans in repayment

 

 

 

 

 

95.9

%

 

 

 

 

 

96.0

%

 

 

 

 

 

96.2

%

Delinquencies as a percentage of loans in
   repayment

 

 

 

 

 

5.4

%

 

 

 

 

 

6.3

%

 

 

 

 

 

6.4

%

Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

1.8

%

 

 

 

 

 

1.5

%

 

 

 

 

 

1.6

%

 

(1)
Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.
(2)
Loans for customers who have requested an extension of the grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.
(4)
June 30, 2026 excludes $528 million of loans classified as held for sale as of June 30, 2026.

 

2. Allowance for Loan Losses – Education Loans (Continued)

FFELP Loans

FFELP Loans are substantially insured and guaranteed as to their principal and accrued interest in the event of default. The key credit quality indicators are loan status and loan type.

 

 

FFELP Loan Delinquencies

 

 

 

June 30, 2026

 

 

December 31, 2025

 

 

June 30, 2025

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

1,131

 

 

 

 

 

$

1,210

 

 

 

 

 

$

1,280

 

 

 

 

Loans in forbearance(2)

 

 

3,283

 

 

 

 

 

 

3,532

 

 

 

 

 

 

3,653

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

19,040

 

 

 

85.3

%

 

 

19,441

 

 

 

82.4

%

 

 

20,145

 

 

 

81.0

%

Loans delinquent 31-60 days(3)

 

 

904

 

 

 

4.1

 

 

 

1,075

 

 

 

4.6

 

 

 

1,333

 

 

 

5.4

 

Loans delinquent 61-90 days(3)

 

 

590

 

 

 

2.6

 

 

 

706

 

 

 

3.0

 

 

 

863

 

 

 

3.5

 

Loans delinquent greater than 90 days(3)

 

 

1,790

 

 

 

8.0

 

 

 

2,350

 

 

 

10.0

 

 

 

2,526

 

 

 

10.1

 

Total FFELP Loans in repayment

 

 

22,324

 

 

 

100

%

 

 

23,572

 

 

 

100

%

 

 

24,867

 

 

 

100

%

Total FFELP Loans

 

 

26,738

 

 

 

 

 

 

28,314

 

 

 

 

 

 

29,800

 

 

 

 

FFELP Loan allowance for losses

 

 

(163

)

 

 

 

 

 

(173

)

 

 

 

 

 

(182

)

 

 

 

FFELP Loans, net

 

$

26,575

 

 

 

 

 

$

28,141

 

 

 

 

 

$

29,618

 

 

 

 

Percentage of FFELP Loans in repayment

 

 

 

 

 

83.5

%

 

 

 

 

 

83.3

%

 

 

 

 

 

83.4

%

Delinquencies as a percentage of FFELP Loans in
   repayment

 

 

 

 

 

14.7

%

 

 

 

 

 

17.5

%

 

 

 

 

 

19.0

%

FFELP Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

12.8

%

 

 

 

 

 

13.0

%

 

 

 

 

 

12.8

%

 

(1)
Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.
(2)
Loans for customers who have used their allowable deferment time or do not qualify for deferment, who need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

 

Loan type:

(Dollars in millions)

 

June 30, 2026

 

 

June 30, 2025

 

 

Change

 

Stafford Loans

 

$

8,825

 

 

$

9,703

 

 

$

(878

)

Consolidation Loans

 

 

15,201

 

 

 

17,077

 

 

 

(1,876

)

Rehab Loans

 

 

2,712

 

 

 

3,020

 

 

 

(308

)

Total loans, gross

 

$

26,738

 

 

$

29,800

 

 

$

(3,062

)

 

Loan Modifications to Borrowers Experiencing Financial Difficulty

We adjust the terms of Private Education Loans for certain borrowers when we believe such changes will help our customers better manage their student loan obligations, achieve better outcomes and increase the collectability of the loans. These changes generally take the form of a temporary interest rate reduction, a temporary forbearance of payments, a temporary interest-only payment, and a temporary interest rate reduction with a permanent extension of the loan term. The effect of modifications of loans made to borrowers who are experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The model design predicts borrowers that will have financial difficulty in the future and require loan modification and increased life of loan default risk.

Under our current forbearance practices, temporary hardship forbearance of payments generally cannot exceed 12 months over the life of the loan. However, exceptions can be made in cases where borrowers have shown the ability to make a substantial number of monthly principal and interest payments and in those cases borrowers can be granted up to 24 months of hardship forbearance over the life of the loan. We offer other administrative forbearances (e.g., death and disability, bankruptcy, military service, and disaster forbearance) that are either required by law (such as the Servicemembers Civil Relief Act) or are considered separate from our active loss mitigation programs and therefore are not considered to be loan modifications requiring disclosure under ASU No. 2022-02.

2. Allowance for Loan Losses – Education Loans (Continued)

FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment and continue to accrue interest on those loans through the date of claim. Further, FFELP loan modification events are either legal entitlements subject to regulatory-driven eligibility criteria or addressed in the promissory note terms, so we do not consider these events as a component of our loan modification programs.

The disclosures below through the end of this footnote, for the three and six months ended June 30, 2026, exclude the $528 million of loans which were classified as held for sale as of June 30, 2026.

The following tables show the amortized cost basis as of June 30, 2026 and 2025 of the loans to borrowers experiencing financial difficulty that were modified during the respective period.

 

 

 

Three Months Ended June 30, 2026

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

562

 

 

 

3.6

%

 

$

240

 

 

 

1.6

%

 

$

31

 

 

 

.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2025

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

568

 

 

 

3.6

%

 

$

295

 

 

 

1.9

%

 

$

35

 

 

 

.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2026

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,154

 

 

 

7.5

%

 

$

473

 

 

 

3.1

%

 

$

67

 

 

 

.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2025

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,171

 

 

 

7.4

%

 

$

548

 

 

 

3.5

%

 

$

75

 

 

 

.5

%

 

(1)
As of June 30, 2026 and 2025, there was $1.0 billion and $1.0 billion, respectively, of loans in the interest rate reduction program.
(2)
More Than an Insignificant Payment Delay includes loans granted more than 3 months of short-term interest only payments or hardship forbearance.

 

2. Allowance for Loan Losses – Education Loans (Continued)

For those loans modified in the three and six months ended June 30, 2026 and 2025, the following tables show the impact of such modification.

 

Three Months Ended June 30, 2026

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 11.6% to 5.2%

Added an average 5 months to the remaining life of the loans

Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from
11.2% to 4.7%.

 

 

 

 

Three Months Ended June 30, 2025

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 12.3% to 5.3%

Added an average 5 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
12.1% to 5.4%.

 

 

 

 

Six Months Ended June 30, 2026

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 11.6% to 5.2%

Added an average 7 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
11.2% to 4.9%.

 

 

 

 

Six Months Ended June 30, 2025

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 12.4% to 5.4%

Added an average 7 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
12.0% to 5.4%.

 

The following table provides the amount of loan modifications for which a charge-off or payment default occurred in the respective period and within 12 months of the loan receiving a loan modification. We define payment default as 60 days or more past due for purposes of this disclosure. We closely monitor performance of the loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of the modification efforts.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Modified loans (amortized cost) (1)

 

$

232

 

 

$

109

 

 

$

278

 

 

$

179

 

Payment default (par)

 

$

235

 

 

$

111

 

 

$

281

 

 

$

183

 

Charge-offs (par)

 

$

24

 

 

$

15

 

 

$

47

 

 

$

25

 

 

(1)
For the three months ended June 30, 2026 and 2025, the modified loans include $179 million and $71 million, respectively, of Interest Rate Reduction, $10 million and $5 million, respectively, of Combination Rate Reduction and Term Extension, and $43 million and $33 million, respectively, of More Than Insignificant Payment Delay. For the six months ended June 30, 2026 and 2025, the modified loans include $208 million and $119 million, respectively, of Interest Rate Reduction, $12 million and $8 million, respectively, of Combination Rate Reduction and Term Extension, and $58 million and $52 million, respectively, of More Than Insignificant Payment Delay.

2. Allowance for Loan Losses – Education Loans (Continued)

The following table provides the performance and related loan status of Private Education Loans that have been modified within the 12 months prior to June 30, 2026 and the 12 months prior to December 31, 2025, respectively.

 

 

 

Payment Status (Amortized Cost)

 

(Dollars in millions)

 

Twelve Months Ended

 

Loan Status

 

June 30, 2026

 

 

December 31, 2025

 

Loans in school/deferment

 

$

18

 

 

$

24

 

Loans in forbearance

 

 

94

 

 

 

73

 

Loans current

 

 

1,987

 

 

 

2,056

 

Loans delinquent 31 - 60 days

 

 

179

 

 

 

191

 

Loans delinquent 61 - 90 days

 

 

113

 

 

 

125

 

Loans delinquent greater than 90 days

 

 

175

 

 

 

211

 

  Total modified loans

 

$

2,566

 

 

$

2,680