What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-24 · 540 added, 536 removed, 1077 unchanged (50% of the section changed)

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The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking and Cautionary Statements” and Item 1A.

“Risk Factors” in this Annual Report on Form 10-K.

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and world economies.

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic.

On March 13, 2020, then President Trump declared a national emergency, which made federal funds available to respond to the crisis.

Beginning on March 15, 2020, many businesses closed or reduced hours throughout the U.S.

to combat the spread of COVID-19.

Throughout 2020, all 50 states reported cases of COVID-19 and each implemented various containment efforts, including lockdowns on non-essential businesses and work from home regimes.

As a result of these measures, in early 2020 the unemployment rate increased dramatically.

In response, we offered disaster forbearance to those customers who contacted us and were negatively affected by COVID-19.

The second half of 2020 saw improvements in economic and consumer trends, but continued waves of new cases of COVID-19 created continued uncertainty in the economic environment.

However, at the end of the fourth quarter of 2020 and into the first quarter of 2021, the rollout of new vaccines and the ratification of two additional stimulus laws resulted in lower infection rates and significant improvement in the outlook of the economy.

The improved outlook in the economy has contributed to faster prepayment rates.

We have continued to see improved trends in unemployment rates in 2021 despite the increase in COVID-19 infections from the Delta and Omicron variants that occurred in the latter half of 2021.

The impact of COVID-19 is felt by our colleagues, our customers, and our communities.

The impact of COVID-19 has been felt by our colleagues, our customers, and our communities.

In response to COVID-19, we implemented efforts to safeguard our team members and enabled a remote work environment.

In addition, we have taken steps to help our customers in this time of crisis.

Further, The Sallie Mae Fund, our charitable arm, has made contributions to assist in our hometown communities.

The following discussion highlights how we are responding and the expected impacts of COVID-19 on our business.

The COVID-19 crisis is unprecedented and has had a significant impact on the economic environment globally and in the U.S.

While we have highlighted below how we have responded to the pandemic and described its financial impact, there is a significant amount of uncertainty as to the length and breadth of the impact to the U.S.

In addition, we took steps to help our customers during the crisis.

Further, The Sallie Mae Fund, our charitable arm, made contributions to assist in our hometown communities.

The COVID-19 crisis was unprecedented and had a significant impact on the economic environment globally and in the U.S.

While we have highlighted below how we responded to the pandemic in 2020 and 2021, the pandemic continued to have lingering impacts on our financial results in 2022.

As COVID-19 mutates into newer strains, there is a significant amount of uncertainty as to the length and breadth of the impact to the U.S.

economy and, consequently, on us.

Economists expect the impact of COVID-19 on the U.S.

economy to continue to be significant into 2022 and beyond.

Accordingly, the information below should be read in conjunction with our COVID-19 pandemic risk factor, see Part I, Item 1A.

The information below should be read in conjunction with our COVID-19 pandemic risk factor, see Part I, Item 1A.

“Risk Factors - Pandemic Risk ” in this annual report on Form 10-K.

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“Risk Factors” and elsewhere in this annual report on Form 10-K.

Customers and Credit Performance

COVID-19 is having far reaching, negative impacts on individuals and businesses.

Specifically, COVID-19 has materially disrupted business operations throughout the country, resulting in supply chain disruptions and inflationary pressures.

As a result, we expect many of our individual customers will experience financial hardship, creating a challenge to meet credit standards for new loan originations and making it difficult, if not impossible, to fulfill their payment obligations to us without temporary assistance.

We are monitoring key metrics as early warning indicators of financial hardship, including changes in weekly unemployment claims, enrollment in auto-debit payments, requests for new forbearances, enrollment in hardship payment plans, and early delinquency metrics.

As a result of the negative impact on employment from COVID-19, our customers are experiencing higher levels of financial hardship, which initially led to elevated levels of forbearance, as we provided disaster forbearance to borrowers who requested it.

We are seeing higher levels of delinquencies and defaults and expect that to continue into the future, as borrowers who had received disaster forbearance from us re-enter repayment status.

We expect that, left unabated, this

Financial Result s

We continued to see an impact to our financial results as a direct result of COVID-19 in 2022.

The economic upheaval that occurred in 2022 (e.g., higher inflation, higher interest rates, and lower stock market) as the country began to recover from the initial effects of the pandemic and the resulting government stimulus programs also affected our financial results and operations through increased loan yields and deposit costs, increased losses on loans and increased allowance for credit losses, increased employee compensation costs, and reduced staffing.

Difficulty in hiring and retaining servicing and collections staff contributed to the higher charge-off rates in 2022, as did losses from the “gap year” program we implemented in 2020 to help our borrowers.

During the first quarter of 2021, we increased our estimates of future prepayment speeds during both the two-year reasonable and supportable period as well as the remaining term of the underlying loans, and in the fourth quarter of 2021 we increased them again for the remaining term of the underlying loans.

These faster estimated prepayment speeds during the two-year reasonable and supportable period reflected the significant improvement in economic forecasts at the time, as well as the implementation of an updated prepayment speed model.

We experienced higher prepayments during the COVID-19 pandemic, when unemployment rates were elevated, than we would have expected based upon our experience during past financial crises.

In 2022, as interest rates rose from the low levels experienced during the pandemic, we saw prepayments slow down, which resulted in an increase in our allowance for credit losses.

Private Education Loans (held for investment) in forbearance as a percentage of held for investment Private Education Loans in repayment and forbearance was 1.8 percent at December 31, 2022, compared to 1.9 percent at December 31, 2021.

The forbearance rate on December 31, 2022 was lower than on December 31, 2021 due to our ending disaster forbearance related to COVID-19 in June 2021 and our adoption of the previously announced planned credit administration practices changes.

Delinquencies at December 31, 2022, as a percentage of Private Education Loans in repayment, increased to 3.8 percent from 3.3 percent at December 31, 2021.

The increase in delinquencies was primarily due to the ending of the disaster forbearance program related to COVID-19, the adoption of new credit administration practices changes in the latter part of 2021, and operational challenges we experienced during 2022.

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For the start of the 2021-2022 academic year, the majority of colleges, universities, and trade schools returned to in-person classes while offering full residential options.

For the start of the 2022-2023 academic year, we continued to see colleges, universities, and trade schools returning to in-person classes and full residential options.

While these schools moved away from an emphasis on hybrid and online classes, some colleges maintained the option for online classes as a safety precaution.

For some students, going back to school in the fall of 2020 was not an option because of the pandemic or for other reasons.

Therefore, some students took a “gap year” before returning to school.

In 2020, for those students that had unexpectedly separated from school, we had provided an extension of time, until the fall of 2021, to re-enroll before beginning their grace period that occurs upon separation from school and prior to entering full principal and interest repayment status.

At December 31, 2020, $1.0 billion of Private Education Loans had been granted this extended period of time.

Beginning September 30, 2021, we no longer granted this “gap year” extension.

Losses on these “gap year” loans, which totaled $59 million, were higher than expected and contributed to the higher charge-offs in 2022.

On March 27, 2020, then President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which, among other things, allows us to (i) elect to suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as troubled debt restructurings (“TDRs”), and (ii) suspend any determination of a loan modified as a result of the effects of COVID-19 as being a TDR, including impairment for accounting purposes.

Furthermore, on December 27, 2020, the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law.

The CAA provides for additional COVID-19 focused relief and extends certain provisions of the CARES Act.

We elected to suspend TDR accounting for modifications of loans that occurred as a result of COVID-19 for the applicable period of the CARES Act and CAA relief.

The relief from TDR guidance applied to modifications of loans that were not more than 30 days past due as of December 31, 2019, and that occurred during the period beginning on March 1, 2020, and ending on the earlier of (i) 60 days after the date on which the national emergency related to the COVID-19 outbreak is terminated, or (ii) January 1, 2022.

We continued to apply TDR accounting to those loans that were more than 30 days past due as of December 31, 2019 and were subsequently modified through December 31, 2021.

Effective January 1, 2022, we adopted Accounting Standards Update (“ASU”) No.

2022-02, “Troubled Debt Restructurings and Vintage Disclosures” (“ASU No.

2022-02”), which eliminated the accounting guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Allowance for Credit Losses —Adoption of ASU No.

2022-02 ‘Troubled Debt Restructurings and Vintage Disclosures’ ” for additional details about the adoption of the new accounting guidance.

Under regulations issued by the FDIC and other federal banking agencies, banking organizations that adopt CECL during the 2020 calendar year, including the Bank, could 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 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.

On January 1, 2022, 25 percent of the adjusted transition amounts were phased in for regulatory capital purposes.

On January 1 of each year from 2023 to 2025, the adjusted transition amounts will continue to 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.

52 SLM CORPORATION — 2022 Form 10-K

deterioration in forbearance, delinquency, and default rates will persist until such time as the economy and employment return to relatively normal levels.

This past year has shown us that there is a lot of uncertainty regarding COVID-19 as two new variants caused a significant increase in infections.

We maintain an allowance for credit losses that incorporates multiple economic scenarios.

For the year ended December 31, 2021, we considered the current economic forecasts as well as how the significant uncertainty may affect future unemployment rates and the economy in estimating our allowance for credit losses.

We could experience significant changes in our allowance for credit losses as the economic impact of the COVID-19 pandemic becomes clearer.

At December 31, 2022, the adjusted transition amounts that were deferred and are being phased in for regulatory capital purposes are as follows:

Transition Amounts Adjustments for the Year Ended Adjustments for the Year Ended Phase-In Amounts for the Year Ended Remaining Adjusted Transition Amounts to be Phased-In

(Dollars in thousands) January 1, 2020 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2022

Retained earnings $ 952,639 $ (57,859) $ (58,429) $ (209,088) $ 627,263

Allowance for credit losses 1,143,053 (55,811) (49,097) (259,536) 778,609

Liability for unfunded commitments 115,758 (2,048) (9,333) (26,094) 78,283

Deferred tax asset 306,171 — — (76,542) 229,629

Customers and Credit Performance

COVID-19 had a far reaching, negative impact on individuals and businesses.

Specifically, COVID-19 materially disrupted business operations throughout the country, resulting in supply chain disruptions and inflationary pressures.

As a result, we expected many of our individual customers to experience financial hardship, creating a challenge to meet credit standards for new loan originations and making it difficult, if not impossible, to fulfill their payment obligations to us without temporary assistance.

We monitored key metrics as early warning indicators of financial hardship, including changes in weekly unemployment claims, enrollment in auto-debit payments, requests for new forbearances, enrollment in hardship payment plans, and early delinquency metrics.

As a result of the negative impact on employment from COVID-19, our customers experienced higher levels of financial hardship, which initially led to elevated levels of forbearance, as we provided disaster forbearance to borrowers who requested it.

We saw higher levels of delinquencies and defaults as borrowers who had received disaster forbearance from us re-entered repayment status.

For the year ended December 31, 2022, we considered the multiple economic forecasts in estimating our allowance for credit losses.

We could experience significant changes in our allowance for credit losses if there are significant changes in the rate of occurrence and the severity of infections from COVID-19 increases.

The process for determining our allowance contemplates material external factors that may require management adjustments.

We used Moody’s Analytics economic forecasts in estimating the losses on our loan portfolio.

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

Historically, we have utilized disaster forbearance to assist borrowers affected by material events, typically federally-declared disasters, 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, but the disaster forbearance granted generally does not apply toward the 12-month forbearance limit described later in this Form 10-K.

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 IVR to address initial high volumes at the onset of the pandemic.

In accordance with regulatory guidance that encouraged lenders to work constructively with customers who were affected by COVID-19, we invoked this same disaster forbearance program to assist our customers through COVID-19 and offered this program across our operations.

During 2021, we ended all COVID-19 disaster forbearances and at December 31, 2022, there were no loans under a disaster forbearance program related to COVID-19.

To make it as easy as possible to access the assistance our customers need, we have communicated to them multiple times and in multiple ways.

At the start of the pandemic, we sent all our customers an email explaining their self-serve options and how to contact us if they need assistance.

We continue to send e-mails to those customers who enrolled for COVID-19 disaster forbearance and we regularly update our website at www.SallieMae.com/coronavirus with the latest information on how our customers can access their account and get assistance or payment relief, if needed.

We expect that, as the economic impact of COVID-19 evolves, we will continue to evaluate the measures we have put in place to assist our customers during this unprecedented time.

We continue to adapt and evolve our customer care and collections practices to meet the needs of our customers, while operating in a safe and sound manner.

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Our Team Members

Our team members have been affected by COVID-19 in many ways, including disruptions due to unexpected school and day-care closings, family underemployment or unemployment, and learning how to work remotely with, in some cases, new tools and technology to learn and support that work.

Our team members have been affected by COVID-19 in many ways, including sickness, disruptions due to unexpected school and day-care closings, family underemployment or unemployment, and learning how to work remotely with, in some cases, new tools and technology to learn and support that work.

Our goal has been to support our team members during the present uncertainty while meeting the needs of our customers and providing business continuity.

Early in the crisis, we provided our team members with information about best practices to prevent the spread of COVID-19 and other viruses or illnesses.

We enabled substantially all of our workforce to work remotely.

In addition, we have limited in-person meetings, non-employee visits to our locations, and non-essential business travel.

In the second quarter of 2021, we communicated our return to office plans to our team members.

Based on the national and local guidelines, we developed a phased-in approach for returning to the office.

Under this phased-in approach, we opened our offices in early July 2021 for employees who wanted to voluntarily come to the office.

We had planned for a more substantial return to our campuses in early October;

however, with the increase in new cases due to the COVID-19 Delta and Omicron variants, we postponed a more fulsome return to our offices until April 2022.

The return to our offices will include enhanced safety protocols and processes to provide the best working environment for our team members and we will implement limited flexible work-from-home schedules for employees.

In April 2022, we returned to our offices, with most team members working under a hybrid model of some days in the office and other days working from home.

We have robust pandemic and business continuity plans that include our business units and technology environments.

When COVID-19 advanced to a pandemic, we activated our business continuity plan.

As an element of the plan, we activated our Executive Crisis Management Team (“ECMT”), a group of the most senior managers across the enterprise.

The ECMT directed a series of activities to address the health and safety of our workforce, to assist customers, to sustain business operations, and to address our management of other ongoing pandemic activities.

In response to a growing infected population across the United States in 2020, we executed plans for social-distancing in our facilities and implemented work-from-home contingencies.

As the virus spread, we created remote-working capabilities for our teams and consulted with regulators about our plans.

We also completed a series of additional steps to appropriately ensure compliance with our telecommuting policy.

The policy is designed to create a secure at-home work environment that protects our customers’ information and transactions while also providing the necessary technology capabilities to enable effective remote-working for our team members.

When COVID-19 was declared a pandemic, we activated our pandemic response plan.

Sallie Mae’s response was initiated by the Incident Management Office (“IMO”), a group of key stakeholders representing members of senior and executive management.

The IMO directed the activities of the operational response group to address the

2022 Form 10-K — SLM CORPORATION 53

health and safety of our workforce, assist customers, sustain business operations, and address the management of other ongoing pandemic activities.

In response to a growing infected population across the United States in 2020, we executed plans for social-distancing and mask wearing in our facilities, implemented work-from-home contingencies and instituted a voluntary vaccination incentive program for our team members.

As the impact of the virus progressed, we expanded remote-working capabilities for our teams and consulted with regulators about our plans.

We closely monitored directives and guidance from both the Centers for Disease Control and Prevention and local health departments to ensure compliance with any requirements.

We also completed a series of additional steps to appropriately ensure data security through compliance with our telecommuting policy.

In addition, we enhanced the functionality of our chatbot, IVR, mobile app, and website features to help our customers manage their accounts.

Most teams continue to work remotely at this time;

however, we continue to see productivity and customer satisfaction survey result at pre-pandemic levels.

Our technology infrastructure is sufficient to maintain a remote-working environment for the vast majority of our workforce for the foreseeable future.

Most team members currently are working on a hybrid model of some days in the office and the other days working from home.

Liquidity and Capital

Over the course of 2019, we significantly increased our overall liquidity position for risk management purposes and enhanced our liquidity stress testing regime.

As a result of these efforts and the activities that occurred in 2020, described below, we currently believe our liquidity position is stable and we expect to be able to fund our business operations through 2022.

As a result of these efforts, we currently believe our liquidity position is stable and we expect to be able to fund our business operations.

Because of the disruptions in the capital markets that occurred at the onset of the pandemic, in the first quarter of 2020 we implemented our Contingency Funding Plan, which entailed monitoring and reporting to management our liquidity position and the health of deposit and asset-backed securities markets.

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As pandemic-related capital market disruptions abated, we de-activated the Contingency Funding Plan in October 2020, but have continued to remain watchful for signs of renewed market stress as the pandemic evolves.

Maintaining our focus on earnings quality as well as prudent liquidity management, we actively managed the cost of our retail deposits downward in response to the rapid downturn in short-term interest rates in the first nine months of 2020.

Rates were further managed downward in early 2021, and were increased slightly in the second half of the year as market rates began to rise.

Despite the lower deposit rates, we have experienced only moderate retail deposit outflows, primarily in term CDs, that are within the outflow targets our Asset and Liability Committee approved.

As the economy recovered and inflation increased in 2022, we saw deposit rates increase as market rates began to rise.

In addition, we were able to access the brokered deposit, asset-backed security, and unsecured debt markets throughout 2021 and 2022.

We manage our capital position through a rigorous capital stress testing regime.

As a result, we believe that, given the high quality of our Private Education Loan portfolio, we have sufficient capital to withstand our current estimate in the event of a downturn.

As a result, we believe that, given the quality of our Private Education Loan portfolio, we have sufficient capital to withstand our current estimate in the event of a downturn.

If circumstances surrounding COVID-19 change in a significantly more adverse way, however, it is possible our liquidity and regulatory capital position could be materially and adversely affected, which could materially and adversely impact our business operations and our overall financial condition.

See “Liquidity and Capital Resources” and “Borrowings” for additional discussion on our capital and funding activities.

See “Liquidity and Capital Resources” and “Borrowings” in Item 7 for additional discussion of our capital and funding activities.

Regulatory agencies have also provided regulatory capital relief to financial institutions as a result of the crisis.

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The federal banking regulators have stated that working with customers who are current on existing loans, either individually or as part of a program for creditworthy customers who are experiencing short-term financial or operational problems as a result COVID-19, generally would not be considered TDRs (as hereinafter defined).

For modification programs, such as forbearance, designed to provide short-term relief for current customers affected by COVID-19, we may presume that customers who are current on payments are not experiencing financial difficulties at the time of the modification for purposes of determining TDR status, and thus no further TDR analysis is required for each loan modification in the program.

For modification programs, such as forbearance, designed to provide short-term relief for current customers affected by COVID-19, we may presume that customers who are current on payments are not experiencing financial difficulties at the time of the modification for purposes of determining TDR status, and thus no further TDR analysis was required for each loan modification in the program.

In addition, the federal banking regulators have indicated their examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk-rate credits that are affected by COVID-19, including those considered TDRs.

Regardless of whether modifications result in loans being considered TDRs or adversely classified, the federal banking regulators have indicated their examiners will not criticize prudent efforts to modify the terms of existing loans to affected customers.

In response to the exceptional needs in our communities, during 2021, our team members volunteered more than 1,100 hours and donated nearly $50,000 through our matching gift program to charitable organizations.

Additionally, through a combination of individual and team led fundraising and "Adopt-A-Family"/"Adopt-A-School" programs, team members also donated clothes to needy families, 20 boxes of school supplies, totaling 14,305 items to local middle and elementary schools, and raised nearly $7,000 to help children and families facing serious illnesses and challenging

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financial situations because of required medical care.

We view these efforts as extensions of our core mission.

Strong communities become the launching pads for students’ academic endeavors.

Financial Result s

For the year ended December 31, 2021, we considered the current economic forecasts as well as the how the significant uncertainty surrounding COVID-19 may affect future unemployment rates and the economy in estimating our allowance for credit losses.

These faster estimated prepayment speeds during the two-year reasonable and supportable period reflect the significant improvement in economic forecasts, as well as the implementation of an updated prepayment speed model.

We experienced higher prepayments during the COVID-19 pandemic, when unemployment rates were elevated, than we would have expected based upon our experience during past financial crises.

In determining the adequacy of the allowance for credit losses, we include forecasts of college graduate unemployment and the Consumer Price Index in our loss forecasting models.

We obtain forecasts for these two inputs from Moody’s Analytics.

Moody’s Analytics provides a range of forecasts for each of these inputs with various likelihoods of occurring.

We determine which forecasts we will include in our estimation of allowance for credit losses and the associated weightings for each of these inputs.

At January 1, 2020 (the initial adoption date of CECL), December 31, 2020, and December 31, 2021, we used the Base (50th percentile likelihood of occurring)/S1 (stronger near-term growth scenario with 10 percent likelihood of occurring)/S3 (downside scenario with 10 percent likelihood of occurring) scenarios and weighted them 40 percent, 30 percent, and 30 percent, respectively.

Management reviews both the scenarios and their respective weightings each quarter in determining the allowance for credit losses.

Provisions for credit losses for the year ended December 31, 2021 decreased by $126 million compared with the year-ago period.

This decrease of $126 million in 2021 compared with the year-ago period was primarily the result of improving economic forecasts in 2021 and faster prepayment speeds.

In the fourth quarter of 2021, we increased our long-term estimate of prepayment speeds to reflect higher long-term prepayment experience.

Partially offsetting these benefits were additional provisions to reflect the adoption of our credit administration practices changes and other management overlays.

As COVID-19 continues to impact the economy, the Company could continue to experience significant changes in its allowance for credit losses in 2022.

Private Education Loans (held for investment) in forbearance as a percentage of held for investment Private Education Loans in repayment and forbearance was 1.9 percent at December 31, 2021, compared to 4.3 percent at December 31, 2020.

The forbearance rate on December 31, 2021 was lower than on December 31, 2020 due to our ending disaster forbearance related to COVID-19 in June 2021 and our adoption of the previously announced planned credit administration practices changes.

Delinquencies at December 31, 2021, as a percentage of Private Education Loans in repayment, increased to 3.3 percent from 2.8 percent at December 31, 2020.

The increase in delinquencies was primarily due to the ending of the disaster forbearance program related to COVID-19 and the adoption of the new credit administration practices changes.

For the start of the 2021-2022 academic year, the majority of colleges, universities, and trade schools returned to in-person classes while offering full residential options.

While these schools moved away from an emphasis on hybrid and online policies, some regional reports indicate an increase in colleges maintaining online classes as a safety precaution, due to the recent uptick in COVID-19 variant infections.

For some students, going back to school in the fall of 2020 was not an option because of the pandemic or for other reasons.

Therefore, some students took a “gap year” before returning to school.

At December 31, 2020, $1.0 billion of Private Education Loans had been granted during this extended period of time.

Beginning September 30, 2021, we no longer granted this “gap year” extension.

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for accounting purposes.

Furthermore, on December 27, 2020, the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law.

The CAA provides for additional COVID-19 focused relief and extends certain provisions of the CARES Act.

We have elected to suspend TDR accounting for modifications of loans that occur as a result of COVID-19 for the applicable period of the CARES Act and CAA relief.

The relief from TDR guidance applies to modifications of loans that were not more than 30 days past due as of December 31, 2019, and that occur during the period beginning on March 1, 2020, and ending on the earlier of (i) sixty days after the date on which the national emergency related to the COVID-19 outbreak is terminated, or (ii) January 1, 2022.

We are continuing to apply TDR accounting to those loans that were more than 30 days past due as of December 31, 2019 and were subsequently modified.

Under regulations issued by the FDIC and other federal banking agencies, banking organizations that adopt CECL 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.

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.

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 transition amounts, reflecting changes over the two-year phase-in period, that will be deferred for regulatory capital purposes are as follows:

Transition Amounts Adjustments for the Year Ended Adjustments for the Year Ended Adjusted Transition Amounts

(Dollars in thousands) January 1, 2020 December 31, 2020 December 31, 2021 December 31, 2021

Retained earnings $ 952,639 $ (57,859) $ (58,429) $ 836,351

Allowance for credit losses 1,143,053 (55,811) (49,097) 1,038,145

Liability for unfunded commitments 115,758 (2,048) (9,333) 104,377

Deferred tax asset 306,171 — — 306,171

52 SLM CORPORATION — 2021 Form 10-K

The following discussion and analysis presents a review of our business and operations as of and for the year ended December 31, 2022.

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Net Interest Income

Most of our earnings are generated from the interest income earned on assets in our education loan portfolios and on Credit Cards, net of the interest expense we pay on the funding for those loans.

Most of our earnings are generated from the interest income earned on assets in our education loan portfolios, net of the interest expense we pay on the funding for those loans.

We report these earnings as net interest income.

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We bear the full credit exposure on our Private Education Loans and Credit Cards.

Losses on our Private Education Loans are affected by risk characteristics such as loan status (in-school, grace, forbearance, repayment, and delinquency), loan seasoning (number of months in active repayment), underwriting criteria (e.g., credit scores), presence of a cosigner, and the current economic environment.

See “CREDIT RISK - Defaults on our loans, particularly Private Education Loans, could adversely affect our business, financial position, results of operations, and/or cash flows .

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Losses typically emerge once a borrower separates from school and enters full principal and interest repayment after the borrower’s grace period (six months, typically) ends.

As a larger proportion of our Private Education Loan portfolio enters full principal and interest repayment in the coming years, we would expect the amount of TDRs, and charge-offs, to increase.

As a larger proportion of our Private Education Loan portfolio enters full principal and interest repayment in the coming years, we would expect the amount of charge-offs to increase.

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We maintain an allowance for credit losses for our FFELP Loans at a level sufficient to cover lifetime expected credit losses.

We maintain an allowance for Credit Card losses at an amount sufficient to absorb losses estimated to cover lifetime expected credit losses.

Because our Credit Card portfolio is relatively new and we do not have sufficient historical loss experience, we use estimated loss rates reported by other financial institutions to estimate our allowance for credit losses for Credit Cards, net of expected recoveries.

In addition, we use a model that utilizes purchased credit card information with risk characteristics similar to those of our own portfolio as a challenger model.

We then consider any qualitative factors that may change our future expectations of losses.

As all of our Credit Card loans are unconditionally cancelable by us, the issuer, we do not record any estimate of credit losses for unused portions of our Credit Card commitments.

Charge-Offs and Delinquencies

Delinquencies are another important indicator of potential future credit performance.

When a Private Education Loan reaches 120 days delinquent, it is charged against the allowance for credit losses.

We charge off Credit Cards when they are 180 days delinquent.

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.

Charge-off data provides relevant information with respect to the actual performance of a loan portfolio over time.

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The cost of operating our business directly affects our profitability.

We strive to manage growth in our business in a prudent fashion by focusing on investments to improve efficiency throughout the Company.

We strive to manage growth in our business in a prudent fashion by focusing on investments to improve efficiency.

We monitor and report internally various metrics, including cost to acquire and cost to service our loans (which include both owned and serviced loans), among others.

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The cost to service a delinquent borrower is significantly higher than the cost to service a current or in-school borrower.

Non-GAAP “Core Earnings”

We prepare financial statements in accordance with GAAP.

However, we also produce and report our after-tax earnings on a separate basis that we refer to as non-GAAP “Core Earnings.” The difference between our non-GAAP “Core Earnings” and GAAP results for periods presented generally is driven by the unrealized, mark-to-fair value gains (losses) on derivative contracts recognized in GAAP, but not in non-GAAP “Core Earnings.”

Non-GAAP “Core Earnings” recognizes the difference in accounting treatment based upon whether a derivative qualifies for hedge accounting treatment.

We enter into derivative instruments to economically hedge interest rate and cash flow risk associated with our portfolio.

We believe that our derivatives are effective economic hedges and, as such, are a critical element of our interest rate risk management strategy.

Those derivative instruments that qualify for hedge accounting treatment have their related cash flows recorded in interest income or interest expense along with the hedged item.

Some of our derivatives do not qualify for hedge accounting treatment and the stand-alone derivative must be marked-to-fair value in the income statement with no consideration for the corresponding change in fair value of the hedged item.

These gains and losses, recorded in “Gains (losses) on derivatives and hedging activities, net,” are primarily caused by interest rate volatility and changing credit spreads during the period as well as the volume and term of derivatives not receiving hedge accounting treatment.

Cash flows on derivative instruments that do not qualify for hedge accounting are not recorded in interest income and interest expense;

they are recorded in non-interest income:

“Gains (losses) on derivatives and hedging activities, net.”

The adjustments required to reconcile from our non-GAAP “Core Earnings” results to our GAAP results of operations, net of tax, relate to differing treatments for those derivative instruments used to hedge our economic risks that do not qualify for hedge accounting treatment.

The amount recorded in “Gains (losses) on derivatives and hedging activities, net” includes (i) the accrual of the current payment on the interest rate swaps that do not qualify for hedge accounting treatment, and (ii) the change in fair values related to future expected cash flows for derivatives that

54 SLM CORPORATION — 2021 Form 10-K

do not qualify for hedge accounting treatment.

For purposes of non-GAAP “Core Earnings,” we include in GAAP earnings the current period accrual amounts (interest reclassification) on the swaps and exclude the change in fair values for those derivatives not qualifying for hedge accounting treatment.

Non-GAAP “Core Earnings” is meant to represent what earnings would have been had these derivatives qualified for hedge accounting and there was no ineffectiveness.

Non-GAAP “Core Earnings” are not a substitute for reported results under GAAP.

We provide a non-GAAP “Core Earnings” basis of presentation because (i) earnings per share computed on a non-GAAP “Core Earnings” basis is one of several measures we utilize in establishing management incentive compensation, and (ii) we believe it better reflects the financial results for derivatives that are economic hedges of interest rate risk, but which do not qualify for hedge accounting treatment.

GAAP provides a uniform, comprehensive basis of accounting.

Our non-GAAP “Core Earnings” basis of presentation differs from GAAP in the way it treats derivatives as described above.

The following table shows the amount in “Gains (losses) on derivatives and hedging activities, net” that relates to the interest reclassification on the derivative contracts.

Years Ended December 31,

(dollars in thousands) 2021 2020 2019

Unrealized gains (losses) on instruments not in a hedging relationship $ (23,216) $ 10,164 $ 19,469

Interest reclassification 23,360 39,380 (1,644)

Gains on derivatives and hedging activities, net $ 144 $ 49,544 $ 17,825

2021 Form 10-K — SLM CORPORATION 55

The following table reflects adjustments associated with our derivative activities.

Years Ended December 31,

(dollars in thousands, except per share amounts) 2021 2020 2019

Non-GAAP “Core Earnings” adjustments to GAAP:

GAAP net income $ 1,160,513 $ 880,690 $ 578,276

Preferred stock dividends 4,736 9,734 16,837

GAAP net income attributable to SLM Corporation common stock $ 1,155,777 $ 870,956 $ 561,439

Net impact of derivative accounting (1)

23,216 (10,164) (19,469)

Net tax expense (benefit) (2)

5,615 (2,481) (4,758)

Total non-GAAP “Core Earnings” adjustments to GAAP 17,601 (7,683) (14,711)

Non-GAAP “Core Earnings” attributable to SLM Corporation common stock $ 1,173,378 $ 863,273 $ 546,728

GAAP diluted earnings per common share $ 3.61 $ 2.25 $ 1.30

Derivative adjustments, net of tax 0.06 (0.02) (0.03)

Non-GAAP “Core Earnings” diluted earnings per common share $ 3.67 $ 2.23 $ 1.27

(1) Derivative Accounting:

Non-GAAP “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-fair value valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, but include current period accruals on the derivative instruments.

Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0.

(2) Non-GAAP “Core Earnings” tax rate is based on the effective tax rate at the Bank, where the derivative instruments are held.

The following table reflects our provisions for credit losses and total portfolio net charge-offs:

Years Ended December 31,

(dollars in thousands) 2021 2020 2019

Provisions for credit losses $ (32,957) $ 93,133 $ 354,249

Total portfolio net charge-offs (200,762) (216,036) (253,143)

Beginning in 2020, we began to evaluate management’s performance internally using a measure that starts with Non-GAAP “Core Earnings” net income as disclosed above for a period, and further adjusting it by increasing it by the impact of GAAP provisions for credit losses, and decreasing it by the total portfolio net charge-offs recorded in that period, net of the tax impact of these adjustments.

56 SLM CORPORATION — 2021 Form 10-K

Private Education Loan Originations

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Borrowings under our Secured Borrowing Facility are accounted for as secured financings.

56 SLM CORPORATION — 2022 Form 10-K

LIBOR Transition

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While publication of the remaining USD settings is expected to cease after June 30, 2023, U.S.

banking and other global financial services regulators have directed regulated institutions to cease entering into new LIBOR-based contracts as soon as practicable and in any event by the end of 2021.

banking and other global financial services regulators directed regulated institutions to cease entering into new LIBOR-based contracts as soon as practicable and in any event by the end of 2021.

In 2020, we launched a formal cross-functional replacement project with the goal of ensuring a smooth transition to a replacement index for our LIBOR-based assets and obligations with minimal negative impact on our customers, investors, and the Company’s business, financial condition, and results of operations.

The project team monitors developments, assesses impacts, proposes plans and, with the approval of an executive committee, implements changes.

The Chief Financial Officer and the project team monitor developments, assess impacts, propose plans and, with the approval of an executive committee, implement changes.

The Chief Financial Officer and/or project team reports status regularly to our Board of Directors.

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In the second quarter of 2021, we began issuing variable-rate Private Education Loans that are indexed to SOFR.

In 2022, subject to market conditions and investor demand, we expect to begin issuing ABS that are indexed to SOFR and to renew the Secured Borrowing Facility with an index based on SOFR.

Substantially all our assets, liabilities, and off-balance sheet items referencing LIBOR are comprised of Private Education Loans originated before April 2021, deposits, variable-rate ABS, and derivatives.

In May 2022, we renewed the Secured Borrowing Facility with an index based on SOFR and, in the third quarter of 2022, we began issuing ABS that are indexed to SOFR.

In addition, our Series B Preferred Stock is indexed to LIBOR.

We plan to transition these exposures to LIBOR by changing them to an alternative reference rate, either through modification or replacement, by June 30, 2023, although we may accelerate the transition of our legacy Private Education Loans depending upon a number of considerations, including regulatory guidance.

Approximately $339 million of our variable-rate ABS (those issued before November 2017) do not have fallback provisions for an alternative reference rate and we intend to rely upon the safe harbors provided by proposed federal legislation, which is currently drafted to supersede state legislation, and/or current New York legislation to transition these ABS to an alternative reference rate.

Generally, the safe harbors will shield parties from liability for transitioning certain USD LIBOR-indexed contracts (generally, those that do not have provisions for an alternative

2021 Form 10-K — SLM CORPORATION 57

reference rate) to SOFR and will render nonactionable any claims brought by parties to such contracts that allege breach of contract based on another party’s use of SOFR.

We plan to transition these exposures to LIBOR by changing them to an alternative reference rate, either through modification or replacement, by June 30, 2023.

Approximately $192 million of our variable-rate ABS (those issued before November 2017) do not have fallback provisions for an alternative reference rate and we intend to rely upon the safe harbors provided by recently passed federal legislation to transition these ABS to an alternative reference rate.

Generally, the safe harbors will shield parties from liability and damages for transitioning certain USD LIBOR-indexed contracts (generally, those that do not have provisions for an alternative reference rate) to a benchmark replacement rate based on SOFR and selected by the Federal Reserve Board.

We have evaluated the potential basis risk associated with a mismatch in variable-rate assets and liabilities, including any mismatches related to (i) legacy assets and liabilities that remain indexed to LIBOR up to June 2023 and newly issued assets and liabilities that are, or will be, indexed to SOFR and (ii) term SOFR-indexed assets and liabilities and average SOFR assets and liabilities.

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The chart below depicts our current LIBOR exposure at December 31, 2022.

2022 Form 10-K — SLM CORPORATION 57

As of December 31, 2022

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Total derivative notional 2,842,846

Secured Borrowing Facility 2,000,000

Total Off-Balance Sheet $ 2,842,846

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“Risk Factors” in this Form 10-K for additional discussion regarding the risks associated with the transition from LIBOR.

58 SLM CORPORATION — 2021 Form 10-K

Strategic Imperatives

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Our focus remains on maximizing the profitability and growth of our core private student loan business, while harnessing and optimizing the power of our brand and attractive client base.

In addition, we continue to seek to better inform the external narrative about student lending and Sallie Mae’s role in helping students and families responsibly plan and pay for college.

In addition, we continue to seek to better inform the external narrative about student lending and Sallie Mae.

We also strive to maintain a rigorous and predictable capital allocation and return program to create shareholder value.

Our internal focus is to drive a mission-led culture that continues to make Sallie Mae a great place to work.

Finally, we continue to strengthen our risk and compliance efforts, to enhance and build upon our risk management framework, and to keep focused and aligned on assessing and monitoring enterprise-wide risk.

We are focused on driving a mission-led culture that continues to make Sallie Mae a great place to work.

We also continue to strengthen our risk and compliance function, enhance and build upon our risk management framework, and assess and monitor enterprise-wide risk.

During 2022, we made the following progress on the above corporate strategic imperatives.

New Servicing Call Center Platform and Rebranded Online Resource Tools

In late March 2021, we migrated our servicing call center to a new integrated platform that will further our goal to deliver exceptional customer experiences.

This new platform allows us to streamline our processes and provide efficiencies, thereby creating more customer-centric capabilities for our team members.

We also 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 will provide significant value to our customers.

Introduced new www.SallieMakesSense.com website

We launched www.SallieMakesSense.com to help educate and inform policymakers, influencers, media, and others about who Sallie Mae is today and illustrate the important role we continue to play in helping students and families plan and pay for college.

In addition to providing key statistics and information about the success of our customers, and the important role of private student lenders, the site also highlights the various tools and resources we provide families to make an informed decision about higher education.

It also features content on the higher education landscape and our work in helping students complete their education.

2021 Loan Sales and 2021-A and 2021-C Transactions

During 2021, we sold $4.24 billion of our Private Education Loans, including $3.98 billion in principal and $264 million in capitalized interest, to unaffiliated third parties.

The transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates.

Acquisition of Nitro College

On March 4, 2022, we completed the acquisition of Nitro, which provides resources that help students and families evaluate how to responsibly pay for college and manage their financial responsibilities after graduation.

The addition of Nitro brought innovative products, tools, and resources to help students and families confidently navigate their higher education journey.

The acquisition of Nitro enhances future strategic growth opportunities for Sallie Mae and expands our digital marketing capabilities, reduces the cost to acquire customer accounts, and accelerates our progress to become a broader education solutions provider helping students to, through, and immediately after college.

For additional information on this transaction, see Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies — Business Combination,” and Note 10, “Goodwill and Acquired Intangible Assets.”

2022 Loan Sales and 2022-A, 2022-B, and 2022-D Transactions

During 2022, we sold $3.34 billion of our Private Education Loans, including $3.13 billion of principal and $217 million in capitalized interest, to unaffiliated third parties.

The transactions qualified for sale treatment and removed

58 SLM CORPORATION — 2022 Form 10-K

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.

These sales resulted in our recognizing a gain of $548 million during 2021.

These sales resulted in our recognizing a gain of $328 million during the year ended December 31, 2022.

For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment” and Note 12, “Borrowings - Unconsolidated VIEs.”

2021-B Securitization

On May 19, 2021, we executed our $531 million SMB Private Education Loan Trust 2021-B term ABS transaction, which was accounted for as a secured financing.

We sold $531 million of notes to third-parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $529 million of gross proceeds.

The Class A and Class B notes had a weighted average life of 4.26 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 0.77 percent.

2021-D Securitization

On August 18, 2021, we executed our $527 million SMB Private Education Loan Trust 2021-D term ABS transaction, which was accounted for as a secured financing.

2022-C Securitization

On August 9, 2022, we executed our $575 million SMB Private Education Loan Trust 2022-C term ABS transaction, which was accounted for as a secured financing.

We sold $575 million of notes to third parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $575 million of gross proceeds.

The Class A and Class B notes had a weighted average life of 4.22 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 0.69 percent.

2021-E Securitization

On November 9, 2021, we executed our $534 million SMB Private Education Loan Trust 2021-E term ABS transaction, which was accounted for as a secured financing.

We sold $534 million of notes to third-parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $532 million of gross

2021 Form 10-K — SLM CORPORATION 59

The Class A and Class B notes had a weighted average life of 4.15 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 0.69 percent.

Final Settlement of ASR

On January 26, 2021, we completed our ASR with a third-party financial institution and 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 regarding this ASR, see Notes to Consolidated Financial Statements, Note 13, “Stockholders’ Equity.”

Common Stock Tender Offer

On February 2, 2021, we announced the commencement of 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.

Share Repurchases under our Rule 10b5-1 Trading Plans

During the year ended December 31, 2021, we repurchased 57 million shares of our common stock at a total cost of $1.1 billion under Rule 10b5-1 trading plans authorized under our share repurchase programs.

Common Stock Dividends

We paid quarterly cash dividends on our common stock of $0.03 per share for the first, second, and third quarters of 2021.

In the fourth quarter of 2021 we increased our dividend per share on our common stock to $0.11 per share, which was paid on December 15, 2021 to shareholders of record at the close of business on December 3, 2021.

The Class A and Class B notes had a weighted average life of 4.69 years and priced at a weighted average SOFR equivalent cost of SOFR plus 1.76 percent.

Secured Borrowing Facility

On July 30, 2021, we amended and extended the maturity of the Secured Borrowing Facility, discussed in Notes to Consolidated Financial Statements, Note 11, “Borrowings.” The Secured Borrowing Facility is a $2 billion secured borrowing facility, under which the full $2 billion is available for us to draw.

Under the amended Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstanding advances.

On May 17, 2022, we amended our Secured Borrowing Facility to extend the maturity of the facility.

The amount that can be borrowed under the facility is $2 billion.

We hold 100 percent of the residual interest in the Secured Borrowing Facility trust.

Under the Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstanding advances.

The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay, and reborrow funds, until May 16, 2023.

The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on May 16, 2024 (or earlier, if certain material adverse events occur).

Disposition of Credit Card Business

We plan to exit and sell our credit card business to focus resources on our core business strategies.

We processed completed credit card applications received through the end of December 2022.

At December 31, 2022, we had $29 million in Credit Card receivables in loans held for sale.

Share Repurchases under our Rule 10b5-1 Trading Plans

During the year ended December 31, 2022, we repurchased 40 million shares of our common stock at a total cost of $708 million under Rule 10b5-1 trading plans authorized under our share repurchase programs.

Business — Human Capital Resources and Talent Development” for a discussion regarding our mission-led culture.

60 SLM CORPORATION — 2021 Form 10-K

2022 Form 10-K — SLM CORPORATION 59

Results of Operations

16 unchanged sentences

Gains on sales of loans, net 328 548 238 (220) (40) 310 130

Gains (losses) on securities, net (60) 39 4 (99) (254) 35 875

Gains on derivatives and hedging activities, net — — 50 — — (50) (100)

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Total operating expenses 551 519 538 32 6 (19) (4)

Acquired intangible assets amortization expense 8 — — 8 100 — —

Restructuring expenses — 1 26 (1) (100) (25) (96)

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Declared dividends per common share $ 0.44 $ 0.20 $ 0.12 $ 0.24 120 % $ 0.08 67 %

2021 Form 10-K — SLM CORPORATION 61

60 SLM CORPORATION — 2022 Form 10-K

GAAP Consolidated Earnings Summary

Year Ended December 31, 2022 Compared with Year Ended December 31, 2021

For the year ended December 31, 2022, net income was $469 million, or $1.76 diluted earnings per common share, compared with net income of $1.16 billion, or $3.61 diluted earnings per common share, for the year ended December 31, 2021.

The year-over-year decrease was primarily attributable to higher provisions for credit losses, decreases in gains on sales of loans, net, and other income, and higher operating expenses, which were offset by an increase in total net interest income.

The primary contributors to each of the identified drivers of change in net income for the current year period compared with the year-ago period are as follows:

• Net interest income in 2022 increased by $94 million compared with the year-ago period primarily due to a 50-basis point increase in our net interest margin, which more than offset a $922 million reduction in average interest-earning assets.

Our net interest margin increased in the current period from the year-ago period because of a combination of factors, including an $855 million reduction in low-yielding average cash and other short-term investments, and a $367 million increase in average taxable securities.

Historically, the yields on interest-earnings assets reprice more quickly than our cost of funds.

As such, as rates increased in 2022, the yields on our interest-earning assets increased 111 basis points, while the cost of our interest-bearing liabilities only increased 63 basis points, compared with 2021.

The higher level of cash and other short-term investments in 2021 was primarily the result of the $4.2 billion Private Education Loan sale that occurred in 2021.

• Provision for credit losses in 2022 was $633 million, compared with a negative provision of $33 million in the year-ago period.

During 2022, the provision for credit losses was primarily affected by new loan commitments made during the period, slower prepayment rates, and additional management overlays, which were partially offset by negative provisions recorded related to $3.34 billion in Private Education Loans sold in 2022, and the adoption of a new loss model that included a reduction in the long-term estimate of losses after the reasonable and supportable period.

Management overlays increased in 2022 due to several factors, including additional provisions for our expectation of higher future loan losses related to the previously announced credit administration practices changes we implemented in 2021, “gap year” loans, a shortage and lack of tenured collections staff, and other operational challenges we experienced in 2022.

We expect the lack of tenured collections staff and operational challenges to persist into 2023 and, to a lesser extent, 2024.

“Gap year” loans refer to loans to borrowers who took a “gap year” during the COVID-19 pandemic and entered full principal and interest repayment status starting in late 2021 and early 2022.

Losses on these “gap year” loans were higher than expected and contributed to the higher provision expense recorded in 2022 to cover the higher-than-expected losses.

In the year-ago period, the provision for credit losses was favorably affected by improved economic forecasts in 2021 and faster prepayments speeds.

In addition, during the first quarter of 2021, we increased our estimates of future prepayment speeds during both the two-year reasonable and supportable period as well as the remaining term of the underlying loans.

The faster estimated prepayment speeds reflected the significant improvement in economic forecasts as well as the implementation of an updated prepayment speed model in the first quarter of 2021.

• Gains on sales of loans, net, were $328 million in 2022, compared with $548 million in the year-ago period.

Higher interest rates in 2022 compared with 2021 resulted in the amount the buyers were willing to pay on our loans in 2022 to decrease compared with the year-ago period.

The decrease in gains on sales of loans, net, also was the result of $90 million less in Private Education Loan sales in 2022 when compared with the year-ago period.

• Gains (losses) on securities, net was a loss of $60 million in 2022, compared with a gain of $39 million in the year ago period.

During 2022, we determined that an investment in non-marketable equity securities was impaired.

As such, we wrote down the value based upon an estimate of the value of these securities.

The gain recorded in 2021 was primarily the result of a $35 million increase in the valuation of the same non-marketable securities.

• Other income was $67 million in 2022, compared with $45 million in the year-ago period.

Other income in 2021 was negatively affected by a $5 million reduction in the tax indemnification receivable related to uncertain tax positions and by a $3 million loss from fees related to the redemption of $200 million of our 5.125 percent unsecured senior notes due in April 2022.

Also, in the year ended December 31, 2022, we recorded a $10 million increase in third-party servicing fees and a $4 million increase in Private Education Loan late fees versus the year-ago period.

2022 Form 10-K — SLM CORPORATION 61

• For the year ended December 31, 2022, total operating expenses were $551 million, compared with $519 million in the year-ago period.

The increase in total operating expenses was primarily driven by transaction costs related to our acquisition of Nitro, higher personnel costs, and initiative spending.

• In 2022, we recorded $8 million in amortization of acquired intangible assets related to our acquisition of Nitro in the first quarter of 2022.

For additional information, see Notes to Consolidated Financial Statements, Note 10, “Goodwill and Acquired Intangible Assets.”

• Income tax expense for the year ended December 31, 2022 was $162 million, compared with $380 million in the year-ago period.

The effective tax rate increased in 2022 to 25.6 percent from 24.7 percent in the year-ago period.

The increase in the effective rate for 2022 was primarily due to an increase in the valuation allowance against future tax benefits, and lower-than-expected tax credits in 2022.

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

For the year ended December 31, 2021, net income was $1.16 billion, or $3.61 diluted earnings per common share, compared with net income of $881 million, or $2.25 diluted earnings per common share, for the year ended December 31, 2020.

The year-over-year increase was primarily attributable to increases in gains on sales of loans, net, other income, lower provisions for credit losses, and lower operating expenses, which were offset by a decline in total net interest income.

The primary contributors to each of the identified drivers of change in net income for the current year period compared with the year-ago period are as follows:

• Net interest income in 2021 decreased by $85 million compared with the year-ago period primarily due to a $2.1 billion reduction in average loans outstanding.

The primary contributors to each of the identified drivers of change in net income for 2021 compared with 2020 are as follows:

• Net interest income in 2021 decreased by $85 million compared with 2020 primarily due to a $2.1 billion reduction in average loans outstanding.

The decline in average loans outstanding was due to the sale of our Personal Loan portfolio that occurred in the third quarter of 2020 and the sale of $4.2 billion of Private Education Loans in 2021.

Net interest margin in 2021 was unchanged from the prior year as the lower yield on our interest earning assets was offset by lower cost of funds.

• Provisions for credit losses for the year ended December 31, 2021 decreased by $126 million compared with the year-ago period.

This decrease of $126 million in 2021 compared with the year-ago period was primarily the result of improving economic forecasts in 2021 and faster prepayment speeds.

Net interest margin in 2021 was unchanged from 2020 as the lower yield on our interest earning assets was offset by lower cost of funds.

• Provisions for credit losses for the year ended December 31, 2021 decreased by $126 million compared with 2020.

This decrease of $126 million in 2021 compared with 2020 was primarily the result of improving economic forecasts in 2021 and faster prepayment speeds.

In the fourth quarter of 2021, we increased our long-term estimate of prepayment speeds to reflect higher long-term prepayment experience.

In the fourth quarter of 2021, we increased our long-term estimate of prepayment speeds to reflected higher long-term prepayment experience.

Partially offsetting these benefits were additional provisions to reflect the adoption of our credit administration practices changes and other management overlays.

• Gains on sales of loans, net, were $548 million in 2021, compared with $238 million in the year-ago period.

The increase in gains on sales of loans was primarily the result of $1.14 billion in additional Private Education Loan sales in 2021 when compared with the year-ago period and improved pricing on the sale of those loans in 2021 compared with the year-ago period.

• Gains on derivatives and hedging activities, net, decreased $50 million in 2021 compared with the year-ago period.

The year-ago period was favorably impacted by a significant decrease in interest rates caused by the economic fallout from the COVID-19 pandemic, which made our receive fixed/pay variable interest rate swaps that are not designated as accounting hedges, but are economic hedges, to increase in value.

• Other income increased $41 million in 2021 from the year-ago period.

The increase in other income compared with the year-ago period was primarily the result of a $35 million gain related to changes in the valuation of certain non-marketable securities, and a $26 million increase in third-party servicing fees, offset by an $11 million gain from the sale of our former Upromise subsidiary recognized in the year-ago period and $6 million in lower revenue related to our former Upromise subsidiary.

• Gains on sales of loans, net, were $548 million in 2021, compared with $238 million in 2020.

The increase in gains on sales of loans was primarily the result of $1.14 billion in additional Private Education Loan sales in 2021 when compared with 2020 and improved pricing on the sale of those loans in 2021 compared with 2020.

• Gains on derivatives and hedging activities, net, decreased $50 million in 2021 compared with 2020.

The year ended December 31, 2020 was favorably impacted by a significant decrease in interest rates caused by the economic fallout from the COVID-19 pandemic, which made our receive fixed/pay variable interest rate swaps that are not designated as accounting hedges, but are economic hedges, to increase in value.

• Gains (losses) on securities, net was a gain of $39 million in 2021, compared with a gain of $4 million in 2020.

The gain recorded in 2021 was primarily the result of a $35 million increase in the valuation of our investment in non-marketable securities.

• Other income increased $6 million in 2021 from 2020.

The increase in other income compared with 2020 was primarily the result of a $26 million increase in third-party servicing fees, offset by an $11 million gain from the sale of our former Upromise subsidiary recognized in 2020 and $6 million in lower revenue related to our former Upromise subsidiary.

In addition, other income during the year ended December 31, 2021 was negatively affected by a $3 million loss from fees related to the redemption of $200 million of our 5.125 percent unsecured senior notes due in April 2022.

Third-party servicing fees increased in 2021 because we sold $4.24 billion in loans in 2021 where we retained servicing rights.

• For the year ended December 31, 2021, total operating expenses were $519 million, compared with $538 million in the year-ago period.

62 SLM CORPORATION — 2022 Form 10-K

• For the year ended December 31, 2021, total operating expenses were $519 million, compared with $538 million in 2020.

The decrease in total operating expenses was primarily driven by lower personnel costs as a result of the corporate reorganization that occurred in the second half of 2020, the divestiture of our former Upromise subsidiary in 2020, the sale of the Personal Loan portfolio in 2020, and lower initiative spending and improved servicing efficiencies in 2021.

2 unchanged sentences

There were de minimis restructuring expenses recorded for the year ended December 31, 2021.

• Income tax expense for the year ended December 31, 2021 was $380 million, compared with $273 million in the year-ago period.

The effective tax rate increased in 2021 to 24.7 percent from 23.7 percent in the year-ago period.

62 SLM CORPORATION — 2021 Form 10-K

The increase in the effective tax rate was primarily driven by higher state income tax expense related to an increase in our uncertain tax positions.

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

For the year ended December 31, 2020, net income was $881 million, or $2.25 diluted earnings per common share, compared with net income of $578 million, or $1.30 diluted earnings per common share, for the year ended December 31, 2019.

The year-over-year increase was primarily attributable to increases in gains on sales of loans, net, lower provisions for credit losses, and lower operating expenses, which were offset by a decline in total net interest income.

The primary contributors to each of the identified drivers of change in net income for 2020 compared with 2019 are as follows:

• Net interest income in 2020 decreased by $143 million compared with 2019 primarily due to a 95 basis point decrease in net interest margin.

Net interest margin decreased primarily due to (i) rates on our cash and short-term investments portfolio decreasing faster than our deposits repriced as interest rates fell as a result of the COVID-19 pandemic, as well as (ii) the sale of our higher yielding Personal Loan portfolio.

• Provisions for credit losses for the year ended December 31, 2020 decreased by $261 million compared with 2019.

The allowance in 2019 was determined using an incurred loss model which, for the most part, based its allowance on expected losses over the next 12 months.

On January 1, 2020, we adopted CECL, which required a life-of-loan loss allowance, and recorded an increase to the allowance for on balance sheet loans and off-balance sheet loan commitments of $1.3 billion with an offsetting entry of a $953 million reduction in retained earnings and a $306 million increase in our deferred tax asset.

After January 1, 2020, all future changes in the allowance were recorded through the provisions for credit losses.

For the year ended December 31, 2020, our provisions for credit losses were $93 million.

This was primarily the result of $290 million in additional provision for credit losses related to new commitments made in 2020, an additional $129 million due to deteriorating economic conditions during the year as a result of the COVID-19 pandemic, and $99 million caused by lower recovery rates and various overlays and other adjustments applied during the year.

Offsetting these was a $206 million reduction in the provisions for credit losses as a result of $2.9 billion of loans transferred to held-for-sale from held for investment in the fourth quarter of 2020, the sale of $3.1 billion of Private Education Loans in the first quarter of 2020, which resulted in a reduction to our provisions for credit losses of $162 million, a benefit of $121 million from faster prepayment speeds, and the sale of our entire Personal Loan portfolio, which resulted in a reduction to our provisions for credit losses of $43 million.

The benefit from faster prepayment speeds was to reflect actual loan prepayment speeds being higher than what our models were predicting due to the significant amount of COVID-19 related government stimulus.

• Gains on sales of loans, net, were $238 million in 2020, primarily as a result of the sale of $3.1 billion of Private Education Loans to unaffiliated third-parties in the first quarter of 2020.

There were no loan sales in 2019.

• Gains on derivatives and hedging activities, net, increased $32 million in 2020 compared with 2019.

The increase was driven by a significant decrease in interest rates during 2020 as a result of the economic impact of the COVID-19 pandemic, which caused our receive-fixed/pay-variable interest rate swaps that are not designated as accounting hedges, but are economic hedges, to increase in value.

• Other income increased $12 million in 2020 from 2019 primarily due to an $11 million gain from the sale of our former Upromise subsidiary in the second quarter of 2020, and an increase of $17 million in third-party servicing fees, offset by $13 million in lower revenue from our divested Upromise business, and an $8 million gain we recorded in 2019 related to changes in the valuation of certain non-marketable securities.

Third-party servicing fees increased primarily as a result of the sale of $3.1 billion of Private Education loans in the first quarter of 2020 (where we continued to service the loans after they were sold).

• For the year ended December 31, 2020, total operating expenses were $538 million, compared with $574 million in 2019.

The decrease in operating expenses was primarily driven by reduced personnel and marketing costs as a result of the suspension of Personal Loan originations and the subsequent sale of our Personal Loan portfolio, the sale of our former Upromise subsidiary, lower FDIC fees, and lower employee compensation costs as a result of the restructuring, which were offset by increased costs from growth in the serviced and owned loan portfolio, CEO transition costs, and costs related to other initiatives.

• Restructuring expenses for the year ended December 31, 2020 were $26 million, related to the restructuring plan we implemented in the third quarter of 2020.

These expenses were primarily related to involuntary termination

2021 Form 10-K — SLM CORPORATION 63

benefit arrangements, as well as certain other costs, such as legal and consulting fees that were incremental and incurred as a direct result of our restructuring plan.

There were no restructuring expenses recorded in 2019.

• Income tax expense for the year ended December 31, 2021 was $380 million, compared with $273 million in 2020.

The effective tax rate increased in 2021 to 24.7 percent from 23.7 percent in 2020.

The increase in the effective tax rate was primarily driven by $14 million in tax credits recorded in 2019.

The increase in the effective tax rate was primarily driven by higher state income tax expense related to an increase in our uncertain tax positions.

Non-GAAP “Core Earnings”

We prepare financial statements in accordance with GAAP.

Non-GAAP “Core Earnings” recognizes the difference in accounting treatment based upon whether a derivative qualifies for hedge accounting treatment.

We enter into derivative instruments to economically hedge interest rate and cash flow risk associated with our portfolio.

We believe that our derivatives are effective economic hedges and, as such, are a critical element of our interest rate risk management strategy.

Those derivative instruments that qualify for hedge accounting treatment have their related cash flows recorded in interest income or interest expense along with the hedged item.

Cash flows on derivative instruments that do not qualify for hedge accounting are not recorded in interest income and interest expense;

they are recorded in non-interest income:

“Gains (losses) on derivatives and hedging activities, net.”

Non-GAAP “Core Earnings” is meant to represent what earnings would have been had these derivatives qualified for hedge accounting and there was no ineffectiveness.

Non-GAAP “Core Earnings” are not a substitute for reported results under GAAP.

GAAP provides a uniform, comprehensive basis of accounting.

Our non-GAAP “Core Earnings” basis of presentation differs from GAAP in the way it treats derivatives as described above.

The following table shows the amount in “Gains (losses) on derivatives and hedging activities, net” that relates to the interest reclassification on the derivative contracts.

2022 Form 10-K — SLM CORPORATION 63

Years Ended December 31,

(dollars in thousands) 2022 2021 2020

Unrealized gains (losses) on instruments not in a hedging relationship $ (248) $ (23,216) $ 10,164

Interest reclassification 243 23,360 39,380

Gains on derivatives and hedging activities, net $ (5) $ 144 $ 49,544

The following table reflects adjustments associated with our derivative activities.

Years Ended December 31,

(dollars in thousands, except per share amounts) 2022 2021 2020

Non-GAAP “Core Earnings” adjustments to GAAP:

GAAP net income $ 469,014 $ 1,160,513 $ 880,690

Preferred stock dividends 9,029 4,736 9,734

GAAP net income attributable to SLM Corporation common stock $ 459,985 $ 1,155,777 $ 870,956

Net impact of derivative accounting (1)

248 23,216 (10,164)

Net tax expense (benefit) (2)

60 5,615 (2,481)

Total non-GAAP “Core Earnings” adjustments to GAAP 188 17,601 (7,683)

Non-GAAP “Core Earnings” attributable to SLM Corporation common stock $ 460,173 $ 1,173,378 $ 863,273

GAAP diluted earnings per common share $ 1.76 $ 3.61 $ 2.25

Derivative adjustments, net of tax — 0.06 (0.02)

Non-GAAP “Core Earnings” diluted earnings per common share $ 1.76 $ 3.67 $ 2.23

(1) Derivative Accounting:

Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0.

(2) Non-GAAP “Core Earnings” tax rate is based on the effective tax rate at the Bank, where the derivative instruments are held.

The following table reflects our provisions for credit losses and total portfolio net charge-offs:

Years Ended December 31,

(dollars in thousands) 2022 2021 2020

Provisions for credit losses $ 633,453 $ (32,957) $ 93,133

Total portfolio net charge-offs (389,502) (200,762) (216,036)

64 SLM CORPORATION — 2022 Form 10-K

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(dollars in thousands) Private

Cards Total Loans Held for Investment

Loans Total Loans

Total loan portfolio:

26 unchanged sentences

(1) Loans for customers still attending school and who are not yet required to make payments on the loans.

At December 31, 2020, the loans in the “in-school” category include $254 million of Private Education Loans whose borrowers did not return to school in the fall of 2020 because of the pandemic, or other reasons, and who received an extension of time from us to re-enroll before beginning their grace period and, therefore, were then not required to make any payments.

For further discussion, see “— Impact of COVID-19 on Sallie Mae — Financial Results.”

(2) At December 31, 2020, the loans in the “grace, repayment and other” category include (a) $147 million of Private Education Loans whose borrowers were in a grace or deferred status and who did not return to school in the fall of 2020, who received an extension of time from us to re-enroll before beginning their grace period and, therefore, were not then required to make any payments, and (b) $639 million of Private Education Loans whose borrowers were in a forbearance or repayment status and who did not return to school in the fall of 2020 and who then received an extension of time from us to re-enroll before beginning their grace period.

For further discussion, see “— Impact of COVID-19 on Sallie Mae — Financial Results.”

(2) Includes loans in 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.

2021 Form 10-K — SLM CORPORATION 67

As of December 31, 2020

(dollars in thousands) Private

Loans Personal

Cards Total Loans Held for Investment

9 unchanged sentences

% of total 96 % 4 % — % 100 %

(1) Loans for customers still attending school and who are not yet required to make payments on the loans.

For further discussion, see “— Impact of COVID-19 on Sallie Mae — Financial Results.”

(3) Includes loans in deferment or forbearance.

2022 Form 10-K — SLM CORPORATION 67

As of December 31, 2019

1 unchanged sentence

Loans Personal

Loans Total Loans Held for Investment

Cards Total Loans Held for Investment

Total loan portfolio:

8 unchanged sentences

% of total 93 % 3 % 4 % — % 100 %

(1) Loans for customers still attending school and who are not yet required to make payments on the loans.

(2) Includes loans in deferment or forbearance.

As of December 31, 2018

36 unchanged sentences

Allowance (194,654) 633 2,281 (191,740)

Transfer from loans held-for-sale 25,040 — — 25,040

Transfer to loans held-for-sale — — (28,905) (28,905)

Repayments and other (2,438,799) (49,545) (78,955) (2,567,299)

Ending balance $ 19,019,713 $ 607,155 $ — $ 19,626,868

2021 Form 10-K — SLM CORPORATION 69

Year Ended December 31, 2021

(dollars in thousands) Private

Loans Personal

Cards Total Loans Held for Investment, net

Beginning balance $ 18,436,968 $ 735,208 $ 10,967 $ 19,183,143

Day 1 CECL adjustment to allowance (1,060,830) (2,852) (79,183) (188) (1,143,053)

Balance at January 1, 2020 21,835,685 780,964 904,460 3,630 23,524,739

Acquisitions and originations:

6 unchanged sentences

Allowance 196,868 300 (780) 196,388

Transfer to loans held-for-sale (2,885,640) — — — (2,885,640)

Transfer from loans held-for-sale 25,040 — — 25,040

Repayments and other (2,357,023) (42,775) (50,232) (2,450,030)

Ending balance $ 19,625,374 $ 692,954 $ 22,955 $ 20,341,283

2022 Form 10-K — SLM CORPORATION 69

Year Ended December 31, 2020

3 unchanged sentences

Beginning balance $ 22,896,515 $ 783,816 $ 983,643 $ 3,818 $ 24,667,792

Day 1 CECL adjustment to allowance (1,060,830) (2,852) (79,183) (188) (1,143,053)

Balance at January 1, 2020 21,835,685 780,964 904,460 3,630 23,524,739

Acquisitions and originations:

3 unchanged sentences

Capitalized interest and deferred origination cost premium amortization 616,115 27,558 (253) (819) 642,601

(2,925,478) — (588,285) — (3,513,763)

Loan consolidations to third parties (1,332,802) (21,243) — — (1,354,045)

Allowance 79,285 107 36,526 (1,211) 114,707

Transfer to loans held-for-sale (2,885,640) — — — (2,885,640)

Repayments and other (2,292,484) (52,178) (352,489) (26,588) (2,723,739)

1 unchanged sentence

“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 full principal and interest repayment status.

Loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at December 31, 2021 decreased by 3 percent compared with December 31, 2020, and now total 44.7 percent of our Private Education Loans held for investment portfolio at December 31, 2021.

The balance of loans held for investment in full principal and interest repayment status was affected in 2021 and 2020 by loan sales, and the transfer of loans from held for investment to held-for-sale in 2020.

The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at December 31, 2022 decreased by 2 percent compared with December 31, 2021, and now totals 45 percent of our Private Education Loans held for investment portfolio at December 31, 2022.

The balance of loans held for investment in full principal and interest repayment status was affected in 2022 and 2021 by loan sales.

“Loan consolidations to third parties” for the year ended December 31, 2022 total 16.2 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at December 31, 2022, or 7.3 percent of our total Private Education Loans held for investment portfolio at December 31, 2022, compared with the year-ago period of 18.1 percent of our Private Education Loan held for investment portfolio in full principal and interest repayment status, or 8.1 percent of our total Private Education Loans held for investment portfolio, respectively.

The increase in consolidations is attributable to consolidators having ready access to funding in spite of the COVID-19 pandemic impact on the economy.

The decrease in consolidations is attributable to higher interest rates in 2022 that made it less competitive for consolidators.

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.

70 SLM CORPORATION — 2021 Form 10-K

The “Repayments and other” category includes all scheduled repayments and returns, as well as voluntary prepayments, made on loans in repayment (including loans in full principal and interest repayment status) and also includes charge-offs.

1 unchanged sentence

Historically, voluntary prepayments and loan consolidations decrease when unemployment increases as borrowers and lenders look to conserve liquidity.

While we saw a decrease in voluntary prepayments in the second quarter of 2020 (as compared to the first quarter of 2020) as a result of the COVID-19 pandemic, the decrease was not as significant as we expected based upon historical experience during higher unemployment periods and has increased to closer to pre-pandemic levels in 2021.

While we saw a decrease in voluntary prepayments in the second quarter of 2020 (as compared to the first quarter of 2020) as a result of the COVID-19 pandemic, the decrease was not as significant as we expected based upon historical experience during higher unemployment periods and increased to closer to pre-pandemic levels in 2021.

70 SLM CORPORATION — 2022 Form 10-K

Private Education Loan Originations

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2,330,719 39 1,996,461 36 1,910,712 36

Smart Option - principal and interest

11,102 — 9,559 — 9,806 —

Graduate Loan (2)

516,877 8 525,050 10 579,451 11

Parent Loan (3)

4 unchanged sentences

(1) Interest only, fixed pay and deferred describe the payment option while in school or in grace period.

“Business - Our Business - Private Education Loans” for further discussion.

“Business - Our Business - Private Education Loans” for a further discussion.

(2) For the year ended December 31, 2022, the Graduate Loan originations include $1.8 million of Parent Loans and $29.1 million of Smart Option Loans where the student was in a graduate status.

For the year ended December 31, 2021, the Graduate Loan originations include $5.8 million of Parent Loans and $24.4 million of Smart Option Loans where the student was in a graduate status.

For the year ended December 31, 2020, the Graduate Loan originations include $6.6 million of Parent Loans and $21.0 million of Smart Option Loans where the student was in a graduate status.

(3) In December 2021, we discontinued offering our Parent Loan product.

Applications for those loans received before the offering termination date will continue to be processed, with final disbursements under those loans to occur until mid–December 2022.

Applications for those loans received before the offering termination date were processed, with final disbursements under those loans occurring in mid-December 2022.

(4) Represents the higher credit score of the cosigner or the borrower.

4 unchanged sentences

Portfolio Private

Loans Personal Loans Credit

Beginning balance $ 1,158,977 $ 4,077 $ 2,281 $ 1,165,335 $ 1,355,844 $ 4,378 $ 1,501 $ 1,361,723

Day 1 adjustment for adoption of CECL — — — — 1,060,830 2,852 79,183 188 1,143,053

Balance at January 1 1,355,844 4,378 1,501 1,361,723 1,435,130 4,485 145,060 290 1,584,965

Transfer from unfunded commitment liability (1)

6 unchanged sentences

Loan sale reduction to provision (174,231) — — (174,231) (66,460) — — (66,460)

Loans transferred to held-for-sale 1,887 — — 1,887 (205,669) — — — (205,669)

Loans transferred (to) from held-for-sale — — (2,372) (2,372) 1,887 — — 1,887

Total provisions for credit losses (2)

1 unchanged sentence

Ending balance $ 1,353,631 $ 3,444 $ — $ 1,357,075 $ 1,158,977 $ 4,077 $ 2,281 $ 1,165,335

Troubled debt restructurings (3)

$ 1,057,665 $ — $ — $ 1,057,665 $ 1,274,590 $ — $ — $ — $ 1,274,590

(1) See Note 8, “Unfunded Loan Commitments,” in this Form 10-K for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(1) See Notes to Consolidated Financial Statements, Note 8, “Unfunded Loan Commitments,” in this Form 10-K for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) For the years ended December 31, 2022 and 2021, below is a reconciliation of the provision for credit losses reported in the consolidated statements of income.

10 unchanged sentences

Other impacts to the provisions for credit losses:

Personal Loans — (2,431)

FFELP Loans (20) 20

2 unchanged sentences

Provisions for credit losses reported in consolidated statements of income $ 633,453 $ (32,957)

(3) Represents the unpaid principal balance of loans classified as troubled debt restructurings.

72 SLM CORPORATION — 2022 Form 10-K

2 unchanged sentences

Portfolio Private

Loans Personal Loans Total

Loans Personal Loans Credit Cards Total

Beginning balance $ 374,300 $ 1,633 $ 65,877 $ 102 $ 441,912 $ 277,943 $ 977 $ 62,201 $ — $ 341,121

Day 1 adjustment for adoption of CECL 1,060,830 2,852 79,183 188 1,143,053 — — — — —

Balance at January 1 1,435,130 4,485 145,060 290 1,584,965 277,943 977 62,201 — 341,121

Transfer from unfunded commitment liability (1)

320,808 — — — 320,808 — — — — —

(205,326) (519) (39,079) (119) (245,043) (208,978) (822) (74,313) (1) (284,114)

Loan sales (2)

1 unchanged sentence

Recoveries 24,021 — 4,984 2 29,007 25,765 — 5,206 — 30,971

Provisions for loan losses 279,570 1,478 72,783 103 353,934 169,287 980 74,317 244,584

Ending balance $ 374,300 $ 1,633 $ 65,877 $ 102 $ 441,912 $ 277,943 $ 977 $ 62,201 $ 341,121

Troubled debt restructurings (2)

Provisions for credit losses:

Provision, current period 148,673 412 40,485 1,328 190,898 279,570 1,478 72,783 103 353,934

Loan sale reduction to provision (161,793) — (42,916) — (204,709) — — — — —

Loans transferred to held-for-sale (205,669) — — — (205,669) — — — — —

Total provisions for credit losses (3)

(218,789) 412 (2,431) 1,328 (219,480) 279,570 1,478 72,783 103 353,934

Years Ended December 31, (dollars in thousands) Private

Ending balance $ 1,355,844 $ 4,378 $ — $ 1,501 $ 1,361,723 $ 374,300 $ 1,633 $ 65,877 $ 102 $ 441,912

(2) Represents fair value adjustments on loans sold.

(3) For the year ended December 31, 2020, below is a reconciliation of the provision for credit losses reported in the consolidated statements of income.

When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses.

When the loan is funded, we transfer that liability to the allowance for credit losses.

Consolidated Statements of Income

Provisions for Credit Losses Reconciliation

Year Ended December 31,

(dollars in thousands) 2020

Private Education Loan provisions for credit losses:

Provisions for loan losses $ (218,789)

Provisions for unfunded loan commitments 312,613

Total Private Education Loan provisions for credit losses 93,824

Other impacts to the provisions for credit losses:

Personal Loans (2,431)

FFELP Loans 412

Credit Cards 1,328

Provisions for credit losses reported in consolidated statements of income $ 93,133

2022 Form 10-K — SLM CORPORATION 73

Year Ended December 31, (dollars in thousands) Private

Loans Personal Loans Total

6 unchanged sentences

Ending balance $ 277,943 $ 977 $ 62,201 $ 341,121

Troubled debt restructurings (2)

$ 990,351 $ — $ — $ 990,351

(1) Represents fair value adjustments on loans sold.

(2) Represents the unpaid principal balance of loans classified as troubled debt restructurings.

2021 Form 10-K — SLM CORPORATION 73

Private Education Loan Allowance for Credit Losses

In establishing the allowance for Private Education Loan losses as of December 31, 2022, 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 full principal and interest repayment status were 45 percent of our total Private Education Loans held for investment portfolio at December 31, 2021, compared with 49 percent at December 31, 2020.

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 “—Allowance for Credit Losses” and Note 5, “Loans Held for Investment — Certain Collection Tools - Private Education Loans” in this Form 10-K.

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 “—Allowance for Credit Losses,” “— Critical Accounting Policies and Estimates — Allowance for Credit Losses,” and Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment — Certain Collection Tools - Private Education Loans” in this Form 10-K.

74 SLM CORPORATION — 2022 Form 10-K

1 unchanged sentence

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 those loans while they are in forbearance).

For the periods presented below, we updated our delinquency bucket periods from what we reported in our 2020 Form 10-K to conform with the delinquency bucket periods defined by the Federal Financial Institutions Examination Council (“FFIEC”).

Private Education Loans Held for Investment 2022 2021 2020

December 31, (dollars in thousands) Balance % Balance % Balance %

As of December 31, (dollars in thousands) Balance % Balance % Balance %

Loans in-school/grace/deferment (1)(2)

27 unchanged sentences

(4) The period of delinquency is based on the number of days scheduled payments are contractually past due.

Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 3.3 percent at December 31, 2021 from 2.8 percent at December 31, 2020, and the forbearance rate decreased to

2021 Form 10-K — SLM CORPORATION 75

1.9 percent at December 31, 2021 from 4.3 percent at December 31, 2020.

The increase in delinquencies and the reduction in forbearance at December 31, 2021, compared with the prior year, were due to a combination of factors, including our new credit administration practices changes that imposed additional requirements for those borrowers requesting forbearance, and the cessation of the use of disaster forbearance related to COVID-19.

Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 3.8 percent at December 31, 2022 from 3.3 percent at December 31, 2021, and the forbearance rate decreased to 1.8 percent at December 31, 2022 from 1.9 percent at December 31, 2021.

The increase in delinquencies and the reduction in forbearance at December 31, 2022, compared with the prior year, were due to a combination of factors, including our new credit administration practices changes that imposed additional requirements for those borrowers requesting forbearance, operational challenges in 2022, including a shortage and lack of tenured collections staff, and the cessation of the use of disaster forbearance related to COVID-19.

We stopped providing COVID-19 related disaster forbearances in June 2021.

See additional discussion in “ — Impact of COVID-19 on Sallie Mae — Customers and Credit Performance” and “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool.”

2022 Form 10-K — SLM CORPORATION 75

The following table summarizes changes in the allowance for Private Education Loan (held for investment) losses.

9 unchanged sentences

Loan sale reduction to provision (174,231) (66,460) (161,793) — —

Loans transferred to held-for-sale 1,887 (205,669) — — —

Loans transferred (to) from held-for-sale — 1,887 (205,669) — —

Total provision 236,023 (298,425) (218,789) 279,570 169,287

6 unchanged sentences

Ending Balance $ 1,353,631 $ 1,158,977 $ 1,355,844 $ 374,300 $ 277,943

Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized (3)

6.37 % 5.35 % 6.55 % — % — %

Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment (3)(4)

8.76 % 7.32 % 9.28 % — % — %

Allowance as a percentage of the ending total loan balance 6.67 % 5.59 % 6.87 % 1.61 % 1.36 %

13 unchanged sentences

$ 15,129,550 $ 15,511,212 $ 14,304,821 $ 16,787,670 $ 14,666,856

(1) See Note 8, “Unfunded Loan Commitments,” in this Form 10-K for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

Accrued interest to be capitalized (3)

$ 936,837 $ 947,391 $ 973,201 $ — $ —

Accrued interest to be capitalized on loans in repayment (3)(5)

$ 324,384 $ 312,537 $ 308,655 $ — $ —

(2) Represents fair value adjustments on loans sold.

(3) Related metrics and ending balances for the years ended December 31, 2019 and 2018, respectively, are not available, as CECL had not yet been adopted, and the allowance for credit losses only covered expected losses over the next twelve months.

(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.

(5) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest payment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

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 allowance as a percentage of ending total loans and of ending loans in repayment;

the allowance as a percentage of ending total loans and accrued interest to be capitalized and of ending loans in repayment and accrued interest to be capitalized on loans in repayment;

and delinquency and forbearance percentages.

76 SLM CORPORATION — 2022 Form 10-K

Charge-offs increased in the year ending December 31, 2022 compared with the year-ago period because of a combination of factors, including the previously announced credit administration practices changes the Company implemented in 2021 that imposed additional requirements for those borrowers requesting forbearance, as well as a shortage and lack of tenured collections staff, and other operational challenges during much of 2022.

In the fourth quarter of 2022, we charged off $13 million of delinquent loans that had received certain grants of forbearance under previous credit administration practices (which have been discontinued) and which were classified as a loss and charged off prior to their reaching 120 days delinquent.

Also contributing to the increase in the full-year 2022 charge-offs compared with the prior year were $59 million in losses on loans whose borrowers took a “gap year” during the pandemic.

“Gap year” loans refer to loans to borrowers who took a “gap year” during the COVID pandemic and entered full principal and interest repayment status starting in late 2021 and early 2022.

Losses on these “gap year” loans were higher than expected and contributed to the higher charge-offs in 2022.

Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool

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In most instances, we require one payment, as an indication of a customer’s willingness and ability to repay, before granting forbearance to delinquent borrowers.

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

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Beginning in June 2021, we stopped granting disaster forbearance in response to the COVID-19 pandemic.

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.

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

2022 Form 10-K — SLM CORPORATION 77

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.

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Prior to implementation of the previously announced changes, borrowers could receive consecutive forbearance grants without intervening payments of principal and interest, if they satisfied all eligibility requirements.

We commenced testing in October 2019 for some of the previously announced planned changes on a very small percentage of our total portfolio and in March 2020 we began to expand the number of borrowers who would be subject to

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the new credit administration practices.

However, due to the COVID-19 pandemic, in April 2020 we postponed our efforts so that we could be more flexible in dealing with our customers’ financial hardship.

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We also now limit the number of interest rate reductions to twice over the life of the loan.

At December 31, 2021 and December 31, 2020, 7.2 percent and 7.8 percent, respectively, of our loans then currently in full principal and interest repayment status were subject to interest rate reductions made under our rate modification program.

Although we are not regulated by the Office of the Comptroller of the Currency, we have reviewed their student lending guidelines when considering and assessing our practices in certain areas.

Now that we have implemented the previously announced credit administration practices changes, we believe our current collection and servicing practices generally align with the guidelines for student lending published by the Office of the Comptroller of the Currency.

While there are limitations to our estimate of the future impact of the various credit administration practices changes we have implemented, absent the effect of any mitigating measures, we expect that the credit administration practices described above, including the changes we implemented in 2021, will accelerate periodic defaults and could increase periodic defaults in our Private Education Loan held for investment portfolio by approximately 10.1 percent to 16.6 percent.

Among the measures that we have implemented and may modify further and expect may partly offset or moderate any acceleration of or increase in defaults will be greater focus on the risk assessment process to ensure borrowers are mapped to the appropriate program, better utilization of existing loss mitigation programs (e.g., GRP and rate modifications), and the use of a program offering short-term payment reductions (permitting interest-only payments for up to six months) for certain early-stage delinquencies.

While there are limitations to our estimate of the future impact of the various credit administration practices changes we have implemented, we expect that the credit administration practices described above, including the changes we implemented in 2021, will accelerate periodic defaults and will increase periodic defaults in our Private Education Loan held for investment portfolio.

For 2021, we increased our allowance for credit losses as a result of the new credit administration practices.

In the fourth quarter of 2022, we further increased our allowance for credit losses to reflect higher expected future periodic defaults in both the near term (reasonable and supportable period) and long term.

This change reflects our estimate that the elevated default rates experienced in the latter half of 2022 will continue into 2023 and then decline over time.

Among the measures that we have implemented and may modify further and expect may partly offset or moderate any acceleration of or increase in defaults will be greater focus on the risk assessment process to ensure borrowers are mapped to the appropriate program, better utilization of existing loss mitigation programs (e.g., GRP and rate modifications), the use of a program offering short-term payment reductions (permitting interest-only payments for up to six months) for certain early-stage delinquencies, and implementation of potential new risk mitigation and collection strategies.

78 SLM CORPORATION — 2022 Form 10-K

The full impact of these changes to our collections practices described above will only be realized over the long term.

When we calculated the allowance for credit losses under CECL at December 31, 2021, our loan loss reserves were significantly impacted because we expect the life of loan defaults on our overall Private Education Loan portfolio to increase, in part as a result of the changes to our credit administration practices described above.

When we calculated the allowance for credit losses under CECL at December 31, 2022, our loan loss reserves were significantly affected because we expect the life of loan defaults on our overall Private Education Loan portfolio to increase, in part as a result of the changes to our credit administration practices described above.

We expect to learn more about how our borrowers are reacting to these changes to credit administration practices and, as we analyze such reactions, we will continue to refine our estimates of the impact of those changes on our allowance for credit losses.

As discussed above, we will continue to monitor our credit administration practices and may modify them further from time to time based upon performance, industry conventions, and/or regulatory feedback.

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

78 SLM CORPORATION — 2021 Form 10-K

percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status.

Our experience shows that the percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status.

At December 31, 2022, for Private Education Loans (held for investment) that have been in active repayment status for fewer than 25 months, loans in forbearance status as a percentage of loans in repayment and forbearance were 1 percent.

Approximately 75 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status fewer than 25 months.

For the periods presented below, we updated our delinquency bucket periods from what we reported in our 2020 Form 10-K to conform with the delinquency bucket periods defined by the FFIEC.

As of December 31, 2022

(dollars in millions) Private Education Loans Held for Investment

Monthly Scheduled Payments Due Not Yet in

Aged by Number of Months in Active Repayment Status Not Yet in

Repayment Total

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(dollars in millions) Private Education Loans Held for Investment

Monthly Scheduled Payments Due Not Yet in

Aged by Number of Months in Active Repayment Status Not Yet in

Repayment Total

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(dollars in millions) Private Education Loans Held for Investment

Monthly Scheduled Payments Due Not Yet in

Aged by Number of Months in Active Repayment Status Not Yet in

Repayment Total

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Smart Option Career

Training Graduate

$ in repayment (3)

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Smart Option Career

Training Graduate

$ in repayment (3)

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(1) In December 2021, we discontinued offering our Parent Loan product.

Applications for those loans received before the offering termination date will continue to be processed, with final disbursements under those loans to occur until mid–December 2022.

Applications for those loans received before the offering termination date continued to be processed, with final disbursements under those loans occurring until mid–December 2022.

(2) In May 2022, we discontinued offering our Career Training loan product.

Applications for those loans received before the offering termination date will continue to be processed, with final disbursements under those loans to occur until May 2023.

(3) 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.

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Accrued Interest Receivable

The following table provides information regarding accrued interest receivable on our Private Education Loans held for investment.

The table also discloses the amount of accrued interest on loans 90 days and greater past due as compared to our allowance for uncollectible interest.

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 that loan in that month.

The accrued interest on these loans will be capitalized against the balance of the loans when the borrower exits the grace period upon separation from school.

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, and the current expected credit losses on accrued interest that will be capitalized is included in our allowance for credit losses.

The allowance for uncollectible interest shown below represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period.

The allowance for this portion of interest is included in our allowance for credit losses.

The allowance for uncollectible interest exceeds the amount of accrued interest on our 90 days past due portfolio for all periods presented.

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Accrued Interest Receivable

(dollars in thousands) Total Interest Receivable 90 Days and Greater

(dollars in thousands) Total Interest Receivable 90 Days or Greater

Past Due Allowance for

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December 31, 2018 $ 1,168,823 $ 1,920 $ 6,322

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(1) The allowance for uncollectible interest at December 31, 2022, 2021, and 2020 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at December 31, 2022 relates to $240 million of accrued interest receivable on those loans that are not expected to be capitalized).

The accrued interest receivable that is expected to be capitalized ($937 million at December 31, 2022) is reserved in the allowance for credit losses.

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Liquidity and Capital Resources

Funding and Liquidity Risk Management

Our primary liquidity needs include our ongoing ability to fund our businesses throughout market cycles, including during periods of financial stress, our ongoing ability to fund originations of Private Education Loans and other loans, and our ability to meet any outflows of our Bank deposits.

To achieve these objectives, we analyze and monitor our liquidity needs, maintain excess liquidity and access to diverse funding sources, such as deposits at the Bank, issuance of secured debt primarily through asset-backed securitizations, and other financing facilities, and loan sales.

Our primary liquidity needs include our ongoing ability to fund our businesses throughout market cycles, including during periods of financial stress, our ongoing ability to fund originations of Private Education Loans, and our ability to meet any outflows of our Bank deposits.

It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan sales under all but the most dire emergency conditions.

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(1) This amount will be used primarily to originate Private Education Loans at the Bank.

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Average Balances

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Fees paid to third-party brokers related to brokered CDs were $13 million, $13 million, and $5 million during the years ended December 31, 2022, 2021, and 2020, respectively.

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Interest bearing deposits at December 31, 2022 and 2021 are summarized as follows:

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(1) Includes the effect of interest rate swaps in effective hedge relationships.

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As of December 31, 2022 and 2021, there were $615 million and $743 million, respectively, of deposits exceeding FDIC insurance limits.

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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.

Excess cash is generally invested with the Federal Reserve Bank of San Francisco (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.

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At December 31, 2022 and 2021, we had a net positive exposure (derivative gain positions to us, less collateral held by us, and plus collateral posted with counterparties) related to derivatives of $12 million and $9 million, respectively.

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We have liquidity exposure related to collateral movements between us and our derivative counterparties.

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Percent of exposure to counterparties with credit ratings below S&P A- or Moody’s A3 — %

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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.

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.

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 DIF 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 2023.

As of December 31, 2022, 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.

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.

Under regulations issued by the FDIC and other federal banking agencies, banking organizations that adopted CECL during the 2020 calendar year, including the Bank, could 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 elected to use this option.

On January 1, 2022, 25 percent of the adjusted transition amounts were phased in for regulatory capital purposes.

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

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At December 31, 2022, the adjusted transition amounts that were deferred and are being phased in for regulatory capital purposes are as follows:

Transition Amounts Adjustments for the Year Ended Adjustments for the Year Ended Phase-In Amounts for the Year Ended Remaining Adjusted Transition Amounts to be Phased-In

(Dollars in thousands) January 1, 2020 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2022

Retained earnings $ 952,639 $ (57,859) $ (58,429) $ (209,088) $ 627,263

Allowance for credit losses 1,143,053 (55,811) (49,097) (259,536) 778,609

Liability for unfunded commitments 115,758 (2,048) (9,333) (26,094) 78,283

Deferred tax asset 306,171 — — (76,542) 229,629

The Bank’s required and actual regulatory capital amounts and ratios 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.

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(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.

(3) For December 31, 2022, the actual amounts and the actual ratios include the adjusted transition amounts discussed above that were phased in at the beginning of 2022.

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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.

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 2022.

As of December 31, 2021, 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.

Basel III, the Bank is required to maintain the following minimum regulatory capital ratios:

In addition, the Bank is subject to a Common Equity Tier 1 capital conservation buffer of greater than 2.5 percent.

As of December 31, 2021, the Bank had a Common Equity Tier 1 risk-based capital ratio and a Tier 1 risk-based capital ratio of 14.1 percent, a Total risk-based capital ratio of 14.5 percent and a Tier 1 leverage ratio of 11.1 percent, which exceed the capital levels required under U.S.

Basel III and the “well capitalized” standard.

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 to the Company 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 Bank declared $1.4 billion, $579 million, and $254 million in dividends to the Company 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, respectively, and stock dividends.

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 Bank declared $700 million, $1.4 billion, and $579 million in dividends to the Company for the years ended December 31, 2022, 2021, and 2020, respectively, with the proceeds primarily used to fund the 2022, 2021, and 2020 Share Repurchase Programs and stock dividends.

See Part I, Item 1.

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“Risk Factors — General Risks” for possible limitations on the payments of our dividends.

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Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term ABS program and our Secured Borrowing Facility.

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Short-term Borrowings

On July 30, 2021, we amended our Secured Borrowing Facility to extend the maturity of the facility.

Unsecured Debt

On November 15, 2021, we redeemed our $200 million, 5.125 percent Senior Notes due April 5, 2022.

The Senior Notes were redeemed at 101.39 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 $3 million loss on the transaction.

At December 31, 2022, and December 31, 2021, there were no borrowings outstanding classified as short-term.

Secured Financings

On May 17, 2022, we amended our Secured Borrowing Facility to extend the maturity of the facility.

The amount that can be borrowed under the facility is $2 billion.

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Under the Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstanding advances.

The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay.

and reborrow funds, until May 17, 2022.

The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on May 17, 2023 (or earlier, if certain material adverse events occur).

At December 31, 2021, and December 31, 2020, there were no secured borrowings outstanding under the Secured Borrowing Facility.

The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay, and reborrow funds, until May 16, 2023.

The scheduled amortization period, during which amounts

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outstanding under the Secured Borrowing Facility must be repaid, ends on May 16, 2024 (or earlier, if certain material adverse events occur).

At both December 31, 2022 and December 31, 2021, there were no secured borrowings outstanding under the Secured Borrowing Facility.

For additional information, see Notes to Consolidated Financial Statements, Note 12, “Borrowings.”

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Unsecured Debt

On November 15, 2021, we redeemed $200 million, 5.125 percent Senior Notes due April 5, 2022.

The Senior Notes were redeemed at 101.39 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 $3 million loss on the transaction.

On October 29, 2020, we issued at par an unsecured debt offering of $500 million of 4.20 percent Senior Notes due October 29, 2025.

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At December 31, 2022, the outstanding balance was $493 million.

88 SLM CORPORATION — 2021 Form 10-K

Secured Financings

2022 Transactions

On August 9, 2022, we executed our $575 million SMB Private Education Loan Trust 2022-C term ABS transaction, which was accounted for as a secured financing.

We sold $575 million of notes to third parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $575 million of gross proceeds.

The Class A and Class B notes had a weighted average life of 4.69 years and priced at a weighted average SOFR equivalent cost of SOFR plus 1.76 percent.

At December 31, 2022, $635 million of our Private Education Loans, including $597 million of principal and $38 million in capitalized interest, were encumbered because of this transaction.

2021 Transactions

On May 19, 2021, we executed our $531 million SMB Private Education Loan Trust 2021-B term ABS transaction, which was accounted for as a secured financing.

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At December 31, 2022, $439 million of our Private Education Loans, including $416 million of principal and $23 million in capitalized interest, were encumbered because of this transaction.

2020 Transactions

On February 12, 2020, we executed our $636 million SMB Private Education Loan Trust 2020-A term ABS transaction, which was accounted for as a secured financing.

We sold $636 million of notes to third-parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $634 million of gross proceeds.

The Class A and Class B notes had a weighted average life of 4.18 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 0.88 percent.

At December 31, 2021, $496 million of our Private Education Loans, including $469 million of principal and $27 million in capitalized interest, were encumbered because of this transaction.

On August 12, 2020, we executed our $707 million SMB Private Education Loan Trust 2020-B term ABS transaction, which was accounted for as a secured financing.

We sold $707 million of notes to third-parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $705 million of gross proceeds.

The Class A and Class B notes had a weighted average life of 4.14 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 1.30 percent.

At December 31, 2021, $615 million of our Private Education Loans, including $581 million of principal and $34 million in capitalized interest, were encumbered because of this transaction.

Pre-2021 Transactions

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At December 31, 2022, $3.75 billion of our Private Education Loans, including $3.63 billion of principal and $120 million in capitalized interest, were encumbered as a result of these transactions.

88 SLM CORPORATION — 2022 Form 10-K

Other Borrowing Sources

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Generally, collateral value is assigned based on the estimated fair value of the pledged assets.

At December 31, 2021 and December 31, 2020, the value of our pledged

2021 Form 10-K — SLM CORPORATION 89

collateral at the FRB was $3.3 billion and $3.8 billion, respectively.

At December 31, 2022 and December 31, 2021, the value of our pledged collateral at the FRB was $2.2 billion and $3.3 billion, respectively.

The interest rate charged to us is the discount rate set by the FRB.

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At December 31, 2022, our contractual cash obligations due in the next year for secured borrowings and lease obligations were $729 million and $7 million, respectively, and our contractual cash obligations due thereafter for our secured borrowings, unsecured debt, and lease obligations were $3.5 billion, $1.0 billion, and $38 million, respectively.

Other Cash Obligations

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years.

If these provisions are not deferred, modified, or repealed by Congress with retroactive effect to January 1, 2022, they will decrease our cash from operations beginning in 2022.

We currently estimate an approximately $18 million impact to 2022 cash from operations based on the provisions currently in effect.

The actual impact on 2022 cash from operations will depend on if and when these provisions are deferred, modified, or repealed by Congress, including if retroactively, and the amount of research and development expenses paid or incurred in 2022, among other factors.

In addition, recent proposals to increase the U.S.

corporate income tax rate would require us to increase our net deferred tax assets upon enactment of new tax legislation, with a corresponding material, one-time, non-cash decrease in income tax expense, but our income tax expense and payments would likely be materially increased in subsequent years.

Our shareholders have authorized the issuance of 1.125 billion shares of common stock (par value of $0.20).

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We also entered into various other ancillary agreements with Navient to effect the Spin-Off and provide a framework for our relationship with Navient thereafter, such as a transition services agreement, a tax sharing agreement, an employee matters agreement, a loan servicing and administration agreement, a joint marketing agreement, a key services agreement, a data sharing agreement, and a master sublease agreement.

The majority of these agreements were transitional in nature with most having terms that have expired or will expire within the next year.

The majority of these agreements were transitional in nature with most having terms that have expired.

In the case of the loan servicing and administration agreement for those FFELP Loans that we hold and Navient services for us, the agreement is scheduled to expire or be renewed by the end of 2026.

We continue to have exposure to risks related to Navient’s creditworthiness.

If we are unable to obtain indemnification payments from Navient, our results of operations and financial condition could be materially and adversely affected.

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Pursuant to the terms of the Spin-Off and applicable law, Navient is responsible for all liabilities (whether accrued, contingent, or otherwise and whether known or unknown) arising out of or resulting from the conduct of pre-Spin-Off SLM and its subsidiaries’ businesses prior to the Spin-Off, other than certain specifically identified liabilities relating to the conduct of our consumer banking business for which the Bank is responsible.

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The loan servicing and administration agreement governs the terms by which Navient provides servicing, administration, and collection services for the Bank’s portfolio of FFELP Loans, as well as servicing history information

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with respect to Private Education Loans previously serviced by Navient and access to certain promissory notes in Navient’s possession.

The term of the loan servicing and administration agreement has been extended to April 30, 2022.

The data sharing agreement provided us the right to obtain from Navient certain post-Spin-Off performance data relating to Private Education Loans owned or serviced by Navient to support and facilitate ongoing underwriting, originations, forecasting, performance, and reserve analyses.

The term of the data sharing agreement expired on April 29, 2019, however.

The term of the loan servicing and administration agreement has been extended to December 31, 2026.

The tax sharing agreement governs the respective rights, responsibilities, and obligations of us and Navient after the Spin-Off relating to taxes, including with respect to the payment of taxes, the preparation and filing of tax returns, and the conduct of tax contests.

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The agreement also addresses the allocation of tax liabilities that are incurred as a result of the Spin-Off and related transactions.

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Critical Accounting Policies and Estimates

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CECL does not mandate the use of any specific method for estimating credit loss, permitting companies to use judgment in selecting the approach that is most appropriate in their circumstances.

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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 model.

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 a vintage-based model that considers life of loan loss expectations, prepayments (both voluntary and involuntary), defaults, recoveries, and any other adjustments deemed necessary, to determine the adequacy of the allowance at each balance sheet date.

To estimate the future expected cash flows, we use a vintage-based model that considers life of loan loss expectations, prepayments, defaults, recoveries, and any other 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.

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As with our loss forecasts, at the end of the two-year reasonable and supportable forecast for prepayments, we immediately revert to our historical long-term prepayment rates.

In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses.

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 qualitative factors include, but are not limited to, changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices not already included in the analysis, and the effect of other external factors such as legal and regulatory requirements on the level of estimated current expected credit losses.

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• Recovery rates.

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Management overlays can encompass a broad array of factors not captured by model inputs, including but not limited to, changes in servicing policies, collection administration practices, state law changes that could impact servicing and collection practices, and observed differences between forecasted and actual results.

This change reflects our estimate that the elevated default rates experienced in the latter half of 2022 will continue into 2023 and then decline over time.

This estimate of future losses, like other aspects of our estimate of current expected credit losses, is susceptible to significant changes.

Of the model inputs outlined above, economic forecasts, weighting of economic forecasts, prepayments speeds, 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.

In determining the adequacy of the allowance for credit losses, we include forecasts of college graduate unemployment and the Consumer Price Index in our loss forecasting models.

We obtain forecasts for these two inputs from Moody’s Analytics.

In the fourth quarter of 2022, we changed our loss model to include forecasts of college graduate unemployment, the home price index, and median family income in determining the adequacy of the allowance for credit losses.

Prior to this change, we included forecasts of college graduate unemployment and the Consumer Price Index in our loss forecasting models.

We obtain forecasts for these inputs from Moody’s Analytics.

Moody’s Analytics provides a range of forecasts for each of these inputs with various likelihoods of occurrence.

We determine which forecasts we will include in our estimation of allowance for credit losses and the associated weightings for each of these inputs.

At December 31, 2020, December 31, 2021, and December 31, 2022, we used the Base (50th percentile likelihood of occurring)/S1 (stronger near-term growth scenario with 10 percent likelihood of occurring)/S3 (downside scenario with 10 percent likelihood of occurring) scenarios and weighted them 40 percent, 30 percent, and 30 percent, respectively.

Management reviews both the scenarios and their respective weightings each quarter in determining the allowance for credit losses.

These faster estimated prepayment speeds during the two-year reasonable and supportable period reflected the significant improvement in economic forecasts, as well as the implementation of an updated prepayment speed model.

During 2022, we experienced slower prepayment rates due to the rising interest rate environment.

Historically, when rates rise loan prepayments and consolidation activity by third parties decline, and when rates decline loan prepayments and consolidation activity increase.

During 2022, we reduced our estimates of future prepayment speeds to reflect the impact of the rising rate environment.

Slower prepayment speeds increase the allowance for credit losses because the loss rates applied in the future periods are applied to higher loan balances.

We experienced higher prepayments during the COVID-19 pandemic, when unemployment rates were elevated, than we would have expected based upon our experience during past financial crises.

In the fourth quarter of 2021, we increased our long-term estimate of prepayment speeds to reflect higher long-term prepayment experience.

A one-percent increase in the college graduate unemployment rate is estimated to increase our allowance for credit losses by $16.9 million and a one-percent decrease in the college graduate unemployment rate is estimated to decrease our allowance for credit losses by $16.2 million.

Increases in the weighting of economic forecasts resulting in greater weight given to more severe economic forecasts would result in an increase in the allowance for credit losses.

A one-percent increase in prepayment speeds is estimated to decrease our allowance for credit losses by $20.4 million and a one-percent decrease in prepayment speeds is estimated to increase our allowance for credit losses by $20.5 million.

The estimated impacts of changes in prepayment speeds and the college graduate unemployment rates on the allowance for credit losses were calculated for the two-year reasonable and supportable period, but were not calculated for the remaining periods since long-term assumptions used to calculate the allowance for the remaining periods will not change.

A one-percent change in recovery rates is estimated to change the allowance for credit losses by $14.2 million.

As a result, during 2021 we increased our estimate of prepayment speeds to reflect higher short-term and long-term prepayment experience, which had a beneficial impact on the allowance for credit losses at that time.

A 100-basis point increase or decrease in the following inputs to the CECL loss model is estimated to change the allowance as follows:

Estimated Increase (Decrease) to the Allowance for Credit Losses (1)

(Dollars in millions) +100 Basis Points -100 Basis Points

College graduate unemployment rate (2)

$ 46,587 $ (63,157)

Prepayment speeds (2)

(15,659) 15,760

Recovery rates (3)

(14,637) 14,637

(1) Based on our Private Education Loan Portfolio at December 31, 2022.

(2) The estimated impacts of changes were calculated for the two-year reasonable and supportable period, but were not calculated for the remaining periods since long-term assumptions used to calculate the allowance for the remaining periods will not change.

(3) The estimated change in the recovery rate is based on long-term assumptions.

Below we describe in further detail our policies and procedures for the allowance for credit losses as they relate to our Private Education Loan, Credit Card, and FFELP Loan portfolios.

A 100-basis point increase or decrease in the home price index or median family income does not result in material changes to our allowance for credit losses.

Increases in the weighting of economic forecasts resulting in greater weight given to more severe economic forecasts would result in an increase in the allowance for credit losses.

The estimated impacts of changes in the above table were calculated for the two-year reasonable and supportable period, but were not calculated for the remaining periods since long-term assumptions used to calculate the allowance for

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the remaining periods are based on longer term averages and only change when we determine there is a fundamental change that will affect long-term rates.

Below we describe in further detail our policies and procedures for the allowance for credit losses as they relate to our Private Education Loan and FFELP Loan portfolios.

During the third quarter of 2022, we reclassified our Credit Card loan portfolio to loans held-for-sale, as we plan to exit and sell our credit card business.

During the third quarter of 2020, we sold our entire Personal Loan portfolio.

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We consider credit score at original approval and periodically refreshed/updated credit scores through the loan’s term, existence of a cosigner, loan status, and loan seasoning as the key credit quality indicators because they have the most significant effect on the determination of the adequacy of our allowance for credit losses.

Credit scores are an indicator of

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the creditworthiness of borrowers and the higher the credit scores the more likely it is the borrowers will be able to make all of their contractual payments.

Credit scores are an indicator of the creditworthiness of borrowers, and the higher the credit scores the more likely it is the borrowers will be able to make all of their contractual payments.

Loan status affects the credit risk because a past due loan is more likely to result in a credit loss than a current loan.

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As part of concluding on the adequacy of the allowance for credit losses for Private Education Loans, we review key allowance and loan metrics.

The most relevant of these metrics considered are the allowance as a percentage of ending total loans, delinquency percentages, and forbearance percentages.

The most relevant of these metrics considered are the allowance as a percentage of ending total loans and accrued interest to be capitalized and of ending loans in repayment and accrued interest to be capitalized on loans in repayment, delinquency percentages, and forbearance percentages.

We consider a Private Education Loan to be delinquent if the borrower has not made a required payment prior to the 31st day after such payment was contractually due.

Troubled Debt Restructurings (“TDRs”)

In estimating the expected defaults for our Private Education Loans that are considered TDRs, we follow the same discounted cash flow process described above but use the historical loss rates related to past TDR loans.

The appropriate gross loss rates are determined for each individual loan by evaluating loan maturity, risk characteristics, and macroeconomic conditions.

The allowance for our TDR portfolio is included in our overall allowance for Private Education Loans.

Our TDR portfolio is comprised mostly of loans with interest rate reductions and loans with forbearance usage greater than three months, as further described below.

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Adoption of ASU No.

2022-02, “Troubled Debt Restructurings and Vintage Disclosures”

On March 31, 2022, the FASB issued ASU No.

2022-02, “Troubled Debt Restructurings and Vintage Disclosures” (“ASU No.

2022-02”), which eliminates the accounting guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

The enhanced disclosures are required to be provided for modifications made starting in the period of adoption.

Information about modifications in periods before adoption is not required to be provided.

2022-02 also requires that entities disclose current-period gross charge-offs by year of origination.

For entities that have adopted the amendments in CECL, the amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption of the amendments in ASU No.

2022-02 is permitted if an entity has adopted CECL.

The amendments should be applied prospectively.

For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method.

We have elected to early adopt all aspects of ASU No.

2022-02 prospectively for the period beginning January 1, 2022.

The adoption was immaterial to our consolidated financial statements.

Troubled Debt Restructurings

For the year ended December 31, 2021, the allowance for our TDR portfolio was included in our overall allowance for Private Education Loans.

In estimating the expected defaults for our Private Education Loans that were considered TDRs, we followed the same discounted cash flow process described above but used the historical loss rates related to past TDR loans.

The appropriate gross loss rates were determined for each individual loan by evaluating loan maturity, risk characteristics, and macroeconomic conditions.

Our TDR portfolio was comprised mostly of loans with interest rate reductions and loans with forbearance usage greater than three months, as further described below.

We adjust the terms of loans for certain borrowers when we believe such changes will help our customers manage their student loan obligations, achieve better student outcomes, and increase the collectability of the loans.

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The combination of these two loan term changes helps reduce the monthly payment due from the borrower and increases the likelihood the borrower will remain current during the interest rate modification period as well as when the loan returns to its original contractual interest rate.

We classify a loan as a TDR due to forbearance using a two-step process.

The first step is to identify a loan that was in full principal and interest repayment status and received more than three months of forbearance in a 24-month period;

however, during the first nine months after a loan had entered full principal and interest repayment status, we do not count up to the first six months of forbearance received during that period against the three-month policy limit.

The second step is to evaluate the creditworthiness of the loan by examining its most recent refreshed FICO score.

Loans that have met the criteria in the first test and have a FICO score above a certain threshold (based on the most recent quarterly FICO score refresh) will not be classified as TDRs.

Loans that have met the criteria in the first test and have a FICO score under the threshold (based on the most recent quarterly FICO score refresh) will be classified as TDRs.

A loan also becomes a TDR when it is modified to reduce the interest rate on the loan (regardless of when such modification occurs and/or whether such interest rate reduction is temporary).

Once a loan qualifies for TDR status, it

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remains a TDR for allowance purposes for the remainder of its life.

About half our loans that are considered TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan.

As of both December 31, 2021 and 2020, approximately 47 percent, respectively, of TDRs were classified as such due to their forbearance status.

For additional information, see Notes to Consolidated Financial Statements, Note 7, “Allowance for Credit Losses.”

On March 27, 2020, then President Trump signed into law the CARES Act, which, among other things, allows us to (i) elect to suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as TDRs, and (ii) suspend any determination of a loan modified as a result of the effects of COVID-19 as being a TDR, including impairment for accounting purposes.

Furthermore, on December 27, 2020, the CAA was signed into law.

The CAA provides for additional COVID-19 focused relief and extends certain provisions of the CARES Act.

We have elected to suspend TDR accounting for both forbearance and interest rate modifications of loans that occur as a result of COVID-19 for the applicable period of the CARES Act and CAA relief.

We are continuing to apply TDR accounting to those loans that were more than 30 days past due as of December 31, 2019 and were subsequently modified.

Prior to January 1, 2022, we classified a loan as a TDR due to forbearance using a two-step process.

The first step was to identify a loan that was in full principal and interest repayment status and received more than three months of forbearance in a 24-month period;

however, during the first nine months after a loan had entered full principal and interest repayment status, we did not count up to the first six months of forbearance received during that period against the three-month policy limit.

The second step was to evaluate the creditworthiness of the loan by examining its most recent refreshed FICO score.

Loans that met the criteria in the first test and had a FICO score above a certain threshold (based on the most recent quarterly FICO score refresh) were not classified as TDRs.

Loans that met the criteria in the first test and had a FICO score under the threshold (based on the most recent quarterly FICO score refresh) were classified as TDRs.

A loan also became a TDR when it was modified to reduce the interest rate on the loan (regardless of when such modification occurred and/or whether such interest rate reduction was temporary).

Once a loan qualified for TDR status, it remained a TDR for allowance purposes for the remainder of its life.

About half our loans that were considered TDRs involved a temporary forbearance of payments and did not change the contractual interest rate of the loan.

Off-Balance Sheet Exposure for Contractual Loan Commitments

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The portion of the allowance for credit losses related to future disbursements is shown as a liability on the face of the balance sheet, and related provision for credit losses is reflected on the income statement.

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Uncollectible Interest

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Accrued interest receivable is separately disclosed on the face of the balance sheet.

Allowance for Credit Card Loans

We use the gross loss approach when estimating the allowance for credit losses for our Credit Card portfolio.

Because our Credit Card portfolio is new and we do not have sufficient historical loss experience, we use estimated loss rates reported by other financial institutions to estimate our allowance for credit losses for Credit Cards, net of expected recoveries.

In addition, we use a model that utilizes purchased credit card information with risk characteristics similar to those of our own portfolio as a challenger model.

We then consider any qualitative factors that may change our future expectations of losses.

As all of our Credit Card loans are unconditionally cancelable by us, the issuer, we do not record any estimate of credit losses for unused portions of our Credit Card commitments.

Allowance for FFELP Loan Losses

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For loans disbursed on or after July 1, 2006, we receive 97 percent reimbursement on all qualifying claims.

For loans disbursed after October 1, 1993, and before July 1, 2006, we receive 98 percent reimbursement on all qualifying

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For loans disbursed after October 1, 1993, and before July 1, 2006, we receive 98 percent reimbursement on all qualifying claims.

For loans disbursed prior to October 1, 1993, we receive 100 percent reimbursement.

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Once the quantitative calculation is performed, we review the adequacy of the allowance for credit losses and determine if qualitative adjustments need to be considered.

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Risk Management

Risk is inherent in our business activities and the specialized lending industry we serve.

The ability of management to anticipate, identify, and remediate risk in a timely manner is critical to our continued success.

Our risk management framework is designed to identify, remediate, control, and report these risks and escalate as appropriate to the Board of Directors or its designee.

The ability of management to identify, manage, and remediate risk in a timely manner is critical to our continued success.

Our risk management framework is designed to assess, manage, and report these risks and escalate as appropriate to the Board of Directors or its designee.

Risk Oversight

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The Board of Directors has oversight of key policies as well as the risk management framework developed and administered by the management team.

We have a robust process to escalate to the Board meaningful departures from our risk appetite statements.

The Board of Directors oversees the continued development of the risk management program.

We have a robust process to escalate meaningful departures from our risk appetite statements to the Board.

The Board of Directors oversees the continued development of the risk management framework.

The Governance Framework

Our overall objective is to ensure all significant risks inherent in our business can be identified, remediated where appropriate, managed, monitored, and reported.

Our overall objective is to ensure all significant risks inherent in our business can be identified and appropriately mitigated.

To this end, we have adopted the “three lines of defense” approach to governance.

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As the risk owner, the first line of defense is accountable for the day-to-day execution of risk and control policies and procedures (including activities performed by third-party contractors).

Our Independent Risk Function constitutes the “second line of defense” and conducts oversight and effective challenge of the risk and control activities within the first line of defense.

Rather than focusing on execution, the second line of defense is accountable for the related policy and standards executed upon by the first line of defense.

The “second line of defense” is our Risk Management function, which is independent from the first line of defense.

The second line of defense conducts oversight and effective challenge of the risk-taking activities within the first line of defense.

Finally, the Internal Audit function comprises the “third line of defense.” The Internal Audit function provides opinions to the Board of Directors on the effectiveness of the first and second lines of defense, as reflected in audit reports.

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The Risk Management Policy and Risk Appetite Framework are designed to establish a stable risk and control environment across the enterprise.

The policy, which is approved by the Board of Directors, outlines the framework used to ensure that risk and control issues across the enterprise are identified, assessed, measured, remediated, managed, monitored, and reported.

The risk management policy, the risk appetite framework, and the related policies and procedures constitute the core of the Independent Risk governance program.

The risk appetite statements are at the heart of the governance framework and establish the level of risk we are willing to accept within each risk category, as described below, in pursuit of our business objectives.

Compliance with our risk appetite is monitored using a set of risk metrics, with thresholds and limits, for each risk type.

The Risk Management Policy, the Risk Appetite Framework, and the related policies and procedures constitute the core of the risk management program.

Sallie Mae leverages risk appetite to outline the level of risk we are willing to accept within each risk category, as described below, in pursuit of our business objectives.

Compliance with our risk appetite is monitored using a set of risk metrics, with defined thresholds and limits, for each risk type.

The Enterprise Risk Committee (the “ERC”) provides oversight of the risk appetite framework with escalation to the Board of Directors, as appropriate.

Our Board of Directors approves the risk appetite framework annually and requires that management provide ongoing updates on adherence to the risk appetites.

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Board of Directors Committee Structure

We have a robust Board of Directors committee structure that facilitates oversight, effective challenge, and escalation of risk and control issues.

We have a robust Board of Directors committee structure as outlined below that facilitates oversight, effective challenge, and escalation of risk and control issues .

• Financial Risk Committee.

The Financial Risk Committee was established to assist the Board of Directors in fulfilling its risk management oversight responsibilities with regard to financial risks.

Annually, the Financial Risk Committee, along with the Operational and Compliance Risk Committee, recommends the risk management policy and the risk appetite framework to the Board of Directors for approval.

The Financial Risk Committee assists the Board of Directors in fulfilling its risk management oversight responsibilities with regard to the Company’s major financial risks, including credit risk, market risk, and liquidity risk.

The Financial Risk Committee, along with the Operational and Compliance Risk Committee, provides oversight of the development, maintenance, and monitoring of the Company’s risk management framework, risk governance structure, and risk appetite statement and thresholds, and the promotion of our risk management culture.

The Financial Risk Committee receives periodic updates on compliance with the framework from the Chief Risk Officer.

• Operational and Compliance Risk Committee.

The Operational and Compliance Risk Committee assists the Board of Directors in fulfilling their oversight responsibilities relating to the major non-financial risks, including compliance risks, operational risks, information security risk and model risk.

Annually, the Operational and Compliance Risk Committee, along with the Financial Risk Committee, recommends the risk management policy and the risk appetite framework to the Board of Directors for approval.

The Operational and Compliance Risk Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the major non-financial risks, including compliance risks, operational risks, information security risk, and model risk.

The Operational and Compliance Risk Committee, along with the Financial Risk Committee, provides oversight of the development, maintenance, and monitoring of our risk management framework, risk governance structure, and risk appetite statement and

98 SLM CORPORATION — 2022 Form 10-K

thresholds, and the promotion of our risk management culture.

The Operational and Compliance Risk Committee receives periodic updates on compliance with the framework from the Chief Risk Officer.

• Audit Committee .

The Audit Committee is responsible for oversight of the Internal Audit function.

Additionally, the Audit Committee oversees the quality and integrity of our financial reporting process and financial statements;

the qualifications, hiring, performance, and independence of our independent registered accounting firm;

and our system of internal financial controls.

The Audit Committee is responsible for oversight of the quality and integrity of our financial statements, accounting and reporting processes, the performance of the internal audit function, and the qualifications, hiring, performance, and independence of our independent registered accounting firm.

• Nominations and Governance Committee.

The Nominations and Governance Committee, among other things:

(i) implements good governance policies for us and our Board of Directors;

(ii) reviews related party transactions;

(iii) conducts assessments of the performance of our Board of Directors and its committees;

and (iv) recommends nominees for election to our Board of Directors.

The Nominations and Governance Committee recommends to the Board appropriate standards of corporate governance, and assists the Board of Directors in fulfilling its obligations with regard to oversight of the operations of the Board, the qualifications and independence of directors, nominations to the Board of Directors, and compliance with the corporate governance standards.

The Nominations and Governance Committee also provides oversight of the ESG matters of the Company.

• Compensation Committee .

The Compensation Committee assists the Board of Directors in fulfilling its oversight responsibilities including those related to the compensation and benefits of our Chief Executive Officer (“CEO”), our incentive compensation practices for employees of all levels, and management’s succession planning.

The Compensation Committee assists the Board of Directors in fulfilling its oversight responsibilities related to the compensation and benefits of our Chief Executive Officer (“CEO”) and the non-employee members of the Board of Directors, our incentive compensation and benefits practices for employees of all levels, and management’s succession planning.

Additionally, the Compensation Committee provides oversight of human capital management, including in the areas of diversity, equity, and inclusion.

• Preferred Stock Committee.

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The EC has established the following sub-committees to assist in fulfilling its duties.

• Enterprise Risk Committee .

The ERC provides independent oversight and effective challenge to risk and control activities across the enterprise.

Additionally, through reports from the Chief Risk Officer the ERC informs the Financial Risk Committee and the Operational and Compliance Risk Committee of the Board of Directors, including escalation of instances of non-compliance with the framework.

• Enterprise Risk Committee (“ERC”).

The ERC provides independent oversight and monitoring of the risk and control environment.

The ERC is jointly accountable to the Financial Risk Committee and the Operational and Compliance Risk Committee of the Board of Directors and provides for escalation accordingly.

• Credit Committee .

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ALCO is responsible for the strategy, processes, and authorities with which the Bank’s interest rate risk, liquidity, and capital adequacy are managed.

• Disclosure Committee.

Our Disclosure Committee assists our CEO and Chief Financial Officer in their review of periodic SEC reporting documents, earnings releases, investor materials, and related disclosure policies and procedures.

Each of these sub-committees is comprised of subject matter experts from the senior management team and is accountable to the EC.

Moreover, these sub-committees may be supported by steering or working groups, as appropriate.

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Disclosure Committee.

Internal Audit

Internal Audit regularly monitors our various risk management and compliance efforts, identifies areas that may require increased focus and resources, and reports significant control issues and recommendations to executive management and the Audit Committee of the Board of Directors.

Internal Audit provides independent assurance to the Audit Committee of the Board of Directors and management as to the adequacy and effectiveness of our risk management, control, and governance processes, and assists management by providing objective assurance, advisory, and consulting services designed to add value and improve operations.

Internal Audit regularly monitors and performs selected reviews of our risk management and compliance functions, to assess the effectiveness of the overall risk management framework, identifies areas that may require increased focus and resources, and reports significant control issues and recommendations to executive management and the Audit Committee of the Board of Directors.

Annually, Internal Audit performs an independent risk assessment to evaluate the risk of all significant components of the Company and uses the results to develop their annual Internal Audit plan.

Additionally, Internal Audit performs selected reviews of both risk management and compliance functions, including key controls, processes, and systems, to assess the effectiveness of the overall risk management framework.

The Internal Audit function provides challenge to the first and second lines of defense and also provides opinions to the Board of Directors on the effectiveness of the first and second lines of defense.

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Risk Categories

Our ERM framework is designed to address the following risk categories:

Risk categories are a foundational element of the Risk Management Framework;

they are widely used in risk

identification and provide the basis for risk aggregation and reporting.

The Company has identified six major risk categories:

Strategic Risk .

Strategic risk is the risk to shareholder value and growth trajectory from incorrect assumptions about external and internal factors, inappropriate business plans, ineffective business strategy execution, or failure to respond in a timely manner to changes in the regulatory, macroeconomic, or competitive environments.

Management must be able to develop and implement business strategies that leverage the organization’s core competencies and are appropriately structured, resourced, and executed.

Strategic risk is the risk of opportunity costs or of adverse impacts to the value of future business from external threats or from internal constraints and/or failings.

The overall development of the strategic plan includes extensive engagement with the Board of Directors.

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Credit Risk .

Credit risk is the risk to earnings, capital, or reputation resulting from an obligor’s failure to repay their contractual obligations to Sallie Mae or otherwise to perform as agreed.

Credit risk is the risk of adverse impacts to earnings, capital, or reputation resulting from obligors’ failure, or the increased probability thereof, to meet the terms of a lending, issuer, or counterparty agreement.

Credit risk is found in all activities where success depends on counterparty, issuer, or borrower performance.

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The credit and counterparty risk associated with derivatives is measured based on the replacement cost should the counterparty with contracts in a gain position to us fail to perform under the terms of the contract.

Market risk is the risk to earnings, capital, or reputation resulting from changes in market conditions, such as interest rates, credit spreads, or other volatilities.

Credit risk exposure is managed primarily through the Credit Committee, and regular reporting on credit programs and credit metrics is provided to the Financial Risk Committee of the Board of Directors.

Market risk is the risk of adverse impacts to earnings, capital, or reputation resulting from changes in market conditions and prices.

We are exposed to various types of market risk, in particular the risk of loss resulting from interest rate risk, basis risk, and other risks that arise through the management of our investment, debt, and loan portfolios.

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Liquidity Risk .

Liquidity risk is the risk to earnings, capital, or reputation from an inability to meet financial obligations when they come due without incurring unacceptable losses, such as the inability to fund liability maturities and deposit withdrawals or invest in future asset growth and business operations at reasonable market rates, as well as the inability to fund Private Education Loan and other loan originations.

Liquidity risk is the risk of adverse impacts to earnings, capital, reputation, or survival resulting from not being able to meet the Company’s financial obligations when they become due.

Our primary liquidity needs include our ongoing ability to:

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and service our indebtedness and bank deposits.

Ultimately, our liquidity risk relates to our ability to access the capital markets at reasonable rates and to maintain deposits and other

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funding sources through the Bank, as well as our maintenance of a reserve of cash and unencumbered highly liquid investment securities that may be readily converted to cash if needed.

Ultimately, our liquidity risk relates to our ability to access the capital markets at reasonable rates and to maintain deposits and other funding sources through the Bank, as well as our maintenance of a reserve of cash and unencumbered highly liquid investment securities that may be readily converted to cash if needed.

Our liquidity risk activities are centralized within our Corporate Finance department, which is responsible for developing and executing our funding strategy.

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The Financial Risk Committee of our Board of Directors is responsible for periodically reviewing the liquidity positions and contingency funding plan developed and administered by ALCO.

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Operational Risk .

Operational risk is the risk to earnings, capital, or reputation resulting from inadequate or failed internal processes, people and systems and third-party vendors, or from external events.

Operational risk is pervasive in that it exists in all business lines, functional units, legal entities, and geographic locations, and it includes information technology risk, physical security risk on tangible assets, as well as model, regulatory, and legal risk.

Operational risk is the risk of adverse impacts to earnings, capital, or reputation resulting from inadequate or failed internal processes, people, and systems, or from external events that are not directly attributable to

other risk categories.

Operational risk is pervasive in that it exists in all business lines, functional units, legal entities, and geographic locations.

Operational risk exposures are managed through a combination of first line of defense and control activities and second line of defense oversight.

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Additionally, our key risk indicators include operational risk metrics, thresholds, and limits and are included in the periodic reporting to the Operational and Compliance Risk Committee of the Board of Directors.

Primary ownership and responsibility for legal risk is placed with the first lines of defense, working with their legal colleagues, to identify and manage.

Compliance supports these activities by providing extensive training, monitoring, and testing of the processes, policies, and procedures utilized by the first lines of defense, maintaining relevant legal and regulatory requirements, and working in close coordination with our Legal department.

The General Counsel provides periodic reports, as appropriate, to the Operational and Compliance Risk Committee and other committees of the Board of Directors.

Compliance Risk.

The risk to earnings, capital, or reputation arising from violations of, or non-conformance with, laws, regulations, related self-regulatory organizations’ standards, and Code of Business Conduct.

Our Code of Business Conduct and the on-going training our employees receive in many compliance areas provide a framework for our employees to conduct themselves with the highest integrity.

We instill a risk-conscious culture through communications, training, policies, and procedures.

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The risk of adverse impacts to earnings, capital, or reputation resulting from violations of, or non-conformance with, the Code of Business Conduct and with laws, rules, regulations, and self regulatory organizations’ standards.

Primary ownership and responsibility for compliance risk is placed with the first line of defense to identify and manage.

Compliance supports these activities by providing extensive training, monitoring, and testing of the processes, policies, and procedures utilized by the first line of defense, maintaining relevant legal and regulatory requirements, and working in close coordination with our Legal department.

Compliance risk metrics and regular reporting on compliance programs are provided to the Operational and Compliance Risk Committee of the Board of Directors.

2022 Form 10-K — SLM CORPORATION 101

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 7. Management’s Discussion and Analysis