What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-24 compared with 2021-02-25 · 113 added, 90 removed, 399 unchanged (34% of the section changed)

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2 https://research.collegeboard.org/trends/education-pays

2021 Form 10-K — SLM CORPORATION 3

Our business is focused and aligned to strategic imperatives that set the foundation for our continued success.

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increasing the profitability and growth of our core business, continuing to build and advance a strong brand among our customers, helping policymakers better understand the student lending marketplace and our role in it, allocating capital and returning it to shareholders when appropriate, and fostering a true mission- and performance-led culture.

In 2020, we developed a new organizational structure to better align to these focused strategic imperatives, which resulted in reduced costs and improved operating efficiencies.

For further information on these new imperatives, see Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — 2020 Strategic Imperatives and Corporate Restructuring,” in this annual report on Form 10-K.

Private Education Loans

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In 2021, more than 397,000 families chose us as their Private Education Loan provider, more than any other private student loan lender.

We originated $5.3 billion of Private Education Loans, a decrease of 5 percent from the year ended December 31, 2019, with the decrease largely due to the COVID-19 pandemic.

We originated $5.4 billion of Private Education Loans in 2021, an increase of 2 percent from the year ended December 31, 2020.

As of December 31, 2021, we had $19.6 billion of Private Education Loans held for investment, net, outstanding.

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The core of our marketing strategy is to promote our products on campuses through financial aid offices as well as through online and direct marketing to students and families.

Our on-campus efforts with approximately 2,400 higher education institutions are led by our sales force, the largest in the industry, which has become a trusted resource for financial aid offices.

Our on-campus efforts with approximately 2,300 higher education institutions are led by our relationship management team, the largest in the industry, which has become a trusted resource for financial aid offices.

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Our loans are high credit quality and the overwhelming majority of our customers manage their payments with great success.

Private Education Loans in repayment include loans on which customers 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.

At December 31, 2020, 2.8 percent of Private Education Loans (held for investment) in repayment were greater than 30 days delinquent, and Private Education Loans (held for investment) in forbearance were 4.3 percent of loans in repayment and forbearance.

In 2020, net charge-offs as a percentage of average loans in repayment were 1.17 percent.

At December 31, 2021, 3.3 percent of Private Education Loans (held for investment) in repayment were 30 days or more delinquent, and Private Education Loans (held for investment) in forbearance were 1.9 percent of loans in repayment and forbearance.

In 2021, Private Education Loan net charge-offs as a percentage of average loans in repayment were 1.33 percent.

Sallie Mae Bank

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We offer three types of credit cards, each uniquely designed to promote and reward financial responsibility, including a card that offers a cash back bonus that cardholders can apply to pay down a student loan.

At December 31, 2020, we had $11 million of Credit Cards, net, outstanding in our held for investment portfolio.

At December 31, 2021, we had $23 million of Credit Cards, net, outstanding in our loans held for investment portfolio.

Our SmartyPig™ product is a free, FDIC-insured, online, goal-based savings account that helps consumers save for long- and short-term goals.

Its tiered interest rates reward consumers for growing their savings.

At December 31, 2021, we had $336 million in SmartyPig deposits.

Personal Loans and Upromise

In the fourth quarter of 2019, we discontinued originations of our unsecured personal loans used for non-educational purposes (“Personal Loans”) and did not originate or purchase any Personal Loans in 2020.

In the third quarter of 2020, we sold our entire Personal Loan portfolio to focus our capital and attention on the core education loan business.

As part of our efforts to focus and align to our core business, on May 31, 2020, we also sold our Upromise Inc.

As part of our efforts to focus and align to our core business, on May 31, 2020, we also sold our former Upromise Inc.

subsidiary, which operated a free to join rewards program.

2021 Form 10-K — SLM CORPORATION 5

Our Lending Philosophy

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Some customers transitioning from school to the work force may require more time before they are financially capable of making full payments of principal and interest.

Sallie Mae created a Graduated Repayment Program (the “GRP”) to assist borrowers with additional payment flexibility, allowing customers to make interest-only payments instead of full principal and interest payments for a period of 12 months if they elect within a specified time frame to participate in the GRP.

Sallie Mae created a Graduated Repayment Period program (the “GRP”) to assist borrowers with additional payment flexibility, allowing customers to make interest-only payments instead of full principal and interest payments for a period of 12 months if they elect within a specified time frame to participate in the GRP.

The time frame for electing to participate in the GRP begins six months before expiration of a borrower’s grace period and extends until 12 months after the expiration of the grace period.

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Examples are provided to help explain how payments are applied and allocated, and see how the accrued interest on alternative repayment programs could affect the cost of customers’ loans.

The site also provides important information on benefits available to service men and women under the Servicemembers Civil Relief Act (the “SCRA”).

The site also provides important information on benefits available to servicemembers under the Servicemembers Civil Relief Act (the “SCRA”).

After graduation, a customer may apply for the cosigner to be released from the loan.

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In the event of a cosigner’s death, the student borrower automatically continues as the sole individual on the loan with the same terms.

6 SLM CORPORATION — 2021 Form 10-K

If a customer’s account becomes delinquent, our collections centers work with the customer and/or the cosigner to understand their ability to make ongoing payments.

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.

These can include extended repayment schedules, temporary interest rate reductions and, if appropriate, short-term hardship forbearance (which typically is retroactive and granted by our collections department), suited to their individual circumstances and ability to make payments.

Currently, our servicing centers generally also grant prospective forbearance if a borrower who is current requests it for increments of up to three months at a time, for up to 12 months.

These can include extended repayment schedules, temporary interest rate reductions and, if appropriate, short-term hardship forbearance.

These arrangements are suited to the customer’s individual circumstances and ability to make payments.

When we grant forbearance, we counsel customers on the effect forbearance will have on their loan balance.

See 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 Rate Modifications as a Private Education Loan Collection Tool” for additional information about planned changes to our credit administration practices.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” for additional information about the recent changes to our credit administration practices.

COVID-19 Response

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Customers may contact us in whatever way is most convenient for them.

Historically we have utilized disaster forbearance for material events, including hurricanes, wildfires, and floods.

Disaster forbearance defers payments for as many as 90 days upon enrollment.

Historically, we also have utilized disaster forbearance to assist borrowers affected by material events, including hurricanes, wildfires, floods, and the COVID-19 pandemic.

We typically grant disaster forbearance to affected borrowers in increments of up to three months at a time.

In accordance with regulatory guidance that encourages lenders to work constructively with customers who have been impacted by COVID-19, we invoked this same disaster forbearance program to assist our customers through COVID-19 and offered this program across our operations, including through mobile and self-service channels such as chat and interactive voice response (“IVR”) to address initial high volumes at the onset of the pandemic.

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Customers requesting a disaster forbearance or an extension of a disaster forbearance are required to speak with our customer care and collections personnel.

The first wave of disaster forbearance was granted primarily in 90-day increments.

As these forbearances ended in late second quarter and early third quarter, we reduced the disaster forbearance to one-month increments and implemented additional discussions between our servicing agents and borrowers to encourage borrowers/cosigners to enter repayment.

Customers who receive a disaster forbearance do not progress in delinquency and are not assessed late fees or other fees.

During a disaster forbearance, a customer’s credit file will continue to reflect the status of the loan as it was immediately prior to granting the disaster forbearance.

During the period of the disaster forbearance, interest continues to accrue, but is not capitalized to the loan balance after the loan returns to repayment status.

If the financial hardship extends beyond 90 days, additional assistance is available for eligible customers.

For example, for borrowers exiting disaster forbearance and not eligible for GRP, we may allow them to make interest only payments for 12 months before reverting to full principal and interest payments.

As of December 31, 2020, $44.2 million of Private Education Loans held for investment were in disaster forbearance status.

During COVID-19, our customers experienced higher levels of financial hardship, which initially led to higher levels of forbearance.

We expect for some customers financial hardship may lead to higher levels of delinquencies and defaults in the future, as borrowers who had received disaster forbearance from us re-enter repayment status.

Beginning in June 2021, we stopped granting COVID-19 related disaster forbearances.

As borrowers in the various delinquency buckets exit disaster forbearance and begin to enter repayment, we expect elevated levels of losses on this segment of our customers.

We expect that, left unabated, this deterioration in delinquency and default rates may persist until economic conditions return to pre-pandemic levels.

For further information on the impact of COVID-19 on the Company, see Part II, Item 7.

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Over the past few years, we have implemented several improvements in our ability to interact with our loan customers, including:

• an integrated platform that allows customers and servicing agents to simultaneously access the same systems in real time interaction;

• an integrated platform that allows customers and servicing agents to streamline our processes and provide efficiencies, thereby creating more customer-centric capabilities for our team members;

• an on-line chat function for customer service;

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• initiation of customer surveys to gain feedback on areas for improvement within our servicing function.

2021 Form 10-K — SLM CORPORATION 7

These and other enhancements have contributed to streamlined originations and servicing processes, increased customer self-services rates, and improved customer satisfaction in all channels.

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We are strongly invested in our customers’ success.

Of total customers, 98 percent of loans in repayment are in good standing.

Of total customers, approximately 98 percent of loans in repayment are in good standing.

Our College Planning Calculator helps families set college savings goals, projects the full costs of a college degree, and estimates future student loan payments and the annual starting salary level needed to keep payments manageable.

Scholarship Search, our free online scholarship database, is home to more than 6 million scholarships collectively worth over $30 billion.

For academic year (“AY”) 2019-2020, more than 24,000 students reported receiving at least one scholarship via our database, covering more than $67 million in college costs.

Our Scholarship Search for Graduate Students includes access to approximately 1 million graduate school scholarships with an aggregate value of more than $1.25 billion.

In 2019, we unveiled a new, one-stop college-planning destination — Sallie Mae’s Paying for College Resource — created with, and for, high school educators and counselors.

We also have a one-stop college-planning destination — Sallie Mae’s Paying for College Resource — created with, and for, high school educators and counselors.

The Sallie Mae Paying for College Resource provides access to free, online college planning tools, short educational videos on financial aid, and other valuable information to help guide students and their families through the planning for college process.

In 2020, to raise awareness about the importance of completing the FAFSA and to simplify the process, we partnered with Embark, the leading provider of admissions software for schools and universities, to provide a free online tool to help families file the FAFSA.

To raise awareness about the importance of completing the FAFSA and to simplify the process, we partnered with Embark, the leading provider of admissions software for schools and universities, to provide a free online tool to help families file the FAFSA.

The tool reduces the average time it takes to complete the FAFSA from 55 minutes to less than 20 minutes.

In 2021, we relaunched our online resource to provide a centralized and simplified site that provides information on tools and resources for school counselors as they assist students and families plan and pay for college.

We are also creating a suite of confidence inspiring tools and resources as well as new, innovative partnerships that we expect will provide significant value to our customers.

In January 2022, we announced we had executed an agreement to acquire the assets of Epic Research Education Services, LLC, which does business as Nitro College (“Nitro”).

Nitro takes pride in equipping college students and their parents with the necessary tools to navigate college financing, manage their debt, and obtain scholarship opportunities.

In addition to providing a scholarship finder, Nitro provides FAFSA application support, information on grants, and calculators to help college students determine the potential return on investment from a college degree.

The addition of Nitro will support our mission of providing students with the confidence needed to successfully navigate the higher education journey.

Strategically, we expect the acquisition of the Nitro assets, including its employees and intellectual property, when complete, to immediately expand our digital marketing capabilities, reduce the cost to acquire customer accounts, and accelerate our progress to become a broader education solutions provider for students before, during, and immediately after college.

The transaction is subject to customary approvals and closing conditions and is expected to close in the first quarter of 2022.

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Key Drivers of Private Education Loan Market Growth

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We compete based on our products, originations capability, price, and customer service.

We expect modest enrollment growth over the next several years.

We expect enrollment to remain relatively flat over the next several years.

Enrollment at Four-Year Degree Granting Institutions 2

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• According to the U.S.

Department of Education’s projections released in December 2019, the high school graduate population is projected to remain relatively flat from 2020 to 2029.

Department of Education’s projections released in January 2021, the enrollment is projected to remain relatively flat from 2020 to 2029.

______________________

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www.measureone.com.

Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2029 (NCES, December 2019), Enrollment in Postsecondary Institutions (NCES, December 2019).

Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2029 (NCES, January 2021), Enrollment in Postsecondary Institutions (NCES, January 2021).

These are the most recent sources available to us for this information.

Given the dates these sources were published, however, the information from these sources may be limited and may not contemplate or reflect the full effects and impacts of COVID-19 on students and college enrollment in future years.

2021 Form 10-K — SLM CORPORATION 9

Tuition Rates

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The College Board restates its data annually, which may cause previously reported results to vary.

10 SLM CORPORATION — 2021 Form 10-K

Sources of Funding

Private Education Loan originations increased to an estimated $13 billion in AY 2019-2020, up 10 percent over the previous year.

Private Education Loan originations decreased to an estimated $11 billion in AY 2020-2021, down 15 percent over the previous year.

The College Board-Trends in Student Aid 2016.

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The College Board restates its data annually, which may cause previously reported results to vary.

We changed our source of participants in this 2020 annual report, removing our internal estimates for Private Education Loans made by smaller lenders, and relying solely on publicly available sources for market estimates, because we believe it provides a more appropriate basis for comparison of the performance of our business.

We rely on publicly available sources for market estimates, because we believe it provides a more appropriate basis for comparison of the performance of our business.

2021 Form 10-K — SLM CORPORATION 11

• We estimate total spending on higher education was $469 billion in AY 2020-2021, up from $435 billion in AY 2016-2017.

Private Education Loan originations increased to an estimated $13 billion in AY 2019-2020, up 10 percent over the previous year and represent just 2.7 percent of total spending on higher education.

Private Education Loan originations decreased to an estimated $11 billion in AY 2020-2021, down 15 percent over the previous year, and represent just 2.4 percent of total spending on higher education.

Modest growth in total spending can lead to meaningful increases in Private Education Loans in the absence of growth in other sources of funding.

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This has a minimal impact on historically-stated numbers.

12 SLM CORPORATION — 2021 Form 10-K

Supervision and Regulation

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Our origination, servicing, first-party collection, and deposit taking activities subject us to federal and state consumer protection, privacy, and related laws and regulations.

Some of the more significant laws and regulations that are applicable to our business include:

Some of the more significant laws and regulations applicable to our business include:

• various state and federal laws governing unfair, deceptive, or abusive acts or practices;

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• the Gramm-Leach-Bliley Act, which governs the ability of financial institutions to disclose nonpublic information about consumers to non-affiliated third-parties;

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• the California Consumer Privacy Act, which governs transparency and disclosure obligations regarding personal information of residents of the State of California.

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Regulators have flexibility to commence enforcement actions against institutions and institution-affiliated parties, and the FDIC has the authority to terminate deposit insurance.

When issued by a banking agency, cease and desist and similar orders may, among other things, require affirmative action to correct any harm resulting from a violation or practice, including by compelling restitution, reimbursement, indemnifications or guarantees against loss.

When issued by a

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banking agency, cease and desist and similar orders may, among other things, require affirmative action to correct any harm resulting from a violation or practice, including by compelling restitution, reimbursement, indemnifications, or guarantees against loss.

A financial institution may also be ordered to restrict its growth, dispose of certain assets, rescind agreements or contracts, or take other actions determined to be appropriate by the ordering agency.

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Oral argument on the motion took place on January 9, 2019.

The Court took the motion under advisement.

To date, four other state attorneys general (California, Washington, Pennsylvania, and New Jersey) have filed suits against Navient and one or more of its current subsidiaries arising out of the Multi-State Investigation.

The Court took the motion under advisement, and a hearing took place on December 7, 2021.

On December 16, 2021, the Court entered an Order granting the Bank’s Motion to Dismiss the First Amended Complaint, thereby dismissing the Bank from the action with prejudice.

On January 13, 2022, Navient announced agreements with a total of forty state attorneys general to resolve their previously disclosed multistate litigation and investigation matters, including but not limited to four lawsuits (brought by the attorneys general for the states of California, Washington, Pennsylvania, and New Jersey) arising out of the Multi-State Investigation.

Neither SLM, the Bank, nor any of their current subsidiaries are named in, or otherwise a party to, the California, Washington, Pennsylvania, or New Jersey lawsuits, and no claims are asserted against them.

Each complaint asserts in its own fashion that Navient assumed responsibility under the Separation and Distribution Agreement for the alleged conduct in the complaints prior to the Spin-Off.

On September 24, 2018, the Washington Attorney General served a third-party subpoena on the Bank calling for the production of certain records.

The Bank has responded to the subpoena.

Additional lawsuits may arise from the Multi-State Investigation which may or may not name the Company, the Bank or any of their current subsidiaries as parties to these suits.

The Company and the Bank are not parties to the Navient settlement and are not contributing any of the relief sought in the settlement.

Further, the consent judgments between Navient and the various states contain releases of claims as to pre-Spin-Off SLM (including the Bank and other consolidated subsidiaries) for conduct occurring on or before the date of the Spin-Off.

Pursuant to the terms of the Separation and Distribution Agreement, and as contemplated by the structure of the Spin-Off, Navient is legally obligated to indemnify the Bank against all claims, actions, damages, losses, or expenses that may arise from the conduct of all activities of pre-Spin-Off SLM occurring prior to the Spin-Off, except for certain liabilities related to the conduct of the pre-Spin-Off consumer banking business that were specifically assumed by the Bank (and as to which the Bank is obligated to indemnify Navient).

Navient has acknowledged its indemnification obligations under the Separation and Distribution Agreement, in connection with the Multi-State Investigation

and the related lawsuits in which the Bank has been named as a party.

Navient has informed the Bank, however, that it believes that the Bank may be responsible to indemnify Navient against certain potential liabilities arising from the above-described lawsuits under the Separation and Distribution Agreement and/or a separate loan servicing agreement between the parties, and has suggested that the parties defer further discussion regarding indemnification obligations, and reimbursement of ongoing legal costs, in connection with the lawsuits until the lawsuits are resolved.

Navient has acknowledged its indemnification obligations under the Separation and Distribution Agreement, in connection with the Multi-State Investigation and the related lawsuits in which the Bank has been named as a party.

2021 Form 10-K — SLM CORPORATION 15

separate loan servicing agreement between the parties, and has suggested that the parties defer further discussion regarding indemnification obligations, and reimbursement of ongoing legal costs, in connection with the lawsuits.

The Bank disagrees with Navient’s position and the Bank has reiterated to Navient that Navient is responsible for promptly indemnifying the Bank against all liabilities arising out of the conduct of pre-Spin-Off SLM that are at issue in the Multi-State Investigation and in the above-described lawsuits.

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Dividends and Share Repurchase Programs

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.

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We have utilized all capacity under the 2019 Share Repurchase Program, having repurchased 17 million shares of common stock for $167 million for the year ended December 31, 2019 and 3 million shares of common stock for $33 million in the year ended December 31, 2020.

The January 22, 2020 share repurchase program (the “2020 Share Repurchase Program”), which was effective upon announcement and expires on January 21, 2022, permits the Company to repurchase shares of its common stock from time to time up to an aggregate repurchase price not to exceed $600 million.

The January 22, 2020 share repurchase program (the “2020 Share Repurchase Program”), which was effective upon announcement and expired on January 21, 2022, permitted the Company to repurchase shares of its common stock from time to time up to an aggregate repurchase price not to exceed $600 million.

Under the authority of the 2020 Share Repurchase Program, on March 10, 2020, we entered into an accelerated share repurchase agreement (“ASR”) with a third-party financial institution under which we paid $525 million for an upfront delivery of our common stock and a forward agreement.

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The final total actual number of shares of common stock delivered to us pursuant to the forward agreement was based upon the Rule 10b-18 volume-weighted average price at which the shares of our common stock traded during the regular trading sessions on the NASDAQ Global Select Market during the term of the ASR.

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.

The transactions were accounted for as equity transactions and were included in treasury stock when the shares were received, at which time there was an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share.

On January 26, 2021, we completed the ASR and upon final settlement on January 28, 2021, we received an additional 13 million shares.

In total, we repurchased 58 million shares under the ASR at an average price per share of $9.01.

For additional information, see Notes to Consolidated Financial Statements, Note 25, “Subsequent Events.”

For additional information, see Notes to Consolidated Financial Statements, Note 13, “Stockholders’ Equity.”

16 SLM CORPORATION — 2021 Form 10-K

Under the 2020 Share Repurchase Program, we repurchased an additional 4 million shares of common stock for $75 million in the three months ended March 31, 2021.

We have now utilized all capacity under the 2020 Share Repurchase Program.

In October 2020, we initiated a cash tender offer to purchase up to 2,000,000 shares of our Series B Preferred Stock.

On November 30, 2020, we accepted for purchase 1,489,304 shares of the Series B Preferred Stock at a purchase price of $45 per share plus an amount equal to accrued and unpaid dividends, for an aggregate purchase price of approximately $68 million.

On January 27, 2021, the Company announced a new share repurchase program (the “2021 Share Repurchase Program”), which was effective upon announcement and expires on January 26, 2023, and permits the Company to repurchase shares of its common stock from time to time up to an aggregate repurchase price not to exceed $1.25 billion.

On February 2, 2021, we announced the commencement of a tender offer (the “Tender Offer”) to purchase up to $1 billion in aggregate purchase price of our outstanding shares of common stock, par value $0.20 per share (the “Securities”) or such lesser aggregate purchase price of Securities as are properly tendered and not properly withdrawn, at a single per-Security price not greater than $15.00 nor less than $13.10 per share to the seller in cash, less any applicable withholding taxes and without interest.

The Tender Offer may be amended from time to time, and will expire, upon the terms and conditions described in the relevant Tender Offer materials filed with the SEC.

The results of the Tender Offer will be reflected in the Company’s financial results for the first fiscal quarter of 2021.

Repurchases under the programs may occur from time to time and through a variety of methods, including tender offers, open market repurchases, repurchases effected through Rule 10b5-1 trading plans, negotiated block purchases, accelerated share repurchase programs, or other similar transactions.

On January 27, 2021, the Company announced another share repurchase program (the “2021 Share Repurchase Program”), which was effective upon announcement and expires on January 26, 2023, and originally permitted the Company to repurchase shares of its common stock from time to time up to an aggregate repurchase price not to exceed $1.25 billion.

On February 2, 2021, under the auspices of the 2021 Share Repurchase Program, we announced the commencement of a “modified Dutch Auction” tender offer (the “Tender Offer”) to purchase up to $1 billion in aggregate purchase price of our outstanding shares of common stock, par value $0.20 per share.

Pursuant to the Tender Offer, we repurchased 28.5 million shares at a price of $16.50 per share.

The purchase of shares settled on March 16, 2021, for an aggregate cost of approximately $472 million, including fees and expenses related to the Tender Offer.

We cancelled the 28.5 million shares purchased in connection with the Tender Offer.

On October 20, 2021, we announced a $250 million increase in the amount of common stock that may be repurchased under our 2021 Share Repurchase Program, which expires on January 26, 2023.

This is in addition to the original $1.25 billion of authorization announced on January 27, 2021, for a total 2021 Share Repurchase Program authorization of $1.5 billion.

Of the total $1.5 billion 2021 Share Repurchase Program authorization, we repurchased 81.1 million shares of common stock at an average price per share of $18.07, for $1.46 billion in the year ended December 31, 2021.

(Those amounts include the shares repurchased under the Tender Offer described above.) There was $38 million of capacity remaining under the 2021 Share Repurchase Program at December 31, 2021.

On January 26, 2022, we announced a new share repurchase program (the “2022 Share Repurchase Program”), which was effective upon announcement and expires on January 25, 2024, and permits us to repurchase shares of our common stock from time to time up to an aggregate repurchase price not to exceed $1.25 billion.

So long as there is unexpired capacity under a given repurchase program, repurchases under the programs may occur from time to time and through a variety of methods, including tender offers, open market repurchases, repurchases effected through Rule 10b5-1 trading plans, negotiated block purchases, accelerated share repurchase programs, or other similar transactions.

The timing and volume of any repurchases under the 2021 Share Repurchase Program and the 2022 Share Repurchase Program will be subject to market conditions, and there can be no guarantee that the Company will repurchase up to the limit of the programs or at all.

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.

The Bank declared $579 million and $254 million in dividends for the years ended December 31, 2020 and 2019, respectively, with the proceeds primarily used to fund the 2019 and 2020 Share Repurchase Programs and stock dividends.

The Bank paid no dividends on its common stock for the year ended December 31, 2018.

The Bank declared $1.4 billion, $579 million, and $254 million in dividends for the years ended December 31, 2021, 2020, and 2019, respectively, with the proceeds primarily used to fund the 2021, 2020, and 2019 Share Repurchase Programs and stock dividends.

Regulatory Capital Requirements

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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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The Bank is subject to the following minimum capital ratios under U.S.

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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.

On August 26, 2020, the FDIC and other federal banking agencies published a final rule that provides those banking organizations that adopt CECL (as hereinafter defined) during the 2020 calendar year with the option to delay for two years, and then phase in over the following three years, the effects on regulatory capital of CECL relative to the incurred loss methodology.

We have elected to use this option.

The final rule is substantially similar to an interim final rule issued on March 27, 2020.

Under this final rule, because we have elected to use the deferral option, the regulatory capital impact of our transition adjustments recorded on January 1, 2020 from the adoption of CECL will be deferred for two years.

In addition, from January 1, 2020 through the end of the two-year deferral period, 25 percent of the ongoing impact of CECL on our allowance for credit

losses, retained earnings, and average total consolidated assets, each as reported for regulatory capital purposes, will be added to the deferred transition amounts (“adjusted transition amounts”) and deferred for the two-year period.

At the conclusion of the two-year period (i.e., beginning January 1, 2022), the adjusted transition amounts will be phased in for regulatory capital purposes at a rate of 25 percent per year, with the phased-in amounts included in regulatory capital at the beginning of each year.

Our January 1, 2020 CECL transition amounts increased the allowance for credit losses by $1.1 billion, increased the liability representing our off-balance sheet exposure for unfunded commitments by $116 million, and increased our deferred tax asset by $306 million, resulting in a cumulative effect adjustment that reduced retained earnings by $953 million.

Under regulations issued by the FDIC and other federal banking agencies, banking organizations that adopt CECL (as hereinafter defined) during the 2020 calendar year, including the Bank, may elect to delay for two years, and then phase in over the following three years, the effects on regulatory capital of CECL relative to the incurred loss methodology.

The Bank has elected to use this option.

Therefore, the regulatory capital impact of the Bank’s transition adjustments recorded on January 1, 2020 from the adoption of CECL, and 25 percent of the ongoing impact of CECL on the Bank’s allowance for credit losses, retained earnings, and average total consolidated assets, each as reported for regulatory capital purposes (collectively, the “adjusted transition amounts”), were deferred for the two-year period ending January 1, 2022.

From January 1, 2022 to January 1, 2025, the adjusted transition amounts will be phased in for regulatory capital purposes at a rate of 25 percent per year, with the phased-in amounts included in regulatory capital at the beginning of each year.

The Bank’s January 1, 2020 CECL transition amounts increased our allowance for credit losses by $1.1 billion, increased the liability representing our off-balance sheet exposure for unfunded commitments by $116 million, and increased our deferred tax asset by $306 million, resulting in a cumulative effect adjustment that reduced retained earnings by $953 million.

This transition adjustment was inclusive of qualitative adjustments incorporated into our CECL allowance as necessary, to address any limitations in the models used.

At December 31, 2021, the adjusted amount of the transition adjustment to be phased-in, in equal amounts on January 1 of each year beginning January 1, 2022 through January 1, 2025, totaled $836 million.

Stress Testing Requirements

4 unchanged sentences

The Bank also conducts quarterly liquidity stress tests to evaluate the adequacy of its liquidity sources under various stress scenarios and provides the results to its Board of Directors.

These scenarios are submitted to the Bank’s prudential regulators at their request.

These results are submitted to the Bank’s prudential regulators at their request.

Deposit Insurance and Assessments

5 unchanged sentences

Assessment rates for insured banks also are subject to adjustment depending on a number of factors, including significant holdings of brokered deposits in certain instances and the issuance or holding of certain types of debt.

18 SLM CORPORATION — 2021 Form 10-K

With respect to brokered deposits, an insured depository institution must be well capitalized under the prompt corrective action framework in order to accept, renew, or roll over such deposits without FDIC clearance.

5 unchanged sentences

The Bank currently undergoes regular on-site examinations by the Bank’s regulators, who examine for adherence to a range of legal and regulatory compliance responsibilities.

A regulator conducting an examination has complete access to the books and records of the examined institution.

A regulator conducting an examination has unfettered access to the books and records of the examined institution.

The results of the examination are confidential.

23 unchanged sentences

adopt similar laws or if a comprehensive federal data privacy law is enacted, we may expend considerable additional resources to meet these requirements and the overall risk to the Company could incrementally increase depending upon the reach and application of any such laws.

2021 Form 10-K — SLM CORPORATION 19

State Regulation of Student Loan Servicers

12 unchanged sentences

The derivative contracts cleared through the CME and the LCH represent 94.4 percent and 5.6 percent, respectively, of our total notional derivative contracts of $5.5 billion at December 31, 2021.

Our exposure is limited to the value of the derivative contracts in a

gain position less any collateral held and plus any collateral posted.

Our exposure 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.

2 unchanged sentences

We early adopted the Dodd-Frank risk retention rules beginning with our 2016-A securitization transaction completed in May 2016.

For our 2016-A transaction and subsequent securitizations to date, we comply with the Dodd-Frank risk retention rules by retaining (for a requisite period of time) an “eligible horizontal residual interest” comprised of residual certificates representing at least five percent of the fair value of all interests issued in the securitization transaction, determined as of the date of transfer.

With any securitizations, including any loan sale transactions structured as securitizations, that are treated as off-balance sheet, we intend to comply with the Dodd-Frank risk retention rules by retaining (for a requisite period) an “eligible vertical interest” comprised of a five percent interest in each class of ABS interests issued in any such transaction or a single interest entitling the holder to five percent of any amounts payable by the trustee in respect of each interest issued by the trust.

The risk retention provisions of the FDIC safe harbor rule were superseded by the Dodd-Frank risk retention rules.

For our 2016-A transaction and subsequent securitizations that are treated as on-balance sheet, we comply with the Dodd-Frank risk retention rules by retaining (for a requisite period of time) an “eligible horizontal residual interest” comprised of residual certificates representing at least five percent of the fair value of all ABS interests issued in the securitization transaction, determined as of the date of transfer.

With any securitizations, including any loan sale transactions structured as securitizations, that are treated as off-balance sheet, we comply with the Dodd-Frank risk retention rules by retaining (for a requisite period) an “eligible vertical interest” comprised of a five percent interest in each class of ABS interests issued in any such transaction or a single interest entitling the holder to five percent of any amounts payable by the trustee in respect of each interest issued by the issuing trust.

Anti-Money Laundering, the USA PATRIOT Act, and U.S.

12 unchanged sentences

laws and regulations applicable to U.S.

20 SLM CORPORATION — 2021 Form 10-K

In December 2013, the U.S.

5 unchanged sentences

Human Capital Resources and Talent Development

As of December 31, 2020, we had approximately 1,600 team members, all located in the United States, none of whom are covered by collective bargaining agreements.

Our “MAPS” program (Manage, Apply, Practice, and Succeed), is designed to identify, and cultivate, our future leaders from existing employees of Sallie Mae.

Now in its third year and seventh cohort, the MAPS program brings together mid and senior-level managers to enhance their leadership skills and build their project management capabilities through group projects and collaborative exercises.

Our leadership development program, “Inspirational Leadership,” is designed to build on our leadership competencies and provide an opportunity to bring about new solutions through our business challenge.

This program is offered to mid to senior-level leaders who have the potential to assume broader roles in the future.

In addition to what we believe to be attractive compensation and benefits programs, our management incentive plan and long-term incentive plan provide cash and equity bonuses to employees to help incentivize employee productivity, which we believe contributes to our success.

We believe in a just and inclusive, values-based, mission-led culture that inspires commitment and drives performance.

Our human capital strategy is focused on the attraction, development, empowerment, recognition, and rewarding of team members as they bring our mission to life.

We strive to create a diverse culture of inclusion — an environment that encourages and reinforces mutual trust, makes it safe to express thoughts, ideas and concerns, and connects and embraces diverse backgrounds and perspectives to power and fuel our mission.

We believe that a diverse and inclusive workforce can lead to a more effective company.

As of December 31, 2020, 54.1 percent of our team members were female and 40.6 percent of our team members self-identified as part of a minority

Our talent acquisition program has led to a steady increase in female and minority representation in leadership positions since 2015 across the Company.

We are focused on providing a total compensation package that enables us to attract, motivate, and retain our employees to help drive our business forward.

Our benefits package includes Company contributions to the 401(k), educational assistance to our team members and their dependents, flexible work arrangements, and other comprehensive health and welfare programs.

We also believe in paying competitive market wages, which is why we established $20/hour as our new starting rate for all positions in 2021.

As of December 31, 2021, we had approximately 1,450 team members, all located in the United States.

We believe an engaged workforce leads to a more innovative, productive, and profitable company.

For this reason, we periodically measure employee engagement.

The results from engagement surveys are used to implement programs and processes designed to keep our team members connected and growing at Sallie Mae.

Ensuring the safety and well-being of our team members remains a priority during the COVID-19 pandemic.

In March 2020, we enacted a robust business continuity plan, including a work-from-home policy for all team members.

Our technology platform and the adaptability of our team allowed for a seamless transition to a remote working environment;

and we continue to provide team members with the tools and resources necessary to continue our business.

Our team members get involved in the communities where they live and work through the Sallie Mae Employee Volunteer Program and the Sallie Mae Employee Matching Gift Program.

In 2020, our team members donated 861 hours through our community engagement programs and more than $60,000 in matching gifts, which efforts we believe provide a sense of inclusiveness and purpose and support our stakeholder communities.

For this reason, we measure employee engagement through culture surveys.

These culture surveys provide insights we use to create an environment in which team members thrive and bring their full selves to work.

Ensuring the safety and well-being of our team members continues to be a priority during the COVID-19 pandemic.

In March 2020, we enacted a robust business continuity plan, including remote working capabilities for all team members.

We further adapted to the changing environment in 2021, and now offer remote, in-office, and hybrid options so our team may work in a manner best suited for them and their positions.

We continue to provide team members with the tools and resources necessary to support their success and drive performance of the Company.

Our team members are involved in the communities in which they live and work through the Sallie Mae Employee Volunteer Program and the Sallie Mae Employee Matching Gift Program.

In 2021, our team members donated 1,128 hours through our community engagement programs.

We also provide matching gifts for team members to support their interests and needs and those of their communities.

2021 Form 10-K — SLM CORPORATION 21

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business