SLM (SLM) Q1 2026: steady earnings, big loan sales and $291M buybacks
Filing Impact
Filing Sentiment
Form Type
10-Q
SLM Corporation reports solid first-quarter 2026 results, driven mainly by its private education loan franchise and loan sale activity. Net income was $307.9 million, slightly above $304.5 million a year earlier, with basic EPS of $1.56 versus $1.43. Total interest income was $649.3 million and net interest income held steady at $375.4 million. The company sold $3.33 billion of private education loans, generating net gains of $146 million, though loan sale gains were lower than in 2025. Provision for credit losses was a net benefit of $11.5 million, compared with an expense of $23.3 million a year earlier, reflecting large negative provisions tied to loan sales and transfers to held-for-sale. Loans held for investment, all private education loans, totaled $21.17 billion gross, with an allowance for credit losses of $1.41 billion. Deposits were $20.5 billion, down modestly from year-end, while borrowings rose with new term ABS issuance. SLM was highly active in capital returns, repurchasing about 12.0 million common shares for roughly $291 million, including a $200 million accelerated share repurchase under a new $500 million program.
Positive
- None.
Negative
- None.
Key Figures
Net income: $307.9M
Basic EPS: $1.56
Total interest income: $649.3M
+5 more
8 metrics
Net income
$307.9M
Three months ended March 31, 2026
Basic EPS
$1.56
Three months ended March 31, 2026 (vs. $1.43 in 2025)
Total interest income
$649.3M
Three months ended March 31, 2026
Private education loans, gross
$21.17B
Loans held for investment as of March 31, 2026
Total allowance for credit losses
$1.41B
Includes loan losses and unfunded commitments at March 31, 2026
Deposits
$20.53B
Total deposits as of March 31, 2026
Loan sales
$3.33B
Private education loans sold in Q1 2026 (principal plus capitalized interest)
Share repurchases
12.03M shares
Common stock repurchased in Q1 2026 at ~$21.50 average
Key Terms
Private Education Loans, allowance for credit losses, variable interest entities (VIEs), accelerated share repurchase agreement, +2 more
6 terms
Private Education Loans financial
"Loans held for investment consist solely of Private Education Loans as of March 31, 2026."
allowance for credit losses financial
"Our provision for credit losses represents the periodic expense of maintaining an allowance sufficient to absorb lifetime expected credit losses..."
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
variable interest entities (VIEs) financial
"There were VIEs created in the execution of certain of these loan sales; however, based on our consolidation analysis, we are not the primary beneficiary..."
A variable interest entity (VIE) is a business structure where one party controls another company’s operations and economic benefits through contracts rather than majority ownership, often used when direct ownership is restricted. Think of it like having power of attorney over a business: you run it and get the profits, but you don’t hold the legal title. For investors this matters because VIEs can concentrate legal and regulatory risk and may limit shareholders’ direct rights to assets, which can affect valuation and stability.
accelerated share repurchase agreement financial
"On March 9, 2026, we entered into an accelerated share repurchase agreement (“ASR”) with a third-party financial institution..."
An accelerated share repurchase agreement is a deal where a company quickly buys back its own shares by paying a financial institution up front, while the institution delivers shares it borrows and settles the exact quantity later based on market prices. For investors this matters because it immediately reduces the number of shares outstanding and can boost per-share earnings, change cash and leverage levels, and signal management’s view on the stock’s value.
term asset-backed securities (ABS) financial
"Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term asset-backed securities (“ABS”) program..."
Secured Overnight Financing Rate (SOFR) financial
"Private Education Loans may be fixed-rate or may carry a variable interest rate indexed to SOFR, the Secured Overnight Financing Rate."
A secured overnight financing rate (SOFR) is the interest rate on very short, one‑day loans that are backed by high‑quality collateral (like government bonds), so lenders face less risk. Investors care because SOFR is a widely used benchmark that sets the cost of borrowing and the pricing of loans, bonds and derivatives; think of it as a trusted yardstick for short‑term interest costs that influences returns and valuations across markets.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
For the quarterly period ended March 31, 2026
or
For the transition period from to
Commission File Number: 001-13251
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(302 ) 451-4911
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | |||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of March 31, 2026, there were 188,582,790 shares of common stock outstanding.
SLM CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
| PART I. Financial Information | |||||||||||
| Item 1. | Financial Statements | 2 | |||||||||
Notes to the Financial Statements | 9 | ||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 46 | |||||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 72 | |||||||||
| Item 4. | Controls and Procedures | 74 | |||||||||
| PART II. Other Information | |||||||||||
| Item 1. | Legal Proceedings | 75 | |||||||||
| Item 1A. | Risk Factors | 75 | |||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 75 | |||||||||
| Item 3. | Defaults Upon Senior Securities | 75 | |||||||||
| Item 4. | Mine Safety Disclosures | 75 | |||||||||
| Item 5. | Other Information | 76 | |||||||||
| Item 6. | Exhibits | 76 | |||||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| (Dollars in thousands, except share and per share amounts) | 2026 | 2025 | ||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Investments: | ||||||||||||||
Trading investments at fair value (cost of $ | ||||||||||||||
Available-for-sale investments at fair value (cost of $ | ||||||||||||||
| Other investments | ||||||||||||||
| Total investments | ||||||||||||||
Loans held for investment (net of allowance for losses of $ | ||||||||||||||
| Loans held for sale | ||||||||||||||
| Restricted cash | ||||||||||||||
| Other interest-earning assets | ||||||||||||||
| Accrued interest receivable | ||||||||||||||
| Premises and equipment, net | ||||||||||||||
| Goodwill and acquired intangible assets, net | ||||||||||||||
| Income taxes receivable, net | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||
| Deposits | $ | $ | ||||||||||||
| Short-term borrowings | ||||||||||||||
| Long-term borrowings | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
Preferred stock, par value $ | ||||||||||||||
Series B: | ||||||||||||||
Common stock, par value $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive loss (net of tax benefit of ($ | ( | ( | ||||||||||||
| Retained earnings | ||||||||||||||
| Total SLM Corporation stockholders’ equity before treasury stock | ||||||||||||||
Less: Common stock held in treasury at cost: | ( | ( | ||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
2
| CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||
| Loans | $ | $ | ||||||||||||||||||||||||
| Investments | ||||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||||
| Total interest income | ||||||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||
| Interest expense on short-term borrowings | ||||||||||||||||||||||||||
| Interest expense on long-term borrowings | ||||||||||||||||||||||||||
| Total interest expense | ||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||
| Less: provisions for credit losses | ( | |||||||||||||||||||||||||
| Net interest income after provisions for credit losses | ||||||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||
| Gains on sales of loans, net | ||||||||||||||||||||||||||
| Losses on securities, net | ( | ( | ||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||
| Total non-interest income | ||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | ||||||||||||||||||||||||||
| FDIC assessment fees | ||||||||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Acquired intangible assets amortization expense | ||||||||||||||||||||||||||
| Total non-interest expenses | ||||||||||||||||||||||||||
| Income before income tax expense | ||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||
| Preferred stock dividends | ||||||||||||||||||||||||||
| Net income attributable to SLM Corporation common stock | $ | $ | ||||||||||||||||||||||||
| Basic earnings per common share | $ | $ | ||||||||||||||||||||||||
| Average common shares outstanding | ||||||||||||||||||||||||||
| Diluted earnings per common share | $ | $ | ||||||||||||||||||||||||
| Average common and common equivalent shares outstanding | ||||||||||||||||||||||||||
| Declared dividends per common share | $ | $ | ||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
3
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||||||||||||||||||||||||
(Dollars in thousands) | Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
| Other comprehensive income: | ||||||||||||||||||||||||||
| Unrealized gains on investments | ||||||||||||||||||||||||||
| Unrealized losses on cash flow hedges | ( | ( | ||||||||||||||||||||||||
| Total unrealized gains | ||||||||||||||||||||||||||
| Income tax expense | ( | ( | ||||||||||||||||||||||||
| Other comprehensive income, net of tax expense | ||||||||||||||||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
4
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share and per share amounts) | Preferred Stock Shares | Issued | Treasury | Outstanding | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | ( | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock, Series B ($ | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | — | — | ( | ( | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased related to employee stock-based compensation plans | — | — | ( | ( | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
5
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share and per share amounts) | Preferred Stock Shares | Issued | Treasury | Outstanding | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | ( | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock, Series B ($ | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | — | — | ( | ( | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased related to employee stock-based compensation plans | — | — | ( | ( | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
6
| CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||
| Operating activities | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||
| Provisions for credit losses | ( | |||||||||||||
| Income tax expense | ||||||||||||||
| Amortization of brokered deposit placement fee | ||||||||||||||
| Amortization of Secured Borrowing Facility upfront fee | ||||||||||||||
| Amortization of deferred loan origination costs and loan premium/(discounts), net | ||||||||||||||
| Net amortization of discount on investments | ( | ( | ||||||||||||
| Depreciation of premises and equipment | ||||||||||||||
| Acquired intangible assets amortization expense | ||||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Unrealized (gains) losses on derivatives and hedging activities, net | ( | |||||||||||||
| Gains on sales of loans, net | ( | ( | ||||||||||||
| Losses on securities, net | ||||||||||||||
| Other adjustments to net income, net | ( | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Increase in accrued interest receivable | ( | ( | ||||||||||||
| Increase in trading investments | ( | |||||||||||||
| Increase in non-marketable securities | ( | |||||||||||||
| Decrease in other interest-earning assets | ||||||||||||||
| Increase in other assets | ( | ( | ||||||||||||
| Decrease in income taxes payable, net | ( | ( | ||||||||||||
| Decrease in accrued interest payable | ( | ( | ||||||||||||
| Decrease in other liabilities | ( | ( | ||||||||||||
| Total adjustments | ( | ( | ||||||||||||
| Total net cash used in operating activities | ( | ( | ||||||||||||
| Investing activities | ||||||||||||||
| Loans acquired and originated | ( | ( | ||||||||||||
| Net proceeds from sales of loans held for investment and loans held for sale | ||||||||||||||
| Net decrease in loans held for investment and loans held for sale (other than loans acquired and originated, and loan sales) | ||||||||||||||
| Purchases of available-for-sale securities | ( | ( | ||||||||||||
| Proceeds from sales and maturities of available-for-sale securities | ||||||||||||||
| Total net cash provided by investing activities | ||||||||||||||
| Financing activities | ||||||||||||||
| Brokered deposit placement fee | ( | |||||||||||||
| Net increase (decrease) in certificates of deposit | ( | |||||||||||||
| Net decrease in other deposits | ( | ( | ||||||||||||
| Issuance costs for collateralized borrowings | ( | |||||||||||||
| Borrowings collateralized by loans in securitization trusts - issued | ||||||||||||||
| Borrowings collateralized by loans in securitization trusts - repaid | ( | ( | ||||||||||||
| Issuance costs for unsecured debt offering | ( | |||||||||||||
| Unsecured debt issued | ||||||||||||||
| Unsecured debt repaid | ( | |||||||||||||
| Fees paid on Secured Borrowing Facility | ( | |||||||||||||
| Common stock dividends paid | ( | ( | ||||||||||||
| Preferred stock dividends paid | ( | ( | ||||||||||||
| Common stock repurchased | ( | ( | ||||||||||||
| Total net cash used in financing activities | ( | ( | ||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | |||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||
7
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||||||||
| Cash disbursements made for: | ||||||||||||||
| Interest | $ | $ | ||||||||||||
| Income taxes paid | $ | $ | ||||||||||||
| Income taxes refunded | $ | ( | $ | ( | ||||||||||
| Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||||||||
| Supplemental non-cash investing activities: | ||||||||||||||
| Accrued interest capitalized during the period | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
8
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, consolidated financial statements of SLM Corporation (“Sallie Mae,” “SLM,” the “Company,” “we,” or “us”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements include the accounts of SLM Corporation and its majority-owned and controlled subsidiaries after eliminating the effects of intercompany accounts and transactions. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or for any other period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries after eliminating the effects of intercompany accounts and transactions.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statements of income. The guidance in this standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the ASU on our consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU amendments modernize guidance to consider different methods of software development, updating the requirements for capitalization of software costs. The standard is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. The ASU can be applied on a prospective, modified transition, or retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The ASU is intended to improve the hedge accounting model to better portray the results of risk management activities in the financial statements. The ASU is effective for fiscal reporting periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. Adoption is on a prospective basis. We are currently evaluating the impact of the ASU on our consolidated financial statements.
9
2. Investments
Trading Investments
We periodically sell Private Education Loans through securitization transactions where we are required to retain a five percent vertical risk retention interest (i.e., five percent of each class issued in the securitizations). We classify those vertical risk retention interests related to the transactions as available-for-sale investments, except for the interest in the residual classes, which we classify as trading investments recorded at fair value with changes recorded through earnings. At March 31, 2026 and December 31, 2025, we had $46 million and $49 million, respectively, classified as trading investments.
Available-for-Sale Investments
The amortized cost and fair value of securities available for sale are as follows:
| As of March 31, 2026 (dollars in thousands) | Amortized Cost | Allowance for credit losses(1) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||||||
| Mortgage-backed securities | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Utah Housing Corporation bonds | ( | |||||||||||||||||||||||||||||||
| U.S. government-sponsored enterprises and Treasuries | ( | |||||||||||||||||||||||||||||||
| Other securities | ( | |||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| As of December 31, 2025 (dollars in thousands) | Amortized Cost | Allowance for credit losses(1) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||||||
| Mortgage-backed securities | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| Utah Housing Corporation bonds | ( | |||||||||||||||||||||||||||||||
| U.S. government-sponsored enterprises and Treasuries | ( | |||||||||||||||||||||||||||||||
| Other securities | ( | |||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
10
| 2. | Investments (Continued) | |||||||
The following table summarizes the amount of gross unrealized losses for our available-for-sale securities and the estimated fair value for securities having gross unrealized loss positions, categorized by length of time the securities have been in an unrealized loss position:
(Dollars in thousands) | Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||||
| Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||||||||||||
As of March 31, 2026: | ||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Utah Housing Corporation bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
| U.S. government-sponsored enterprises and Treasuries | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
As of December 31, 2025: | ||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Utah Housing Corporation bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
| U.S. government-sponsored enterprises and Treasuries | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||
At March 31, 2026 and December 31, 2025, 198 of 296 and 179 of 295 , respectively, of our available-for-sale securities were in an unrealized loss position.
Impairment
For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell or, if it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria are met, the security’s amortized cost basis is written down to fair value through net income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, as well as any guarantees (e.g., guarantees by the U.S. Government) that may be applicable to the security. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security.
Our investment portfolio contains mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, as well as Utah Housing Corporation bonds. We own these securities to meet our requirements under the Community Reinvestment Act (“CRA”). We also invest in other U.S. government-sponsored enterprise securities issued by the Federal Home Loan Banks, Freddie Mac, and the Federal Farm Credit Bank. Our mortgage-backed securities that were issued under Ginnie Mae programs carry a full faith and credit guarantee from the U.S. Government. The remaining mortgage-backed securities in a net loss position carry a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. Our Treasury and other U.S. government-sponsored enterprise bonds are rated Aaa by Moody’s Investors Service or AA+ by Standard and Poor’s. We have the intent and ability to hold these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. Based on this qualitative analysis, we have determined that no credit impairment exists.
We periodically sell Private Education Loans through securitization transactions where we are required to retain a five percent vertical risk retention interest. We classify the non-residual vertical risk retention interests as available-for-sale investments. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. We expect to receive all contractual cash flows related to these investments and do not consider a credit impairment to exist.
11
| 2. | Investments (Continued) | |||||||
As of March 31, 2026, the amortized cost and fair value of securities, by contractual maturities, are summarized below. Contractual maturities versus actual maturities may differ due to the effect of prepayments.
As of March 31, 2026 Year of Maturity (dollars in thousands) | Amortized Cost | Estimated Fair Value | ||||||||||||
| 2026 | $ | $ | ||||||||||||
| 2027 | ||||||||||||||
| 2038 | ||||||||||||||
| 2039 | ||||||||||||||
| 2042 | ||||||||||||||
| 2043 | ||||||||||||||
| 2044 | ||||||||||||||
| 2045 | ||||||||||||||
| 2046 | ||||||||||||||
| 2047 | ||||||||||||||
| 2048 | ||||||||||||||
| 2049 | ||||||||||||||
| 2050 | ||||||||||||||
| 2051 | ||||||||||||||
| 2052 | ||||||||||||||
| 2053 | ||||||||||||||
| 2054 | ||||||||||||||
| 2055 | ||||||||||||||
| 2056 | ||||||||||||||
| 2058 | ||||||||||||||
| Total | $ | $ | ||||||||||||
Some of the mortgage-backed securities and a portion of the government securities have been pledged to the Federal Reserve Bank (the “FRB”) as collateral against any advances and accrued interest under the Primary Credit lending program sponsored by the FRB. We had $641
Other Investments
Investments in Non-Marketable Securities
We hold investments in non-marketable securities and account for these investments at cost, less impairment, plus or minus observable price changes of identical or similar securities of the same issuer. Changes in market value are recorded through earnings. Because these are non-marketable securities, we use observable price changes of identical or similar securities of the same issuer, or when observable prices are not available, use market data of similar entities, in determining any changes in the value of the securities. In the first quarter of 2025, we recognized an impairment on certain of our other non-marketable equity securities, related to our former credit card platform, resulting in a loss of $10 million, which is net of a valuation adjustment on a trading investment with the same issuer. As of both March 31, 2026 and December 31, 2025, our total investment in non-marketable securities was $12
12
| 2. | Investments (Continued) | |||||||
Low Income Housing Tax Credit Investments
We invest in affordable housing projects that qualify for the low-income housing tax credit (“LIHTC”), which is designed to promote private development of low-income housing. These investments generate a return mostly through realization of federal tax credits and tax benefits from net operating losses on the underlying properties. Total carrying value of the LIHTC investments was $93 million at March 31, 2026 and $96 million at December 31, 2025. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $34 million at March 31, 2026 and $36 million at December 31, 2025.
Related to these investments, we recognized tax credits and other tax benefits through tax expense of $2 million at March 31, 2026 and $14 million at December 31, 2025. Tax credits and other tax benefits are recognized as part of our annual effective tax rate used to determine tax expense in a given quarter. Accordingly, the portion of a year’s expected tax benefits recognized in any given quarter may differ from 25 percent.
3. Loans Held for Investment
Loans held for investment consist solely of Private Education Loans as of March 31, 2026. We use “Private Education Loans” to mean education loans to students or their families that are not made, insured, or guaranteed by any state or federal government.
Our Private Education Loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, government loans, and customers’ resources. Private Education Loans bear the full credit risk of the customer. We manage this risk through risk-performance underwriting strategies and qualified cosigners. Private Education Loans may be fixed-rate or may carry a variable interest rate indexed to SOFR, the Secured Overnight Financing Rate. As of both March 31, 2026 and December 31, 2025, 22
The following table summarizes our Private Education Loan sales to unaffiliated third parties for the periods presented.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
(Dollars in millions) | 2026 | 2025 | ||||||||||||||||||||||||
| Loan principal | $ | $ | ||||||||||||||||||||||||
Capitalized interest | ||||||||||||||||||||||||||
| Total Private Education Loans sold | $ | $ | ||||||||||||||||||||||||
Gain on sale of loans, net | $ | $ | ||||||||||||||||||||||||
There were VIEs created in the execution of certain of these loan sales; however, based on our consolidation analysis, we are not the primary beneficiary of those VIEs. These 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, see Note 8, “Borrowings - Unconsolidated Funding Vehicles” in this Form 10-Q.
Certain of these loans sales were a component of a larger transaction that included fees paid to us as a decision maker or service provider. Based on our analysis, we determined that the fees are not variable interests in VIEs. For additional information, see Note 2, “Significant Accounting Policies — Variable Interest Entities (“VIEs”)” in our 2025 Form 10-K for additional information.
13
| 3. | Loans Held for Investment (Continued) | |||||||
Loans held for investment are summarized as follows:
| March 31, | December 31, | |||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||
| Loans Held for Investment, net: | ||||||||||||||
| Fixed-rate | $ | $ | ||||||||||||
| Variable-rate | ||||||||||||||
| Total Private Education Loans, gross | ||||||||||||||
| Deferred origination costs and unamortized premium/(discount) | ||||||||||||||
| Allowance for credit losses | ( | ( | ||||||||||||
| Loans held for investment, net | $ | $ | ||||||||||||
The estimated weighted average life of education loans in our portfolio was approximately 5.7
The average balance (net of unamortized premium/(discount)) and the respective weighted average interest rates of loans held for investment in our portfolio are summarized as follows:
| 2026 | 2025 | |||||||||||||||||||||||||
Three Months Ended March 31, (dollars in thousands) | Average Balance | Weighted Average Interest Rate | Average Balance | Weighted Average Interest Rate | ||||||||||||||||||||||
| Private Education Loans | $ | % | $ | % | ||||||||||||||||||||||
| Total portfolio | $ | $ | ||||||||||||||||||||||||
See Note 5, “Loans Held for Investment — Certain Collection Tools — Private Education Loans” in our 2025 Form 10-K for additional information.
4. Loans Held for Sale
14
5. Allowance for Credit Losses and Unfunded Loan Commitments
Our provision for credit losses represents the periodic expense of maintaining an allowance sufficient to absorb lifetime expected credit losses in the held for investment loan portfolio and unfunded loan commitments. The evaluation of the allowance for credit losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. We believe the allowance for credit losses is appropriate to cover lifetime expected losses incurred in the loan portfolio.
When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. The allowance is recorded in “Other Liabilities” on the consolidated balance sheet. When the loan is funded, we transfer that liability to the allowance for loan losses.
The majority of the total accrued interest receivable on our Private Education Loan portfolio represents accrued interest on deferred loans where no payments are due while the borrower is in school and on fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accrued on the loan in that month. The allowance for credit losses considers the collectability of both principal and accrued interest. The allowance for uncollectible interest estimates the additional uncollectible interest that is not captured in the allowance for credit losses. See “— Accrued Interest Receivable” in this Note 5 for further discussion.
See Note 2, “Significant Accounting Policies — Allowance for Credit Losses” in our 2025 Form 10-K for a more detailed discussion on our allowance for credit losses accounting policies.
15
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Allowance for Credit Losses Metrics
The following tables provide a summary of the activity in the allowance for loan losses and the allowance for unfunded loan commitments during the three months ended March 31, 2026 and 2025.
Three Months Ended March 31, 2026 (dollars in thousands) | Private Education Loans | |||||||||||||||||||||||||
| Allowance for loan losses, beginning balance | $ | |||||||||||||||||||||||||
| Transfer from allowance for unfunded loan commitments | ||||||||||||||||||||||||||
| Provisions: | ||||||||||||||||||||||||||
| Provision for current period | ||||||||||||||||||||||||||
| Loan sale reduction to provision | ( | |||||||||||||||||||||||||
| Loans transferred to held for sale | ( | |||||||||||||||||||||||||
Total provisions(1) | ( | |||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||
| Charge-offs | ( | |||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||
| Net charge-offs | ( | |||||||||||||||||||||||||
| Allowance for loan losses, ending balance | $ | |||||||||||||||||||||||||
Allowance for unfunded loan commitments, beginning balance(2) | ||||||||||||||||||||||||||
Provision(1)(3) | ||||||||||||||||||||||||||
| Transfer to allowance for loan losses | ( | |||||||||||||||||||||||||
Allowance for unfunded loan commitments, ending balance(2) | ||||||||||||||||||||||||||
| Total allowance for credit losses, ending balance | $ | |||||||||||||||||||||||||
Net charge-offs as a percentage of average loans in repayment (annualized)(4) | % | |||||||||||||||||||||||||
| Allowance for loan losses coverage of net charge-offs (annualized) | ||||||||||||||||||||||||||
Total Allowance Percentage of Private Education Loan Exposure(5)(6) | % | |||||||||||||||||||||||||
| Ending total loans, gross | $ | |||||||||||||||||||||||||
Average loans in repayment(4) | $ | |||||||||||||||||||||||||
Ending loans in repayment(4) | $ | |||||||||||||||||||||||||
Unfunded loan commitments for loans held for investment(6) | $ | |||||||||||||||||||||||||
| Total accrued interest receivable | $ | |||||||||||||||||||||||||
(1) See “—Provisions for Credit Losses” below in this Note 5 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
(2) When a new loan commitment is made, we record an allowance to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheet. See “—Unfunded Loan Commitments” in this Note 5 for further discussion.
(3) Includes incremental provision for new commitments and changes to provision for existing commitments.
(4) Loans in repayment include 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 (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
(5) The Total Allowance Percentage of Private Education Loan Exposure is the total allowance for credit losses as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable on Private Education Loans.
(6) Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $35 million of unfunded loan commitments associated with loans classified as held for sale at March 31, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.
16
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Three Months Ended March 31, 2025 (dollars in thousands) | Private Education Loans | |||||||||||||||||||||||||
| Allowance for loan losses, beginning balance | $ | |||||||||||||||||||||||||
| Transfer from allowance for unfunded loan commitments | ||||||||||||||||||||||||||
| Provisions: | ||||||||||||||||||||||||||
| Provision for current period | ||||||||||||||||||||||||||
| Loan sale reduction to provision | ( | |||||||||||||||||||||||||
Total provisions(1) | ( | |||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||
| Charge-offs | ( | |||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||
| Net charge-offs | ( | |||||||||||||||||||||||||
| Allowance for loan losses, ending balance | $ | |||||||||||||||||||||||||
Allowance for unfunded loan commitments, beginning balance(2) | ||||||||||||||||||||||||||
Provision(1)(3) | ||||||||||||||||||||||||||
| Transfer to allowance for loan losses | ( | |||||||||||||||||||||||||
Allowance for unfunded loan commitments, ending balance(2) | ||||||||||||||||||||||||||
| Total allowance for credit losses, ending balance | $ | |||||||||||||||||||||||||
Net charge-offs as a percentage of average loans in repayment (annualized)(4) | % | |||||||||||||||||||||||||
| Allowance for loan losses coverage of net charge-offs (annualized) | ||||||||||||||||||||||||||
Total Allowance Percentage of Private Education Loan Exposure(5) | % | |||||||||||||||||||||||||
| Ending total loans, gross | $ | |||||||||||||||||||||||||
Average loans in repayment(4) | $ | |||||||||||||||||||||||||
Ending loans in repayment(4) | $ | |||||||||||||||||||||||||
| Unfunded loan commitments | $ | |||||||||||||||||||||||||
| Total accrued interest receivable | $ | |||||||||||||||||||||||||
(1) See “—Provisions for Credit Losses” below in this Note 5 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
(2) When a new loan commitment is made, we record an allowance to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheet. See “—Unfunded Loan Commitments” in this Note 5 for further discussion.
(3) Includes incremental provision for new commitments and changes to provision for existing commitments.
(4) Loans in repayment include 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 (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
(5) The Total Allowance Percentage of Private Education Loan Exposure is the total allowance for credit losses as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable on Private Education Loans.
l
17
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Provisions for Credit Losses
Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
| Consolidated Statements of Income Provisions for Credit Losses Reconciliation | |||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| (dollars in thousands) | 2026 | 2025 | |||||||||||||||||||||||||||
| Provisions for credit losses: | |||||||||||||||||||||||||||||
| Provisions for loan losses | $ | ( | $ | ( | |||||||||||||||||||||||||
| Provisions for unfunded loan commitments | |||||||||||||||||||||||||||||
| Provisions for credit losses reported in consolidated statements of income | $ | ( | $ | ||||||||||||||||||||||||||
Provision for credit losses for the three months ended March 31, 2026 decreased by $35 million, compared with the year-ago period. During the three months ended March 31, 2026, the provision for credit losses was primarily affected by $120 million in negative provisions recorded as a result of the $3.33 billion in Private Education Loan sales during the first three months of 2026 and the $10 million reversal of provision due to the transfer of loans to held for sale, offset by new loan commitments, net of expired commitments, and changes in economic outlook. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in economic outlook, offset by $116 million in negative provisions recorded as a result of the $2.00 billion Private Education Loan sale during the first three months of 2025, and adjustments to the weightings of our economic forecast scenarios.
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical information, which includes losses from modifications of receivables whose borrowers are experiencing financial difficulty. We use a discounted cash flow model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made as of the date of a modification.
The effect of most 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 forecast of expected future cash flows is updated as the loan modifications occur.
As part of concluding on the adequacy of the allowance for credit losses, we review key allowance and loan metrics. The most significant of the metrics considered are the allowance coverage of net charge-offs ratio; the allowance as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable (which we refer to as the “Total Allowance Percentage of Private Education Loan Exposure”); and delinquency and forbearance percentages.
Within the Private Education Loan portfolio, we deem loans greater than 90 days past due as nonperforming.
For additional information, see Note 1, “Significant Accounting Policies — Allowance for Credit Losses” in this Form 10-Q and Note 7, “Allowance for Credit Losses and Unfunded Loan Commitments” in our 2025 Form 10-K.
Forbearance
Under our current forbearance practices, temporary forbearance of payments is generally granted in one-to-two month increments, for up to 12 months over the life of the loan, with 12 months of positive payment performance by a borrower required between grants (meaning the borrower must make payment in a cumulative amount equivalent to 12 monthly required payments under the loan). During the first six months following a borrower’s grace period, the borrower may be eligible for extended grace forbearance in one six-month increment (which would also count towards the 12-month forbearance cap). Due to our current forbearance practices, including the limitations on forbearances offered to borrowers, we do not believe the granting of forbearances will exceed the significance threshold under our accounting policy and, therefore, we do not consider the forbearances as loan modifications for the purposes of the tables below.
For additional information on our forbearance and modification programs, see Note 5, “Loans Held for Investment —Certain Collection Tools — Private Education Loans” in our 2025 Form 10-K. The tables below provide information about modifications to borrowers experiencing financial difficulty.
We offer certain administrative forbearances (e.g., death and disability, bankruptcy, military service, disaster forbearance, and in school assistance) that are required by law (such as by the Servicemembers Civil Relief Act), are considered separate from our active loss mitigation programs, or do not exceed the significance threshold and therefore
18
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
are not considered to be loan modifications requiring disclosure. In addition, we may offer on a limited basis term extensions or rate reductions or a combination of both to borrowers to reduce consolidation activities. We do not consider them modifications of loans to borrowers experiencing financial difficulty and they therefore are not included in the tables below.
Loan Modifications to Borrowers Experiencing Financial Difficulty
The following tables show the amortized cost basis at the end of the respective reporting periods of the loans to borrowers experiencing financial difficulty that were modified during the period, disaggregated by class of financing receivable and type of modification. When we approve a Private Education Loan at the beginning of an academic year, we do not always disburse the full amount of the loan at the time of approval, but instead have a commitment to fund a portion of the loan at a later date (usually at the start of the second semester or subsequent trimesters). We consider borrowers to be in financial difficulty after they have exited school and have difficulty making their scheduled principal and interest payments.
| Loan Modifications Made to Borrowers Experiencing Financial Difficulty | ||||||||||||||||||||||||||
Three Months Ended March 31, 2026 (dollars in thousands) | Interest Rate Reduction | Combination - Interest Rate Reduction and Term Extension | ||||||||||||||||||||||||
| Loan Type: | Amortized Cost Basis | % of Total Class of Financing Receivable | Amortized Cost Basis | % of Total Class of Financing Receivable | ||||||||||||||||||||||
| Private Education Loans | $ | % | $ | % | ||||||||||||||||||||||
| Total | $ | % | $ | % | ||||||||||||||||||||||
| Loan Modifications Made to Borrowers Experiencing Financial Difficulty | ||||||||||||||||||||||||||
Three Months Ended March 31, 2025 (dollars in thousands) | Interest Rate Reduction | Combination - Interest Rate Reduction and Term Extension | ||||||||||||||||||||||||
| Loan Type: | Amortized Cost Basis | % of Total Class of Financing Receivable | Amortized Cost Basis | % of Total Class of Financing Receivable | ||||||||||||||||||||||
| Private Education Loans | $ | % | $ | % | ||||||||||||||||||||||
| Total | $ | % | $ | % | ||||||||||||||||||||||
The following tables summarize the financial effect of the modifications made to loans whose borrowers are experiencing financial difficulty:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Interest Rate Reduction | Combination - Interest Rate Reduction and Term Extension | Interest Rate Reduction | Combination - Interest Rate Reduction and Term Extension | |||||||||||||||||
| Financial Effect: | Financial Effect: | Financial Effect: | Financial Effect: | |||||||||||||||||
Reduced average contractual rate from | Added a weighted average Reduced average contractual rate from | Reduced average contractual rate from | Added a weighted average Reduced average contractual rate from | |||||||||||||||||
19
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Private Education Loans are charged off at the end of the month in which they reach 120 days delinquent or otherwise when the loans are classified as a loss by us or our regulator. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Allowance for Private Education Loan Losses” in our 2025 Form 10-K for a more detailed discussion.
For the periods presented, the following table presents the defaulted amount and period-end amortized cost basis, by modification category, of loans that defaulted during the period and were modified for borrowers experiencing financial difficulty during the 12 months preceding default. Solely for the purpose of the below table, our definition of payment default is two missed consecutive post-modification payment obligations. As such, defaulted amount represents the principal amount of modified loans at the time the borrower missed two consecutive post-modification payment obligations during the period. Loans that were modified during the twelve months ended March 31, 2026 and subsequently charged-off during the three months ended March 31, 2026 are not included in the period-end amortized cost basis and had an amortized cost basis of $15.2 million at the time of charge-off.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (Dollars in thousands) | Defaulted Amount | Period-end Amortized Cost Basis | Defaulted Amount | Period-end Amortized Cost Basis | ||||||||||||||||||||||
| Loan Type: | ||||||||||||||||||||||||||
| Private Education Loans | ||||||||||||||||||||||||||
| Interest Rate Reduction | $ | $ | $ | $ | ||||||||||||||||||||||
| Combination - Interest Rate Reduction and Term Extension | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
20
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
We closely monitor performance of the loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of the modification efforts. The following table depicts the performance of loans that were modified within the three months prior to March 31, 2026, the 12 months prior to March 31, 2026, and the 12 months prior to December 31, 2025, respectively.
| Three Months Ended March 31, 2026 | Twelve Months Ended March 31, 2026 | Twelve Months Ended December 31, 2025 | |||||||||||||||||||||||||||
| (Dollars in thousands) | Balance | % | Balance | % | Balance | % | |||||||||||||||||||||||
Payment Status (Amortized Cost Basis at March 31, 2026)(1): | |||||||||||||||||||||||||||||
Loan modifications in deferment(2) | $ | $ | $ | ||||||||||||||||||||||||||
| Loan modifications in repayment: | |||||||||||||||||||||||||||||
Loans current(3)(4) | % | % | % | ||||||||||||||||||||||||||
Loans delinquent 30-59 days(3)(4) | % | % | % | ||||||||||||||||||||||||||
Loans delinquent 60-89 days(3)(4) | % | % | % | ||||||||||||||||||||||||||
Loans 90 days or greater past due(3)(4) | % | % | % | ||||||||||||||||||||||||||
| Total loan modifications in repayment | % | % | % | ||||||||||||||||||||||||||
| Total Private Education Loan modifications | $ | $ | $ | ||||||||||||||||||||||||||
(1) Loans that were modified during the twelve months ended March 31, 2026 and subsequently charged-off during the three months ended March 31, 2026 are excluded from the table and had an amortized cost basis of $15.2 million. Loans that were both modified and subsequently charged-off during the twelve months ended March 31, 2026 are excluded from the table and had an amortized cost basis of $40.7 million. Loans that were both modified and subsequently charged-off during the twelve months ended December 31, 2025 are excluded from the table and had an amortized cost basis of $39.1 million.
(2) Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make full principal and interest payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation). Deferment also includes loans that have entered a forbearance after the loan modification was granted.
(3) Represents loans in repayment, which include loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
(4) The period of delinquency is based on the number of days scheduled payments are contractually past due.
21
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Private Education Loans Held for Investment - Key Credit Quality Indicators
For Private Education Loans, the key credit quality indicators are FICO scores, the existence of a cosigner, the loan status, and loan seasoning. The FICO scores are assessed at original approval and periodically refreshed/updated through the loan’s term. The following tables highlight the gross principal balance of our Private Education Loan portfolio (held for investment), by year of origination approval/first disbursement, stratified by key credit quality indicators.
As of March 31, 2026 (dollars in thousands) | Private Education Loans Held for Investment - Credit Quality Indicators | |||||||||||||||||||||||||||||||||||||||||||||||||
| Year of Origination Approval | 2026(1) | 2025(1) | 2024(1) | 2023(1) | 2022(1) | 2021 and Prior(1) | Total(1) | % of Balance | ||||||||||||||||||||||||||||||||||||||||||
| Cosigners: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| With cosigner | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| Without cosigner | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
FICO at Origination Approval(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 670 | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 670-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 700-749 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
FICO Refreshed(2)(3): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 670 | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 670-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 700-749 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
Seasoning(4): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-12 payments | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 13-24 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 25-36 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 37-48 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| More than 48 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not yet in repayment | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
2026 Current period(5) gross charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
2026 Current period(5) recoveries | ||||||||||||||||||||||||||||||||||||||||||||||||||
2026 Current period(5) net charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
| Total accrued interest by origination approval vintage | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
(1)Balance represents gross Private Education Loans held for investment. (2)Represents the higher credit score of the cosigner or the borrower. (3)Represents the FICO score updated as of the first quarter 2026. (4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due. (5)Current period refers to period from January 1, 2026 through March 31, 2026. | ||||||||||||||||||||||||||||||||||||||||||||||||||
22
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
| As of December 31, 2025 (dollars in thousands) | Private Education Loans Held for Investment - Credit Quality Indicators | |||||||||||||||||||||||||||||||||||||||||||||||||
| Year of Origination Approval | 2025(1) | 2024(1) | 2023(1) | 2022(1) | 2021(1) | 2020 and Prior(1) | Total(1) | % of Balance | ||||||||||||||||||||||||||||||||||||||||||
| Cosigners: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| With cosigner | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| Without cosigner | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
FICO at Origination Approval(2): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 670 | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 670-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 700-749 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
FICO Refreshed(2)(3): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 670 | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 670-699 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 700-749 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 750 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
Seasoning(4): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-12 payments | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| 13-24 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 25-36 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 37-48 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| More than 48 payments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not yet in repayment | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||
2025 Current period(5) gross charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
2025 Current period(5) recoveries | ||||||||||||||||||||||||||||||||||||||||||||||||||
2025 Current period(5) net charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
| Total accrued interest by origination approval vintage | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
(1)Balance represents gross Private Education Loans held for investment.
(2)Represents the higher credit score of the cosigner or the borrower.
(3)Represents the FICO score updated as of the fourth quarter 2025.
(4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due.
23
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Delinquencies - Private Education Loans Held for Investment
The following tables provide information regarding the loan status of our Private Education Loans held for investment, by year of origination approval/first disbursement. Loans in repayment include 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 (but, for purposes of the following tables, do not include loans in the “loans in forbearance” metric).
| Private Education Loans Held for Investment - Delinquencies by Origination Approval Vintage | ||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2026 (dollars in thousands) | 2026 | 2025 | 2024 | 2023 | 2022 | 2021 and Prior | Total | |||||||||||||||||||||||||||||||||||||
Loans in-school/grace/deferment(1) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Loans in forbearance(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment: | ||||||||||||||||||||||||||||||||||||||||||||
| Loans current | ||||||||||||||||||||||||||||||||||||||||||||
Loans delinquent 30-59 days(3) | ||||||||||||||||||||||||||||||||||||||||||||
Loans delinquent 60-89 days(3) | ||||||||||||||||||||||||||||||||||||||||||||
Loans 90 days or greater past due(3) | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans in repayment | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans, gross | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans deferred origination costs and unamortized premium/(discount) | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans allowance for losses | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Private Education Loans, net | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Percentage of Private Education Loans in repayment | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Loans in forbearance as a percentage of loans in repayment and forbearance | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
(1)Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).
(2)Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors (other than delinquent loans in disaster forbearance), 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.
24
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
| Private Education Loans Held for Investment - Delinquencies by Origination Vintage | ||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 (dollars in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 and Prior | Total | |||||||||||||||||||||||||||||||||||||
Loans in-school/grace/deferment(1) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Loans in forbearance(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment: | ||||||||||||||||||||||||||||||||||||||||||||
| Loans current | ||||||||||||||||||||||||||||||||||||||||||||
Loans delinquent 30-59 days(3) | ||||||||||||||||||||||||||||||||||||||||||||
Loans delinquent 60-89 days(3) | ||||||||||||||||||||||||||||||||||||||||||||
Loans 90 days or greater past due(3) | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans in repayment | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans, gross | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans deferred origination costs and unamortized premium/(discount) | ||||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans allowance for losses | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Private Education Loans, net | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Percentage of Private Education Loans in repayment | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
| Loans in forbearance as a percentage of loans in repayment and forbearance | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||
(1)Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).
(2)Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors (other than delinquent loans in disaster forbearance), 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.
25
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Accrued Interest Receivable
The following table provides information regarding accrued interest receivable on our Private Education Loans. 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. The allowance for credit losses considers the collectibility of both principal and accrued interest. The allowance for uncollectible interest estimates the additional uncollectible interest that is not captured in the allowance for credit losses.
| Private Education Loans | ||||||||||||||||||||
| Accrued Interest Receivable | ||||||||||||||||||||
| (Dollars in thousands) | Total Interest Receivable | 90 Days or Greater Past Due | Allowance for Uncollectible Interest(1) | |||||||||||||||||
| March 31, 2026 | $ | $ | $ | |||||||||||||||||
| December 31, 2025 | $ | $ | $ | |||||||||||||||||
(1)At March 31, 2026 and December 31, 2025, $153 million and $164 million, respectively, of accrued interest receivable was not expected to be capitalized and $1.4 billion and $1.4 billion of accrued interest receivable was expected to be capitalized.
26
| 5. | Allowance for Credit Losses and Unfunded Loan Commitments (Continued) | |||||||
Unfunded Loan Commitments
When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval but, instead, have a commitment to fund a portion of the loan later (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by us. See Note 2, “Significant Accounting Policies - Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2025 Form 10-K for additional information.
At March 31, 2026, we had $588 million of outstanding contractual loan commitments that we expect to fund during the remainder of the 2025/2026 academic year, including $35 million of contractual loan commitments associated with loans classified as held for sale. The table below summarizes the activity in the allowance recorded to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheets, as well as the activity in the unfunded commitments balance.
| 2026 | 2025 | ||||||||||||||||||||||
Three Months Ended March 31, (dollars in thousands) | Allowance | Unfunded Commitments | Allowance | Unfunded Commitments | |||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | |||||||||||||||||||
Provision/New commitments - net(1) | |||||||||||||||||||||||
Transfer - funded loans(2) | ( | ( | ( | ( | |||||||||||||||||||
| Unfunded loan commitments sold | ( | ||||||||||||||||||||||
Ending Balance(3) | $ | $ | $ | $ | |||||||||||||||||||
(1) Net of expirations of commitments unused. Also includes incremental provision for new commitments and changes to provision for existing commitments.
(2) When a loan commitment is funded, its related liability for credit losses (which originally was recorded as a provision for unfunded commitments) is transferred to the allowance for credit losses.
The unfunded commitments disclosed above represent the total amount of outstanding unfunded commitments at each period end. However, historically not all of these commitments are funded prior to the expiration of the commitments. We estimate the amount of commitments expected to be funded in calculating the reserve for unfunded commitments. The amount we expect to fund and use in our calculation of the reserve for unfunded commitments will change period to period based upon the loan characteristics of the underlying commitments.
27
6. Goodwill and Acquired Intangible Assets
Goodwill
We recorded as goodwill the excess of the purchase price over the estimated fair values of identifiable assets and liabilities acquired as part of the acquisition of the assets primarily used or held for use of Epic Research Education Services, LLC, which did business as Nitro College (“Nitro”), in the first quarter of 2022, and the acquisition of the key assets of Scholly Inc. (“Scholly”) in the third quarter of 2023. Goodwill is not amortized but is tested periodically for impairment. We test goodwill for impairment annually in the fourth quarter of the year, or more frequently if we believe that indicators of impairment exist. At both March 31, 2026 and December 31, 2025, we had $56
Acquired Intangible Assets
Our intangible assets include acquired trade names and trademarks, customer relationships, and developed technologies. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Acquired intangible assets include the following:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Weighted Average Useful Life (in years)(1) | Cost Basis | Accumulated Amortization | Net | Cost Basis | Accumulated Amortization | Net | |||||||||||||||||||||||||||||||||||||
| Trade names and trademarks | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Customer relationships | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Developed technologies | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Sallie.com domain | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total acquired intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
(1) The weighted average useful life of acquired intangible assets related to the Nitro acquisition is 4.6 years and the weighted average useful life of the acquired intangible assets related to the Scholly acquisition is 4.0 years.
28
7. Deposits
The following table summarizes total deposits at March 31, 2026 and December 31, 2025.
| March 31, | December 31, | |||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||
| Deposits - interest-bearing | $ | $ | ||||||||||||
| Deposits - non-interest-bearing | ||||||||||||||
| Total deposits | $ | $ | ||||||||||||
Our total deposits of $20.5 billion were comprised of $8.7 billion in brokered deposits and $11.8 billion in retail and other deposits at March 31, 2026, compared to total deposits of $21.1 billion, which were comprised of $8.8 billion in brokered deposits and $12.3 billion in retail and other deposits, at December 31, 2025.
Interest-bearing deposits as of March 31, 2026 and December 31, 2025 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity money market deposits (“MMDAs”), and retail and brokered certificates of deposit (“CDs”). Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.8 billion and $7.6 billion of our deposit total as of March 31, 2026 and December 31, 2025, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to Federal Deposit Insurance Corporation (“FDIC”) rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 5 million in fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2026. There were no fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2025.
Interest bearing deposits at March 31, 2026 and December 31, 2025 are summarized as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| (Dollars in thousands) | Amount | Qtr.-End Weighted Average Stated Rate(1) | Amount | Year-End Weighted Average Stated Rate(1) | ||||||||||||||||||||||
| Money market | $ | % | $ | % | ||||||||||||||||||||||
| Savings | ||||||||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||||||||
| Deposits - interest bearing | $ | $ | ||||||||||||||||||||||||
(1) Includes the effect of interest rate swaps in effective hedge relationships.
Certificates of deposit remaining maturities are summarized as follows:
(Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| One year or less | $ | $ | ||||||||||||
| After one to two years | ||||||||||||||
| After two to three years | ||||||||||||||
| After three to four years | ||||||||||||||
| After four to five years | ||||||||||||||
| After five years | ||||||||||||||
| Total | $ | $ | ||||||||||||
29
| 7. | Deposits (Continued) | |||||||
8. Borrowings
Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term asset-backed securities (“ABS”) program and our Private Education Loan multi-lender secured borrowing facility (the “Secured Borrowing Facility”). For additional information regarding our borrowings, see Note 11, “Borrowings” in our 2025 Form 10-K. The following table summarizes our borrowings at March 31, 2026 and December 31, 2025.
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Short-Term | Long-Term | Total | Short-Term | Long-Term | Total | ||||||||||||||||||||||||||||||||
| Unsecured borrowings: | ||||||||||||||||||||||||||||||||||||||
| Unsecured debt (fixed-rate) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Total unsecured borrowings | ||||||||||||||||||||||||||||||||||||||
| Secured borrowings: | ||||||||||||||||||||||||||||||||||||||
| Private Education Loan term securitizations: | ||||||||||||||||||||||||||||||||||||||
| Fixed-rate | ||||||||||||||||||||||||||||||||||||||
| Variable-rate | ||||||||||||||||||||||||||||||||||||||
| Total Private Education Loan term securitizations | ||||||||||||||||||||||||||||||||||||||
| Secured Borrowing Facility | ||||||||||||||||||||||||||||||||||||||
| Total secured borrowings | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Short-term Borrowings
Unsecured Borrowings Transactions
On November 1, 2021, we issued $500 million of 3.125 percent unsecured Senior Notes due November 2, 2026, at a price of 99.43 percent. At March 31, 2026, the outstanding carrying value, net of deferred financing fees, was $499 million.
Long-term Borrowings
Unsecured Borrowings Transactions
On January 31, 2025, we issued $500 million of 6.50 percent unsecured Senior Notes due January 31, 2030, at a price of 99.78 percent. At March 31, 2026, the outstanding balance was $494 million.
On February 18, 2025, we redeemed $500 million of the 4.20 percent unsecured Senior Notes due October 29, 2025. The Senior Notes were redeemed at 100 percent of their principal amount, plus the accrued and unpaid interest thereon through the redemption date. As a result of the redemption, we recognized a $1 million loss on the transaction.
30
| 8. | Borrowings (Continued) | ||||
Secured Borrowings Transactions
The following table summarizes our term ABS fundings issued in the year ended December 31, 2025 and in the three months ended March 31, 2026, in which we retained 100 percent of the residual class certificates and which are collateralized by pools of Private Education Loans. The transfer of these loans did not qualify for sale treatment and thus remain encumbered on our consolidated balance sheet.
| SMB Private Education Loan Trust | Date Closed | Loans Transferred to the Trust(1) | Notes Issued | Gross Proceeds | Weighted Average Cost of Funds(2) | Weighted Average Life of Notes (in years) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| 2025-A ABS Transaction | May 7, 2025 | $ | $ | $ | SOFR plus | |||||||||||||||||||||||||||||||||
| Total 2025 | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Loans encumbered at March 31, 2026, related to 2025 term ABS: | $ | |||||||||||||||||||||||||||||||||||||
| 2026-A ABS Transaction | March 11, 2026 | $ | $ | $ | SOFR plus | |||||||||||||||||||||||||||||||||
| Total 2026 | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Loans encumbered at March 31, 2026, related to 2026 term ABS: | $ | |||||||||||||||||||||||||||||||||||||
(1) Represents principal and capitalized interest.
(2) Represents SOFR equivalent cost of funds for variable and fixed-rate bonds, excluding issuance costs.
Secured Borrowing Facility
On June 13, 2025, we amended our Secured Borrowing Facility to increase the amount to be borrowed under the facility from $2 billion to $2.5 billion and extended the maturity. We hold 100 two years from the date of inception or renewal. At both March 31, 2026 and December 31, 2025, there were no
Consolidated Funding Vehicles
We consolidate our financing entities that are VIEs as a result of our being the entities’ primary beneficiary. As a result, these financing VIEs are accounted for as secured borrowings.
As of March 31, 2026 (dollars in thousands) | Debt Outstanding | Carrying Amount of Net Assets Securing Debt Outstanding | ||||||||||||||||||||||||||||||||||||||||||
| Short-Term | Long-Term | Total | Loans | Restricted Cash | Other Assets, Net(1) | Total | ||||||||||||||||||||||||||||||||||||||
| Secured borrowings: | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loan term securitizations | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Secured Borrowing Facility | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
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| 8. | Borrowings (Continued) | ||||
As of December 31, 2025 (dollars in thousands) | Debt Outstanding | Carrying Amount of Net Assets Securing Debt Outstanding | ||||||||||||||||||||||||||||||||||||||||||
| Short-Term | Long-Term | Total | Loans | Restricted Cash | Other Assets, Net(1) | Total | ||||||||||||||||||||||||||||||||||||||
| Secured borrowings: | ||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loan term securitizations | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Secured Borrowing Facility | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
(1) Other assets, net primarily represents accrued interest receivable and payable.
Unconsolidated Funding Vehicles
Private Education Loan Securitizations
Unconsolidated VIEs include variable interests that we hold in certain securitization trusts created by the sale of our Private Education Loans to unaffiliated third parties. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales, and we are also the administrator of these trusts. Additionally, we own five percent of the securities issued by the trusts, as a vertical interest, to meet risk retention requirements. We were not required to consolidate these entities because the fees we receive as the servicer/administrator are commensurate with our responsibility, so the fees are not considered a variable interest. Additionally, the five percent vertical interest we maintain does not absorb more than an insignificant amount of the VIE’s expected losses, nor do we receive more than an insignificant amount of the VIE’s expected residual returns. We classified those vertical risk retention interests related to securitization transactions as available-for-sale investments, except for the interest in the residual class, which we classified as trading investments recorded at fair value with changes recorded through earnings. No Private Education Loan ABS transactions closed in the three months ended March 31, 2026 where the respective VIEs were not consolidated.
The table below provides a summary of our exposure related to our unconsolidated VIEs.
March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Debt Interests(1) | Equity Interests(2) | Total Exposure | Debt Interests(1) | Equity Interests(2) | Total Exposure | ||||||||||||||||||||||||||||||||
| Private Education Loan term securitizations | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
(1) Vertical risk retention interest classified as available-for-sale investment.
Other Borrowing Sources
We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at March 31, 2026. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing and is payable daily. We did not utilize these lines of credit in the three months ended March 31, 2026, nor in the year ended December 31, 2025.
We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Discount Window (the “Window”). The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At March 31, 2026 and December 31, 2025, the value of our pledged collateral at the FRB totaled $2.3 billion and $2.5 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the three months ended March 31, 2026, nor in the year ended December 31, 2025.
32
9. Derivative Financial Instruments
Risk Management Strategy
We maintain an overall interest rate risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate changes. Our goal is to manage interest rate sensitivity by modifying the repricing frequency and underlying index characteristics of certain balance sheet assets or liabilities so any adverse impacts related to movements in interest rates are managed within low to moderate limits. As a result of interest rate fluctuations, hedged balance sheet positions will appreciate or depreciate in market value or create variability in cash flows. Income or loss on the derivative instruments linked to the hedged item will generally offset the effect of this unrealized appreciation or depreciation or volatility in cash flows for the period the item is being hedged. We view this strategy as a prudent management of interest rate risk. Please refer to Note 12, “Derivative Financial Instruments” in our 2025 Form 10-K for a full discussion of our risk management strategy.
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the Chicago Mercantile Exchange (“CME”) and the London Clearing House (“LCH”). All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of March 31, 2026, $11 million notional of our derivative contracts were cleared on the CME and $5 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 66.6 percent and 33.4 percent, respectively, of our total notional derivative contracts of $16 million at March 31, 2026.
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of March 31, 2026 was immaterial
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At March 31, 2026 and December 31, 2025, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $0.1 million and $0.1 million, respectively.
33
| 9. | Derivative Financial Instruments (Continued) | |||||||
Summary of Derivative Financial Statement Impact
The following tables summarize the fair values and notional amounts of all derivative instruments at March 31, 2026 and December 31, 2025, and their impact on earnings and other comprehensive income for the three months ended March 31, 2026 and March 31, 2025. Please refer to Note 12, “Derivative Financial Instruments” in our 2025 Form 10-K for a full discussion of fair value hedges and cash flow hedges.
| Impact of Derivatives on the Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow Hedges | Fair Value Hedges | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
Fair Values(1) | Hedged Risk Exposure | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Assets:(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | Interest rate | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liabilities:(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | Interest rate | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net derivatives | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||
(1) Fair values reported include variation margin as legal settlement of the derivative contract. Asset and liabilities are presented without consideration of master netting agreements. Derivatives are carried on the balance sheet based on net position by counterparty under master netting agreements and classified in other assets or other liabilities depending on whether in a net positive or negative position.
(2) The following table reconciles gross positions with the impact of master netting agreements to the balance sheet classification:
| Other Assets | Other Liabilities | |||||||||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
Gross position(1) | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
| Impact of master netting agreement | ( | |||||||||||||||||||||||||
| Derivative values with impact of master netting agreements (as carried on balance sheet) | ( | |||||||||||||||||||||||||
Cash collateral pledged(2) | ||||||||||||||||||||||||||
| Net position | $ | $ | $ | $ | ( | |||||||||||||||||||||
(1)Gross position amounts include accrued interest and variation margin as legal settlement of the derivative contract.
| Notional Values | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow | Fair Value | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net total notional | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
34
| 9. | Derivative Financial Instruments (Continued) | |||||||
As of March 31, 2026 and December 31, 2025, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
| (Dollars in thousands) | Carrying Amount of the Hedged Assets/(Liabilities) | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities) | ||||||||||||||||||||||||
| Line Item in the Balance Sheet in Which the Hedged Item is Included: | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Deposits | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
| Impact of Derivatives on the Consolidated Statements of Income | ||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Fair Value Hedges | ||||||||||||||||||||||||||
| Interest rate swaps: | ||||||||||||||||||||||||||
| Interest recognized on derivatives | $ | ( | $ | ( | ||||||||||||||||||||||
| Hedged items recorded in interest expense | ( | |||||||||||||||||||||||||
| Derivatives recorded in interest expense | ( | |||||||||||||||||||||||||
| Total | $ | ( | $ | ( | ||||||||||||||||||||||
| Cash Flow Hedges | ||||||||||||||||||||||||||
| Interest rate swaps: | ||||||||||||||||||||||||||
| Amount of gain (loss) reclassified from accumulated other comprehensive income into interest expense | $ | $ | ||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
35
| 9. | Derivative Financial Instruments (Continued) | |||||||
| Impact of Derivatives on the Statements of Changes in Stockholders’ Equity | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Amount of gain (loss) recognized in other comprehensive income (loss) | $ | $ | ||||||||||||||||||||||||
| Less: amount of gain (loss) reclassified in interest expense | ||||||||||||||||||||||||||
| Total change in other comprehensive income (loss) for unrealized gains (losses) on derivatives, before income tax (expense) benefit | $ | ( | $ | ( | ||||||||||||||||||||||
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate deposits. During the next twelve months, we estimate $0.1 million will be reclassified as a decrease to interest expense.
Cash Collateral
As of March 31, 2026, cash collateral held and pledged excludes amounts that represent legal settlement of the derivative contracts held with the CME and LCH. There was no 0.1 million and $0.1 million at March 31, 2026 and December 31, 2025, respectively. Collateral pledged is recorded in “Other interest-earning assets” on the consolidated balance sheets.
36
10. Stockholders’ Equity
The following table summarizes our common share repurchases and issuances.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
(Shares and per share amounts in actuals) | 2026 | 2025 | ||||||||||||||||||||||||
Common stock repurchased under repurchase programs(1)(2) | ||||||||||||||||||||||||||
Average purchase price per share(3) | $ | $ | ||||||||||||||||||||||||
Shares repurchased related to employee stock-based compensation plans(4) | ||||||||||||||||||||||||||
| Average purchase price per share | $ | $ | ||||||||||||||||||||||||
Common shares issued(5) | ||||||||||||||||||||||||||
(1) Common shares purchased under our share repurchase programs. There was $242 million of capacity remaining under the 2026 Share Repurchase Program at March 31, 2026.
(2) For the three months ended March 31, 2026, the amount includes 8.4 million shares related to the initial delivery of shares under our accelerated share repurchase agreement, described below.
(3) Average purchase price per share includes purchase commission costs and excise taxes.
(4) Comprised of shares withheld from stock option exercises and the vesting of restricted stock, restricted stock units, performance stock units, and dividend equivalent units for employees’ tax withholding obligations and shares tendered by employees to satisfy option exercise costs.
The closing price of our common stock on the NASDAQ Global Select Market on March 31, 2026 was $21.41 .
Common Stock Dividend
In both March 2026 and March 2025, we paid a common stock dividend of $0.13
Share Repurchases
In January 2024, we announced a share repurchase program of up to $650 million of common stock (the “2024 Share Repurchase Program”). The 2024 Share Repurchase program expired on February 6, 2026. Under the 2024 Share Repurchase Program, we repurchased 1.0 million shares of common stock for $33 million during the three months ended March 31, 2026, and we repurchased 1.0 million shares of common stock for $31 million during the three months ended March 31, 2025.
On January 22, 2026, we announced a new share repurchase program (the “2026 Share Repurchase Program”), which became effective on January 22, 2026 and will expire, if not earlier exhausted, on February 4, 2028. The 2026 Share Repurchase Program permits us to repurchase shares of our common stock from time to time up to an aggregate repurchase price not to exceed $500 million. Under the 2026 Share Repurchase Program, we repurchased 11.0 million shares of common stock for $226 million in the three months ended March 31, 2026. We had $242 million of capacity remaining under the 2026 Share Repurchase Program at March 31, 2026.
On March 9, 2026, we entered into an accelerated share repurchase agreement (“ASR”) with a third-party financial institution under which we purchased $200 million of our outstanding common stock. On March 11, 2026, the third-party financial institution initially delivered to us approximately 8.4 million shares. The final total actual number of shares of common stock to be delivered to us will be based generally upon a discount to the Rule 10b-18 volume-weighted average price at which the shares of our common stock trade during the regular trading sessions on the NASDAQ Global Select Market during the term of the ASR. At settlement, the third-party financial institution may be obligated to deliver additional shares of common stock to us or we may be obligated to make delivery of common stock or a cash payment to them, at our option. The transactions are accounted for as equity transactions and are included in treasury stock when the shares are received, at which time there is an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share. We expect final settlement of the share repurchases under the ASR to occur during the second quarter of 2026.
Under the 2026 Share Repurchase Program, repurchases can continue to occur from time to time and through a variety of methods, including open market repurchases, repurchases effected through Rule 10b5-1 trading plans,
37
| 10. | Stockholders’ Equity (Continued) | |||||||
negotiated or block purchases, accelerated share repurchase programs, tender offers, or other similar transactions. The timing and volume of any repurchases are subject to market conditions, and there can be no guarantee that the Company will repurchase up to the limit of the 2026 Share Repurchase Program.
Share Repurchases under Rule 10b5-1 Trading Plans
During the three months ended March 31, 2026 and 2025, we repurchased 3.6 million and 1.0 million shares, respectively, of our common stock at a total cost of $91 million and $31 million, respectively, under Rule 10b5-1 trading plans authorized under our share repurchase programs.
11. Earnings per Common Share
Basic earnings per common share (“EPS”) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations follows.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | 2026 | 2025 | ||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
| Preferred stock dividends | ||||||||||||||||||||||||||
| Net income attributable to SLM Corporation common stock | $ | $ | ||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average shares used to compute basic EPS | ||||||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
Dilutive effect of stock options, restricted stock, restricted stock units, performance stock units, dividend equivalent units, and Employee Stock Purchase Plan (“ESPP”) (1)(2) | ||||||||||||||||||||||||||
| Weighted average shares used to compute diluted EPS | ||||||||||||||||||||||||||
| Basic earnings per common share | $ | $ | ||||||||||||||||||||||||
| Diluted earnings per common share | $ | $ | ||||||||||||||||||||||||
(1) Includes the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options, restricted stock, restricted stock units, performance stock units, dividend equivalent units, and the outstanding commitment to issue shares under the ESPP, determined by the treasury stock method.
38
12. Fair Value Measurements
We use estimates of fair value in applying various accounting standards for our consolidated financial statements.
We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. For additional information regarding our policies for determining fair value and the hierarchical framework, see Note 2, “Significant Accounting Policies - Fair Value Measurement” in our 2025 Form 10-K.
During the three months ended March 31, 2026, there were no significant transfers of financial instruments between levels or changes in our methodology or assumptions used to value our financial instruments.
The following table summarizes the valuation of our financial instruments that are marked-to-fair value on a recurring basis.
| Fair Value Measurements on a Recurring Basis | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Trading investments | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale investments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | $ | $ | ( | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||
39
| 12. | Fair Value Measurements (Continued) | |||||||
The following table summarizes the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| Investments | Investments | |||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Available For Sale - Debt Securities | Trading - Residual Interests | Total | Available For Sale - Debt Securities | Trading - Residual Interests | Total | ||||||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Total gains/(losses): | ||||||||||||||||||||||||||||||||||||||
Included in earnings (or changes in net assets)(1) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Included in other comprehensive income | ( | ( | ||||||||||||||||||||||||||||||||||||
| Settlements | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Transfers into level 3 | ||||||||||||||||||||||||||||||||||||||
| Transfers out of level 3 | ||||||||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period | $ | ( | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period(2) | $ | $ | ( | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||
(1) Included in earnings (or changes in net assets) is comprised of the amounts recorded in the specified line item in the consolidated statements of income:
Three Months Ended March 31, | ||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||
| Interest Income - Investments | $ | $ | ||||||||||||
| Losses on securities, net | ( | ( | ||||||||||||
| Total | $ | ( | $ | ( | ||||||||||
(2) Recorded in "losses on securities, net" in the consolidated statements of income.
The following table presents the significant unobservable inputs used in the recurring valuations of the level 3 financial instruments detailed above.
| As of March 31, 2026 (dollars in thousands) | Fair Value | Valuation Technique | Unobservable Input | Range (Average) | ||||||||||||||||||||||
| Debt Securities | $ | Discounted cash flow | Constant Prepayment Rate | |||||||||||||||||||||||
| Probability of default | ||||||||||||||||||||||||||
| Residual Interests | Discounted cash flow | Constant Prepayment Rate | ||||||||||||||||||||||||
| Probability of default | ||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||
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| 12. | Fair Value Measurements (Continued) | |||||||
The significant inputs detailed in the above table would be expected to have the following impacts to the valuations:
•A decrease in constant prepayment rate (“CPR”) would result in a longer weighted average life of the trust, resulting in a decrease to the valuation due to the delay in residual cash flows with the increased term. The opposite is true for an increase in the CPR.
•A decrease in the probability of defaults means increased principal receipts, resulting in an increase to the valuation due to the increase in residual cash flow.
•Conversely, an increase in the probability of defaults means decreased principal receipts, resulting in a decrease to the valuation due to the decrease in residual cash flow.
The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Fair Value | Carrying Value | Difference | Fair Value | Carrying Value | Difference | ||||||||||||||||||||||||||||||||
| Earning assets: | ||||||||||||||||||||||||||||||||||||||
| Loans held for investment, net: | ||||||||||||||||||||||||||||||||||||||
| Private Education Loans | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | — | — | ||||||||||||||||||||||||||||||||||||
| Trading investments | — | — | ||||||||||||||||||||||||||||||||||||
| Available-for-sale investments | — | — | ||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||||||||||||||||||||
| Derivative instruments | — | — | ||||||||||||||||||||||||||||||||||||
| Total earning assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Money-market and savings accounts | $ | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||||||||||||
| Long-term borrowings | ( | ( | ||||||||||||||||||||||||||||||||||||
| Accrued interest payable | — | — | ||||||||||||||||||||||||||||||||||||
| Derivative instruments | — | — | ||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||
| Excess of net asset fair value over carrying value | $ | $ | ||||||||||||||||||||||||||||||||||||
Please refer to Note 16, “Fair Value Measurements” in our 2025 Form 10-K for a full discussion of the methods and assumptions used to estimate the fair value of each class of financial instruments.
41
13. Regulatory Capital
Sallie Mae Bank (the “Bank”) is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on our business, results of operations, and financial position. Under the FDIC’s regulations implementing the Basel III capital framework (“U.S. Basel III”) and the regulatory framework for prompt corrective action, the Bank must meet specific capital standards that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and its classification under the prompt corrective action framework are also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.
The Bank is subject to the following minimum capital ratios under U.S. Basel III: a Common Equity Tier 1 risk-based capital ratio of 4.5 percent, a Tier 1 risk-based capital ratio of 6.0 percent, a Total risk-based capital ratio of 8.0 percent, and a Tier 1 leverage ratio of 4.0 percent. In addition, the Bank is subject to a Common Equity Tier 1 capital conservation buffer of greater than 2.5 percent. Failure to maintain the buffer will result in restrictions on the Bank’s ability to make capital distributions, including the payment of dividends, and to pay discretionary bonuses to executive officers. Including the buffer, the Bank is required to maintain the following capital ratios under U.S. Basel III in order to avoid such restrictions: a Common Equity Tier 1 risk-based capital ratio of greater than 7.0 percent, a Tier 1 risk-based capital ratio of greater than 8.5 percent, and a Total risk-based capital ratio of greater than 10.5 percent.
To qualify as “well capitalized” under the prompt corrective action framework for insured depository institutions, the Bank must maintain a Common Equity Tier 1 risk-based capital ratio of at least 6.5 percent, a Tier 1 risk-based capital ratio of at least 8.0 percent, a Total risk-based capital ratio of at least 10.0 percent, and a Tier 1 leverage ratio of at least 5.0 percent.
See Note 17, “Regulatory Capital” in our 2025 Form 10-K for additional information regarding the adjusted transition amounts.
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital.
| (Dollars in thousands) | Actual | U.S. Basel III Minimum Requirements Plus Buffer(1)(2) | |||||||||||||||||||||
| Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
As of March 31, 2026: | |||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Total Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Tier 1 Capital (to Average Assets) | $ | % | $ | > | % | ||||||||||||||||||
As of December 31, 2025: | |||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Total Capital (to Risk-Weighted Assets) | $ | % | $ | > | % | ||||||||||||||||||
| Tier 1 Capital (to Average Assets) | $ | % | $ | > | % | ||||||||||||||||||
(1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer.
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| 13. | Regulatory Capital (Continued) | |||||||
Bank Dividends
The Bank is chartered under the laws of the State of Utah, and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as necessary. The Bank declared $200 million and $100 million in dividends to the Company for the three months ended March 31, 2026 and March 31, 2025, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends.
14. Commitments, Contingencies and Guarantees
Commitments
When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval but, instead, have a commitment to fund a portion of the loan later (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period that we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At March 31, 2026, we had $588 million of outstanding contractual loan commitments that we expect to fund during the remainder of the 2025/2026 academic year, including $35 million of contractual loan commitments associated with loans classified as held for sale. At March 31, 2026, we had a $24 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies - Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2025 Form 10-K and Note 5, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for additional information.
Contingencies
In the ordinary course of business, we and our subsidiaries are routinely defendants in or parties to pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment, and other laws. In certain of these actions and proceedings, claims for substantial monetary damage may be asserted against us and our subsidiaries.
It is common for the Company, our subsidiaries, and affiliates to receive information and document requests and investigative demands from state attorneys general, legislative committees, and administrative agencies. These requests may be for informational or regulatory purposes and may relate to our business practices, the industries in which we operate, or other companies with whom we conduct business. Our practice has been and continues to be to cooperate with these bodies and be responsive to any such requests.
We are required to establish reserves for litigation and regulatory matters where those matters present loss contingencies that are both probable and estimable. When loss contingencies are not both probable and estimable, we do not establish reserves.
Securities Class Action Litigation
On December 19, 2025, a putative securities class action lawsuit was filed against SLM Corporation and certain of its officers in the United States District Court for the District of New Jersey, captioned Zappia v. SLM Corporation, et al. The complaint asserts claims under Section 10(b) and Section 20(a) of the Securities and Exchange Act of 1934, on behalf of a putative class of persons and entities who purchased (or otherwise acquired) the Company’s securities. The complaint contends that certain statements made by the Company and certain of its officers were allegedly false or misleading, and seeks unspecified damages on behalf of the putative class. The Company intends to defend itself vigorously. At this time, the Company is unable to predict the outcome of this matter or estimate the possible loss or range of loss, if any, that may result from this action.
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15. Segment Reporting
The Company is managed as a single line of business with a single reportable segment originating and servicing high-quality Private Education Loans and providing other education-related services to customers. Our consolidated financial results are regularly reviewed by the Company’s Chief Executive Officer (the “CEO”) to allocate resources and evaluate financial performance.
The CEO evaluates the performance of the Company and decides how to allocate resources based on net income and total consolidated assets. The CEO uses net income to assess financial performance and to decide whether to re-invest profits into the Company or to return capital to stockholders in the form of dividends or the repurchase of common stock. Net income is also used to compare budget versus actual results, and the budget versus actual analysis is part of the segment financial performance review.
The following table illustrates the significant expense categories and amounts regularly provided to the CEO.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
(Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||
| Compensation and benefits | $ | $ | ||||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||||
| Technology expenses | ||||||||||||||||||||||||||
| FDIC assessment fees | ||||||||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Acquired intangible assets impairment and amortization expense | ||||||||||||||||||||||||||
| Total non-interest expenses | $ | $ | ||||||||||||||||||||||||
16. Subsequent Events
2026 Loan Sales
On April 22, 2026, we sold approximately $239 million of our Private Education Loans to our strategic partner, including $234 million in principal, $5 million in capitalized interest and $0.3 million in accrued interest. The loan sale included the amounts that were classified as held for sale as of March 31, 2026, which consisted of newly originated loans, some of which were not fully-disbursed. Some of these loans had disbursements between March 31, 2026 and the date of the loan sale, resulting in the amount sold being larger than the $236 million of loans held for sale in the consolidated balance sheets.
As the loan sale included newly originated loans that were not fully-disbursed, the resulting gain on sale expressed as a percentage was in the low single-digits. The gain will be recognized in the second quarter 2026 consolidated statements of income. The transaction qualified for sale treatment and removed the balance of the loans from our balance sheet on the settlement date. We will continue to service these loans and provide loan program management pursuant to the terms of the applicable transaction documents.
2026 Securitizations
On April 2, 2026, we closed a SMB Private Education Loan Trust 2026-B term ABS transaction (the “2026-B Transaction”), in which an unaffiliated third-party sold to the trust approximately $1.4 billion of Private Education Loans. Sallie Mae Bank sponsored the 2026-B Transaction, is the servicer and administrator of the loans in the trust. In connection with the 2026-B Transaction settlement, we retained a five percent vertical risk retention interest (i.e., 5 percent of each class issued in the securitization). We classified those vertical risk retention interests related to the 2026-B Transaction as available-for-sale investments, except for the interest in the residual class, which we classified as a trading investment recorded at fair value with changes recorded through earnings.
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| 16. | Subsequent Events (Continued) | ||||
On April 15, 2026, we closed a SMB Private Education Loan Trust 2026-C term ABS transaction (the “2026-C Transaction”), in which an unaffiliated third-party sold to the trust approximately $2.0 billion of Private Education Loans. Sallie Mae Bank sponsored the 2026-C Transaction, is the servicer and administrator of the loans in the trust. In connection with the 2026-C Transaction settlement, we retained a five percent vertical risk retention interest (i.e., 5 percent of each class issued in the securitization). We classified those vertical risk retention interests related to the 2026-C Transaction as available-for-sale investments, except for the interest in the residual class, which we classified as a trading investment recorded at fair value with changes recorded through earnings.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Through this discussion and analysis, we intend to provide the reader with some narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity, and cash flows.
The following information should be read in connection with SLM Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025 (filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2026) (the “2025 Form 10-K”), and subsequent reports filed with the SEC. Definitions for capitalized terms used in this report not defined herein can be found in the 2025 Form 10-K.
References in this Form 10-Q to “we,” “us,” “our,” “Sallie Mae,” “SLM,” and the “Company” refer to SLM Corporation and its subsidiaries, except as otherwise indicated or unless the context otherwise requires.
This report contains “forward-looking statements” and information based on management’s current expectations as of the date of this report. Statements that are not historical facts, including statements about the Company’s beliefs, opinions, expectations, and/or statements that assume or are dependent upon future events, are forward-looking statements. These include, but are not limited to, the strategies, goals, and assumptions of the Company; the Company’s expectation and ability to execute loan sales (including sales under the Company’s strategic partnership) and share repurchases; the Company’s expectation and ability to pay a quarterly cash dividend on the Company’s common stock in the future, subject to approval of the Board of Directors; the Company’s 2026 guidance; the Company’s three-year horizon outlook; the Company’s credit outlook; the impact of acquisitions the Company has made or may make in the future; the Company’s projections regarding originations, net charge-offs, non-interest expenses, earnings, balance sheet position, and other metrics; any estimates related to accounting standard changes; and any estimates related to the impact of changes in credit administration practices, including the results of simulations or other behavioral observations.
Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors, many of which are difficult to predict and generally beyond the Company’s control, which may cause actual results to differ materially from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be as anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied by, or projected in such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A., “Risk Factors,” and elsewhere in the Company’s most recently filed Annual Report on Form 10-K and subsequent filings with the SEC; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking, and other laws or regulations; changes in laws, regulations, and supervisory expectations, especially in light of the goals of the current federal administration; the ability to timely develop new products and services and the acceptance of those products and services by potential and existing customers; changes in accounting standards and related changes in significant accounting estimates, including those regarding the measurement of the Company’s allowance for credit losses and the related provision expense; any adverse outcomes in significant litigation to which the Company is a party; credit risk associated with the Company’s exposure to third parties, including counterparties to the Company’s derivative transactions; the effectiveness of the Company’s risk management framework and quantitative models; changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws); and changes in the demand for the Company’s deposit products, including changes caused by new or emerging market entrants or technologies. The Company could also be affected by, among other things, changes in funding costs and availability; reductions to credit ratings; cybersecurity incidents, cyberattacks, risks related to artificial intelligence (“AI”), and other failures or breaches of operating systems or infrastructure, including those of third-party vendors; the societal, demographic, business, and legislative/regulatory impacts of pandemics, other public health crises, severe weather events, and/or natural disasters; damage to reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on the business; changes in the demand for higher education, educational financing, or financing preferences of lenders, educational institutions, students, and their families, including changes to the amount or availability of funding that educational institutions, students, or their families receive from government sources; changes in laws and regulations with respect to the student lending business and financial institutions generally; changes in banking rules and regulations, including increased capital requirements; increased competition from banks and other consumer lenders; changes in customer creditworthiness; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of earning assets versus funding arrangements; rates of prepayments on loans owned by the Company; and changes in general economic or macroeconomic conditions, including, but not limited to, changes due to inflation, stagflation, recession, shifts in the labor market, and changes to government policies or initiatives, such as tariffs, trade wars, wars, immigration, and student visa policies, which could negatively impact consumer or business sentiment, demand for higher education, demand for student loans, financial and business results and/or modeling, and the ability to successfully effectuate any
46
acquisitions, strategic partnerships, or initiatives. The preparation of the Company’s consolidated financial statements also requires management to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect.
All forward-looking statements contained in this Form 10-Q are expressly qualified in their entirety by the factors, risks, and uncertainties set forth in the foregoing cautionary statements, and are made only as of the date of this report. The Company does not undertake any obligation to update, supplement, or revise any forward-looking statements or estimates to conform to actual results or changes in the Company’s expectations, nor to reflect events or circumstances that occur after the date on which such statements were made. In light of these risks, uncertainties, and assumptions, you should not place undue reliance on any forward-looking statements or estimates discussed herein.
Selected Financial Information and Ratios
| (In thousands, except per share data and percentages) | Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net income attributable to SLM Corporation common stock | $ | 304,399 | $ | 300,584 | ||||||||||||||||||||||
| Diluted earnings per common share | $ | 1.54 | $ | 1.40 | ||||||||||||||||||||||
| Weighted average shares used to compute diluted earnings per common share | 197,875 | 214,986 | ||||||||||||||||||||||||
Return on Assets(1) | 4.2 | % | 4.2 | % | ||||||||||||||||||||||
Efficiency ratio(2) | 30.6 | % | 26.6 | % | ||||||||||||||||||||||
| Other Operating Statistics (Held for Investment) | ||||||||||||||||||||||||||
| Ending Private Education Loans, net | $ | 19,886,735 | $ | 21,091,204 | ||||||||||||||||||||||
| Average education loans | $ | 23,345,648 | $ | 22,916,916 | ||||||||||||||||||||||
| (1) We calculate and report our Return on Assets as the ratio of (a) GAAP net income numerator (annualized) to (b) the GAAP total average assets denominator. | ||||||||||||||||||||||||||
| (2) We calculate and report on our Efficiency ratio as the ratio of (a) GAAP total non-interest expenses to (b) the sum of GAAP net interest income plus GAAP total non-interest income. | ||||||||||||||||||||||||||
Overview
The following discussion and analysis presents a review of our business and operations as of and for the three months ended March 31, 2026.
Strategic Imperatives
To further focus our business and increase stockholder value, we continue to advance our strategic imperatives. Our primary focus is driving innovation to maximize the sustainable growth and profitability of our core private student loan business. Additionally, we aim to accelerate the growth of new lines of business to attract more customers requiring our products and services. We are also focused on building the data infrastructure, technology, and talent required to compete in a digital world. We seek to create a customer-centric brand as an education solutions company that supports students and families through their higher education journey. We are focused on driving greater internal commitment to our mission, brand, and strategy, while we evolve our structure and risk capabilities to support our core private student loan business and emerging new businesses.
Key Financial Measures
Our operating results are primarily driven by net interest income from our Private Education Loan portfolio, gains and losses on loan sales, provision expense for credit losses, and operating expenses. The growth of our business and the strength of our financial condition are primarily driven by our ability to achieve our annual Private Education Loan origination goals while sustaining credit quality and maintaining cost-efficient funding sources to support our originations.
A brief summary of our key financial measures (net interest income and net interest margin; loan sales and secured financings; allowance for credit losses; charge-offs and delinquencies; operating expenses; Private Education Loan originations; and funding sources) can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.
47
Results of Operations
We present the results of operations below on a consolidated basis in accordance with GAAP.
GAAP Consolidated Statements of Income (Unaudited)
| (Dollars in millions, except per share amounts) | Three Months Ended March 31, | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 602 | $ | 599 | $ | 3 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Investments | 15 | 15 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | 32 | 43 | (11) | (26) | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest income | 649 | 656 | (8) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Total interest expense | 274 | 281 | (7) | (2) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 375 | 375 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Less: provisions for credit losses | (11) | 23 | (34) | (148) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income after provisions for credit losses | 387 | 352 | 35 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gains on sales of loans, net | 146 | 188 | (42) | (22) | ||||||||||||||||||||||||||||||||||||||||||||||
| Losses on securities, net | (2) | (10) | 8 | 80 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other income | 41 | 29 | 12 | 41 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest income | 185 | 206 | (22) | (11) | ||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 170 | 154 | 16 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||
| Acquired intangible assets amortization expense | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expenses | 171 | 155 | 16 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 400 | 403 | (3) | (1) | ||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 92 | 99 | (7) | (7) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 308 | 305 | 3 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 4 | 4 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to SLM Corporation common stock | $ | 304 | $ | 301 | $ | 3 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $ | 1.56 | $ | 1.43 | $ | 0.13 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 1.54 | $ | 1.40 | $ | 0.14 | 10 | % | ||||||||||||||||||||||||||||||||||||||||||
| Declared dividends per common share | $ | 0.13 | $ | 0.13 | $ | — | — | % | ||||||||||||||||||||||||||||||||||||||||||
Note: Due to rounding, amounts in this table may not sum to totals.
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GAAP Consolidated Earnings Summary
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
For the three months ended March 31, 2026, net income attributable to common stock was $304 million, or $1.54 diluted earnings per common share, compared with net income attributable to common stock of $301 million, or $1.40 diluted earnings per common share, for the three months ended March 31, 2025.
The primary drivers of changes in net income for the current quarter compared with net income in the year-ago quarter are as follows:
•Net interest income was $375 million in both the current quarter and the year-ago quarter. Our net interest margin increased 2 basis points in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased slightly less than our cost of funds decreased. The yields on both our interest-earning assets and our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago quarter.
•Provision for credit losses in the current quarter was $11 million in negative provisions, compared with $23 million of provisions in the year-ago quarter. The year-over-year decrease was primarily due to $120 million in negative provisions recorded in the current quarter, resulting from the $3.33 billion in Private Education Loan sales during the first quarter of 2026 and the $10 million reversal of provision in the current quarter due to the transfer of loans to held for sale. These drivers were offset by new loan commitments, net of expired commitments, and changes in the economic outlook. In the year-ago quarter, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in the economic outlook, offset by $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sale during the quarter and adjustments to the weightings of our economic forecast scenarios.
•Gains on sales of loans, net, were $146 million in the first quarter of 2026, as a result of the $3.33 billion Private Education Loan sales that occurred in the quarter. There were $188 million gains on sales of loans, net, in the year-ago quarter, as a result of $2.00 billion Private Education Loans sold in the first quarter of 2025. Gains on sales of loans, net, in the first quarter of 2026 was less than the year-ago quarter primarily due to the January 2026 loan sale, which included newly originated loans that were not fully-disbursed, and the resulting gain on sale expressed as a percentage was in the low single-digits, as well as lower pricing in the first quarter 2026 seasoned loan sale compared to the loan sales in the year-ago quarter.
•Losses on securities, net, were $2 million in losses in the current quarter compared with $10 million of losses in the year-ago quarter. The change compared to the year-ago quarter was primarily due to an impairment recorded in the first quarter of 2025 on certain of our non-marketable equity securities, and the changes in mark-to-fair value of our trading investments.
•Other income was $41 million in the first quarter of 2026, compared with $29 million in the year-ago quarter. Third-party servicing fees in the first quarter of 2026 increased $6 million compared to the year-ago quarter due to an additional $6.28 billion of loans that we sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.
•First quarter 2026 total operating expenses were $170 million, up from $154 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased personnel costs and higher spending on information technology initiatives, offset by lower FDIC fees.
•During the first quarter of 2026, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.
•First quarter 2026 income tax expense was $92 million, compared with $99 million income tax expense in the year-ago quarter. Our effective income tax rate decreased to 23.1 percent in the first quarter of 2026 from 24.5 percent in the year-ago quarter. The decrease in the effective rate for the first quarter of 2026 was primarily due to a decrease in state income taxes.
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Financial Condition
Average Balance Sheets
The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities and reflects our net interest margin on a consolidated basis.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Balance | Rate | Balance | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans | $ | 23,345,648 | 10.46 | % | $ | 22,916,916 | 10.59 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Taxable securities | 1,806,886 | 3.36 | 1,967,738 | 3.04 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and other short-term investments | 3,653,950 | 3.59 | 3,966,338 | 4.37 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 28,806,484 | 9.14 | % | 28,850,992 | 9.22 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 786,714 | 463,749 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 29,593,198 | $ | 29,314,741 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average Liabilities and Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokered deposits | $ | 8,853,520 | 3.77 | % | $ | 9,174,527 | 4.01 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Retail and other deposits | 12,180,265 | 3.96 | 11,380,124 | 4.23 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other interest-bearing liabilities(1) | 5,841,633 | 5.04 | 6,405,872 | 4.53 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 26,875,418 | 4.13 | % | 26,960,523 | 4.23 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | 276,384 | 75,856 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | 2,441,396 | 2,278,362 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 29,593,198 | $ | 29,314,741 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 5.29 | % | 5.27 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our Secured Borrowing Facility.
50
Rate/Volume Analysis
The following rate/volume analysis shows the relative contribution of changes in interest rates and asset volumes to changes in interest income, interest expense, and net interest income.
| (Dollars in thousands) | Increase (Decrease) | Change Due To(1) | ||||||||||||||||||
Rate | Volume | |||||||||||||||||||
| Three Months Ended March 31, 2026 vs. 2025 | ||||||||||||||||||||
| Interest income | $ | (6,780) | $ | (5,770) | $ | (1,010) | ||||||||||||||
| Interest expense | (7,221) | (6,336) | (885) | |||||||||||||||||
| Net interest income | $ | 441 | $ | 1,020 | $ | (579) | ||||||||||||||
(1) Changes in income and expense due to both rate and volume have been allocated in proportion to the relationship of the absolute dollar amounts of the change in each. The changes in income and expense are calculated independently for each line in the table. The totals for the rate and volume columns are not the sum of the individual lines.
Summary of Our Loans Held for Investment Portfolio
Ending Loans Held for Investment Balances, net
| Total Loans Held for Investment (Private Education Loans) | ||||||||||||||||||||||||||
(Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||
| Total loan portfolio: | ||||||||||||||||||||||||||
In-school(1) | $ | 3,989,847 | $ | 3,983,859 | ||||||||||||||||||||||
Grace, repayment and other(2) | 17,184,270 | 17,676,575 | ||||||||||||||||||||||||
| Total, gross | 21,174,117 | 21,660,434 | ||||||||||||||||||||||||
| Deferred origination costs and unamortized premium/(discount) | 95,784 | 102,008 | ||||||||||||||||||||||||
| Allowance for credit losses | (1,383,166) | (1,430,318) | ||||||||||||||||||||||||
| Total loans held for investment portfolio, net | $ | 19,886,735 | $ | 20,332,124 | ||||||||||||||||||||||
(1) Loans for customers still attending school and who are not yet required to make payments on the loans.
(2) Includes loans in repayment, grace, deferment, or forbearance. Loans in repayment include 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 (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
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Average Loans Held for Investment Balances (net of unamortized premium/(discount))
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Private Education Loans | $ | 23,345,648 | 100 | % | $ | 22,916,916 | 100 | % | ||||||||||||||||||||||||||||||||||||||||||
Loans Held for Investment, Net — Activity
| Total Loans Held for Investment (Private Education Loans), net (dollars in thousands) | Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Beginning balance | $ | 20,332,124 | $ | 20,902,158 | ||||||||||||||||||||||
| Acquisitions and originations: | ||||||||||||||||||||||||||
| Fixed-rate | 1,979,166 | 2,471,686 | ||||||||||||||||||||||||
| Variable-rate | 454,892 | 311,650 | ||||||||||||||||||||||||
| Total acquisitions and originations | 2,434,058 | 2,783,336 | ||||||||||||||||||||||||
| Capitalized interest and deferred origination cost premium amortization | 130,538 | 112,216 | ||||||||||||||||||||||||
Sales | (1,881,824) | (1,847,734) | ||||||||||||||||||||||||
| Loan consolidations to third parties | (323,055) | (227,266) | ||||||||||||||||||||||||
| Allowance | 47,152 | (7,795) | ||||||||||||||||||||||||
| Transfer to loans held for sale | (226,711) | — | ||||||||||||||||||||||||
| Repayments and other | (625,547) | (623,711) | ||||||||||||||||||||||||
| Ending balance | $ | 19,886,735 | $ | 21,091,204 | ||||||||||||||||||||||
“Loan consolidations to third parties” and “Repayments and other” are both significantly affected by the volume of loans in our held for investment portfolio in P&I repayment status. Loans in P&I repayment status include loans in full principal and interest repayment status as well as certain loans in short-term interest-only payment programs (such as loans in a Graduated Repayment Period program and loans in a short-term interest only alternative program). The amount of loans in P&I repayment status in our Private Education Loans held for investment portfolio at March 31, 2026 was consistent with March 31, 2025, and now totals 43 percent of our Private Education Loans held for investment portfolio at March 31, 2026. The balance of loans held for investment in P&I repayment status was primarily affected in the first three months of 2026 by loan sales.
“Loan consolidations to third parties” for the three months ended March 31, 2026 total 3.8 percent of our Private Education Loans held for investment portfolio in P&I repayment status at March 31, 2026, or 1.6 percent of our total Private Education Loans held for investment portfolio at March 31, 2026, compared with the year-ago quarter of 2.6 percent of our Private Education Loans held for investment portfolio in P&I repayment status, or 1.1 percent of our total Private Education Loans held for investment portfolio, respectively. The increase in consolidations compared to the year-ago quarter is primarily attributable to lower interest rates in 2026. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time.
The “Repayments and other” category includes all scheduled repayments, as well as voluntary prepayments, made on loans in repayment and also includes charge-offs. Consequently, this category can be significantly affected by the volume of loans in repayment.
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Private Education Loan Originations
The following table summarizes our Private Education Loan originations. Originations represent loans that were funded or acquired during the period presented.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | % | 2025 | % | ||||||||||||||||||||||
Smart Option - interest only(1) | $ | 632,871 | 22 | % | $ | 537,895 | 19 | % | ||||||||||||||||||
Smart Option - fixed pay(1) | 960,142 | 33 | 919,012 | 33 | ||||||||||||||||||||||
Smart Option - deferred(1) | 1,095,472 | 38 | 1,123,347 | 41 | ||||||||||||||||||||||
Graduate Loan(2) | 217,735 | 7 | 191,224 | 7 | ||||||||||||||||||||||
| Total Private Education Loan originations | $ | 2,906,220 | 100 | % | $ | 2,771,478 | 100 | % | ||||||||||||||||||
| Percentage of loans with a cosigner | 94.7 | % | 93.5 | % | ||||||||||||||||||||||
Average FICO at approval(3) | 754 | 753 | ||||||||||||||||||||||||
(1) Interest only, fixed pay, and deferred describe the payment option while in school or in grace period. See Item 1. “Business - Our Business - Private Education Loans” in the 2025 Form 10-K for a further discussion.
(2) For the three months ended March 31, 2026, the Graduate Loan originations include $8.7 million of Smart Option Loans where the student was in a graduate status. For the three months ended March 31, 2025, the Graduate Loan originations include $8.7 million of Smart Option Loans where the student was in a graduate status.
(3) Represents the higher credit score of the cosigner or the borrower.
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Allowance for Credit Losses
Allowance for Loan Losses Activity
Three Months Ended March 31, (dollars in thousands) | Total Portfolio (Private Education Loans) | |||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Beginning balance | $ | 1,430,318 | $ | 1,435,920 | ||||||||||||||||||||||||||||
Transfer from unfunded commitment liability(1) | 99,294 | 105,134 | ||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
Charge-offs | (102,833) | (86,903) | ||||||||||||||||||||||||||||||
| Plus: | ||||||||||||||||||||||||||||||||
| Recoveries | 13,769 | 10,734 | ||||||||||||||||||||||||||||||
| Provisions for credit losses: | ||||||||||||||||||||||||||||||||
| Provision, current period | 73,196 | 95,289 | ||||||||||||||||||||||||||||||
| Loan sale reduction to provision | (120,086) | (116,459) | ||||||||||||||||||||||||||||||
| Loans transferred to held for sale | (10,492) | — | ||||||||||||||||||||||||||||||
Total provisions for credit losses(2) | (57,382) | (21,170) | ||||||||||||||||||||||||||||||
| Ending balance | $ | 1,383,166 | $ | 1,443,715 | ||||||||||||||||||||||||||||
(1) See Note 5, “Allowance for Credit Losses and Unfunded Loan Commitments,” in this Form 10-Q for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.
(2) See “—Financial Condition — Allowance for Credit Losses — Provision for Credit Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
Provision for Credit Losses
Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
| Consolidated Statements of Income Provisions for Credit Losses Reconciliation | ||||||||||||||
| Three Months Ended March 31, (dollars in thousands) | 2026 | 2025 | ||||||||||||
| Private Education Loan provisions for credit losses: | ||||||||||||||
| Provisions for loan losses | $ | (57,382) | $ | (21,170) | ||||||||||
| Provisions for unfunded loan commitments | 45,916 | 44,456 | ||||||||||||
| Provisions for credit losses reported in consolidated statements of income | $ | (11,466) | $ | 23,286 | ||||||||||
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Private Education Loan Allowance for Credit Losses
In establishing the allowance for Private Education Loan losses as of March 31, 2026, we considered several factors with respect to our Private Education Loan held for investment portfolio, in particular, credit quality and delinquency, forbearance, and charge-off trends.
Private Education Loans held for investment in P&I repayment status were 43 percent of our total Private Education Loans held for investment portfolio at March 31, 2026, compared with 41 percent at March 31, 2025.
For a more detailed discussion of our policy for determining the collectability of Private Education Loans and maintaining our allowance for Private Education Loans, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Allowance for Credit Losses” and Note 5, “Loans Held for Investment — Certain Collection Tools - Private Education Loans” in the 2025 Form 10-K.
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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 loans in the “loans in forbearance” metric).
| Private Education Loans Held for Investment | 2026 | 2025 | ||||||||||||||||||||||||
March 31, (dollars in thousands) | Balance | % | Balance | % | ||||||||||||||||||||||
Loans in-school/grace/deferment(1) | $ | 5,321,220 | $ | 6,063,727 | ||||||||||||||||||||||
Loans in forbearance(2) | 488,404 | 464,601 | ||||||||||||||||||||||||
| Loans in repayment and percentage of each status: | ||||||||||||||||||||||||||
| Loans current | 14,753,563 | 96.0 | % | 15,333,672 | 96.4 | % | ||||||||||||||||||||
Loans delinquent 30-59 days(3) | 298,732 | 2.0 | 276,279 | 1.7 | ||||||||||||||||||||||
Loans delinquent 60-89 days(3) | 159,714 | 1.0 | 152,612 | 1.0 | ||||||||||||||||||||||
Loans 90 days or greater past due(3) | 152,484 | 1.0 | 141,234 | 0.9 | ||||||||||||||||||||||
| Total Private Education Loans in repayment | 15,364,493 | 100.0 | % | 15,903,797 | 100.0 | % | ||||||||||||||||||||
| Total Private Education Loans, gross | 21,174,117 | 22,432,125 | ||||||||||||||||||||||||
| Private Education Loans deferred origination costs and unamortized premium/(discount) | 95,784 | 102,794 | ||||||||||||||||||||||||
| Total Private Education Loans | 21,269,901 | 22,534,919 | ||||||||||||||||||||||||
| Private Education Loans allowance for losses | (1,383,166) | (1,443,715) | ||||||||||||||||||||||||
| Private Education Loans, net | $ | 19,886,735 | $ | 21,091,204 | ||||||||||||||||||||||
| Percentage of loans in repayment | 72.6 | % | 70.9 | % | ||||||||||||||||||||||
| Delinquencies as a percentage of loans in repayment | 4.0 | % | 3.6 | % | ||||||||||||||||||||||
| Percentage of loans in forbearance: | ||||||||||||||||||||||||||
Percentage of loans in an extended grace period(4) | 2.1 | % | 1.9 | % | ||||||||||||||||||||||
Percentage of loans in hardship and other forbearances(5) | 1.0 | % | 0.9 | % | ||||||||||||||||||||||
(1)Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).
(2)Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors (other than delinquent loans in disaster forbearance), 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)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 $331 million and $314 million at March 31, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
(5)We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) were approximately $157 million and $151 million at March 31, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 4.0 percent at March 31, 2026 from 3.6 percent at March 31, 2025. The increase in the delinquency metric is primarily attributable to changes and refinements to our loss mitigation programs in late 2024 which generally restricted loan modification eligibility to borrowers in later-stage delinquency. While the changes and refinements were made in late 2024, the full impact on delinquencies was not observed until late in the first quarter of 2025. Also impacting the delinquency percentage, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $236 million of newly originated loans were transferred to held for sale status during the first quarter of 2026 and sold in April 2026 to our strategic partner. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. See additional discussion related to collections activity in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in the 2025 Form 10-K.
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The percentage of loans in an extended grace forbearance increased to 2.1 percent at March 31, 2026 from 1.9 percent at March 31, 2025. The increase was due to additional enrollments in extended grace forbearance and the shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $236 million of newly originated loans were transferred to held for sale status during the first quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. The percentage of loans in hardship and other forbearances remained relatively consistent at 1.0 percent and 0.9 percent at March 31, 2026 and March 31, 2025, respectively.
For additional discussion of our strategic partnership funding model, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Financial Measures — Funding Sources — Loan Sales” in the 2025 Form 10-K.
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Changes in Allowance for Private Education Loan Losses
The following table summarizes changes in the allowance for Private Education Loan (held for investment) losses and the allowance for unfunded loan commitments.
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Allowance for loan losses, beginning balance | $ | 1,430,318 | $ | 1,435,920 | ||||||||||||||||||||||
Transfer from allowance for unfunded loan commitments(1) | 99,294 | 105,134 | ||||||||||||||||||||||||
| Provisions: | ||||||||||||||||||||||||||
| Provision for current period | 73,196 | 95,289 | ||||||||||||||||||||||||
| Loan sale reduction to provision | (120,086) | (116,459) | ||||||||||||||||||||||||
| Loans transferred from held for sale | (10,492) | — | ||||||||||||||||||||||||
Total provisions(2) | (57,382) | (21,170) | ||||||||||||||||||||||||
| Net charge-offs: | ||||||||||||||||||||||||||
| Charge-offs | (102,833) | (86,903) | ||||||||||||||||||||||||
| Recoveries | 13,769 | 10,734 | ||||||||||||||||||||||||
| Net charge-offs | (89,064) | (76,169) | ||||||||||||||||||||||||
| Allowance for loan losses, ending balance | $ | 1,383,166 | $ | 1,443,715 | ||||||||||||||||||||||
Allowance for unfunded loan commitments, beginning balance(1) | 77,132 | 84,568 | ||||||||||||||||||||||||
Provision(2)(3) | 45,916 | 44,456 | ||||||||||||||||||||||||
| Transfer to allowance for loan losses | (99,294) | (105,134) | ||||||||||||||||||||||||
Allowance for unfunded loan commitments, ending balance(1) | 23,754 | 23,890 | ||||||||||||||||||||||||
| Total allowance for credit losses, ending balance | $ | 1,406,920 | $ | 1,467,605 | ||||||||||||||||||||||
Total Allowance Percentage of Private Education Loan Exposure(5) | 6.05 | % | 5.97 | % | ||||||||||||||||||||||
| Allowance for loan losses coverage of net charge-offs (annualized) | 3.88 | 4.74 | ||||||||||||||||||||||||
Net charge-offs as a percentage of average loans in repayment (annualized)(4) | 2.20 | % | 1.88 | % | ||||||||||||||||||||||
Delinquencies as a percentage of ending loans in repayment(4) | 3.98 | % | 3.58 | % | ||||||||||||||||||||||
Loans in forbearance as a percentage of ending loans in repayment and forbearance(4) | 3.08 | % | 2.84 | % | ||||||||||||||||||||||
| Ending total loans, gross | $ | 21,174,117 | $ | 22,432,125 | ||||||||||||||||||||||
Average loans in repayment(4) | $ | 16,179,577 | $ | 16,240,511 | ||||||||||||||||||||||
Ending loans in repayment(4) | $ | 15,364,493 | $ | 15,903,797 | ||||||||||||||||||||||
Unfunded loan commitments for loans held for investment(6) | $ | 553,268 | $ | 584,140 | ||||||||||||||||||||||
| Total accrued interest receivable | $ | 1,530,851 | $ | 1,558,465 | ||||||||||||||||||||||
(1) When a new loan commitment is made, we record an allowance to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheet. See Note 5, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for a summary of the activity in the allowance for and balance of unfunded loan commitments.
(2) See “—Financial Condition — Allowance for Credit Losses — Provision for Credit Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.
(3) Includes incremental provision for new commitments and changes to provision for existing commitments.
(4) Loans in repayment include 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 (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
(5) The Total Allowance Percentage of Private Education Loan Exposure is the total allowance for credit losses as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable on Private Education Loans.
(6) Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $35 million of unfunded loan commitments associated with loans classified as held for sale at March 31, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.
As part of concluding on the adequacy of the allowance for credit losses, we review key allowance and loan metrics. The most significant of these metrics considered are the allowance coverage of net charge-offs ratio; the Total Allowance Percentage of Private Education Loan Exposure; and delinquency and forbearance percentages.
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Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool
In recent years, we have made significant changes to our credit administration practices, enhancing our loss mitigation programs through both our forbearance and loan modification offerings. We adjust the terms of loans for certain borrowers when we believe such changes will help our borrowers manage their student loan obligations, achieve better student outcomes and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term and/or a short-term extended repayment or interest-only alternative.
We continually monitor our credit administration practices and modify them from time to time based upon performance, industry conventions, and/or regulatory feedback.
See Note 5, “Allowance for Credit Losses and Unfunded Commitments — Loan Modifications to Borrowers Experiencing Financial Difficulty” in this Form 10-Q for additional information regarding loan modifications to borrowers experiencing financial difficulty. As discussed therein, our forbearance programs are not considered loan modifications to borrowers experiencing financial difficulty because they are either short-term in nature, and therefore, we believe, they do not provide a significant concession to the borrower, or they are provided for reasons other than financial difficulty being experienced by the borrower.
Forbearance
Forbearance allows a borrower to not make scheduled payments for a specified period of time. Our forbearance policies and practices vary depending upon whether a borrower is current or delinquent at the time forbearance is requested, generally with stricter requirements for delinquent borrowers. Using forbearance extends the original term of the loan by the term of forbearance taken. Forbearance does not grant any reduction in the total principal or interest repayment obligation. While a loan is in forbearance status, interest continues to accrue and is capitalized (added to principal) at the end of the forbearance. Interest will not capitalize at the end of certain types of forbearance, such as disaster forbearance, however.
During the first six months following a borrower’s grace period, the borrower may be eligible for extended grace forbearance, which provides temporary payment relief to give the borrower additional time to be in a position to make regular principal and interest payments. We do not consider borrowers who are eligible for extended grace to be experiencing financial difficulty.
Hardship forbearance may be granted in order to provide temporary payment relief to borrowers who are either current in their payments but demonstrate a need for relief, or who are delinquent in their payments but demonstrate an ability and willingness to repay their obligation. In these circumstances, a borrower’s loan is placed into a forbearance status in limited monthly increments and is reflected in the forbearance status at month-end during this time. At the end of the forbearance period, for borrowers who were current when they entered forbearance or those who were delinquent but met specific payment requirements curing their delinquency, the borrower will enter repayment status as current. In all instances, the borrowers are expected to begin making scheduled monthly payments at the end of their forbearance periods. This strategy is aimed at assisting borrowers while mitigating the risks of delinquency and default as well as encouraging resolution of delinquent loans.
Disaster forbearance is used to assist borrowers affected by material events, typically federally-declared disasters, including hurricanes, wildfires, floods, and pandemics. We typically grant disaster forbearance to affected borrowers in one-month increments, up to three months at a time, but the disaster forbearance granted generally does not apply toward the 12-month forbearance limit described below. Disaster forbearance is granted based on areas impacted by federally declared disasters, not because the borrower is experiencing financial difficulty. Loans in disaster forbearance are not assessed late or other fees. Due to the nature and limited timeframe of disaster forbearance, delinquent loans granted disaster forbearance are maintained in their pre-grant delinquency status, and as such, are not reflected in our loans in forbearance metrics.
We offer certain other administrative forbearances (e.g., death and disability, bankruptcy, military service, and in school assistance) that are required by law (such as by the Servicemembers Civil Relief Act), are considered separate from our active loss mitigation programs, or do not exceed the significance threshold. We do not consider borrowers eligible for these other administrative forbearances to be experiencing financial difficulty.
Currently, we generally grant forbearance for up to 12 months over the life of the loan, in increments of one to two months at a time, although extended grace forbearance is typically granted in one six-month increment. Disaster
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forbearance and certain other limited instances do not apply toward the 12-month limit. We also currently require 12 months of positive payment performance by a borrower (meaning the borrower must make payment in a cumulative amount equivalent to 12 monthly required payments under the loan) between successive grants of forbearance and between forbearance grants and certain other repayment alternatives. This required period of positive payment performance is not necessary to receive additional increments of extended grace forbearance or for a borrower to receive a contractual interest rate reduction. In addition, we currently limit the participation of delinquent borrowers in certain short-term extended or interest-only repayment alternatives to once in 12 months and twice in five years. We also now count the number of months a borrower receives a short-term extended repayment alternative toward the 12-month forbearance limit described above.
Modification Programs other than Forbearances
For borrowers experiencing more severe hardship, following evaluation of their ability and willingness to repay, we currently use modification programs tailored to the financial condition of the individual borrower. Pursuant to our modification programs, we may reduce the contractual interest rate on a loan to a rate between 2 percent and 8 percent temporarily, and/or in some instances may permanently extend the final maturity of a loan. For borrowers experiencing the most severe financial conditions, we may permanently reduce the contractual interest rate on a loan to 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Following modification, borrowers who are delinquent but meet specific payment requirements curing their delinquency will be brought current. We currently limit the granting of a permanent extension of the final maturity date of a loan to once over the life of the loan, and the number of interest rate reductions to twice over the life of the loan.
Modifications under these programs are generally considered loan modifications to borrowers experiencing financial difficulty. See Note 5, “Allowance for Credit Losses and Unfunded Commitments — Loan Modifications to Borrowers Experiencing Financial Difficulty” in this Form 10-Q for disclosures related to these modification programs. However, in some situations, we may offer on a limited basis term extensions or rate reductions or a combination of both to borrowers to reduce consolidation activities. We do not consider these to be modifications of loans to borrowers experiencing financial difficulty.
Delinquency Trends by Active Repayment Status
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 March 31, 2026, Private Education Loans (held for investment) in forbearance that have been in active repayment status for fewer than 25 months as a percentage of all loans in repayment and forbearance were 2.3 percent. At March 31, 2026, approximately 75 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status for fewer than 25 months.
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As of March 31, 2026 (dollars in millions) | Private Education Loans Held for Investment Aged by Number of Months in Active Repayment Status | Not Yet in Repayment | Total | |||||||||||||||||||||||||||||||||||||||||
| 0 to 12 | 13 to 24 | 25 to 36 | 37 to 48 | More than 48 | ||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 5,321 | $ | 5,321 | ||||||||||||||||||||||||||||||
| Loans in forbearance | 298 | 68 | 44 | 34 | 44 | — | 488 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - current | 4,434 | 3,100 | 1,748 | 1,533 | 3,939 | — | 14,754 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - delinquent 30-59 days | 80 | 42 | 41 | 38 | 98 | — | 299 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - delinquent 60-89 days | 50 | 22 | 20 | 19 | 49 | — | 160 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - 90 days or greater past due | 47 | 23 | 21 | 17 | 44 | — | 152 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 4,909 | $ | 3,255 | $ | 1,874 | $ | 1,641 | $ | 4,174 | $ | 5,321 | 21,174 | |||||||||||||||||||||||||||||||
| Deferred origination costs and unamortized premium/(discount) | 96 | |||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (1,383) | |||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans, net | $ | 19,887 | ||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance as a percentage of total Private Education Loans in repayment and forbearance | 1.88 | % | 0.43 | % | 0.28 | % | 0.21 | % | 0.28 | % | — | % | 3.08 | % | ||||||||||||||||||||||||||||||
As of March 31, 2025 (dollars in millions) | Private Education Loans Held for Investment Aged by Number of Months in Active Repayment Status | Not Yet in Repayment | Total | |||||||||||||||||||||||||||||||||||||||||
| 0 to 12 | 13 to 24 | 25 to 36 | 37 to 48 | More than 48 | ||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6,064 | $ | 6,064 | ||||||||||||||||||||||||||||||
| Loans in forbearance | 289 | 66 | 44 | 28 | 38 | — | 465 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - current | 5,044 | 3,069 | 2,075 | 1,509 | 3,637 | — | 15,334 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - delinquent 30-59 days | 78 | 45 | 41 | 32 | 80 | — | 276 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - delinquent 60-89 days | 50 | 24 | 22 | 15 | 41 | — | 152 | |||||||||||||||||||||||||||||||||||||
| Loans in repayment - 90 days or greater past due | 43 | 24 | 21 | 14 | 39 | — | 141 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 5,504 | $ | 3,228 | $ | 2,203 | $ | 1,598 | $ | 3,835 | $ | 6,064 | 22,432 | |||||||||||||||||||||||||||||||
| Deferred origination costs and unamortized premium/(discount) | 103 | |||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (1,444) | |||||||||||||||||||||||||||||||||||||||||||
| Total Private Education Loans, net | $ | 21,091 | ||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance as a percentage of total Private Education Loans in repayment and forbearance | 1.77 | % | 0.40 | % | 0.27 | % | 0.17 | % | 0.23 | % | — | % | 2.84 | % | ||||||||||||||||||||||||||||||
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Private Education Loans Held for Investment Types
The following table provides information regarding the loans in repayment balance and total loan balance by Private Education Loan held for investment product type at March 31, 2026 and December 31, 2025.
As of March 31, 2026 (dollars in thousands) | Smart Option | Graduate Loan | Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||
$ in repayment(2) | $ | 13,213,954 | $ | 1,837,614 | $ | 312,925 | $ | 15,364,493 | ||||||||||||||||||||||||||||||||||||
| $ in total | $ | 18,200,710 | $ | 2,583,397 | $ | 390,010 | $ | 21,174,117 | ||||||||||||||||||||||||||||||||||||
As of December 31, 2025 (dollars in thousands) | Smart Option | Graduate Loan | Other(1) | Total | ||||||||||||||||||||||||||||||||||||||||
$ in repayment(2) | $ | 13,806,666 | $ | 1,765,589 | $ | 322,572 | $ | 15,894,827 | ||||||||||||||||||||||||||||||||||||
| $ in total | $ | 18,785,313 | $ | 2,468,471 | $ | 406,650 | $ | 21,660,434 | ||||||||||||||||||||||||||||||||||||
(1) Other includes Parent Loan and Career training loan products, both of which were discontinued, with final disbursements made in 2023.
(2) Loans in repayment include 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 (but, for purposes of the table, do not include loans in the “loans in forbearance” metric).
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Accrued Interest Receivable
The following table provides information regarding accrued interest receivable on our Private Education Loans. 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. The allowance for credit losses considers both the collectibility of principal and accrued interest. The allowance for uncollectible interest estimates the additional uncollectible interest that is not captured in the allowance for credit losses.
| Private Education Loans | ||||||||||||||||||||
Accrued Interest Receivable | ||||||||||||||||||||
| (Dollars in thousands) | Total Interest Receivable | 90 Days or Greater Past Due | Allowance for Uncollectible Interest(1)(2) | |||||||||||||||||
| March 31, 2026 | $ | 1,530,851 | $ | 6,910 | $ | 8,953 | ||||||||||||||
| December 31, 2025 | $ | 1,570,069 | $ | 6,548 | $ | 14,511 | ||||||||||||||
| March 31, 2025 | $ | 1,558,465 | $ | 6,539 | $ | 14,192 | ||||||||||||||
(1)The allowance for uncollectible interest at March 31, 2026 and 2025 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at March 31, 2026 and 2025, relates to $153 million and $156 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 at both March 31, 2026 and 2025) is/was reserved in the allowance for credit losses.
(2)The allowance for uncollectible interest at December 31, 2025 represents the expected losses related to the portion of accrued interest receivable on those loans in repayment ($164 million of accrued interest receivable) that was not expected to be capitalized. The accrued interest receivable that was expected to be capitalized ($1.4 billion) was reserved in the allowance for credit losses.
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Liquidity and Capital Resources
Funding and Liquidity Risk Management
Our primary funding and liquidity objective is to support our businesses throughout market cycles, including during periods of financial stress. Our business needs primarily include funding originations of Private Education Loans and meeting any deposits outflows at the Bank. To achieve these objectives, we maintain access to a diverse set of funding sources, such as retail deposits, brokered deposits, asset-backed securitizations, unsecured debt, other financing facilities, and loan sales. We maintained liquidity reserves in the form of unrestricted cash and liquid investments of $6.3 billion and $5.4 billion as of March 31, 2026 and December 31, 2025, respectively, as noted in the table below.
At both March 31, 2026 and December 31, 2025, our sources of liquidity included liquid investments with unrealized losses of $61.2 million. It is our policy to maintain a liquidity stockpile that is sufficiently liquid and sized to meet our financial obligations in normal and stressed times. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed at the Asset and Liability Committee, a management-level committee. These policies consider the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines.
Key risks associated with our liquidity relate to our ability to access the capital markets and deposit markets at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the market. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses and specific stresses that test the resiliency of our balance sheet. At March 31, 2026, we held a significant liquidity buffer of cash and government-backed investments, which we expect to maintain in the future. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.
Sources of Liquidity and Available Capacity
Ending Balances
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Sources of primary liquidity: | ||||||||||||||
| Unrestricted cash and liquid investments: | ||||||||||||||
| Holding Company and other non-bank subsidiaries | $ | 10,060 | $ | 4,421 | ||||||||||
Sallie Mae Bank(1) | 5,147,392 | 4,236,844 | ||||||||||||
Available-for-sale investments | 1,146,205 | 1,135,886 | ||||||||||||
| Total unrestricted cash and liquid investments | $ | 6,303,657 | $ | 5,377,151 | ||||||||||
(1) This amount will be used primarily to originate Private Education Loans at the Bank.
Average Balances
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Sources of primary liquidity: | ||||||||||||||||||||||||||
| Unrestricted cash and liquid investments: | ||||||||||||||||||||||||||
| Holding Company and other non-bank subsidiaries | $ | 4,724 | $ | 5,479 | ||||||||||||||||||||||
Sallie Mae Bank(1) | 3,424,149 | 3,764,708 | ||||||||||||||||||||||||
| Available-for-sale investments | 1,144,363 | 1,301,677 | ||||||||||||||||||||||||
| Total unrestricted cash and liquid investments | $ | 4,573,236 | $ | 5,071,864 | ||||||||||||||||||||||
(1) This amount will be used primarily to originate Private Education Loans at the Bank.
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Deposits
The following table summarizes total deposits at March 31, 2026 and December 31, 2025.
| March 31, | December 31, | ||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | |||||||||||||||
| Deposits - interest-bearing | $ | 20,524,379 | $ | 21,059,967 | |||||||||||||
| Deposits - non-interest-bearing | 1,107 | 184 | |||||||||||||||
| Total deposits | $ | 20,525,486 | $ | 21,060,151 | |||||||||||||
Our total deposits of $20.5 billion were comprised of $8.7 billion in brokered deposits and $11.8 billion in retail and other deposits at March 31, 2026, compared with total deposits of $21.1 billion, which were comprised of $8.8 billion in brokered deposits and $12.3 billion in retail and other deposits, at December 31, 2025.
Interest-bearing deposits as of March 31, 2026 and December 31, 2025 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.8 billion and $7.6 billion of our deposit total as of March 31, 2026 and December 31, 2025, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 million in both the three months ended March 31, 2026 and 2025. There were $5 million in fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2026. There were no fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2025.
Interest bearing deposits at March 31, 2026 and December 31, 2025 are summarized as follows:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | Amount | Qtr.-End Weighted Average Stated Rate(1) | Amount | Year-End Weighted Average Stated Rate(1) | |||||||||||||||||||||||||
| Money market | $ | 9,101,954 | 3.81 | % | $ | 10,004,845 | 3.83 | % | |||||||||||||||||||||
| Savings | 1,404,838 | 3.62 | 1,177,177 | 3.83 | |||||||||||||||||||||||||
| Certificates of deposit | 10,017,587 | 3.84 | 9,877,945 | 3.87 | |||||||||||||||||||||||||
| Deposits - interest bearing | $ | 20,524,379 | $ | 21,059,967 | |||||||||||||||||||||||||
(1) Includes the effect of interest rate swaps in effective hedge relationships.
As of March 31, 2026 and December 31, 2025, there were $651 million and $557 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $56 million and $71 million at March 31, 2026 and December 31, 2025, respectively.
Counterparty Exposure
Counterparty exposure related to financial instruments arises from the risk that a lending, investment, or derivative counterparty will not be able to meet its obligations to us.
Excess cash is generally invested with the FRB on an overnight basis or in the FRB’s Term Deposit Facility, minimizing counterparty exposure on cash balances.
Our investment portfolio is primarily comprised of a small portfolio of mortgage-backed securities issued by government agencies and government-sponsored enterprises that are purchased to meet CRA targets. Additionally, our investing activity is governed by Board-approved limits on the amount that is allowed to be invested with any one issuer
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based on the credit rating of the issuer, further minimizing our counterparty exposure. Counterparty credit risk is considered when valuing investments and considering impairment.
Related to derivative transactions, protection against counterparty risk is generally provided by International Swaps and Derivatives Association, Inc. Credit Support Annexes (“CSAs”), or clearinghouses for over-the-counter derivatives. CSAs require a counterparty to post collateral if a potential default would expose the other party to a loss. All derivative contracts entered into by the Bank are covered under CSAs or clearinghouse agreements and require collateral to be exchanged based on the net fair value of derivatives with each counterparty. Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position, less any collateral held by us and plus collateral posted with the counterparty.
Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of March 31, 2026, $11 million notional of our derivative contracts were cleared on the CME and $5 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 66.6 percent and 33.4 percent, respectively, of our total notional derivative contracts of $16 million at March 31, 2026.
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of March 31, 2026 was immaterial for both the CME and LCH. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At March 31, 2026 and December 31, 2025, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $0.1 million and $0.1 million, respectively.
We have liquidity exposure related to collateral movements between us and our derivative counterparties. Movements in the value of the derivatives, which are primarily affected by changes in interest rates, may require us to return cash collateral held or may require us to access primary liquidity to post collateral to counterparties.
The table below highlights exposure related to our derivative counterparties as of March 31, 2026.
| As of March 31, 2026 (dollars in thousands) | SLM Corporation and Sallie Mae Bank Contracts | |||||||
Total exposure, net of collateral | $ | 102 | ||||||
| Exposure to counterparties with credit ratings, net of collateral | $ | 102 | ||||||
| Percent of exposure to counterparties with credit ratings below S&P AA- or Moody’s Aa3 | — | % | ||||||
| Percent of exposure to counterparties with credit ratings below S&P A- or Moody’s A3 | — | % | ||||||
Regulatory Capital
The Bank is subject to various regulatory capital requirements administered by federal and state banking authorities. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on our business, results of operations, and financial condition. Under U.S. Basel III and the regulatory framework for prompt corrective action, the Bank must meet specific capital standards that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and its classification under the prompt corrective action framework are also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.
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Capital Management
The Bank intends to maintain at all times regulatory capital levels that meet both the minimum levels required under U.S. Basel III (including applicable buffers) and the levels necessary to be considered “well capitalized” under the FDIC’s prompt corrective action framework, in order to support asset growth and operating needs, address unexpected credit risks, and protect the interests of depositors and the Deposit Insurance Fund administered by the FDIC. The Bank’s Capital Policy requires management to monitor these capital standards and the Bank’s compliance with them. The Board of Directors and management periodically evaluate the quality of assets, the stability of earnings, and the adequacy of the allowance for credit losses for the Bank. The Company is a source of strength for the Bank and will provide additional capital if necessary.
We believe that current and projected capital levels are appropriate for 2026. As of March 31, 2026, the Bank’s risk-based and leverage capital ratios exceed the required minimum ratios and the applicable buffers under the fully phased-in U.S. Basel III standards as well as the “well capitalized” standards under the prompt corrective action framework.
Under U.S. Basel III, the Bank is required to maintain the following minimum regulatory capital ratios: a Common Equity Tier 1 risk-based capital ratio of 4.5 percent, a Tier 1 risk-based capital ratio of 6.0 percent, a Total risk-based capital ratio of 8.0 percent, and a Tier 1 leverage ratio of 4.0 percent. In addition, the Bank is subject to a Common Equity Tier 1 capital conservation buffer of greater than 2.5 percent. Failure to maintain the buffer will result in restrictions on the Bank’s ability to make capital distributions, including the payment of dividends, and to pay discretionary bonuses to executive officers. Including the buffer, the Bank is required to maintain the following capital ratios under U.S. Basel III in order to avoid such restrictions: a Common Equity Tier 1 risk-based capital ratio of greater than 7.0 percent, a Tier 1 risk-based capital ratio of greater than 8.5 percent, and a Total risk-based capital ratio of greater than 10.5 percent.
To qualify as “well capitalized” under the prompt corrective action framework for insured depository institutions, the Bank must maintain a Common Equity Tier 1 risk-based capital ratio of at least 6.5 percent, a Tier 1 risk-based capital ratio of at least 8.0 percent, a Total risk-based capital ratio of at least 10.0 percent, and a Tier 1 leverage ratio of at least 5.0 percent.
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital.
| Actual | U.S. Basel III Minimum Requirements Plus Buffer(1)(2) | ||||||||||||||||||||||
| (Dollars in thousands) | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
As of March 31, 2026: | |||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | 3,059,144 | 12.4 | % | $ | 1,732,754 | > | 7.0 | % | ||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | $ | 3,059,144 | 12.4 | % | $ | 2,104,059 | > | 8.5 | % | ||||||||||||||
| Total Capital (to Risk-Weighted Assets) | $ | 3,382,210 | 13.7 | % | $ | 2,599,131 | > | 10.5 | % | ||||||||||||||
| Tier 1 Capital (to Average Assets) | $ | 3,059,144 | 10.3 | % | $ | 1,185,069 | > | 4.0 | % | ||||||||||||||
As of December 31, 2025: | |||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | 2,929,973 | 11.1 | % | $ | 1,849,590 | > | 7.0 | % | ||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | $ | 2,929,973 | 11.1 | % | $ | 2,245,930 | > | 8.5 | % | ||||||||||||||
| Total Capital (to Risk-Weighted Assets) | $ | 3,274,883 | 12.4 | % | $ | 2,774,384 | > | 10.5 | % | ||||||||||||||
| Tier 1 Capital (to Average Assets) | $ | 2,929,973 | 9.9 | % | $ | 1,186,335 | > | 4.0 | % | ||||||||||||||
(1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer.
(2) The Bank’s regulatory capital ratios also exceeded all applicable standards for the Bank to qualify as “well capitalized” under the prompt corrective action framework.
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Dividends
The Bank is chartered under the laws of the State of Utah, and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $200 million and $100 million in dividends to the Company for the three months ended March 31, 2026 and 2025, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs.
Borrowings
Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term ABS program and our Secured Borrowing Facility. The issuing entities for those secured borrowings are VIEs and are consolidated for accounting purposes. The following table summarizes our borrowings at March 31, 2026 and December 31, 2025, respectively. For additional information, see Note 8, “Borrowings” in this Form 10-Q.
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Short-Term | Long-Term | Total | Short-Term | Long-Term | Total | ||||||||||||||||||||||||||||||||
| Unsecured borrowings: | ||||||||||||||||||||||||||||||||||||||
| Unsecured debt (fixed-rate) | $ | 498,889 | $ | 493,817 | $ | 992,706 | $ | 498,415 | $ | 493,415 | $ | 991,830 | ||||||||||||||||||||||||||
| Total unsecured borrowings | 498,889 | 493,817 | 992,706 | 498,415 | 493,415 | 991,830 | ||||||||||||||||||||||||||||||||
| Secured borrowings: | ||||||||||||||||||||||||||||||||||||||
| Private Education Loan term securitizations: | ||||||||||||||||||||||||||||||||||||||
| Fixed-rate | — | 4,471,435 | 4,471,435 | — | 4,174,513 | 4,174,513 | ||||||||||||||||||||||||||||||||
| Variable-rate | — | 705,041 | 705,041 | — | 694,566 | 694,566 | ||||||||||||||||||||||||||||||||
| Total Private Education Loan term securitizations | — | 5,176,476 | 5,176,476 | — | 4,869,079 | 4,869,079 | ||||||||||||||||||||||||||||||||
| Secured Borrowing Facility | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Total secured borrowings | — | 5,176,476 | 5,176,476 | — | 4,869,079 | 4,869,079 | ||||||||||||||||||||||||||||||||
| Total | $ | 498,889 | $ | 5,670,293 | $ | 6,169,182 | $ | 498,415 | $ | 5,362,494 | $ | 5,860,909 | ||||||||||||||||||||||||||
Short-term Borrowings
Unsecured Borrowings Transactions
On November 1, 2021, we issued $500 million of 3.125 percent unsecured Senior Notes due November 2, 2026, at a price of 99.43 percent. At March 31, 2026, the outstanding carrying value, net of deferred financing fees, was $499 million.
Long-term Borrowings
Unsecured Borrowings Transactions
On January 31, 2025, we issued $500 million of 6.50 percent unsecured Senior Notes due January 31, 2030, at a price of 99.78 percent. At March 31, 2026, the outstanding balance was $494 million.
Secured Borrowing Facility
On June 13, 2025, we amended our Secured Borrowing Facility to increase the amount to be borrowed under the facility from $2 billion to $2.5 billion and extended the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility Trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 12, 2026. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 12, 2027 (or earlier, if certain material adverse events occur).
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The one-year revolving period plus the one-year amortization period results in a contractual maturity that is two years from the date of inception or renewal. At both March 31, 2026 and December 31, 2025, there were no outstanding borrowings under the Secured Borrowing Facility.
Other Borrowing Sources
We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at March 31, 2026. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing and is payable daily. We did not utilize these lines of credit in the three months ended March 31, 2026, nor in the year ended December 31, 2025.
We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Window. The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At March 31, 2026 and December 31, 2025, the value of our pledged collateral at the FRB totaled $2.3 billion and $2.5 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the three months ended March 31, 2026, nor in the year ended December 31, 2025.
Contractual Loan Commitments
When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval but, instead, have a commitment to fund a portion of the loan later (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At March 31, 2026, we had $588 million of outstanding contractual loan commitments that we expect to fund during the remainder of the 2025/2026 academic year, including $35 million of contractual loan commitments associated with loans classified as held for sale. At March 31, 2026, we had a $24 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2025 Form 10-K and Note 5, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for additional information.
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Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing our consolidated financial statements, we have identified certain accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties.
The critical accounting estimates we have identified relate to the allowance for credit losses. These estimates reflect our best judgment about current and, for some estimates, including management overlays, future economic and market conditions. These estimates are based on information available as of the date of these financial statements. If conditions change from those expected, it is reasonably possible that these judgments and estimates could change, which may result in a change in the allowance for credit losses or material changes to our consolidated financial statements. A discussion of our critical accounting policies can be found in our 2025 Form 10-K.
Allowance for Credit Losses
We maintain an allowance for credit losses for the lifetime expected credit losses on loans in our portfolios, as well as for future loan commitments, at the reporting date.
In determining the lifetime expected credit losses on our Private Education Loan portfolio loan segments, we use a discounted cash flow method. This method requires us to project future principal and interest cash flows on our loans in those portfolios.
To estimate the future expected cash flows, we use statistical loan-level models that consider life of loan expectations for defaults, prepayments, recoveries, and any other qualitative adjustments deemed necessary, to determine the adequacy of the allowance at each balance sheet date. These cash flows are discounted at the loan’s effective interest rate to calculate the present value of those cash flows. Management adjusts the effective interest rate used to discount expected cash flows to incorporate expected prepayments. The difference between the present value of those cash flows and the amortized cost basis of the underlying loans is the allowance for credit losses. Entities that measure credit losses based on the present value of expected future cash flows are permitted to report the entire change in present value as credit loss expense but may alternatively report the change in present value due to the passage of time as interest income. We have elected to report the entire change in present value as credit loss expense.
We estimate future default rates used in our current expected credit losses at a loan level using historical loss experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period. At the end of the reasonable and supportable forecast period, we immediately revert our forecasted economic factors to long-term historical averages. We estimate future prepayment speeds used in our current expected credit losses at a loan level using historical prepayment experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period.
The reasonable and supportable forecast period is meant to represent the period in which we believe we can estimate the impact of forecasted economic factors in our expected losses. We use a two-year reasonable and supportable forecast period, although this period is subject to change as our view evolves on our ability to reasonably forecast economic conditions to estimate future losses.
In estimating future default rates and prepayment speeds in our current expected credit losses, we use a combination of expected economic scenarios coupled with our historical experience and adjust for any qualitative factors (as described below). We also develop an adverse and favorable economic scenario. At each reporting date, we determine the appropriate weighting of these alternate scenarios based upon the current economic conditions and our view of the risks of alternate outcomes. This weighting of expectations is used in calculating our current expected credit losses recorded each period.
We obtain forecasts for our expected loss model from an external economic data provider who provides a range of economic forecasts with various likelihoods of occurrence. Management reviews and weighs the economic forecasts for each of these inputs to calculate our allowance for credit losses. Our forecasting process reflects management’s continuous review of forecasting assumptions and model inputs and is consistent with our internal governance, risk management framework and CECL methodologies. Management continues to review both the scenarios and their respective weightings each quarter in determining the allowance for credit losses. The most recent adjustment to scenario weightings occurred in the first quarter of 2025.
In estimating recoveries, we use both estimates of what we expect to receive from the sale of defaulted loans as well as historical borrower payment behavior to estimate the timing and amount of future recoveries on charged-off loans.
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In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses, which could result in management overlays (increases or decreases to the allowance for credit losses). These management overlays can encompass a broad array of factors not captured by model inputs, including, but not limited to, changes in lending policies and procedures, including changes in underwriting standards, changes in servicing policies and collection administration practices, including changes we have implemented to our loan modification programs, state law changes that could impact servicing and collection practices, charge-offs, recoveries not already included in the analysis, the effect of other external factors such as shifts in the macroeconomic environment or legal and regulatory requirements that impact the level of estimated current expected credit losses or prepayments, the performance of the model over time versus actual losses, and any other operational or regulatory changes that could materially affect our estimate of future losses.
The evaluation of the allowance for credit losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. If actual future performance in delinquency, charge-offs, and recoveries is significantly different than estimated, or management assumptions or practices were to change, this could materially affect the estimate of the allowance for credit losses, the timing of when losses are recognized, and the related provision for credit losses in our consolidated statements of income.
When calculating our allowance for credit losses and liability for unfunded commitments, we incorporate several inputs that are subject to change period to period. These include, but are not limited to, CECL model inputs and any overlays deemed necessary by management. The most impactful CECL model inputs include:
•Economic forecasts;
•Weighting of economic forecasts; and
•Recovery rates.
Of the model inputs outlined above, economic forecasts, weighting of economic forecasts, and recovery rates are subject to estimation uncertainty, and changes in these inputs could have a material impact to our allowance for credit losses and the related provision for credit losses.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Sensitivity Analysis
Our interest rate risk management program seeks to manage interest rate risk, thereby reducing our exposure to fluctuations in interest rates, and achieving less volatile levels of profit in varying interest rate environments. We evaluate and monitor interest rate risk primarily through two measurements:
•Earnings at Risk (“EAR”), which measures the estimated impact on net interest income to changes in interest rates; and
•Economic Value of Equity (“EVE”), which measures the estimated sensitivity or change in the economic value of equity to changes in interest rates.
We simulate several potential interest rate scenarios using our asset liability management system. The Bank is the primary source of interest rate risk within the Company. Currently, a significant portion of the Bank’s earning assets and deposits are indexed to 30-day average SOFR. Therefore, the 30-day average SOFR rate is considered a core rate in our interest rate risk analysis. The 30-day average SOFR rate and other rates are shocked in parallel for shock scenarios unless otherwise indicated. Rates are adjusted up or down via a set of scenarios that includes both rate shocks and ramps. Rate shocks represent an immediate and sustained change in key rates, with the resulting changes in other indices correlated accordingly. Interest rate ramps represent a linear increase in those key rates over the course of 12 months, with the resulting changes in other indices correlated accordingly.
The following table summarizes the potential effect of certain rate-change scenarios on earnings over the next 24 months and on the market values of assets and liabilities at March 31, 2026 and 2025. This analysis shows four scenarios where interest rates are shocked up and down 100 basis points and 300 basis points while credit and funding spreads remain constant. The EAR analysis shown below assumes a static balance sheet, with maturities of each product replaced with assumed issuance of new products of the same type. The EVE sensitivity is applied only to financial assets and liabilities, including hedging instruments, that existed at the balance sheet date, and does not reflect any impact of loan sales, new assets, liabilities, commitments, or hedging instruments that may arise in the future.
The EAR results for March 31, 2026 indicate a market risk profile of low sensitivity to rate changes, based on static balance sheet assumptions over the next two years. The higher mix of fixed-rate versus variable-rate loan disbursements continues, which results in our liabilities repricing more quickly than our assets over time. Planned loan sales, which are not included in the static EVE modeling, significantly reduce our EVE exposure.
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, | +300 Basis Points | +100 Basis Points | -100 Basis Points | -300 Basis Points | +300 Basis Points | +100 Basis Points | -100 Basis Points | -300 Basis Points | |||||||||||||||||||||||||||||||||||||||
| EAR - Shock | -6.6% | -2.0% | +1.5% | +4.7% | -9.7% | -3.1% | +2.5% | +7.7% | |||||||||||||||||||||||||||||||||||||||
| EAR - Ramp | -4.1% | -1.3% | +1.1% | +3.0% | -6.3% | -2.0% | +1.8% | +5.3% | |||||||||||||||||||||||||||||||||||||||
| EVE | -16.5% | -5.5% | +4.9% | +14.0% | -23.7% | -7.8% | +7.2% | +21.8% | |||||||||||||||||||||||||||||||||||||||
In the preceding tables, the interest rate sensitivity analysis reflects the balance sheet mix of fully variable SOFR and fixed-rate loans, fully variable funding, and fixed-rate funding. The analysis assumes that retail MMDAs and retail savings balances, while relatively sensitive to interest rate changes, will not correlate 100 percent to the full interest rate shocks or ramps.
Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, and size of our balance sheet. They also do not account for other business developments that could affect net income, or for management actions that could affect net income or could be taken to change our risk profile. Accordingly, we can give no assurance that actual results would not differ
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materially from the estimated outcomes of our simulations. Further, such simulations do not represent our current view of expected future interest rate movements.
Asset and Liability Funding Gap
The table below presents our assets and liabilities (funding) arranged by underlying indices as of March 31, 2026. In the following GAAP presentation, the funding gap only includes derivatives that qualify as effective hedges (those derivatives which are reflected in net interest income, as opposed to those reflected in the “gains (losses) on derivatives and hedging activities, net” line on the consolidated statements of income). The difference between the asset and the funding is the funding gap for the specified index. This represents at a high level our exposure to interest rate risk in the form of basis risk and repricing risk, which is the risk that the different indices may reset at different frequencies or may not move in the same direction or at the same magnitude. (Note that all fixed-rate assets and liabilities are aggregated into one line item, which does not capture the differences in time due to maturity.)
As of March 31, 2026 (dollars in millions) Index | Frequency of Variable Resets | Assets | Funding (1) | Funding Gap | ||||||||||||||||||||||
| SOFR Rate | daily/weekly/monthly | $ | 4,890.9 | $ | 5,462.0 | $ | (571.1) | |||||||||||||||||||
| 3-month SOFR | quarterly | — | 251.1 | (251.1) | ||||||||||||||||||||||
| Prime | monthly | 0.2 | — | 0.2 | ||||||||||||||||||||||
Non-Discrete reset(2) | daily/weekly | 5,427.2 | 3,834.2 | 1,593.0 | ||||||||||||||||||||||
Fixed-Rate(3) | 19,091.3 | 19,862.3 | (771.0) | |||||||||||||||||||||||
| Total | $ | 29,409.6 | $ | 29,409.6 | $ | — | ||||||||||||||||||||
(1) Funding (by index) includes the impact of all derivatives that qualify as effective hedges.
(2) Assets include restricted and unrestricted cash equivalents and other overnight type instruments. Funding includes liquid retail deposits and the obligation to return cash collateral held related to derivatives exposures.
(3) Assets include receivables and other assets (including premiums and reserves). Funding includes unswapped time deposits, liquid MMDAs swapped to fixed-rates, and stockholders' equity.
The “Funding Gap” in the above table primarily shows mismatches in the Fed Funds Effective Rate, SOFR rate, 3-month SOFR, Non-Discrete Reset, and Fixed-Rate categories. Changes in the Fed Funds Effective Rate, the Non-Discrete Reset, and the daily, weekly, and monthly SOFR, and 3-month SOFR categories are generally quite highly correlated and should offset each other effectively. The funding in the fixed-rate bucket includes $2.2 billion of stockholders’ equity and $0.3 billion of non-interest-bearing liabilities. We consider the overall repricing risk to be low.
We use interest rate swaps and other derivatives to achieve our risk management objectives. Our asset liability management strategy is to match assets with debt (in combination with derivatives) that have the same underlying index and reset frequency or have interest rate characteristics that we believe are highly correlated. The use of funding with index types and reset frequencies that are different from our assets exposes us to interest rate risk in the form of basis and repricing risk. This could result in our cost of funds not moving in the same direction or with the same magnitude as the yield on our assets. While we believe this risk is low, as all of these indices are short-term with rate movements that are highly correlated over a long period of time, market disruptions (which have occurred in recent years) can lead to a temporary divergence between indices, resulting in a negative impact to our earnings.
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Weighted Average Life
The following table reflects the weighted average lives of our earning assets and liabilities at March 31, 2026.
As of March 31, 2026 (averages in years) | Weighted Average Life | ||||
| Earning assets | |||||
| Private Education Loans | 5.73 | ||||
| Cash and investments | 1.06 | ||||
| Total earning assets | 4.55 | ||||
| Deposits | |||||
| Short-term deposits | 0.72 | ||||
| Long-term deposits | 3.46 | ||||
| Total deposits | 1.17 | ||||
| Borrowings | |||||
| Short-term borrowings | 0.59 | ||||
| Long-term borrowings | 4.07 | ||||
| Total borrowings | 3.79 | ||||
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information required by this item is set forth in the “Commitments, Contingencies and Guarantees” discussion in Note 14 to our consolidated financial statements included elsewhere in this Form 10-Q, which discussion is incorporated herein by reference in response to this Item.
Item 1A. Risk Factors
Our business activities involve a variety of risks. Readers should carefully consider the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchases
The following table provides information relating to our purchase of shares of our common stock in the three months ended March 31, 2026.
| (Dollars in thousands, except per share data) | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)(3) | Approximate Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs(2) | |||||||||||||||||||
| Period: | |||||||||||||||||||||||
| January 1 - January 31, 2026 | 1,122,818 | $ | 27.61 | 1,119,571 | $ | 2,000 | |||||||||||||||||
| February 1 - February 28, 2026 | 3,237,495 | $ | 23.49 | 2,530,058 | $ | 442,000 | |||||||||||||||||
| March 1 - March 31, 2026 | 8,505,512 | $ | 19.96 | 8,381,351 | $ | 242,000 | |||||||||||||||||
| Total First Quarter 2026 | 12,865,825 | $ | 21.52 | 12,030,980 | |||||||||||||||||||
(1) The total number of shares purchased includes: (i) shares purchased under the stock repurchase programs discussed herein, and (ii) 834,845 shares of our common stock tendered to us to satisfy the exercise price in connection with cashless exercises of stock options, and tax withholding obligations in connection with exercises of stock options and vesting of restricted stock, restricted stock units, performance stock units, and dividend equivalent units.
(2) The 2024 Share Repurchase Program expired on February 6, 2026. The 2026 Share Repurchase Program was announced on January 22, 2026, with an effective date of January 22, 2026, and expires on February 4, 2028. As of March 31, 2026, there was $242 million in capacity remaining under the 2026 Share Repurchase Program. See Note 10, “Stockholders’ Equity” to our consolidated financial statements in this Form 10-Q for further discussion.
(3) In the first quarter of 2026, we repurchased 3.6 million shares under 10b5-1 trading plans and the ASR. See Note 10, “Stockholders’ Equity” to our consolidated financial statements in this Form 10-Q for further discussion.
The closing price of our common stock on the NASDAQ Global Select Market on March 31, 2026 was $21.41.
Item 3. Defaults Upon Senior Securities
Nothing to report.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
In the first quarter of 2026, no director or officer (as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended) of the Company adopted terminated
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Item 6. Exhibits
The following exhibits are furnished or filed, as applicable:
| 10.1 | ASR Master Confirmation and Form of Supplemental Confirmation, dated March 9, 2026 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 9, 2026). | ||||
| 10.2 | Form of SLM Corporation 2021 Omnibus Incentive Plan, 2026 Restricted Stock Unit Term Sheet. | ||||
| 10.3 | Form of SLM Corporation 2021 Omnibus Incentive Plan, 2026 Performance Stock Unit Term Sheet. | ||||
| 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
| 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
| 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
| 32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SLM CORPORATION (Registrant) | |||||||||||
| By: | /S/ PETER M. GRAHAM | ||||||||||
Peter M. Graham Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |||||||||||
Date: April 23, 2026
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FAQ
How profitable was SLM (SLM) in the first quarter of 2026?
SLM generated net income of $307.9 million in Q1 2026, slightly above $304.5 million a year earlier. Basic earnings per share were $1.56, up from $1.43, reflecting stable net interest income and favorable credit provisions.
What were SLM (SLM) earnings per share and dividends in Q1 2026?
SLM reported basic EPS of $1.56 and diluted EPS of $1.54 for Q1 2026. The company declared a cash dividend of $0.13 per common share, the same level as in the prior-year quarter, continuing its regular common dividend policy.
How large is SLM’s private education loan portfolio as of March 31, 2026?
SLM’s private education loans held for investment totaled $21.17 billion gross at March 31, 2026. After deferred items and an allowance for credit losses of $1.38 billion, net loans were $19.89 billion, all in private education lending to students and families.
What credit loss allowance did SLM (SLM) carry on its loans and commitments?
SLM reported a total allowance for credit losses of $1.41 billion at March 31, 2026. This includes $1.38 billion for loan losses and $23.8 million for unfunded loan commitments, covering expected lifetime losses on its private education loan exposure.
How much did SLM (SLM) repurchase in common stock in Q1 2026?
In Q1 2026, SLM repurchased 12.0 million common shares in total. This included 11.0 million shares for $226 million under its 2026 repurchase program and 1.0 million shares for $33 million under the 2024 program, plus a $200 million accelerated share repurchase.
What were SLM’s deposits and funding profile at March 31, 2026?
Total deposits were $20.53 billion, almost all interest-bearing, split between brokered and retail/other balances. Certificates of deposit were $10.02 billion with a weighted average stated rate of 3.84%, while total borrowings reached $6.17 billion, mainly term ABS and senior notes.