Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2026

Segment Results and Reconciliations to GAAP


	Three Months Ended September 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	$	651												$	270		$	381	$	—	$	—
Personal Loans		1													1			—		—		—
Cash and investments		17													5			8		—		4
Total interest income		669													276			389		—		4
Total interest expense		554													189			342		—		27
Net interest income (loss)		115		$	—	$	(4	)	$	(4	)	$	111		87			47		—		(23	)
Less: provisions for loan losses		227											227		214			13		—		—
Net interest income (loss) after provisions for loan losses		(112	)												(127	)		34		—		(23	)
Other income (loss):
Servicing revenue		10													2			8		—		—
Asset recovery and business processing revenue		—													—			—		—		—
Other revenue		7													—			—		—		2
Gains on sales of loans		162													162			—		—		—
Net fair value changes of loans		23													23			—		—		—
Total other income		202			—		(5	)		(5	)		197		187			8		—		2
Expenses:
Direct operating expenses		70													57			13		—		—
Unallocated shared services expenses		5													—			—		—		5
Operating expenses(2)		75			—		—			—			75		57			13		—		5
Goodwill and acquired intangible asset impairment and amortization		—			—		—			—			—		—			—		—		—
Restructuring/other reorganization expenses		2			—		—			—			2		—			—		—		2
Total expenses		77			—		—			—			77		57			13		—		7
Income (loss) before income tax expense (benefit)		13			—		(9	)	$	(9	)	$	4		3			29		—		(28	)
Income tax expense (benefit)(3)		(2	)		—		3			3			1		1			7		—		(7	)
Net income (loss)	$	15		$	—	$	(12	)	$	(12	)	$	3	$	2		$	22	$	—	$	(21	)

(1)

Core Earnings adjustments to GAAP:


	Three Months Ended September 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	$	(4	)	$	—	$	(4	)
Total other income		(5	)		—		(5	)
Goodwill and acquired intangible asset impairment and amortization		—			—		—
Total Core Earnings adjustments to GAAP	$	(9	)	$	—		(9	)
Income tax expense (benefit)							3
Net income (loss)						$	(12	)

(2)

Reportable segment significant operating expenses are comprised of:


	Three Months Ended September 30, 2026
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other			Total
Servicing expenses	$	14	$	12	$	—	$	—		$	26
Information technology expenses		9		—		—		5			14
Corporate expenses		—		—		—		15			15
Other/remaining expenses		34		1		—		(15	)		20
Operating expenses	$	57	$	13	$	—	$	5		$	75

(3)

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

13. Segment Reporting (Continued)


	Three Months Ended September 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	$	760														$	276		$	484	$	—	$	—
Cash and investments		21															5			10		—		6
Total interest income		781															281			494		—		6
Total interest expense		639															183			429		—		23
Net interest income (loss)		142		$	4		$	—		$	4		$	146			98			65		—		(17	)
Less: provisions for loan losses		168												168			155			13		—		—
Net interest income (loss) after provisions for loan losses		(26	)														(57	)		52		—		(17	)
Other income (loss):
Servicing revenue		13															3			10		—		—
Asset recovery and business processing revenue		—															—			—		—		—
Other revenue (loss)		6															—			—		—		10
Total other income		19			(4	)		8			4			23			3			10		—		10
Expenses:
Direct operating expenses		61															45			16		—		—
Unallocated shared services expenses		44															—			—		—		44
Operating expenses(2)		105			—			—			—			105			45			16		—		44
Goodwill and acquired intangible asset impairment and amortization		1			—			(1	)		(1	)		—			—			—		—		—
Restructuring/other reorganization expenses		4			—			—			—			4			—			—		—		4
Total expenses		110			—			(1	)		(1	)		109			45			16		—		48
Income (loss) before income tax expense (benefit)		(117	)		—			9			9			(108	)		(99	)		46		—		(55	)
Income tax expense (benefit)(3)		(31	)		—			6			6			(25	)		(23	)		11		—		(13	)
Net income (loss)	$	(86	)	$	—		$	3		$	3		$	(83	)	$	(76	)	$	35	$	—	$	(42	)

(1)

Core Earnings adjustments to GAAP:


	Three Months Ended September 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	$	4	$	—		$	4
Total other income		4		—			4
Goodwill and acquired intangible asset impairment and amortization		—		(1	)		(1	)
Total Core Earnings adjustments to GAAP	$	8	$	1			9
Income tax expense (benefit)							6
Net income (loss)						$	3

(2)

Reportable segment significant operating expenses are comprised of:


	Three Months Ended September 30, 2025
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other		Total
Servicing expenses	$	12	$	16	$	—	$	—	$	28
Information technology expenses		8		—		—		19		27
Corporate expenses		—		—		—		21		21
Other/remaining expenses		25		—		—		4		29
Operating expenses	$	45	$	16	$	—	$	44	$	105

(3)

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

13. Segment Reporting (Continued)


	Nine Months Ended September 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	$	1,993												$	820	$	1,173	$	—	$	—
Personal Loans		1													1		—		—		—
Cash and investments		51													14		24		—		13
Total interest income		2,045													835		1,197		—		13
Total interest expense		1,677													553		1,056		—		79
Net interest income (loss)		368	$	3		$	(14	)	$	(11	)	$	357		282		141		—		(66	)
Less: provisions for loan losses		281											281		251		30		—		—
Net interest income (loss) after provisions for loan losses		87													31		111		—		(66	)
Other income (loss):
Servicing revenue		31													7		24		—		—
Asset recovery and business processing revenue		—													—		—		—		—
Other revenue		34													—		—		—		23
Gains on sales of loans		162													162		—		—		—
Net fair value changes of loans		23													23		—		—		—
Total other income		250		(3	)		(8	)		(11	)		239		192		24		—		23
Expenses:
Direct operating expenses		182													138		44		—		—
Unallocated shared services expenses		64													—		—		—		64
Operating expenses(2)		246		—			—			—			246		138		44		—		64
Goodwill and acquired intangible asset impairment and amortization		5		—			(5	)		(5	)		—		—		—		—		—
Restructuring/other reorganization expenses		4		—			—			—			4		—		—		—		4
Total expenses		255		—			(5	)		(5	)		250		138		44		—		68
Income (loss) before income tax expense (benefit)		82		—			(17	)		(17	)		65		85		91		—		(111	)
Income tax expense (benefit)(3)		26		—			(11	)		(11	)		15		20		21		—		(26	)
Net income (loss)	$	56	$	—		$	(6	)	$	(6	)	$	50	$	65	$	70	$	—	$	(85	)

(1)

Core Earnings adjustments to GAAP:


	Nine Months Ended September 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	$	(11	)	$	—		$	(11	)
Total other income		(11	)		—			(11	)
Goodwill and acquired intangible asset impairment and amortization		—			(5	)		(5	)
Total Core Earnings adjustments to GAAP	$	(22	)	$	5			(17	)
Income tax expense (benefit)								(11	)
Net income (loss)							$	(6	)

(2)

Reportable segment significant operating expenses are comprised of:


	Nine Months Ended September 30, 2026
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other			Total
Servicing expenses	$	41	$	42	$	—	$	—		$	83
Information technology expenses		29		—		—		21			50
Corporate expenses		1		1		—		54			56
Other/remaining expenses		67		1		—		(11	)		57
Operating expenses	$	138	$	44	$	—	$	64		$	246

(3)

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

13. Segment Reporting (Continued)


	Nine Months Ended September 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	$	2,297														$	838		$	1,459		$	—	$	—
Cash and investments		64															15			30			—		19
Total interest income		2,361															853			1,489			—		19
Total interest expense		1,961															547			1,321			—		72
Net interest income (loss)		400		$	15		$	6		$	21		$	421			306			168			—		(53	)
Less: provisions for loan losses		236												236			207			29			—		—
Net interest income (loss) after provisions for loan losses		164															99			139			—		(53	)
Other income (loss):
Servicing revenue		40															8			32			—		—
Asset recovery and business processing revenue		23															—			—			23		—
Other revenue (loss)		10															1			(1	)		—		44
Total other income		73			(15	)		49			34			107			9			31			23		44
Expenses:
Direct operating expenses		189															115			54			20		—
Unallocated shared services expenses		144															—			—			—		144
Operating expenses(2)		333			—			—			—			333			115			54			20		144
Goodwill and acquired intangible asset impairment and amortization		2			—			(2	)		(2	)		—			—			—			—		—
Restructuring/other reorganization expenses		6			—			—			—			6			—			—			—		6
Total expenses		341			—			(2	)		(2	)		339			115			54			20		150
Income (loss) before income tax expense (benefit)		(104	)		—			57			57			(47	)		(7	)		116			3		(159	)
Income tax expense (benefit)(3)		(29	)		—			18			18			(11	)		(3	)		27			1		(36	)
Net income (loss)	$	(75	)	$	—		$	39		$	39		$	(36	)	$	(4	)	$	89		$	2	$	(123	)

(1)

Core Earnings adjustments to GAAP:


	Nine Months Ended September 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	$	21	$	—		$	21
Total other income		34		—			34
Goodwill and acquired intangible asset impairment and amortization		—		(2	)		(2	)
Total Core Earnings adjustments to GAAP	$	55	$	2			57
Income tax expense (benefit)							18
Net income (loss)						$	39

(2)

Reportable segment significant operating expenses are comprised of:


	Nine Months Ended September 30, 2025
(Dollars in millions)	Consumer Lending		Federal Education Loans		Business Processing		Other		Total
Servicing expenses	$	40	$	50	$	—	$	5	$	95
Information technology expenses		25		—		1		60		86
Corporate expenses		1		2		—		64		67
Other/remaining expenses		49		2		19		15		85
Operating expenses	$	115	$	54	$	20	$	144	$	333

(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 September 30,						Nine Months Ended September 30,
(Dollars in millions)	2026			2025			2026			2025
GAAP net income	$	15		$	(86	)	$	56		$	(75	)
Core Earnings adjustments to GAAP:
Net impact of derivative accounting(1)		(9	)		8			(22	)		55
Net impact of goodwill and acquired intangible assets(2)		—			1			5			2
Net tax effect(3)		(3	)		(6	)		11			(18	)
Total Core Earnings adjustments to GAAP		(12	)		3			(6	)		39
Core Earnings net income	$	3		$	(83	)	$	50		$	(36	)

(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.

(3)

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)	September 30, 2026		December 31, 2025
Private Education Loans, net	$	15,254	$	15,451
Cash and investments(1)		532		529
Other		593		565
Total assets	$	16,379	$	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)	September 30, 2026		December 31, 2025
FFELP Loans, net	$	25,898	$	28,141
Cash and investments(1)		848		1,034
Other		1,641		1,681
Total assets	$	28,387	$	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