2 unchanged sentences
This summary does not address all of the risks that we face.
−Removed: Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our stock.
+Added: Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our securities.
• Our product offerings are primarily concentrated in loan products for higher education and deposit products for online depositors.
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• Consolidation or refinancing of existing Private Education Loans could have a material adverse effect on our business, financial condition, results of operations, and/or cash flows.
−Removed: • Defaults on our loans, particularly Private Education Loans, could adversely affect our business, financial condition, results of operations, and/or cash flows.
−Removed: • Our allowance for credit losses may not be adequate to cover actual losses, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition, and/or results of operations.
+Added: • Defaults on our loans could adversely affect our business, financial condition, results of operations, and/or cash flows.
+Added: • Our allowance for credit losses may not be adequate to cover actual losses in all possible scenarios, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition, and/or results of operations.
• We are subject to the creditworthiness of third parties other than borrowers and exposure to those third parties could adversely affect our business, financial condition, results of operations, and/or cash flows.
• The levels of or changes in interest rates could adversely affect our results of operations, financial condition, regulatory capital, and/or liquidity.
−Removed: • The interest rate and maturity characteristics of our earning assets do not fully match the interest rate and maturity characteristics of our funding arrangements.
−Removed: We are also subject to repayment and prepayment risks.
−Removed: These can increase uncertainty and adversely affect our business, financial condition, results of operations, and/or cash flows.
+Added: • The interest rate and maturity characteristics of our earning assets do not fully match the interest rate and maturity characteristics of our funding arrangements, which may negatively impact the level of our net interest income.
+Added: • We are subject to repayment and prepayment risks, which can increase uncertainty and adversely affect our business, financial condition, results of operations, and/or cash flows.
• Our use of derivatives to manage interest rate sensitivity exposes us to credit and market risk that could have a material adverse effect on our earnings.
−Removed: • The discontinuance of LIBOR could adversely affect our business and financial results.
−Removed: • Our ability to achieve our business goals will be heavily reliant on our ability to obtain deposits, obtain funding through asset-backed securitizations, and sell loans at attractive prices to help fund any share repurchase programs that may be authorized from time to time.
+Added: • The trailing effects of the discontinuance of LIBOR could adversely affect our business and financial results.
+Added: • Our ability to achieve our business goals will be heavily reliant on our ability to obtain deposits, obtain funding through asset-backed securitizations, and sell loans at attractive prices to help fund share repurchase programs and other activities.
An inability to effectively manage our liquidity could have a material adverse effect on us.
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• Failure to comply with consumer protection, privacy, data protection, or cybersecurity laws and requirements could subject us to civil and criminal penalties or litigation, including class actions, and have a material adverse effect on our business.
−Removed: • Our framework for managing risks, including model risk and data governance risk, may not be effective in mitigating our risk of loss and, if the framework is ineffective, could have a material adverse effect on us.
−Removed: • Proposals of federal and state governments, or of various political candidates, affecting the student loan industry in particular subject us to political risk and could have a material adverse impact on us.
−Removed: • We are subject to reputational risk, including risk arising from environmental, social, and governance matters or other areas or events, which could damage our brand and have a material adverse impact on us.
+Added: • Our framework for managing risks, including model risk and data governance risk, may not be effective in mitigating our risk of loss in all possible scenarios and, if the framework is ineffective, could have a material adverse effect on us.
+Added: • Proposals of federal and state governments, or of various political officials or candidates, affecting the student loan industry in particular, subject us to political risk and could have a material adverse impact on us.
+Added: • We are subject to reputational and other risks, which could damage our brand and have a material adverse impact on us.
• Failure or significant interruption of our operating systems or infrastructure or the inability to adapt to changes could disrupt our business, cause significant losses, result in regulatory action or litigation, or damage our reputation.
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• New lines of business and our ability to successfully make acquisitions are subject to significant risks.
−Removed: • Because of Navient’s indemnification obligations, we have significant exposures to risks related to its creditworthiness.
−Removed: • The holders of our preferred stock have rights that are senior to those of our common shareholders.
+Added: • We may have exposure to risks related to the Spin-Off, indemnification claims, and/or Navient’s creditworthiness.
+Added: • The holders of our preferred stock have rights that are senior to those of our common stockholders.
• We may be limited in our ability to receive dividends from the Bank, pay dividends on and repurchase our common stock, and make payments on our corporate debt.
• Our business could be negatively affected if we are unable to attract, retain, and motivate skilled employees.
−Removed: 22 SLM CORPORATION — 2023 Form 10-K
+Added: 2024 Form 10-K — SLM CORPORATION 22
We face many risks and uncertainties, any one or more of which could have a material adverse effect on our business, financial condition (including capital and liquidity), results of operations, cash flows, and/or stock price.
We describe certain of these risk and uncertainties in this section, although we may be adversely affected by other risks or uncertainties that (i) are presently not known to us, (ii) we have failed to identify or appreciate, or (iii) we currently consider immaterial.
−Removed: These Risk Factors, together with other information in this Form 10-K and our other filings with the SEC, should be carefully considered before making an investment decision regarding our stock.
+Added: These Risk Factors, together with other information in this Form 10-K and our other filings with the SEC, should be carefully considered before making an investment decision regarding our securities.
CONCENTRATION RISK
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We compete with banks and other consumer lending institutions, many of whom have strong consumer brand name recognition, greater financial resources, and greater diversification in their mix of assets, which can enable them to be more competitive in their products and offerings, particularly in uncertain or challenging economic times.
−Removed: We also compete with financial technology (“FinTech”) companies, many of whom have lower return hurdles than more traditional consumer lending institutions.
−Removed: The use of marketplace lending sites is growing in popularity in the student loan sector.
−Removed: This market channel may erode our more traditional lending channels and increase our cost to originate Private Education Loans.
−Removed: Moreover, we expect that our competition will increase as various lending institutions and other competitors, including Navient, through its Earnest subsidiary, enter or re-enter the Private Education Loan market.
+Added: We also compete with financial technology (“FinTech”) companies and digital asset service providers, many of whom have lower return hurdles than more traditional consumer lending institutions.
+Added: The emergence, adoption, and evolution of new technologies and advances in robotic process automation and artificial intelligence could significantly affect the competition for financial services.
+Added: The use of marketplace lending sites is also growing in popularity in the student loan sector.
+Added: These market channels may erode our more traditional lending channels and increase our cost to originate Private Education Loans.
+Added: Moreover, we expect that our competition will increase as various lending institutions and other competitors enter or re-enter the Private Education Loan market.
We compete based on our brand products, origination capability, and customer service.
To the extent our competitors compete more aggressively or effectively, we could lose market share to them and/or our existing loans could be subject to consolidation or refinancing risk.
−Removed: In addition to competition from private industry players, the federal government, through the Federal Direct Student Loan Program (the “DSLP”), poses significant competition to our Private Education Loan products.
+Added: In addition to competition from private industry players, the federal government, through the Federal Direct Student Loan Program and other higher education lending programs, poses significant competition to our Private Education Loan products.
The availability and terms of loans the government originates or guarantees affect the demand for Private Education Loans because students and their families often rely on Private Education Loans to bridge the gap between available funds, including family savings, scholarships, grants, and federal and state loans, and the costs of post-secondary education.
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Reauthorization, as well as measures to provide relief for borrowers of student loans in general, could provide a legislative vehicle for changes to student loan programs.
−Removed: Possible components that could impact the Private Education Loan market and our business include changes to federal education loan limits and/or payment requirements, private loan refinancing programs, or Private Education Loan forgiveness.
+Added: Possible components that could impact the Private Education Loan market and our business include changes to federal education loan limits and/or payment requirements, or private loan refinancing programs.
Other components of any legislation also could have a negative impact on our business and financial condition.
−Removed: See “— POLITICAL/REPUTATIONAL RISK.”
+Added: See “— POLITICAL/REPUTATIONAL RISK” in this Item 1A.
We also face substantial competition for our online deposit products.
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Our competitors, many of whom have greater financial resources or lower costs than we do, may be more effective in attracting new deposits and retaining existing deposits such as by offering more competitive rates, dedicating more resources for advertising, or engaging in more effective forms of marketing.
−Removed: For instance, our new depositor acquisition marketing is partly dependent on search engines, as well as bank deposit information aggregators, to direct a significant amount of traffic to our website via organic ranking and paid search advertising.
−Removed: Our bank competitors’ paid search activities, such as pay per click marketing, may result in their sites receiving higher search results than ours, thus
+Added: For instance, our new depositor acquisition marketing is partly dependent on search engines, as well as bank deposit information aggregators, to direct a significant
2024 Form 10-K — SLM CORPORATION 23
−Removed: leading to significant increases in the cost of such depositor acquisition for us.
+Added: amount of traffic to our website via organic ranking and paid search advertising.
+Added: Our bank competitors’ paid search activities, such as pay per click marketing, may result in their sites receiving higher search results than ours, thus leading to significant increases in the cost of such depositor acquisition for us.
In addition, changes to search engines and deposit information aggregators’ methodologies and business practices could result in a decline in our new deposit growth or existing customer retention.
Increased competition for deposits could cause our cost of funds to increase, which could negatively impact our loan pricing and net interest margin.
−Removed: See also “- LIQUIDITY RISK.”
+Added: See also “—LIQUIDITY RISK” in this Item 1A.
Consumer access to alternative means of financing the costs of education and other factors may reduce demand for, or adversely affect our ability to retain, Private Education Loans, which could have a material adverse effect on our business, financial condition, results of operations, and/or cash flows.
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• Education IRAs, now known as Coverdell Education Savings Accounts, under which a holder can make annual contributions for education savings;
−Removed: • Government education loan programs such as the DSLP;
+Added: • Government education loan programs;
• Direct loans from colleges and universities, as well as income sharing agreements offered by schools and facilitated by private companies.
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However, increasing amounts of private education consolidation loans at interest rates below those of our existing portfolio - whether from private sources (including FinTech companies) or otherwise - can contribute to an increase in the prepayment rates of our existing Private Education Loans and, if prolonged and continuous, could have a material adverse effect on our business, financial condition, results of operations, and/or cash flows.
−Removed: Increases in consolidation loans may result from competition as well as legislative or regulatory changes, as there has been, and there may be continue to be, an increase in the number of lenders offering consolidation or refinancing products as well as proposed legislation designed to promote federal financing for consolidation or refinancing of existing loans.
−Removed: 24 SLM CORPORATION — 2023 Form 10-K
−Removed: Defaults on our loans, particularly Private Education Loans, could adversely affect our business, financial condition, results of operations, and/or cash flows.
+Added: Increases in consolidation loans may result from competition, as there has been, and there may be continue to be, an increase in the number of lenders offering consolidation or refinancing products.
+Added: 2024 Form 10-K — SLM CORPORATION 24
+Added: Defaults on our loans could adversely affect our business, financial condition, results of operations, and/or cash flows.
We bear the full credit exposure on our Private Education Loans, which are unsecured loans.
If those loans were to default at rates much higher than anticipated or at speeds faster than anticipated, our business, financial condition, results of operations, and/or cash flows could be adversely affected.
−Removed: Delinquencies are an important indicator of the potential future credit performance of our loan portfolios.
−Removed: Many factors can have an impact on borrower delinquencies, including, without limitation, economic conditions (including inflationary, rising or high interest rate, and recessionary environments), changes in interest rates, personal circumstances and hardships, risk characteristics such as school type, loan status, loan seasoning, underwriting criteria, presence of a cosigner, changes made in credit administration practices from time to time, changes in loan underwriting criteria made from time to time, legislative, regulatory and operational changes, servicing and collections staffing challenges, other operational challenges we may encounter, the cessation by the federal government in 2023 of its payment suspension program (initiated during the COVID-19 pandemic) for borrowers of federal student loans, the invalidation or failure of the Biden Administration’s effort to forgive federal student loan indebtedness for certain borrowers, and unforeseen events or trends.
−Removed: Rising unemployment rates and the failure of our in-school borrowers to graduate are two of the most significant macroeconomic factors that could increase loan delinquencies, defaults, and loan modifications, or otherwise negatively affect performance of our existing education loan portfolios, as such factors may cause borrowers and cosigners to experience trouble repaying credit obligations or meeting our credit standards.
+Added: Delinquencies are an important indicator of the potential future credit performance of our loan portfolio.
+Added: Many factors can have an impact on borrower delinquencies, including, without limitation, economic conditions (including inflationary, rising or high interest rate, and recessionary environments), changes in interest rates, personal circumstances and hardships, risk characteristics such as school type, loan status, loan seasoning, underwriting criteria, presence of a cosigner, changes made in credit administration practices from time to time, changes in loan underwriting criteria made from time to time, legislative, regulatory and operational changes, servicing and collections staffing challenges, other operational challenges we may encounter, the cessation by the federal government of any payment suspension programs it may implement from time to time for borrowers of federal student loans (including the suspension program initiated during the COVID-19 pandemic), the invalidation or failure of efforts to forgive or lessen the burden of federal student loan indebtedness for certain borrowers, and unforeseen events or trends.
+Added: Rising unemployment rates and the failure of our in-school borrowers to graduate are two of the most significant macroeconomic factors that could increase loan delinquencies, defaults, and loan modifications, or otherwise negatively affect performance of our existing education loan portfolio, as such factors may cause borrowers and cosigners to experience trouble repaying credit obligations or meeting our credit standards.
The impact of these factors may be heightened in rising or high interest rate environments when interest rates rise causing payments on variable-rate loans to increase.
−Removed: See Part II, Item 7.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” for a discussion of how items such as changes in credit administration practices can impact the timing and level of delinquencies and defaults on our loans.
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” for a discussion of how items such as changes in credit administration practices can impact the timing and level of delinquencies and defaults on our loans.
As part of our underwriting process, we rely heavily upon information supplied by applicants and third parties.
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Higher credit-related losses and weaker credit quality negatively affect our business, financial condition, and results of operations and limit funding options, which could also adversely impact our liquidity position.
−Removed: Our Private Education Loan (held for investment) delinquencies (loans greater than 30 days past due), as a percentage of Private Education Loans (held for investment) in repayment, were 3.90 percent at December 31, 2023.
−Removed: Our allowance for credit losses may not be adequate to cover actual losses, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition, and/or results of operations.
+Added: Our Private Education Loan (held for investment) delinquencies (loans greater than 30 days past due), as a percentage of Private Education Loans (held for investment) in repayment, were 3.68% at December 31, 2024.
+Added: Our allowance for credit losses may not be adequate to cover actual losses in all possible scenarios, and we may be required to materially increase our allowance, which may adversely affect our capital, financial condition, and/or results of operations.
We are required to measure our allowance for credit losses based on our estimate of all current expected credit losses over the remaining contractual term of our assets.
−Removed: The CECL standard resulted in a significant change in how we recognize credit losses and has had a material impact on our financial condition, results of operations, and capital levels.
+Added: The current expected credit loss (“CECL”) standard resulted in a significant change in how we recognize credit losses and has had a material impact on our financial condition, results of operations, and capital levels.
The evaluation of our allowance for credit losses is inherently subjective, as it requires material estimates that may be subject to significant changes.
The measurement of expected credit losses is based on historical information, current conditions, and reasonable and supportable forecasts to estimate the expected loss over the life of the loan.
−Removed: (This differs significantly from the “incurred loss” model, which was in effect prior to our adoption of CECL and delayed recognition until it was probable a loss had been incurred.) Our models take into account historical loss experience in various economic conditions to estimate expected future losses based upon future economic forecasts over a period of time (“reasonable and supportable period”), at which point we immediately revert our forecasted economic factors to long-term historical loss conditions.
+Added: Our models take into account historical loss experience in various economic conditions to estimate expected future losses based upon future economic forecasts over a period of time (“reasonable and supportable period”), at which point we immediately revert our forecasted economic factors to long-term historical loss conditions.
Defaults can be higher than anticipated due to a variety of factors, and our models may not accurately estimate future loan loss performance.
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As such, changes to these inputs could significantly change the amount of allowance necessary, which could have a negative impact on our financial results and capital levels.
−Removed: Additionally, regulatory agencies may periodically review our allowance for credit losses, including our methodology and models used in calculating the allowance, and could
+Added: Additionally, regulatory agencies may periodically review our allowance for credit losses, including our methodology and models used in calculating the allowance, and could insist on an increase in the
2024 Form 10-K — SLM CORPORATION 25
−Removed: insist on an increase in the allowance or recognition of additional charge-offs based on judgments different than those used by our management.
+Added: allowance or recognition of additional charge-offs based on judgments different than those used by our management.
If these differences in judgment are significant, our allowance could increase significantly and result in sizable decreases in our net income and capital.
−Removed: See Part II, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Allowance for Credit Losses” for further details regarding our allowance for credit losses .
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Changes in interest rate levels also can lead to other adverse impacts, such as reducing the demand for or increasing the prepayment speeds of our Private Education Loans, increasing the delinquencies or defaults of our borrowers or other counterparties, reducing the value of our assets, or increasing our liabilities.
−Removed: Many of these adverse impacts can occur in an inflationary and rising interest rate environment.
+Added: Many of these adverse impacts can occur in an inflationary and/or rising interest rate environment.
These adverse impacts may materially adversely affect our operations, our regulatory capital and liquidity position, the credit performance of our Private Education Loans and other assets, the number of borrowers seeking payment relief, our results of operations and financial condition, and/or our cash flows.
1 unchanged sentence
The interest rate and maturity characteristics of our earning assets do not fully match the interest rate and maturity characteristics of our funding arrangements, which may negatively impact the level of our net interest income.
−Removed: We are also subject to repayment and prepayment risks, which can increase uncertainty as we manage our interest rate risk and can adversely affect our business, financial condition, results of operations, and/or cash flows.
−Removed: Net interest income is the primary source of cash flow generated by our loan portfolios.
−Removed: Interest earned on our Private Education Loans and FFELP Loans is either fixed-rate or indexed to a short-term variable rate, and these loans are originated with relatively long repayment periods.
+Added: Net interest income is the primary source of cash flow generated by our loan portfolio.
+Added: Interest earned on our Private Education Loans is either fixed-rate or indexed to a short-term variable rate, and these loans are originated with relatively long repayment periods.
ABS funding closely mirrors the expected maturities of our education loans and provides a combination of fixed and variable-rate funding.
−Removed: Deposits are issued with both fixed and variable rates, and the average term is typically shorter than the expected term of our combined loan portfolios.
−Removed: The different interest rate and maturity characteristics of our loan portfolios and the liabilities funding those portfolios result in fluctuations in our net interest income.
+Added: Deposits are issued with both fixed and variable rates, and the average term is typically shorter than the expected term of our loan portfolio.
+Added: The different interest rate and maturity characteristics of our loan portfolio and the liabilities funding the portfolio result in fluctuations in our net interest income.
In certain interest rate environments, this mismatch may reduce our net interest margin (the interest yield earned on our portfolio less the rate paid on our interest-bearing liabilities) and net interest income.
While we actively monitor and manage mismatches in the interest rate and maturity characteristics of our assets and liabilities, using derivative transactions where necessary to avoid excessive levels of repricing and refunding risk, it is not possible to hedge all of our exposure to such risks.
−Removed: While the assets, liabilities, and related hedging derivative contract re-pricing indices are typically highly correlated, there
−Removed: 26 SLM CORPORATION — 2023 Form 10-K
−Removed: can be no assurance that the historically high correlation will not be disrupted by capital market dislocations or other factors outside our control.
+Added: While the assets, liabilities, and related hedging derivative contract re-pricing indices are typically highly correlated, there can be no assurance that the historically high correlation will not be disrupted by capital market dislocations or other factors outside our control.
In these circumstances, our earnings could be materially adversely affected.
−Removed: We are also subject to risks associated with changes in repayment and prepayment rates on Private Education Loans, which can increase uncertainty as we manage our interest rate risk.
+Added: 2024 Form 10-K — SLM CORPORATION 26
+Added: We are subject to repayment and prepayment risks, which can increase uncertainty as we manage our interest rate risk and can adversely affect our business, financial condition, results of operations, and/or cash flows.
+Added: We are subject to risks associated with changes in repayment and prepayment rates on Private Education Loans, which can increase uncertainty as we manage our interest rate risk.
Consolidations and refinancings contribute to increased prepayment rates.
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Developing an effective hedging strategy for dealing with movements in interest rates is complex, and no strategy can completely avoid the risks associated with these fluctuations.
−Removed: For example, our education loan portfolios remain subject to prepayment risk that could cause them to be under- or over-hedged, which could result in material losses.
+Added: For example, our Private Education Loan portfolio remains subject to prepayment risk that could cause it to be under- or over-hedged, which could result in material losses.
In addition, some of our interest rate risk management activities expose us to mark-to-market losses if interest rates move in a materially different way than was expected when we entered into the related derivative contracts.
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A decline in the fair value of those derivatives could have a material adverse effect on our reported earnings.
−Removed: Also, see “— We are subject to the creditworthiness of third parties other than borrowers and exposure to those third parties could adversely affect our business, financial condition, results of operations, and/or cash flows.”
−Removed: The discontinuance of LIBOR could adversely affect our business and financial results.
−Removed: Following announcements by the United Kingdom’s Financial Conduct Authority (the “UKFCA”), which regulates LIBOR, the London interbank offered rate, and ICE Benchmark Administration Limited, the administrator of LIBOR, publication of 1-week and 2-month USD LIBOR and all tenors for other currencies ceased after December 31, 2021.
−Removed: Publication of the remaining USD settings ceased after June 30, 2023.
−Removed: The Alternative Reference Rates Committee (the “ARRC”), a group of market participants that includes both banks and a number of non-banks, was convened by the Federal Reserve Board and the Federal Reserve Bank of New York in 2014 to identify alternative reference rates to LIBOR.
−Removed: In 2017, the ARRC identified the Secured Overnight Financing Rate (“SOFR”), which is a rate based on overnight U.S.
−Removed: Treasury repurchase agreement transactions, as its recommended alternative to USD LIBOR.
−Removed: In 2020, we began accepting certain deposits based on SOFR.
−Removed: In the second quarter of 2021, we began issuing variable-rate Private Education Loans that are indexed to SOFR.
−Removed: In 2022, we began issuing ABS that are indexed to SOFR and renewed our education loan-backed multi-lender secured borrowing facility (the “Secured Borrowing Facility”) with an index based on SOFR.
−Removed: In 2023, we transitioned to SOFR (plus the applicable spread adjustment) the remainder of our assets, liabilities, and off-balance sheet items referencing LIBOR on their respective first repricing dates after June 30, 2023.
+Added: See also “— CREDIT RISK — We are subject to the creditworthiness of third parties other than borrowers and exposure to those third parties could adversely affect our business, financial condition, results of operations, and/or cash flows” in this Item 1A.
+Added: The trailing effects of the discontinuance of LIBOR could adversely affect our business and financial results.
+Added: In 2017, the Alternative Reference Rates Committee, a group of market participants that includes both banks and a number of non-banks, identified the Secured Overnight Financing Rate (“SOFR”), which is a rate based on overnight U.S.
+Added: Treasury repurchase agreement transactions, as its recommended alternative to USD LIBOR (which was being phased out by regulatory authorities).
+Added: Between 2020 and 2023, we transitioned our assets, liabilities, and off-balance sheet items to SOFR (plus the applicable spread adjustment).
In some instances, we relied on safe harbors provided by federal legislation to transition obligations from LIBOR to SOFR because the obligations did not have fallback provisions for alternative reference rates.
−Removed: Although we relied on those safe harbors in certain instances, the safe harbors are untested.
+Added: Although we relied on those safe harbors in certain instances, the safe harbors were untested.
We could still be exposed to risks associated with disputes and litigation with customers, counterparties, and other market participants in connection with implementing replacement rates for LIBOR.
−Removed: Also, the replacement of LIBOR could adversely affect the value of and return on certain of our financial assets, the value of certain of our liabilities, and could result in changes to our various risk exposures.
−Removed: These uncertainties could adversely impact our funding costs and could have a material adverse effect on our business, results of operations, financial position, and/or cash flows.
−Removed: See Part II, Item 7.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — LIBOR Transition” for further details.
−Removed: 2023 Form 10-K — SLM CORPORATION 27
LIQUIDITY RISK
−Removed: Our ability to achieve our business goals will be heavily reliant on our ability to obtain deposits, obtain funding through asset-backed securitizations, and sell loans at attractive prices to help fund any share repurchase programs that may be authorized from time to time.
+Added: Our ability to achieve our business goals will be heavily reliant on our ability to obtain deposits, obtain funding through asset-backed securitizations, and sell loans at attractive prices to help fund share repurchase programs and other activities.
An inability to effectively manage our liquidity could negatively impact our ability to fund our business obligations and opportunities, which could lead to regulatory scrutiny and could have a material adverse effect on our business, financial condition, results of operations, and/or cash flows.
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We require liquidity to meet cash requirements for such things as day-to-day operating expenses, funding of our Private Education Loan originations, deposit withdrawals and maturities, payment of any declared dividends on our preferred stock and common stock, payment of our debt service, and payment for any shares of common stock or preferred stock acquired under any stock repurchase program or otherwise.
−Removed: Our primary sources of liquidity and funding are customer deposits, payments received on Private Education Loans and FFELP Loans that we hold, and proceeds from loan sales and securitization transactions.
+Added: Our primary sources of liquidity and funding are customer deposits,
+Added: 2024 Form 10-K — SLM CORPORATION 27
+Added: payments received on Private Education Loans that we hold, and proceeds from loan sales and securitization transactions.
We may maintain too much liquidity, which can be costly, or we may be too illiquid, which could result in financial distress during times of economic stress or capital market disruptions.
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In addition, our ability to maintain existing balances of all deposit types or obtain additional deposits of any type may be affected by factors, including those beyond our control, such as a rising stock market, more attractive returns on alternative investments, perceptions about our existing and future financial strength, quality of deposit servicing or online banking generally, changes in monetary or fiscal policies that influence deposit or other rates, general economic conditions, including high unemployment and decreased savings rates, and adverse developments in the financial services industry generally.
−Removed: See also “— Adverse developments, and/or a continuation of recent turmoil, in the financial services industry could adversely affect our financial condition and results of operations.” Also, our ability to maintain our current level of deposits or grow our deposit base could be affected by regulatory restrictions, including the possible imposition by our regulators of prior approval requirements or restrictions on our offered rates, brokered deposit growth, or other areas.
+Added: See also “—LIQUIDITY RISK — Adverse developments, and/or a continuation of recent turmoil, in the financial services industry could adversely affect our financial condition and results of operations” in this Item 1A.
+Added: Also, our ability to maintain our current level of deposits or grow our deposit base could be affected by regulatory restrictions, including the possible imposition by our regulators of prior approval requirements or restrictions on our offered rates, brokered deposit growth, or other areas.
Our success also depends on our ability to structure Private Education Loan securitizations or execute other secured funding transactions.
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• Our inability to structure and gain market acceptance for new product features or services to meet new demands of ABS investors, rating agencies, or credit facility providers.
−Removed: 28 SLM CORPORATION — 2023 Form 10-K
If we require funding beyond that which we may be able to obtain through deposits and proceeds from ABS transactions at attractive prices, we may need to raise additional liquidity through other forms of secured and unsecured debt financing, which, in turn, could increase our funding costs and reduce our net interest margin.
Future downgrades to our credit ratings, or to the credit ratings of our subsidiaries or to the securities issued in our securitization transactions, also could result in higher funding costs and reduce our net interest margin.
−Removed: Our ability to sell loans at attractive prices, as well as the timing and volume of any sales, will be subject to market conditions, and there can be no guarantee that we will be able to effectuate planned or unplanned loan sales at the prices, times, or volumes we desire, or at all.
+Added: Our ability to sell loans at attractive prices, as well as the timing and volume of any sales, will be subject to market conditions and competitive purchasers, and there can be no guarantee that we will be able to effectuate planned or unplanned loan sales at the prices, times, or volumes we desire, or at all.
If we are unable to effectuate loan sales at the prices, times, and volumes we desire, we may not be able to fund share repurchase programs that are authorized from time to time, originate Private Education Loans in the volumes we desire, meet other obligations, or achieve other business goals.
−Removed: We currently maintain sufficient risk-based capital through adequate retention and reinvestment of earnings from operations.
+Added: 2024 Form 10-K — SLM CORPORATION 28
If our business objectives require capital above and beyond what we generate through retained earnings, we may need to raise capital for our business by issuing additional equity to investors.
2 unchanged sentences
We conduct quarterly liquidity stress tests to evaluate the adequacy of our liquidity sources under several stress scenarios, including a severely adverse macroeconomic scenario.
−Removed: The results of these scenarios may lead management to determine, or our regulators to demand, that higher levels of liquidity be maintained at significant incremental expense to the Bank.
+Added: The results of these scenarios may lead management to determine, or our regulators to demand, that higher levels of capital be maintained at significant incremental expense to the Bank.
In structuring and facilitating securitizations or sales of Private Education Loans, administering securitization trusts, or servicing loans we have securitized or sold, we may incur liabilities to transaction parties.
3 unchanged sentences
If we fail to cause the securitization trusts or other transaction parties to disclose adequately all material information regarding an investment in any securities, if we or the trusts make statements that are misleading in any material respect in information delivered to investors in any securities, if we breach any representations or warranties made in connection with securitization of the loans, or if we breach any other duties as the administrator or servicer of the securitization trusts, it is possible we could be sued and ultimately held liable to an investor or other transaction party.
−Removed: In transactions involving the sale of loans in non-securitized form where we remain the servicer of the loans, it is possible we could be sued and ultimately held liable to the purchaser of the loans or another transaction party for breaches of representations or warranties or breaches of servicing covenants.
+Added: In transactions involving the sale of loans in non-securitized form where we remain the servicer of the loans, it is possible we could be subject to claims and ultimately held liable to the purchaser of the loans or another transaction party for breaches of representations or warranties or breaches of servicing covenants.
If any of those liabilities are significant, they could adversely affect our business, financial condition, results of operations, and/or cash flows.
Adverse developments, and/or a continuation of recent turmoil, in the financial services industry could adversely affect our financial condition and results of operations.
−Removed: In 2023, several financial services institutions failed or required outside liquidity support.
−Removed: For example, Silicon Valley Bank and Signature Bank were put into FDIC receivership in March 2023 and First Republic Bank was put into FDIC receivership in May 2023.
−Removed: The impact of this situation led to risk of additional stress to the financial services industry generally as a result of increased lack of confidence in the financial sector.
−Removed: Although we currently do not anticipate liquidity constraints of the kind that caused certain other financial services institutions to fail or require external support, unanticipated deposit withdrawals due to market distress or otherwise or our inability to access other sources of liquidity, whether due to capital markets dislocations or otherwise, could result in constraints on our liquidity and adversely affect our business, financial condition, and results of operations.
+Added: In the past couple of years, several financial services institutions failed or required outside liquidity support.
+Added: The impact of these failures led to risk of additional stress to the financial services industry generally as a result of increased lack of confidence in the financial sector.
+Added: Significant, unanticipated deposit withdrawals due to market distress or otherwise or our inability to access other sources of liquidity, whether due to capital markets dislocations or otherwise, could result in constraints on our liquidity and adversely affect our business, financial condition, and results of operations.
The financial system is highly interrelated, and we have exposure to, and routinely execute transactions with, a variety of financial institutions.
−Removed: If any of these financial institutions or participants were to become or be perceived
+Added: If any of these financial institutions or participants were to become or be perceived as unstable, or enter conservatorship, receivership, or bankruptcy, the consequences could have an adverse effect on our business, financial condition, and results of operations.
2024 Form 10-K — SLM CORPORATION 29
−Removed: as unstable, or enter conservatorship, receivership, or bankruptcy, the consequences could have an adverse effect on our business, financial condition, and results of operations.
The Bank is subject to various regulatory capital requirements administered by the FDIC and the UDFI.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material adverse effect on our business, results of operations, and/or financial condition.
+Added: Under the FDIC’s regulations implementing the Basel III capital framework (“U.S.
Basel III”) and the regulatory framework for prompt corrective action, the Bank must meet specific capital standards that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.
1 unchanged sentence
If the Bank fails to satisfy regulatory risk-based or leverage capital requirements, it would be subject to serious regulatory consequences, including restrictions on the ability to make dividend payments or share repurchases, that could prevent us from successfully executing our business plan and may have a material adverse effect on our business, results of operations, financial position, and/or cash flows.
−Removed: “Business — Supervision and Regulation — Regulation of Sallie Mae Bank — Regulatory Capital Requirements.”
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory Capital.”
Unfavorable results from the periodic stress scenarios we model under regulatory guidance may adversely affect our business and result in regulatory action that could adversely affect our cost of capital and liquidity position.
9 unchanged sentences
Our regulators may also update their supervisory expectations applicable to the Bank’s stress tests, which could change how the Bank conducts stress tests or how senior management uses the results of the stress tests to inform business plans and capital targets.
−Removed: Changes in accounting standards, or incorrect estimates and assumptions by management in connection with the preparation of our consolidated financial statements, could adversely affect our capital levels, results of operation, and/or financial condition.
+Added: Changes in accounting standards, or incorrect estimates and assumptions by management in connection with the preparation of our consolidated financial statements, could adversely affect our capital levels, results of operations, and/or financial condition.
We are subject to the requirements of entities that set and interpret the accounting standards governing the preparation of our financial statements and other financial reports.
4 unchanged sentences
Incorrect estimates and assumptions by us in connection with the preparation of our consolidated financial statements could adversely affect the reported amounts of assets, liabilities, income, and expenses.
−Removed: 30 SLM CORPORATION — 2023 Form 10-K
−Removed: incorrect assumptions or estimates, we may under- or overstate reported financial results, which could materially and adversely affect our business, financial condition, results of operations, and/or capital levels.
−Removed: For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see Part II, Item 7.
+Added: If we make incorrect assumptions or estimates, we may under- or overstate reported financial results, which could materially and adversely affect our business, financial condition, results of operations, and/or capital levels.
+Added: For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements,
+Added: 2024 Form 10-K — SLM CORPORATION 30
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” and Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies.”
17 unchanged sentences
• result in greater or earlier charges to earnings or reductions in our capital.
−Removed: The FDIC has the authority to limit the Bank’s annual total balance sheet growth, but no such limitations were imposed in recent years.
−Removed: There can be no assurance that limitations will not be imposed in the future, however.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations, as well as increased intensity in supervision, often impose additional costs and could result in additional charge-offs.
In recent years, there has been an increase in the scope of the laws and regulations and the intensity of the supervision to which we are subject, as well as an increase in regulatory enforcement and fines across the banking and financial services sector.
−Removed: The scope of regulation and the intensity of supervision will likely continue to become higher in the future, which could increase our costs and levels of charge-offs, require increased management attention, and adversely impact our results of operations.
+Added: The scope of regulation and the intensity of supervision may become higher in the future, which could increase our costs and levels of charge-offs, require increased management attention, and adversely impact our results of operations.
In connection with their continuous supervision and examinations of us, the FDIC, the UDFI, the CFPB, or other regulatory agencies may require changes in our business or operations.
3 unchanged sentences
We could be required as well to dispose of specified assets and liabilities or to increase our level of charge-offs within a prescribed period of time.
−Removed: As a result, any enforcement or
−Removed: 2023 Form 10-K — SLM CORPORATION 31
−Removed: other supervisory action could have an adverse effect on our business, financial condition, results of operations, and prospects.
+Added: As a result, any enforcement or other supervisory action could have an adverse effect on our business, financial condition, results of operations, and prospects.
Restrictions or limitations on our operations, or other directives, imposed by our regulators may be confidential and thus, in some instances, we may not be permitted to publicly disclose the actions.
−Removed: In addition, changes in the regulatory and supervisory environments could adversely affect us in substantial and unpredictable ways, including by limiting the types of financial services and products we may offer, enhancing the ability of others to offer more competitive financial services and products, restricting our ability to make acquisitions or pursue other profitable opportunities, and negatively impacting our financial condition and results of operations.
−Removed: Changes in the prevailing interpretations of federal or state laws and related regulations could also invalidate or call into question the legality of certain of our services and business practices.
+Added: In addition, changes in the regulatory and supervisory environments could adversely affect us in substantial and unpredictable ways, including by limiting the types of financial services and products we may offer, enhancing
+Added: 2024 Form 10-K — SLM CORPORATION 31
+Added: the ability of others to offer more competitive financial services and products, restricting our ability to make acquisitions or pursue other profitable opportunities, and negatively impacting our financial condition and results of operations.
+Added: Changes in the prevailing interpretations of federal or state laws, or the passage of new federal or state laws, and related regulations could also invalidate or call into question the legality of certain of our services and business practices.
+Added: The impact of the Trump Administration’s policies is unclear.
Our failure to comply with the laws, regulations, and supervisory actions to which we are subject, even if the failure is inadvertent or reflects a difference in interpretation, could subject us to fines, other penalties, and restrictions on our business activities, any of which could adversely affect our business, financial condition, cash flows, results of operations, capital base, and/or the price of our securities.
3 unchanged sentences
CFPB jurisdiction, regulation, and supervision could increase our costs and limit our ability to pursue business opportunities.
−Removed: The CFPB/ DOE MOU could lead to additional complaints received by the CFPB regarding us, which could lead to additional scrutiny of us and increase our costs.
+Added: Complaints received by the CFPB regarding us could lead to additional scrutiny of us and increase our costs.
Consent orders, decrees, or settlements entered into with governmental agencies may also increase our compliance costs or restrict certain of our activities.
6 unchanged sentences
As an example, certain state laws regarding personal information may be broader in scope or more stringent than federal laws or the laws of other states regarding personal information.
−Removed: “Business — Supervision and Regulation —Regulation of Sallie Mae Bank — Privacy Laws” for additional information.
+Added: “Business — Supervision and Regulation — Regulation of Sallie Mae Bank — Data Privacy and Data Security Laws and Regulations” for additional information.
Further, we make public statements about our use, collection, disclosure, and other processing of personal information through our privacy policies, information provided on our website, and press statements.
2 unchanged sentences
Violations of federal or state consumer protection, privacy, data protection, or cybersecurity laws or related regulations may expose us to litigation, administrative fines, penalties, and restitution.
−Removed: Compliance with laws and
−Removed: 32 SLM CORPORATION — 2023 Form 10-K
−Removed: regulations can be difficult and costly, and changes to laws and regulations, as well as increased intensity in compliance and supervision activities, often impose additional compliance costs and may constrain the marketing and origination of Private Education Loans or other products, adversely affect the collection of balances due on the loan assets held by us or by securitization trusts, adversely affect the execution of strategic initiatives, or otherwise adversely affect our business.
−Removed: From time to time, we may use artificial intelligence, machine learning, data analytics, and similar tools to collect, aggregate, and analyze data in connection with our business.
−Removed: The regulatory framework for such technology continues to evolve and remains uncertain and could affect our operations and the way in which we use such technology.
+Added: Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations, as well as increased intensity in compliance and supervision activities, often impose additional compliance costs and may constrain the marketing and origination of Private Education Loans or other products, adversely affect the collection of balances due on the loan assets held by us or by securitization trusts, adversely affect the execution of strategic initiatives, or otherwise adversely affect our business.
+Added: 2024 Form 10-K — SLM CORPORATION 32
+Added: From time to time, we and our third-party service providers may use artificial intelligence, machine learning, data analytics, and similar tools to collect, aggregate, and analyze data in connection with our business.
+Added: The impacts of, and regulatory framework for, such technology are continually evolving and remain uncertain and could affect our operations and the way in which we and our third-party service providers use such technology.
Additionally, we could incur significant costs to comply with such evolving framework, which could adversely affect our business, financial condition, and results of operations.
−Removed: Our framework for managing risks, including model risk and data governance risk, may not be effective in mitigating our risk of loss and, if the framework is ineffective, could have a material adverse effect on us and our business.
+Added: Our framework for managing risks, including model risk and data governance risk, may not be effective in mitigating our risk of loss in all possible scenarios and, if the framework is ineffective, could have a material adverse effect on us and our business.
Our risk management framework seeks to mitigate risk and appropriately balance risk and return.
8 unchanged sentences
POLITICAL/REPUTATIONAL RISK
−Removed: Proposals of federal and state governments, or of various political candidates, affecting the student loan industry in particular, such as proposals for new federal education spending designed to make higher education “free” or substantially so regardless of financial need, or to create new federally funded programs to refinance private student loans, or to require private student loan lenders to reform loan agreements to provide for income-driven repayment plans and other payment plans, subject us to political risk and could have a material adverse impact on our business, results of operations, financial condition, and/or cash flows.
+Added: Proposals of federal and state governments, or of various political officials or candidates, affecting the student loan industry in particular, subject us to political risk and could have a material adverse impact on our business, results of operations, financial condition, and/or cash flows.
We operate in an environment of heightened political and regulatory scrutiny of education loan lending, servicing, and originations.
−Removed: The rising cost of higher education, questions regarding the quality of education provided, particularly among for-profit institutions, and the increasing amount of student loan debt outstanding in the United States have prompted this heightened and ongoing scrutiny.
−Removed: This environment could lead to further proposals by political candidates and state and federal legislators and regulators, and to the enactment of laws and regulations, applicable to, or limiting, our business.
−Removed: For instance, over the last several years, numerous proposals for new federal spending have been discussed by political candidates and/or introduced by legislators to make higher education “free” or substantially so.
−Removed: Some proposals have included the potential forgiveness of substantial amounts of existing outstanding student loan indebtedness.
−Removed: Also, various states have proposed and/or enacted legislation providing for “free” or “substantially free” higher education to residents of the state having incomes below a certain level and who attend publicly-funded universities in the state.
−Removed: Moreover, a number of bills have been introduced in the United States Congress in the past to promote federal financing for consolidation or refinancing of
−Removed: 2023 Form 10-K — SLM CORPORATION 33
−Removed: existing student loans.
−Removed: The regulatory environment at the state level has shifted such that many states recently have enacted new legislation specifically restricting the conduct and practices of student loan servicers.
+Added: The rising cost of higher education, questions regarding the quality of education provided, and the increasing amount of student loan debt outstanding in the United States have sustained this heightened and ongoing scrutiny.
+Added: This environment could lead to further proposals by federal and state legislators and regulators, and/or political officials or candidates, and to the enactment of laws, regulations, and/or executive orders applicable to, or limiting, our business.
+Added: Further, the regulatory environment at the state level has shifted such that some states recently have enacted new legislation specifically restricting the conduct and practices of student loan servicers.
The enactment of any proposed legislation or policies like those described above, even if they do not apply specifically to Private Education Loans, could have a material adverse impact on our business, results of operations, financial condition, and/or cash flows.
In addition, the continued ongoing publicity regarding these various proposals, even if they are not enacted, could negatively impact the market price of our common stock.
−Removed: We are subject to reputational risk, including risk arising from environmental, social, and governance matters or other areas or events, which could damage our brand and have a material adverse impact on our business, results of operations, financial condition, and/or cash flows.
+Added: 2024 Form 10-K — SLM CORPORATION 33
+Added: We are subject to reputational and other risks, which could damage our brand and have a material adverse impact on our business, results of operations, financial condition, and/or cash flows.
Our brand is very important to us and our business.
−Removed: Our reputation as an originator, servicer, seller, and securitizer of high-quality Private Education Loans and as a depository for online deposits is very dependent upon how our customers, our regulators, legislators, the education community, our employees, and the broader market perceive our business practices, financial heath, and integrity, and the business practices, financial health, and integrity of the overall student loan market, other loan markets, or the market for online deposits, as applicable.
−Removed: Negative publicity, including as a result of our culture, actual or alleged conduct by us, our employees, or our vendors, or public opinion of the student loan industry or other relevant industries generally, could damage our reputation and business and adversely impact the price of our common stock or other securities.
−Removed: Environmental, social, and governance matters, or “ESG,” include, but are not limited to, climate risk, hiring practices, the diversity of our work force, community impact issues, and our overall governance environment.
−Removed: We may be exposed to negative publicity based on the identity and activities of those with whom we do business and the public’s view of our approach and performance, and that of our business partners, regarding ESG matters.
+Added: Our reputation as an originator, servicer, seller, and securitizer of high-quality Private Education Loans and as a depository for online deposits is very dependent upon how our customers, our regulators, legislators, the education community, our employees, and the broader market perceive our business practices, financial heath, and integrity.
+Added: In addition, the business practices, financial health, and integrity of the overall student loan market, other loan markets, or the market for online deposits, as applicable, could impact our reputation.
+Added: Negative publicity, including as a result of our culture, actual or alleged conduct by us, our employees, or our vendors, or public opinion of the broader student loan industry or other relevant industries generally, could damage our reputation and business and adversely impact the price of our common stock or other securities.
+Added: Other matters that can impact our reputation, including, but not limited to, community impact and workforce issues, and our overall governance environment, may expose us to negative publicity based on the identity and activities of those with whom we do business and the public’s view of our approach and performance, and that of our business partners, regarding these matters.
Such negative publicity could damage our relationships and reputation with our existing and prospective customers and third parties with whom we do business, have an adverse effect on our ability to attract and retain customers and employees, and have a negative impact on the demand for and market price of our securities.
−Removed: Stakeholders’ expectations regarding ESG practices are diverse and rapidly changing, and we may not be able to align our ESG practices with such evolving expectations within the timeframes expected by stakeholders or without incurring significant costs.
−Removed: Additionally, as described above, proposals of political candidates, administrations, or legislators that may affect the financial industry, or the student loan industry in particular, could damage our reputation and business and adversely impact the price of our common stock.
−Removed: Any internal, market, or other developments, including those relating to our competitors or our business, that result in a negative impact on our brand or reputation or the reputation of the student loan industry or other relevant industries could have an adverse effect on our ability to originate, service, sell, securitize, and retain Private Education Loans or other loans, as applicable, result in greater regulatory, legislative, and media scrutiny, increase our risk of litigation and regulatory sanctions or other actions, and have a material adverse effect on our financial condition and/or results of operations.
+Added: Stakeholders’ expectations are diverse and rapidly changing, and we may not be able to align our practices with such evolving expectations within the timeframes expected by stakeholders or without incurring significant costs.
+Added: Any negative publicity, including individual posts via social media, could “go viral”, causing potentially significant harm to our brand and reputation, and our business, whether or not factually accurate.
+Added: Additionally, as described above, proposals of political candidates, administrations, or legislators that may affect the financial industry, or the student loan industry, in particular, could impact our reputation and/or business and adversely impact the price of our common stock.
+Added: Any internal, market, or other developments, including those relating to our competitors or our business, that result in a negative impact on our brand or reputation or the reputation of the student loan industry or other relevant industries could have an adverse effect on our ability to originate, service, sell, securitize, and retain Private Education Loans, as applicable, result in greater regulatory, legislative, and media scrutiny, increase our risk of litigation and regulatory sanctions or other actions, and have a material adverse effect on our financial condition and/or results of operations.
OPERATIONAL RISKS
1 unchanged sentence
Our business is dependent on our ability to process and monitor large numbers of transactions in compliance with legal and regulatory standards and our product specifications.
−Removed: As processing demands change and our loan portfolios grow in both volume and differing terms and conditions, developing and maintaining our operating systems and infrastructure become increasingly challenging.
+Added: As processing demands change and our loan portfolio grows in both volume and differing terms and conditions, developing and maintaining our operating systems and infrastructure become increasingly challenging.
There is no assurance we can adequately or efficiently develop, maintain, or acquire access to such systems and infrastructure.
Our loan originations and deposits and the servicing, financial, accounting, data processing, communications, or other operating systems, processes, and facilities that support them may fail to operate properly, become disabled as a result of events beyond our control, or be unable to be rapidly configured to timely address regulatory changes or other business requirements, in each case potentially adversely affecting our ability to process these transactions adequately.
−Removed: Any such failure could adversely affect our ability to service our customers, result in financial loss or liability to our customers and investors, disrupt our business, result in regulatory action or litigation,
−Removed: 34 SLM CORPORATION — 2023 Form 10-K
−Removed: or cause reputational damage.
+Added: Any such failure could adversely affect our ability to service our customers, result in financial loss or liability to our customers and investors, disrupt our business, result in regulatory action or litigation, or cause reputational damage.
Despite the plans we have in place from time to time, our ability to operate may be adversely affected by a disruption in the infrastructure that supports our businesses.
−Removed: Notwithstanding our efforts to maintain business continuity, a disruptive event impacting our processing locations, a failure to adequately anticipate the level of staffing or effort needed to efficiently and effectively communicate with and service our customers or to service and collect on our loans, or another similar operational event could adversely affect our business, financial condition, results of operations, and/or cash flows.
+Added: Notwithstanding our efforts to maintain business continuity, a disruptive event impacting our processing locations, a failure to adequately anticipate the level of staffing or effort needed to efficiently and effectively communicate with and service our
+Added: 2024 Form 10-K — SLM CORPORATION 34
+Added: customers or to service and collect on our loans, or another similar operational event could adversely affect our business, financial condition, results of operations, and/or cash flows.
Our business processes are becoming increasingly dependent upon technological advancement, and we could lose market share if we are not able to keep pace with rapid changes in technology.
12 unchanged sentences
These parties also may fraudulently induce employees, customers, and others who use our or our service providers’ systems or have access to our or our customers’ data, to gain access to our and our customers’ data or our assets.
−Removed: We and our service providers face constant threats to our systems and data and from time to time experience cyberattacks and other security incidents.
−Removed: While we have not been materially impacted by cyber incidents, we continue to evolve our security controls to improve our ability to prevent, detect, and respond to the continually changing threats, and we may be required to expend significant additional resources in the future to enhance our security controls in response to new or more sophisticated threats, as well as new regulations related to cybersecurity.
+Added: We and our service providers face constant threats to our systems and data and continuously experience cyberattacks and other security incidents.
+Added: While we continue to evolve our security controls to improve our ability to prevent, detect, and respond to the continually changing threats, we may be required to expend significant additional resources in the future to enhance our security controls in response to new or more sophisticated threats, as well as new regulations related to cybersecurity.
Additionally, while we and our third-party service providers commit resources to the design, implementation, maintenance, security, and monitoring of our networks and systems, there is no guarantee that our security controls, or those of our third-party service providers, will protect against all threats.
2 unchanged sentences
Or, they may seek to disrupt or disable our or our service providers’ services through attacks such as denial-of-service and ransomware attacks.
−Removed: In addition, we or our service providers may be unable to identify, or may be significantly
+Added: In addition, we or our service providers may be unable to identify, or may be significantly delayed in identifying, cyberattacks and incidents due to the increasing use of techniques and tools that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic artifacts.
+Added: As a result, our computer systems, software, and networks, as well as those of third-party vendors we utilize, may be vulnerable to unauthorized access, computer viruses, malware attacks, and other events that could have a security impact
2024 Form 10-K — SLM CORPORATION 35
−Removed: delayed in identifying, cyberattacks and incidents due to the increasing use of techniques and tools that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic artifacts.
−Removed: As a result, our computer systems, software, and networks, as well as those of third-party vendors we utilize, may be vulnerable to unauthorized access, computer viruses, malware attacks, and other events that could have a security impact beyond our control.
+Added: beyond our control.
We also routinely transmit and receive personal, confidential, and proprietary information, some through third parties, which may be vulnerable to interception, misuse, or mishandling.
−Removed: This risk may be heightened by our hybrid work environment, which may lead to unanticipated issues arising from handling personal, confidential, and other information from a less efficient work-from-home environment.
+Added: This risk may be heightened by our hybrid work environment, which may lead to unanticipated issues arising from handling personal, confidential, and other information from a work-from-home environment.
If one or more of such events occur, personal, confidential, and other information processed by, stored in, or transmitted through, our computer systems and networks, or those of third-party vendors, could be compromised or could cause interruptions or malfunctions in our or our customers’ or service providers’ operations that could result in significant losses, loss of business by us and loss of confidence in us, customer dissatisfaction, significant litigation, regulatory exposures, and harm to our reputation and brand.
3 unchanged sentences
While we seek to mitigate cyber and related risks associated with outsourcing to third-party service providers, including through our vendor management processes, both operational and technological cyber risks remain, and certain risks are beyond our security and control systems.
−Removed: Cyberattacks targeted at our service providers or in other areas of our business chain may result in unauthorized interception, misuse, mishandling, access, acquisition, loss, or destruction of our or our customers’ data, or other cyber incidents that may affect the availability of our services, and impose costs and other liabilities that significantly and adversely affect us in the ways discussed above.
+Added: Cyberattacks targeted at our service providers or in other areas of our business chain may result in unauthorized interception, misuse, mishandling, access, acquisition, loss, or destruction of our or our customers’ data, or may affect the availability of our services, and impose costs and other liabilities that significantly and adversely affect us in the ways discussed above.
While we maintain insurance coverage that may apply to various cybersecurity risks and liabilities, there is no guarantee that any or all costs or losses incurred would be partially or fully covered.
1 unchanged sentence
We depend significantly on third parties for a wide array of our operations and customer services and key components of our information technology and security infrastructures.
−Removed: Third-party vendors are significantly involved in aspects of our servicing for Private Education Loans, FFELP Loans, Bank deposit-taking activities, payroll software and systems development, data center and operations, including the timely and secure transmission of information across our data communication network, and for “cloud” computing services and other telecommunications, email, processing, storage, remittance, and technology-related services in connection with our business.
+Added: Third-party vendors are significantly involved in aspects of our servicing for Private Education Loans, Bank deposit-taking activities, payroll software and systems development, data center and operations, including the timely and secure transmission of information across our data communication network, and for “cloud” computing services and other telecommunications, email, processing, storage, remittance, and technology-related services in connection with our business.
If a service provider fails to provide the services we require or expect, or fails to meet applicable regulatory or contractual requirements, such as service levels, protection of our customers’ personal and confidential information, or compliance with applicable laws, that failure could negatively impact our business by adversely affecting our ability to process customers’ transactions in a timely and accurate manner, otherwise hampering our ability to serve our customers and investors, or subjecting us to litigation and regulatory risk for matters as diverse as poor vendor oversight, improper release or protection of personal information, or release of incorrect information.
1 unchanged sentence
We may face risks from our operations related to litigation or regulatory or supervisory actions that could result in significant legal expenses and settlement or damage awards.
−Removed: Defending against litigation or regulatory or supervisory actions may require significant attention and resources of management and, regardless of the outcome, such actions could result in significant expenses.
−Removed: If we are a party to material litigation or regulatory or supervisory actions and if the defenses we assert are ultimately unsuccessful, or if we are unable to achieve a favorable outcome, we could be liable for large damages, penalties,
−Removed: 36 SLM CORPORATION — 2023 Form 10-K
−Removed: or other costs or charge-offs and that could have a material adverse effect on our business, results of operations, and/or financial condition.
+Added: From time to time, in the ordinary course of our business, we face litigation alleging violations of consumer protection, securities, employment, and other laws.
+Added: Defending against such litigation, or regulatory or supervisory actions, may require significant attention and resources of management and, regardless of the outcome, such actions could result in significant expenses.
+Added: If we are a party to material litigation or regulatory or supervisory actions and if the defenses we assert are ultimately unsuccessful, or if we are unable to achieve a favorable outcome, we could be liable for large damages, penalties, or other costs or charge-offs and that could have a material adverse effect on our business, results of operations, and/or financial condition.
+Added: 2024 Form 10-K — SLM CORPORATION 36
Our internal controls over financial reporting and disclosure controls, as well as other internal controls, may be ineffective, which could have a material adverse effect on our financial condition and/or results of operations.
5 unchanged sentences
Our business operations and those of our third-party vendors may be adversely impacted by political events, terrorism, cyberattacks, public health issues (including pandemics), natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes, business interruptions, and other unpredictable catastrophic events .
−Removed: Our business operations and those of our third-party vendors are subject to interruption by, among other things, geopolitical events, terrorism, cyberattacks, public health issues (including pandemics), natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes, and other unpredictable catastrophic events, which could decrease demand for our products and services or make it difficult or impossible for us to deliver a satisfactory experience to our customers.
+Added: Our business operations and those of our third-party vendors are subject to interruption by, among other things, geopolitical events, terrorism, cyberattacks, public health issues (including pandemics), natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes, and other unpredictable catastrophic events, which could make it difficult or impossible for us to deliver a satisfactory experience to our customers or could decrease demand for our products and services.
Any of the unpredictable catastrophic events discussed above could affect the stability of our deposit base, impair the ability of our borrowers and cosigners to repay their outstanding loans, cause significant property damage, and result in loss of revenue and/or cause us to incur additional expenses.
The occurrence of any such event could have a material adverse impact on our business, financial condition, results of operations, and/or cash flows.
−Removed: The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment.
−Removed: As a result, political and social attention to the issue of climate change has increased.
−Removed: In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions.
−Removed: The United States Congress, state legislatures, and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
−Removed: Such initiatives have been pursued with rigor under the current presidential administration.
−Removed: In October 2023, the FDIC finalized principles for climate risk management by “large financial institutions.” Although the Bank currently does not meet the definition of a “large financial institution” with over $100 billion in total consolidated assets, if it were ever to become subject to those principles in the future, such measures could result in the implementation of significant operational changes and increased costs.
−Removed: We also might voluntarily choose to follow some of the principles for climate risk management in the future.
−Removed: Required or voluntary compliance with such principles could lead us to expend significant capital and incur compliance, operating, maintenance, and remediation costs.
−Removed: Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations.
−Removed: 2023 Form 10-K — SLM CORPORATION 37
New lines of business or new products and services may subject us to additional risks.
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Any failure or delay in closing an acquisition could adversely affect our reputation, business, and performance.
−Removed: Acquisitions and/or implementation of new lines of business, products, or services involve numerous risks and uncertainties, including inaccurate financial and operational assumptions, incomplete or failed due diligence, lower-than-expected performance, higher-than-expected costs, difficulties related to integration, diversion of management’s attention from other business activities, adverse market or other reactions, changes in relationships with customers or counterparties, the potential loss of key personnel, and the possibility of litigation and other disputes.
+Added: Acquisitions and/or implementation of new lines of business, products, or services involve numerous risks and uncertainties, including inaccurate financial and operational assumptions, incomplete or failed due diligence, lower-than-expected performance, higher-than-expected costs, difficulties related to integration, diversion of
+Added: 2024 Form 10-K — SLM CORPORATION 37
+Added: management’s attention from other business activities, adverse market or other reactions, changes in relationships with customers or counterparties, the potential loss of key personnel, and the possibility of litigation and other disputes.
An acquisition also could be dilutive to our existing stockholders if we were to issue common stock to fully or partially pay or fund the purchase price.
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RISKS RELATED TO SPIN-OFF
−Removed: Because of Navient’s indemnification obligations, we have exposures to risks related to its creditworthiness.
−Removed: If we are unable to obtain indemnification payments from Navient, we could experience higher-than-expected costs and operating expenses and our results of operations, cash flows, and/or financial condition could be materially and adversely affected.
−Removed: Pursuant to the terms of the Separation and Distribution Agreement, and as contemplated by the structure of the Spin-Off, Navient is legally obligated to indemnify the Bank against all claims, actions, damages, losses, or expenses that may arise from the conduct of all activities of pre-Spin-Off SLM occurring prior to the Spin-Off, except for certain liabilities specifically assumed by the Bank in the agreement as to which the Bank would be obligated to indemnify Navient.
−Removed: The Separation and Distribution Agreement provides specific processes and procedures pursuant to which we may submit claims for indemnification to Navient.
−Removed: If for any reason Navient is unable or unwilling to pay claims made against it, our costs, operating expenses, cash flows, and/or financial condition could be materially and adversely affected over time.
+Added: We may have exposure to risks related to the Spin-Off, indemnification claims, and/or Navient’s creditworthiness.
+Added: In connection with the Spin-Off, we entered into a Separation and Distribution Agreement with Navient (the “Separation and Distribution Agreement”).
+Added: We also entered into various other ancillary agreements with Navient, including a tax sharing agreement, to effect the Spin-Off and provide a framework for our relationship with Navient thereafter.
+Added: Pursuant to the terms of the Separation and Distribution Agreement, and as contemplated by the structure of the Spin-Off, Navient is legally responsible for, and obligated to indemnify the Bank against, all claims, actions, damages, losses, or expenses that may arise from the conduct of all activities of pre-Spin-Off SLM occurring prior to the Spin-Off, except for certain liabilities specifically assumed by the Bank in the agreement as to which the Bank would be obligated to indemnify Navient.
+Added: The Bank and Navient entered into the above-referenced tax sharing agreement to govern the respective rights, responsibilities, and obligations of the parties 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.
+Added: Under this agreement, each party is generally liable for taxes attributable to its business.
+Added: The agreement also addresses the allocation of tax liabilities that are incurred as a result of the Spin-Off and related transactions.
+Added: While the statutes of limitation on the tax periods covered by the tax sharing agreement have largely run, any trailing tax liabilities associated with past periods could impact our business, financial condition, and/or results of operations.
+Added: The Separation and Distribution Agreement and tax sharing agreement provide specific processes and procedures pursuant to which claims for indemnification may be submitted.
+Added: Any financial liability or litigation costs resulting from an indemnification claim made against or by Navient could have a material adverse impact on our business, financial condition, and/or results of operations.
+Added: Additionally, if Navient is unable or unwilling to pay claims that we make against it, our financial condition, results of operations, and/or cash flows could be materially and adversely affected over time.
GENERAL RISKS
−Removed: The holders of our preferred stock have rights that are senior to those of our common shareholders.
+Added: The holders of our preferred stock have rights that are senior to those of our common stockholders.
At December 31, 2024, we had issued and outstanding 2.5 million shares of our Series B Preferred Stock.
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We also must comply with certain provisions that are protective of the Series B Preferred Stock in order to effectuate any repurchases under our common stock share repurchase program.
−Removed: In the event of our bankruptcy, dissolution, or liquidation, the holders of our Series B Preferred Stock must be satisfied before any distributions can be made to our common shareholders.
−Removed: 38 SLM CORPORATION — 2023 Form 10-K
+Added: In the event of our bankruptcy, dissolution, or liquidation, the holders of our Series B Preferred Stock must be satisfied before any distributions can be made to our common stockholders.
+Added: 2024 Form 10-K — SLM CORPORATION 38
We may be limited in our ability to receive dividends from the Bank, pay dividends on and repurchase our common stock, and make payments on our corporate debt.
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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.