Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2026

Segment Results and Reconciliations to GAAP


	Three Months Ended June 30, 2026
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Consumer Lending		Federal Education Loans		Business Processing		Other
Interest income:
Education loans	$	664												$	273	$	391	$	—	$	—
Cash and investments		18													5		8		—		5
Total interest income		682													278		399		—		5
Total interest expense		560													185		351		—		26
Net interest income (loss)		122	$	1		$	(3	)	$	(2	)	$	120		93		48		—		(21	)
Less: provisions for loan losses		26											26		18		8		—		—
Net interest income (loss) after provisions for loan losses		96													75		40		—		(21	)
Other income (loss):
Servicing revenue		10													2		8		—		—
Asset recovery and business processing revenue		—													—		—		—		—
Other revenue		18													—		—		—		17
Total other income		28		(1	)		—			(1	)		27		2		8		—		17
Expenses:
Direct operating expenses		57													42		15		—		—
Unallocated shared services expenses		25													—		—		—		25
Operating expenses(2)		82		—			—			—			82		42		15		—		25
Goodwill and acquired intangible asset impairment and amortization		—		—			—			—			—		—		—		—		—
Restructuring/other reorganization expenses		3		—			—			—			3		—		—		—		3
Total expenses		85		—			—			—			85		42		15		—		28
Income (loss) before income tax expense (benefit)		39		—			(3	)		(3	)		36		35		33		—		(32	)
Income tax expense (benefit)(3)		14		—			(5	)		(5	)		9		8		7		—		(6	)
Net income (loss)	$	25	$	—		$	2		$	2		$	27	$	27	$	26	$	—	$	(26	)

(1)

Core Earnings adjustments to GAAP:


	Three Months Ended June 30, 2026
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income (loss) after provisions for loan losses	$	(2	)	$	—	$	(2	)
Total other income		(1	)		—		(1	)
Goodwill and acquired intangible asset impairment and amortization		—			—		—
Total Core Earnings adjustments to GAAP	$	(3	)	$	—		(3	)
Income tax expense (benefit)							(5	)
Net income (loss)						$	2

(2)

Reportable segment significant operating expenses are comprised of:


	Three Months Ended June 30, 2026
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other		Total
Servicing expenses	$	14	$	14	$	—	$	—	$	28
Information technology expenses		10		—		—		6		16
Corporate expenses		—		—		—		18		18
Other/remaining expenses		18		1		—		1		20
Operating expenses	$	42	$	15	$	—	$	25	$	82

(3)

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

11. Segment Reporting (Continued)


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

(1)

Core Earnings adjustments to GAAP:


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

(2)

Reportable segment significant operating expenses are comprised of:


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

(3)

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

11. Segment Reporting (Continued)


	Six Months Ended June 30, 2026
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Consumer Lending		Federal Education Loans		Business Processing		Other
Interest income:
Education loans	$	1,341												$	550	$	791	$	—	$	—
Cash and investments		35													9		17		—		9
Total interest income		1,376													559		808		—		9
Total interest expense		1,123													365		714		—		51
Net interest income (loss)		253	$	3		$	(10	)	$	(7	)	$	246		194		94		—		(42	)
Less: provisions for loan losses		54											54		37		17		—		—
Net interest income (loss) after provisions for loan losses		199													157		77		—		(42	)
Other income (loss):
Servicing revenue		21													4		17		—		—
Asset recovery and business processing revenue		—													—		—		—		—
Other revenue		28													—		—		—		22
Total other income		49		(3	)		(3	)		(6	)		43		4		17		—		22
Expenses:
Direct operating expenses		112													81		31		—		—
Unallocated shared services expenses		59													—		—		—		59
Operating expenses(2)		171		—			—			—			171		81		31		—		59
Goodwill and acquired intangible asset impairment and amortization		4		—			(4	)		(4	)		—		—		—		—		—
Restructuring/other reorganization expenses		2		—			—			—			2		—		—		—		2
Total expenses		177		—			(4	)		(4	)		173		81		31		—		61
Income (loss) before income tax expense (benefit)		71		—			(9	)		(9	)		62		80		63		—		(81	)
Income tax expense (benefit)(3)		29		—			(14	)		(14	)		15		18		15		—		(18	)
Net income (loss)	$	42	$	—		$	5		$	5		$	47	$	62	$	48	$	—	$	(63	)

(1)

Core Earnings adjustments to GAAP:


	Six Months Ended June 30, 2026
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Goodwill and Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	(7	)	$	—		$	(7	)
Total other income		(6	)		—			(6	)
Goodwill and acquired intangible asset impairment and amortization		—			(4	)		(4	)
Total Core Earnings adjustments to GAAP	$	(13	)	$	4			(9	)
Income tax expense (benefit)								(14	)
Net income (loss)							$	5

(2)

Reportable segment significant operating expenses are comprised of:


	Six Months Ended June 30, 2026
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other		Total
Servicing expenses	$	28	$	30	$	—	$	—	$	58
Information technology expenses		20		—		—		16		36
Corporate expenses		1		—		—		39		40
Other/remaining expenses		32		1		—		4		37
Operating expenses	$	81	$	31	$	—	$	59	$	171

(3)

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

11. Segment Reporting (Continued)


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

(2)

Core Earnings adjustments to GAAP:


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

(2)

Reportable segment significant operating expenses are comprised of:


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

(3)

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

Core Earnings Adjustments to GAAP

Summary of Core Earnings Adjustments to GAAP


	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2026			2025			2026			2025
GAAP net income	$	25		$	14		$	42		$	11
Core Earnings adjustments to GAAP:
Net impact of derivative accounting(1)		(3	)		8			(13	)		47
Net impact of goodwill and acquired intangible assets(2)		—			1			4			2
Net tax effect(3)		5			(2	)		14			(13	)
Total Core Earnings adjustments to GAAP		2			7			5			36
Core Earnings net income	$	27		$	21		$	47		$	47

(1)

Derivative accounting: Core Earnings exclude periodic gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP as well as the periodic mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0. In our Core Earnings presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.

(2)

Goodwill and acquired intangible assets: Our Core Earnings exclude goodwill and intangible asset impairment and amortization of acquired intangible assets.

Net tax effect: Such tax effect is based upon our Core Earnings effective tax rate for the year.

Consumer Lending [Member]

Asset Information for Loans Segment

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


(Dollars in millions)	June 30, 2026		December 31, 2025
Private Education Loans, net	$	15,674	$	15,451
Cash and investments(1)		564		529
Other		563		565
Total assets	$	16,801	$	16,545

(1)

Includes restricted cash and investments.

Federal Education Loans [Member]

Asset Information for Loans Segment

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


(Dollars in millions)	June 30, 2026		December 31, 2025
FFELP Loans, net	$	26,575	$	28,141
Cash and investments(1)		848		1,034
Other		1,643		1,681
Total assets	$	29,066	$	30,856

(1)

Includes restricted cash and investments.

- Definition

Tabular disclosure of segment reporting. Includes, but is not limited to, reconciliation of reportable segment amount to corresponding consolidated total.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-31

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-34

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-30

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26C

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26B

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 26A
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-26A

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 25
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-25

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-15

+ Details