SLM Corp 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 Part I, Item 1A. “Risk Factors” in this Annual Report on Form 10-K. Through this discussion and analysis, we intend to provide the reader with some narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity, and cash flows. Overview The following discussion and analysis presents a review of our business and operations as of and for the year ended December 31, 2024. Strategic Imperatives To focus our business and increase shareholder value, we continue to advance our strategic imperatives. Our primary 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, and strive to maintain a rigorous and predictable capital allocation and return program to create shareholder value. We are focused on driving a mission-led culture that continues to make Sallie Mae a great place to work, while we continue to strengthen our risk and compliance functions, enhance and build upon our risk management framework, and assess and monitor enterprise-wide risk. Key Financial Measures Set forth below are brief summaries of our key financial measures. Our operating results are primarily driven by net interest income from our Private Education Loan portfolio, gains and losses on loan sales, provision expense for credit losses, and operating expenses. The growth of our business and the strength of our financial condition are primarily driven by our ability to achieve our annual Private Education Loan origination goals while sustaining credit quality and maintaining cost-efficient funding sources to support our originations. Net Interest Income and Net Interest Margin 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. The majority of our interest income comes from our Private Education Loan portfolio. We also often refer to the net interest margin, which is the net interest yield earned on our interest-earning assets less the rate paid on our related interest-bearing liabilities. As interest rates change, changes in the cost of our interest-bearing liabilities tend to lag slightly compared to changes in the yields on our interest-earning assets, which could impact our net interest margin in any given period. Loan Sales and Secured Financings We may sell loans to third parties through whole loan sales, securitizations, or other similar transactions. We typically retain servicing of loans subsequent to their sale and earn revenue for this servicing at prevailing market rates for such services. Selling loans removes the loan assets from our balance sheet and helps us manage our asset growth, capital, and liquidity needs. Alternatively, we may use loans as collateral in connection with the creation of asset-backed securitizations or secured funding facilities structured as financings. These types of transactions may provide us long-term financing, but they do not remove loan assets from our balance sheet, nor do they generate gains on sales of loans, net. Consequently, our operating results may be significantly affected by whether we choose to sell loans and recognize current gains on sale or continue to hold or finance loans, thereby retaining some or all the net interest income from those loans. In 2024, we recognized $255 million in gains from the sale of approximately $3.69 billion of our Private Education Loans, including $3.42 billion of principal and $274 million in capitalized interest, to unaffiliated third parties. 2024 Form 10-K — SLM CORPORATION 45 For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment” and Note 10, “Borrowings - Unconsolidated Funding Vehicles” in this Form 10-K. During the third quarter of 2024, we transferred our remaining FFELP Loan portfolio to loans held for sale and subsequently sold the FFELP Loan portfolio to an unaffiliated third party in the fourth quarter of 2024. We wrote down the FFELP Loan portfolio to its estimated fair value through an adjustment to the allowance for credit losses of $8 million in 2024. For additional information, see Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment.” Allowance for Credit Losses Management estimates and maintains 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. See “ — Critical Accounting Policies and Estimates — Allowance for Credit Losses” in this Item 7. Allowances for credit losses are an important indicator of management’s perspective on the future performance of a loan portfolio. Each quarter, management makes an adjustment to the allowance for credit losses to reflect its most up-to-date estimate of future losses by recording a charge against quarterly revenues known as provision expense. As they occur, actual loan charge-offs and recoveries are then charged or credited, respectively, against the allowance for credit losses rather than against earnings. The allowance for credit losses and provision expense rise in periods of high loan origination, when future charge-offs are expected to increase, and fall when future charge-offs are expected to decline. We bear the full credit exposure on our Private Education Loans. 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, servicing and collections practices, and the current economic environment. See Item 1A “Risk Factors — CREDIT RISK — Defaults on our loans could adversely affect our business, financial condition, results of operations, and/or cash flows” for additional information. 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 dollar amount of charge-offs to increase. Prior to the sale of our remaining FFELP Loan portfolio in the fourth quarter of 2024, our allowance for credit losses for FFELP Loans and related periodic provision expense was small because we generally bore a maximum of three percent loss exposure due to the federal guarantee on such loans. We maintained an allowance for credit losses for our FFELP Loans at a level sufficient to cover lifetime expected credit losses. Charge-Offs and Delinquencies Delinquencies are another important indicator of potential future credit performance. 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. Management focuses on delinquencies as well as the progression of loans from early to late stage delinquency as a key metric in estimating the allowance for credit losses and tailoring its future collections strategies. We sell a segment of defaulted loans immediately after charge-off, and use in-house collectors and third-party collectors to collect on retained defaulted loans. Operating Expenses 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. 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. The cost to acquire is affected by such variables as technology, personnel, and marketing costs. Servicing expenses primarily include compensation and benefit expenses related to our collections, customer support, and payment processing employees, and technology costs and other expenses associated with facilitating and servicing borrowers. Costs to service can vary period to period based upon seasonality and borrower payment status. The cost to service a delinquent borrower is significantly higher than the cost to service a current or in-school borrower. Private Education Loan Originations Private Education Loans are the principal asset on our balance sheet, and the amount of new Private Education Loan originations we generate each year is a key indicator of the trajectory of our business, including our future earnings and asset growth. 2024 Form 10-K — SLM CORPORATION 46 Funding Sources Though we rely primarily on deposits and loan securitizations to fund our loan originations, we also have access to a multi-lender secured borrowing facility (the “Secured Borrowing Facility”) and, from time to time, we access the debt capital markets through unsecured bond issuances. For additional information, see “—Borrowings — Long-term Borrowings” below in this Item 7. Deposits We utilize brokered, retail, and other core deposits to meet funding needs and enhance our liquidity position. These deposits can be term or liquid deposits. Our term brokered deposits have original terms from three months to ten years. Retail deposits are sourced through a direct banking platform and serve as an important source of diversified funding. Brokered deposits are sourced through a network of brokers and provide a stable source of funding. In addition, we accept certain deposits considered non-brokered that are held in large accounts structured to allow FDIC insurance to flow through to underlying individual depositors. We further diversify our funding sources with deposits from Educational 529 savings plans and Health Savings plans. Loan Securitizations Term ABS financing provides long-term funding for our Private Education Loan portfolio at attractive interest rates and at terms that effectively match the average life of the assets. Loans associated with these transactions will remain on our balance sheet if we retain the residual interest in the related trusts. 2024 Form 10-K — SLM CORPORATION 47 Results of Operations We present the results of operations below on a consolidated basis in accordance with GAAP. GAAP Consolidated Statements of Income Years ended December 31, (dollars in millions, except per share amounts) Increase (Decrease) 2024 vs. 2023 2023 vs. 2022 2024 2023 2022 $ % $ % Interest income: Loans $ 2,314 $ 2,327 $ 1,915 $ (13) (1) % $ 412 22 % Investments 61 51 35 10 20 16 46 Cash and cash equivalents 243 214 82 29 14 132 161 Total interest income 2,619 2,592 2,032 26 1 560 28 Total interest expense 1,138 1,030 543 108 10 487 90 Net interest income 1,481 1,562 1,489 (82) (5) 73 5 Less: provisions for credit losses 409 345 633 64 19 (288) (45) Net interest income after provisions for credit losses 1,072 1,217 855 (145) (12) 362 42 Non-interest income: Gains on sales of loans, net 255 160 328 95 59 (168) (51) Gains (losses) on securities, net — 3 (60) (3) (100) 63 105 Other income 113 84 67 29 35 17 25 Total non-interest income 368 247 335 121 49 (88) (26) Non-interest expenses: Total operating expenses 637 619 551 18 3 68 12 Acquired intangible assets impairment and amortization expense 5 66 8 (61) (92) 58 725 Total non-interest expenses 642 685 559 (43) (6) 126 23 Income before income tax expense 798 778 631 20 3 147 23 Income tax expense 190 197 162 (7) (4) 35 22 Net income 608 581 469 27 5 112 24 Preferred stock dividends 18 18 9 — — 9 100 Net income attributable to SLM Corporation common stock $ 590 $ 564 $ 460 $ 26 5 % $ 104 23 % Basic earnings per common share $ 2.73 $ 2.44 $ 1.78 $ 0.29 12 % $ 0.66 37 % Diluted earnings per common share $ 2.68 $ 2.41 $ 1.76 $ 0.27 11 % $ 0.65 37 % Declared dividends per common share $ 0.46 $ 0.44 $ 0.44 $ 0.02 5 % $ — — % Note: Due to rounding, amounts in this table may not sum to totals. 2024 Form 10-K — SLM CORPORATION 48 GAAP Consolidated Earnings Summary Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 For the year ended December 31, 2024, net income was $608 million, or $2.68 diluted earnings per common share, compared with net income of $581 million, or $2.41 diluted earnings per common share, for the year ended December 31, 2023. The year-over-year increase was primarily attributable to an increase in gains on sales of loans, net and other income and a decrease in total non-interest expense, which were offset by a decrease in total net interest income and an increase in provisions for credit losses. The primary contributors to the drivers of change in net income for the current year period compared with the year-ago period are as follows: • Net interest income in 2024 decreased by $82 million compared with the year-ago period primarily due to a 31-basis point decrease in our net interest margin and an $79 million decrease in average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current period from the year-ago period primarily because our cost of funds increased more than the yields on our interest-earning assets. As interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin. • Provision for credit losses in 2024 was $409 million, compared with $345 million in the year-ago period. During 2024, the increase in the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in recovery rates. These drivers were offset by $236 million in negative provisions resulting from the approximately $3.69 billion Private Education Loan sales during 2024, an improved economic outlook, and changes in management overlays. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, management overlays, and changes in economic outlook, which were partially offset by $205 million in negative provisions recorded as a result of the approximately $3.15 billion in Private Education Loan sales during 2023 and an increase in recovery rates (as the result of a 2023 change in our defaulted loan recovery process). • Gains on sales of loans, net, were $255 million in 2024, compared with $160 million in the year-ago period. The increase in gains on sales of loans was primarily the result of selling approximately $3.69 billion of Private Education Loans in 2024, compared with the sale of approximately $3.15 billion of Private Education Loans in the year-ago period. Additionally, we received lower sales premiums in 2023 as compared to 2024 due to movement in market interest rates in 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $4 million loss on the sale in 2023. • Gains (losses) on securities, net, were less than $1 million in gains in 2024, compared with $3 million in gains in the year-ago period. The decrease from the year-ago period was due to the change in mark-to-fair value of our trading investments. • Other income was $113 million in 2024, compared with $84 million in the year-ago period. The increase in other income compared with the year-ago period was primarily the result of a $21 million increase in third-party servicing fees from the year-ago period. The increase in third-party servicing fees was primarily due to an additional approximately $3.7 billion of sold loans that we continue to service on behalf of the owners of the loans. There was also a $3 million increase in early withdrawal penalty fee income in 2024 compared with the year-ago period, which was related to a health savings account provider that redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024. • For the year ended December 31, 2024, total operating expenses were $637 million, compared with $619 million in the year-ago period. The increase in total operating expenses was primarily driven by higher personnel costs, increased marketing costs, and higher FDIC assessment fees. • In 2024, we recorded $5 million in impairment and amortization of acquired intangible assets, compared with $66 million in the year-ago period. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 8, “Goodwill and Acquired Intangible Assets” in this Form 10-K. 2024 Form 10-K — SLM CORPORATION 49 • Income tax expense for the year ended December 31, 2024 was $190 million, compared with $197 million in the year-ago period. The effective tax rate decreased in 2024 to 23.8 percent from 25.3 percent in the year-ago period. The decrease in the effective rate for 2024 was primarily attributable to a decrease in state income taxes. Year Ended December 31, 2023 Compared with Year Ended December 31, 2022 For the year ended December 31, 2023, net income was $581 million, or $2.41 diluted earnings per common share, compared with net income of $469 million, or $1.76 diluted earnings per common share, for the year ended December 31, 2022. The year-over-year increase was primarily attributable to less provisions for credit losses and an increase in total net interest income and other income, which were offset by decreases in gains on sales of loans, net, and higher operating expenses. The primary contributors to each of the identified drivers of change in net income for 2023 compared with 2022 are as follows: • Net interest income in 2023 increased by $73 million compared with 2022 primarily due to a $375 million increase in average Private Education Loans and FFELP Loans outstanding and a 19-basis point increase in our net interest margin. Our net interest margin increased in 2023 from 2022 because of the dramatic increase in interest rates in 2023. When interest rates rise, the yield on our interest-earning assets typically increases faster than our cost of funds. As such, as rates increased in 2023, we saw our net interest margin increase. • Provision for credit losses in 2023 was $345 million, compared with $633 million in 2022. During 2023, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, management overlays, and changes in economic outlook, which were partially offset by $205 million in negative provisions recorded as a result of the approximately $3.15 billion in Private Education Loan sales during 2023 and an increase in recovery rates (as the result of a change in our defaulted loan recovery process). In 2022, the provision for credit losses was primarily affected by new loan commitments made during the period, slower than expected prepayment rates, and additional management overlays, which were partially offset by negative provisions recorded related to approximately $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. • Gains on sales of loans, net, were $160 million in 2023, compared with $328 million in 2022. The decrease in gains on sales of loans was primarily the result of selling approximately $3.15 billion of Private Education Loans in 2023, compared with the sale of approximately $3.34 billion of Private Education Loans in 2022, and lower sales premiums received in 2023 compared to 2022, which were attributable to higher interest rates in 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $4 million loss on the sale in 2023. • Gains (losses) on securities, net, were $3 million in gains in 2023, compared with a net loss of $60 million in 2022. The gains on securities, net, in 2023 were related to the changes in mark-to-fair value of our trading investments. During 2022, we determined that an investment in non-marketable equity securities was impaired. As such, we wrote down the value by $60 million in 2022 based upon an estimate of the value of these securities. • Other income was $84 million in 2023, compared with $67 million in 2022. The increase in other income compared with 2022 was primarily the result of a $13 million increase in third-party servicing fees from 2022 and a $2 million increase in Private Education Loan late fees compared with 2022. • For the year ended December 31, 2023, total operating expenses were $619 million, compared with $551 million in 2022. The increase in total operating expenses was primarily driven by higher personnel costs, initiative spending, and higher FDIC assessment fees, which were partially offset by lower Credit Card portfolio expenses as a result of the sale of the portfolio. • In 2023, we recorded $66 million in impairment and amortization of acquired intangible assets, compared with $8 million in 2022. During the fourth quarter of 2023, we recorded an impairment of $56 million as a result of a write-down of the value of the Nitro trade name and trademarks intangible assets. This write-down occurred because we planned to discontinue the use of the Nitro trade name and trademarks in 2024 and transition the related branding to the Sallie and Sallie Mae brands and platforms. In 2023, we recorded $10 million in amortization expense of acquired intangible assets, compared to $8 million in 2022. The increase in amortization expense was related to our acquisition of several key assets of Scholly in the third quarter of 2023. For additional 2024 Form 10-K — SLM CORPORATION 50 information, see Notes to Consolidated Financial Statements, Note 8, “Goodwill and Acquired Intangible Assets” in this Form 10-K. • Income tax expense for the year ended December 31, 2023 was $197 million, compared with $162 million in 2022. The effective tax rate decreased in 2023 to 25.3 percent from 25.6 percent in 2022. The decrease in the effective rate for 2023 was primarily attributable to an increase in tax credits utilized in the year. 2024 Form 10-K — SLM CORPORATION 51 , Financial Condition Average Balance Sheets - GAAP The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities and reflects our net interest margin on a consolidated basis. Years Ended December 31, (dollars in thousands) 2024 2023 2022 Balance Rate Balance Rate Balance Rate Average Assets Private Education Loans $ 21,121,545 10.81 % $ 21,039,701 10.86 % $ 20,576,737 9.14 % FFELP Loans 413,338 7.45 574,218 7.19 662,194 4.62 Credit Cards — — 11,096 14.02 28,547 5.10 Taxable securities 2,316,848 2.65 2,543,586 2.00 2,509,215 1.41 Cash and other short-term investments 4,700,066 5.19 4,215,164 5.09 4,284,442 1.93 Total interest-earning assets 28,551,797 9.17 % 28,383,765 9.13 % 28,061,135 7.24 % Non-interest-earning assets 505,245 301,749 605,447 Total assets $ 29,057,042 $ 28,685,514 $ 28,666,582 Average Liabilities and Equity Brokered deposits $ 10,009,221 3.89 % $ 9,803,802 3.29 % $ 9,871,787 1.95 % Retail and other deposits 11,142,798 4.65 11,605,215 4.40 11,109,675 1.65 Other interest-bearing liabilities (1) 5,616,445 4.09 5,366,365 3.66 5,517,489 3.03 Total interest-bearing liabilities 26,768,464 4.25 % 26,775,382 3.85 % 26,498,951 2.05 % Non-interest-bearing liabilities 149,594 83,895 107,611 Equity 2,138,984 1,826,237 2,060,020 Total liabilities and equity $ 29,057,042 $ 28,685,514 $ 28,666,582 Net interest margin 5.19 % 5.50 % 5.31 % (1) Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our Secured Borrowing Facility. 2024 Form 10-K — SLM CORPORATION 52 Rate/Volume Analysis - GAAP The following rate/volume analysis shows the relative contribution of changes in interest rates and asset volumes. Years Ended December 31, (dollars in thousands) Increase (Decrease) Change Due To (1) Rate Volume 2024 vs. 2023 Interest income $ 26,743 $ 11,358 $ 15,385 Interest expense 108,174 108,440 (266) Net interest income (loss) $ (81,431) $ (90,630) $ 9,199 2023 vs. 2022 Interest income $ 560,723 $ 537,107 $ 23,616 Interest expense 487,291 481,570 5,721 Net interest income $ 73,432 $ 56,165 $ 17,267 (1) Changes in income and expense due to both rate and volume have been allocated in proportion to the relationship of the absolute dollar amounts of the change in each. The changes in income and expense are calculated independently for each line in the table. The totals for the rate and volume columns are not the sum of the individual lines. Summary of Our Loans Held for Investment Portfolio Ending Loans Held for Investment Balances, net As of December 31, 2024 (dollars in thousands) Total Loans Held for Investment (Private Education Loans) Total loan portfolio: In-school (1) $ 4,397,127 Repayment and other (2) 17,837,881 Total, gross 22,235,008 Deferred origination costs and unamortized premium/(discount) 103,070 Allowance for loan losses (1,435,920) Total loans held for investment portfolio, net $ 20,902,158 % of total 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. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance). 2024 Form 10-K — SLM CORPORATION 53 As of December 31, 2023 (dollars in thousands) Private Education Loans FFELP Loans Total Loans Held for Investment Total loan portfolio: In-school (1) $ 3,997,092 $ 57 $ 3,997,149 Repayment and other (2) 17,028,752 537,344 17,566,096 Total, gross 21,025,844 537,401 21,563,245 Deferred origination costs and unamortized premium/(discount) 81,554 1,330 82,884 Allowance for loan losses (1,335,105) (4,667) (1,339,772) Total loans held for investment portfolio, net $ 19,772,293 $ 534,064 $ 20,306,357 % of total 97 % 3 % 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. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance). As of December 31, 2022 (dollars in thousands) Private Education Loans FFELP Loans Total Loans Held for Investment Total loan portfolio: In-school (1) $ 3,659,323 $ 57 $ 3,659,380 Repayment and other (2) 16,644,365 608,993 17,253,358 Total, gross 20,303,688 609,050 20,912,738 Deferred origination costs and unamortized premium/(discount) 69,656 1,549 71,205 Allowance for loan losses (1,353,631) (3,444) (1,357,075) Total loans held for investment portfolio, net $ 19,019,713 $ 607,155 $ 19,626,868 % of total 97 % 3 % 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. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance). 2024 Form 10-K — SLM CORPORATION 54 As of December 31, 2021 (dollars in thousands) Private Education Loans FFELP Loans Credit Cards Total Loans Held for Investment Total loan portfolio: In-school (1) $ 3,544,030 $ 82 $ — $ 3,544,112 Repayment and other (2) 17,172,833 695,134 25,014 17,892,981 Total, gross 20,716,863 695,216 25,014 21,437,093 Deferred origination costs and unamortized premium/(discount) 67,488 1,815 222 69,525 Allowance for loan losses (1,158,977) (4,077) (2,281) (1,165,335) Total loans held for investment portfolio, net $ 19,625,374 $ 692,954 $ 22,955 $ 20,341,283 % of total 97 % 3 % — % 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. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance). As of December 31, 2020 (dollars in thousands) Private Education Loans FFELP Loans Credit Cards Total Loans Held for Investment Total loan portfolio: In-school (1) $ 3,582,394 $ 81 $ — $ 3,582,475 Repayment and other (2)(3) 16,146,943 737,512 12,238 16,896,693 Total, gross 19,729,337 737,593 12,238 20,479,168 Deferred origination costs and unamortized premium/(discount) 63,475 1,993 230 65,698 Allowance for loan losses (1,355,844) (4,378) (1,501) (1,361,723) Total loans held for investment portfolio, net $ 18,436,968 $ 735,208 $ 10,967 $ 19,183,143 % of total 96 % 4 % — % 100 % (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 COVID-19 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. (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. (3) 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 (but, for purposes of the table, do not include those loans while they are in forbearance). 2024 Form 10-K — SLM CORPORATION 55 Average Loans Held for Investment Balances (net of unamortized premium/discount) Years Ended December 31, (dollars in thousands) 2024 2023 2022 Private Education Loans $ 21,121,545 98 % $ 21,039,701 97 % $ 20,576,737 97 % FFELP Loans 413,338 2 574,218 3 662,194 3 Total portfolio $ 21,534,883 100 % $ 21,613,919 100 % $ 21,238,931 100 % . Loans Held for Investment, Net — Activity Year Ended December 31, 2024 (dollars in thousands) Private Education Loans FFELP Loans Total Loans Held for Investment, net Beginning balance $ 19,772,293 $ 534,064 $ 20,306,357 Acquisitions and originations: Fixed-rate 6,629,205 — 6,629,205 Variable-rate 435,025 — 435,025 Total acquisitions and originations 7,064,230 — 7,064,230 Capitalized interest and deferred origination cost premium amortization 602,825 16,796 619,621 Sales (3,430,920) — (3,430,920) Loan consolidations to third parties (806,908) (45,467) (852,375) Allowance (100,815) 4,667 (96,148) Transfer to loans held-for-sale — (466,168) (466,168) Repayments and other (2,198,547) (43,892) (2,242,439) Ending balance $ 20,902,158 $ — $ 20,902,158 Year Ended December 31, 2023 (dollars in thousands) Private Education Loans FFELP Loans Total Loans Held for Investment, net Beginning balance $ 19,019,713 $ 607,155 $ 19,626,868 Acquisitions and originations: Fixed-rate 5,760,434 — 5,760,434 Variable-rate 665,987 — 665,987 Total acquisitions and originations 6,426,421 — 6,426,421 Capitalized interest and deferred origination cost premium amortization 597,480 22,584 620,064 Sales (2,938,616) — (2,938,616) Loan consolidations to third parties (975,889) (32,855) (1,008,744) Allowance 18,526 (1,223) 17,303 Repayments and other (2,375,342) (61,597) (2,436,939) Ending balance $ 19,772,293 $ 534,064 $ 20,306,357 2024 Form 10-K — SLM CORPORATION 56 Year Ended December 31, 2022 (dollars in thousands) Private Education Loans FFELP Loans Credit Cards Total Loans Held for Investment, net Beginning balance $ 19,625,374 $ 692,954 $ 22,955 $ 20,341,283 Acquisitions and originations: Fixed-rate 4,189,269 — — 4,189,269 Variable-rate 1,809,301 — 82,819 1,892,120 Total acquisitions and originations 5,998,570 — 82,819 6,081,389 Capitalized interest and deferred origination cost premium amortization 550,474 24,642 (195) 574,921 Sales (3,136,302) — — (3,136,302) Loan consolidations to third parties (1,384,950) (61,529) — (1,446,479) Allowance (194,654) 633 2,281 (191,740) 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 “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. The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at December 31, 2024 increased by 3.7 percent compared with December 31, 2023, and now totals 42 percent of our Private Education Loans held for investment portfolio at December 31, 2024. The balance of loans held for investment in full principal and interest repayment status was affected in 2024 and 2023 by loan sales. “Loan consolidations to third parties” for the year ended December 31, 2024 total 9.1 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at December 31, 2024, or 3.9 percent of our total Private Education Loans held for investment portfolio at December 31, 2024, compared with the year-ago period of 11.5 percent of our Private Education Loan held for investment portfolio in full principal and interest repayment status, or 4.9 percent of our total Private Education Loans held for investment portfolio, respectively. While interest rates began to decrease towards the end of 2024, increased interest rates for most of the year led to a decrease in consolidations compared to 2023. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time. The “Repayments and other” category includes all scheduled repayments, as well as voluntary prepayments, made on loans in repayment (including loans in full principal and interest repayment status) and also includes charge-offs. Consequently, this category can be significantly affected by the volume of loans in repayment. 2024 Form 10-K — SLM CORPORATION 57 Private Education Loan Originations The following table summarizes our Private Education Loan originations. Originations represent loans that were funded or acquired during the period presented. Years Ended December 31, (dollars in thousands) 2024 % 2023 % 2022 % Smart Option - interest only (1) $ 1,272,414 18 % $ 1,166,442 18 % $ 1,146,365 19 % Smart Option - fixed pay (1) 2,331,055 33 2,121,112 33 1,950,048 33 Smart Option - deferred (1) 2,786,821 40 2,584,545 41 2,330,719 39 Graduate Loan (2) 623,033 9 511,193 8 516,877 8 Parent Loan (3) — — 38 — 30,515 1 Total Private Education Loan originations $ 7,013,323 100 % $ 6,383,330 100 % $ 5,974,524 100 % Percentage of loans with a cosigner 90.0 % 87.5 % 86.0 % Average FICO at approval (4) 752 748 747 (1) Interest only, fixed pay and deferred describe the payment option while in school or in grace period. See Item 1. “Business - Our Business - Private Education Loans” for a further discussion. (2) For the year ended December 31, 2024, the Graduate Loan originations include $32.2 million of Smart Option Loans where the student was in a graduate status. For the year ended December 31, 2023, the Graduate Loan originations include $29.4 million of Smart Option Loans where the student was in a graduate status. 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. (3) In December 2021, we discontinued offering our Parent Loan product. Applications for those loans received before the offering termination date were processed, and final disbursements under those loans occurred in February 2023. (4) Represents the higher credit score of the cosigner or the borrower. Private Education Loan Maturitie s The following table summarizes the remaining maturities of our Private Education Loan portfolio. As of December 31, 2024 (dollars in thousands) One year or less After one year to five years After five years to 15 years After 15 years Total Fixed-rate $ 7,782 $ 313,875 $ 8,191,111 $ 8,580,614 $ 17,093,382 Variable-rate 20,054 506,104 3,349,420 1,266,048 5,141,626 Total Private Education Loans, gross $ 27,836 $ 819,979 $ 11,540,531 $ 9,846,662 $ 22,235,008 2024 Form 10-K — SLM CORPORATION 58 Allowance for Credit Losses Allowance for Loan Losses Activity Years Ended December 31, (dollars in thousands) 2024 2023 Private Education Loans FFELP Loans Total Portfolio Private Education Loans FFELP Loans Total Portfolio Beginning balance $ 1,335,105 $ 4,667 $ 1,339,772 $ 1,353,631 $ 3,444 $ 1,357,075 Transfer from unfunded commitment liability (1) 311,787 — 311,787 320,237 — 320,237 Less: Charge-offs (376,840) (380) (377,220) (420,095) (1,001) (421,096) Write-downs arising from transfer of loans to held for sale (2) — (8,297) (8,297) — — — Plus: Recoveries 44,756 — 44,756 46,368 — 46,368 Provisions for loan losses: Provision, current period 357,067 4,010 361,077 240,347 2,224 242,571 Loan sale reduction to provision (235,955) — (235,955) (205,383) — (205,383) Total provisions for loan losses (3) 121,112 4,010 125,122 34,964 2,224 37,188 Ending balance $ 1,435,920 $ — $ 1,435,920 $ 1,335,105 $ 4,667 $ 1,339,772 2022 2021 Years Ended December 31, (dollars in thousands) Private Education Loans FFELP Loans Credit Cards Total Portfolio Private Education Loans FFELP Loans Credit Cards Total Portfolio Beginning balance $ 1,158,977 $ 4,077 $ 2,281 $ 1,165,335 $ 1,355,844 $ 4,378 $ 1,501 $ 1,361,723 Transfer from unfunded commitment liability (1) 344,310 — — 344,310 301,655 — — 301,655 Less: Charge-offs (427,416) (613) (3,215) (431,244) (229,591) (321) (356) (230,268) Plus: Recoveries 41,737 — 5 41,742 29,494 — 12 29,506 Provisions for loan losses: Provision, current period 410,254 (20) 3,301 413,535 (233,852) 20 1,124 (232,708) Loan sale reduction to provision (174,231) — — (174,231) (66,460) — — (66,460) Loans transferred (to) from held-for-sale — — (2,372) (2,372) 1,887 — — 1,887 Total provisions for loan losses (3) 236,023 (20) 929 236,932 (298,425) 20 1,124 (297,281) Ending balance $ 1,353,631 $ 3,444 $ — $ 1,357,075 $ 1,158,977 $ 4,077 $ 2,281 $ 1,165,335 (1) See Notes to Consolidated Financial Statements, Note 6, “Allowance for Credit Losses and 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) Represents fair value adjustments on loans transferred to held for sale. (3) See “ — Financial Condition — Allowance for Credit Losses — Provision for Credit Losses” in this Item 7 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income. 2024 Form 10-K — SLM CORPORATION 59 2020 Year Ended December 31, (dollars in thousands) Private Education Loans FFELP Loans Personal Loans Credit Cards Total Portfolio Beginning balance $ 374,300 $ 1,633 $ 65,877 $ 102 $ 441,912 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 Transfer from unfunded commitment liability (1) 320,808 — — — 320,808 Less: Charge-offs (205,326) (519) (39,079) (119) (245,043) Loan sales (2) — — (108,534) — (108,534) Plus: Recoveries 24,021 — 4,984 2 29,007 Provisions for loan losses: Provision, current period 148,673 412 40,485 1,328 190,898 Loan sale reduction to provision (161,793) — (42,916) — (204,709) Loans transferred (to) from held-for-sale (205,669) — — — (205,669) Total provisions for loan losses (3) (218,789) 412 (2,431) 1,328 (219,480) Ending balance $ 1,355,844 $ 4,378 $ — $ 1,501 $ 1,361,723 (1) See Notes to Consolidated Financial Statements, Note 6, “Allowance for Credit Losses and 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) Represents fair value adjustments on loans sold. (3) See “ — Financial Condition — Allowance for Credit Losses — Provision for Credit Losses” in this Item 7 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income. Provision for Credit Losses Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. Consolidated Statements of Income Provisions for Credit Losses Reconciliation Years Ended December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Private Education Loan provisions for credit losses: Provisions for loan losses $ 121,112 $ 34,964 $ 236,023 $ (298,425) $ (218,789) Provisions for unfunded loan commitments 283,393 308,275 396,521 264,324 312,613 Total Private Education Loan provisions for credit losses 404,505 343,239 632,544 (34,101) 93,824 Other impacts to the provisions for credit losses: Personal Loans — — — — (2,431) FFELP Loans 4,010 2,224 (20) 20 412 Credit Cards — — 929 1,124 1,328 Total 4,010 2,224 909 1,144 (691) Provisions for credit losses reported in consolidated statements of income 408,515 345,463 633,453 (32,957) 93,133 2024 Form 10-K — SLM CORPORATION 60 Private Education Loan Allowance for Credit Losses In establishing the allowance for Private Education Loan losses as of December 31, 2024, 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 42 percent of our total Private Education Loans held for investment portfolio at December 31, 2024, compared with 43 percent at December 31, 2023. 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 “— Critical Accounting Policies and Estimates — Allowance for Credit Losses” in this Item 7 and Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment — Certain Collection Tools — Private Education Loans” in this Form 10-K. 2024 Form 10-K — SLM CORPORATION 61 The table below presents our Private Education Loans held for investment portfolio delinquency trends. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the following table, do not include those loans while they are in forbearance). Private Education Loans Held for Investment 2024 2023 2022 As of December 31, (dollars in thousands) Balance % Balance % Balance % Loans in-school/grace/deferment (1) $ 5,722,827 $ 5,291,991 $ 4,895,053 Loans in forbearance (2) 405,430 324,039 279,085 Loans in repayment and percentage of each status: Loans current 15,513,333 96.3 % 14,809,271 96.1 % 14,559,347 96.2 % Loans delinquent 30-59 days (3) 310,748 1.9 298,751 1.9 287,308 1.9 Loans delinquent 60-89 days (3) 140,735 0.9 151,017 1.0 147,505 1.0 Loans 90 days or greater past due (3) 141,935 0.9 150,775 1.0 135,390 0.9 Total Private Education Loans in repayment 16,106,751 100.0 % 15,409,814 100.0 % 15,129,550 100.0 % Total Private Education Loans, gross 22,235,008 21,025,844 20,303,688 Private Education Loans deferred origination costs and unamortized premium/(discount) 103,070 81,554 69,656 Total Private Education Loans 22,338,078 21,107,398 20,373,344 Private Education Loans allowance for losses (1,435,920) (1,335,105) (1,353,631) Private Education Loans, net $ 20,902,158 $ 19,772,293 $ 19,019,713 Percentage of loans in repayment 72.4 % 73.3 % 74.5 % Delinquencies as a percentage of loans in repayment 3.7 % 3.9 % 3.8 % Percentage of loans in forbearance: Percentage of loans in an extended grace period (4) 1.6 % 1.1 % 0.7 % Percentage of loans in hardship and other forbearances (5) 0.9 % 1.0 % 1.1 % (1) Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation). (2) Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures. (3) The period of delinquency is based on the number of days scheduled payments are contractually past due. (4) We calculate the percentage of loans in an extended grace period as the ratio of (a) Private Education Loans in forbearance in an extended grace period numerator to (b) Private Education Loans in repayment and forbearance denominator. An extended grace period aligns with The Office of the Comptroller of the Currency definition of an additional, consecutive, one-time period during which no payment is required for up to six months after the initial grace period. We typically grant this extended grace period to customers who may be having difficulty finding employment before the full principal and interest repayment period starts or once it has begun. Loans in forbearance in an extended grace period were approximately $253 million, $168 million, and $114 million at December 31, 2024, 2023, and 2022, respectively. See “—Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in this Item 7 for additional details. (5) We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period) were approximately $152 million, $156 million, and $165 million at December 31, 2024, 2023, and 2022, respectively. See “—Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in this Item 7 for additional details. Delinquencies as a percentage of Private Education Loans (held for investment) in repayment decreased to 3.7 percent at December 31, 2024 from 3.9 percent at December 31, 2023. The decrease in the delinquency metric in 2024 compared with 2023 was primarily attributable to the new loan modification programs. See “—Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in this 2024 Form 10-K — SLM CORPORATION 62 Item 7 for additional details. The percentage of loans in an extended grace forbearance increased to 1.6 percent at December 31, 2024 from 1.1 percent at December 31, 2023. The increase was primarily due to borrowers being eligible to receive up to six months of extended grace forbearance in one increment instead of multiple instances of two-month increments, coupled with our continued efforts to better match our available program offerings to the financial needs of our borrowers. The percentage of loans in hardship and other forbearances remained relatively consistent at 0.9 percent and 1.0 percent, respectively, at December 31, 2024 and December 31, 2023. The increase in delinquencies at December 31, 2023, compared with 2022, was primarily attributable to loan modification programs initiated in the fourth quarter of 2023 that required borrowers to remain in their respective delinquency buckets until three consecutive payments were made under the modified loan terms before being brought current (if re-age eligible). The increase in the percentage of loans in an extended grace period at December 31, 2023 compared with 2022 was primarily due to borrowers being eligible to receive up to six months of extended grace forbearance in one increment instead of multiple instances of two-month increments, beginning in September 2023. The percentage of loans in hardship and other forbearances remained relatively consistent at 1.0 percent and 1.1 percent, respectively at December 31, 2023 and December 31, 2022. 2024 Form 10-K — SLM CORPORATION 63 The following table summarizes changes in the allowance for Private Education Loan (held for investment) losses and the allowance for unfunded loan commitments. Years Ended December 31, (dollars in thousands) 2024 2023 2022 2021 2020 Allowance for loan losses, beginning balance $ 1,335,105 $ 1,353,631 $ 1,158,977 $ 1,355,844 $ 374,300 Day 1 adjustment for adoption of CECL — — — — 1,060,830 Balance at January 1 1,335,105 1,353,631 1,158,977 1,355,844 1,435,130 Transfer from allowance for unfunded loan commitments (1) 311,787 320,237 344,310 301,655 320,808 Provisions: Provision for current period 357,067 240,347 410,254 (233,852) 148,673 Loan sale reduction to provision (235,955) (205,383) (174,231) (66,460) (161,793) Loans transferred (to) from held-for-sale — — — 1,887 (205,669) Total provisions (2) 121,112 34,964 236,023 (298,425) (218,789) Net charge-offs: Charge-offs (376,840) (420,095) (427,416) (229,591) (205,326) Recoveries 44,756 46,368 41,737 29,494 24,021 Net charge-offs (332,084) (373,727) (385,679) (200,097) (181,305) Allowance for loan losses, ending balance 1,435,920 1,335,105 1,353,631 1,158,977 1,355,844 Allowance for unfunded loan commitments, beginning balance (1) 112,962 124,924 72,713 110,044 2,481 Day 1 adjustment for adoption of CECL — — — — 115,758 Balance at January 1 112,962 124,924 72,713 110,044 118,239 Provision (2)(3) 283,393 308,275 396,521 264,324 312,613 Transfer to allowance for loan losses (311,787) (320,237) (344,310) (301,655) (320,808) Allowance for unfunded loan commitments, ending balance (1) 84,568 112,962 124,924 72,713 110,044 Total allowance for credit losses, ending balance $ 1,520,488 $ 1,448,067 $ 1,478,555 $ 1,231,690 $ 1,465,888 Total allowance for credit losses as a percentage of the ending total loan balance, plus unfunded loan commitments and total accrued interest receivable 5.83 % 5.89 % 6.30 % 5.20 % 6.49 % Allowance for loan losses coverage of net charge-offs 4.32 3.57 3.51 5.79 7.48 Net charge-offs as a percentage of average loans in repayment (4) 2.19 % 2.44 % 2.55 % 1.33 % 1.17 % Delinquencies as a percentage of ending loans in repayment (4) 3.68 % 3.90 % 3.77 % 3.26 % 2.84 % Loans in forbearance as a percentage of ending loans in repayment and forbearance (4) 2.46 % 2.06 % 1.81 % 1.91 % 4.32 % Ending total loans, gross $ 22,235,008 $ 21,025,844 $ 20,303,688 $ 20,716,863 $ 19,729,337 Average loans in repayment (4) $ 15,139,184 $ 15,310,934 $ 15,103,123 $ 15,019,869 $ 15,518,851 Ending loans in repayment (4) $ 16,106,751 $ 15,409,814 $ 15,129,550 $ 15,511,212 $ 14,304,821 Unfunded loan commitments $ 2,311,660 $ 2,221,077 $ 1,995,808 $ 1,776,976 $ 1,673,018 Total accrued interest receivable $ 1,549,415 $ 1,354,565 $ 1,177,562 $ 1,187,123 $ 1,168,895 (1) When a new loan commitment is made, we record an allowance to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheet. See Notes to Consolidated Financial Statements, Note 6, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-K for a summary of the activity in the allowance for and balance of unfunded loan commitments. (2) See “ — Financial Condition — Allowance for Credit Losses — Provision for Credit Losses” in this Item 7 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income. (3) Includes incremental provision for new commitments and changes to provision for existing commitments. (4) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include 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 the metrics considered are the allowance coverage of net charge-offs ratio; the allowance as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable; and delinquency and forbearance percentages. 2024 Form 10-K — SLM CORPORATION 64 Charge-offs decreased in the year ended December 31, 2024 compared with the year-ago period primarily due to the new loan modification programs implemented throughout the full year 2024. Charge-offs decreased in the year ended December 31, 2023 compared with the year ended December 31, 2022 because of a combination of factors, including improved staffing levels and the impact of the new loan modification programs begun in the fourth quarter of 2023. 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. Use of Forbearance and Modifications as a Private Education Loan Collection Tool Over the course of the last few years, we have made significant changes to our credit administration practices, enhancing our loss mitigation programs through both our forbearance and loan modification offerings. We adjust the terms of loans for certain borrowers when we believe such changes will help our borrowers manage their student loan obligations and achieve better student outcomes, and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term, and/or a short-term extended repayment or interest-only alternative. Forbearance allows a borrower to not make scheduled payments for a specified period of time. Our forbearance policies and practices vary depending upon whether a borrower is current or delinquent at the time forbearance is requested, generally with stricter requirements for delinquent borrowers. Using forbearance extends the original term of the loan by the term of forbearance taken. Forbearance does not grant any reduction in the total principal or interest repayment obligation. While a loan is in forbearance status, interest continues to accrue and is capitalized (added to principal) at the end of the forbearance. Interest will not capitalize at the end of certain types of forbearance, such as disaster forbearance, however. During the first six months following a borrower’s grace period, the borrower may be eligible for extended grace forbearance, which provides temporary payment relief to give the borrower additional time to be in a position to make regular principal and interest payments. Hardship forbearance may be granted in order to provide temporary payment relief to borrowers who are either current in their payments but demonstrate a need for relief, or who are delinquent in their payments but demonstrate an ability and willingness to repay their obligation. In these circumstances, a borrower’s loan is placed into a forbearance status in limited monthly increments and is reflected in the forbearance status at month-end during this time. At the end of the forbearance period, for borrowers who were current when they entered forbearance, or those who were delinquent but met specific payment requirements curing their delinquency, the borrower will enter repayment status as current. In all instances, the borrowers are expected to begin making scheduled monthly payments at the end of their forbearance periods. This strategy is aimed at assisting borrowers while mitigating the risks of delinquency and default as well as encouraging resolution of delinquent loans. Disaster forbearance is used to assist borrowers affected by material events, typically federally-declared disasters, including hurricanes, wildfires, floods, and pandemics. We typically grant disaster forbearance to affected borrowers in 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 below. Currently, we generally grant forbearance in increments of one to two months at a time, for up to 12 months over the life of the loan, although extended grace forbearance is typically granted in one six-month increment and disaster forbearance and certain other limited instances do not apply toward the 12-month limit. We also currently require 12 months of positive payment performance by a borrower (meaning the borrower must make payment in a cumulative amount equivalent to 12 monthly required payments under the loan) between successive grants of forbearance and between forbearance grants and certain other repayment alternatives. This required period of positive payment performance does not apply, however, to extended grace forbearances and is not required for a borrower to receive a contractual interest rate reduction. In addition, we currently limit the participation of delinquent borrowers in certain short-term extended or interest-only repayment alternatives to once in 12 months and twice in five years. We also now count the number of months a borrower receives a short-term extended repayment alternative toward the 12-month forbearance limit described above. For borrowers experiencing more severe hardship, following evaluation of their ability and willingness to repay, we currently use modification programs tailored to the financial condition of the individual borrower. Pursuant to our modification programs, we may reduce the contractual interest rate on a loan to a rate between 2 percent and 8 percent 2024 Form 10-K — SLM CORPORATION 65 for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan. For borrowers experiencing the most severe financial conditions, we may permanently reduce the contractual interest rate on a loan to 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Following modification, borrowers who are delinquent but meet specific payment requirements curing their delinquency will be brought current. We currently limit the granting of a permanent extension of the final maturity date of a loan to once over the life of the loan, and the number of interest rate reductions to twice over the life of the loan. We continually 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 percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status. At December 31, 2024, 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 1.9 percent. Approximately 77 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status fewer than 25 months. As of December 31, 2024 (dollars in millions) Private Education Loans Held for Investment Aged by Number of Months in Active Repayment Status Not Yet in Repayment Total 0 to 12 13 to 24 25 to 36 37 to 48 More than 48 Loans in-school/grace/deferment $ — $ — $ — $ — $ — $ 5,723 $ 5,723 Loans in forbearance 247 66 37 23 32 — 405 Loans in repayment - current 4,497 3,585 2,230 1,518 3,683 — 15,513 Loans in repayment - delinquent 30-59 days 78 58 49 36 90 — 311 Loans in repayment - delinquent 60-89 days 38 25 22 17 39 — 141 Loans in repayment - 90 days or greater past due 39 23 20 16 44 — 142 Total $ 4,899 $ 3,757 $ 2,358 $ 1,610 $ 3,888 $ 5,723 22,235 Deferred origination costs and unamortized premium/(discount) 103 Allowance for loan losses (1,436) Total Private Education Loans, net $ 20,902 Loans in forbearance as a percentage of total Private Education Loans in repayment and forbearance 1.50 % 0.40 % 0.23 % 0.14 % 0.19 % — % 2.46 % 2024 Form 10-K — SLM CORPORATION 66 As of December 31, 2023 (dollars in millions) Private Education Loans Held for Investment Aged by Number of Months in Active Repayment Status Not Yet in Repayment Total 0 to 12 13 to 24 25 to 36 37 to 48 More than 48 Loans in-school/grace/deferment $ — $ — $ — $ — $ — $ 5,292 $ 5,292 Loans in forbearance 190 55 31 20 28 — 324 Loans in repayment - current 4,129 3,529 2,183 1,472 3,496 — 14,809 Loans in repayment - delinquent 30-59 days 81 56 45 33 84 — 299 Loans in repayment - delinquent 60-89 days 40 29 24 17 41 — 151 Loans in repayment - 90 days or greater past due 42 28 23 16 42 — 151 Total $ 4,482 $ 3,697 $ 2,306 $ 1,558 $ 3,691 $ 5,292 21,026 Deferred origination costs and unamortized premium/(discount) 81 Allowance for loan losses (1,335) Total Private Education Loans, net $ 19,772 Loans in forbearance as a percentage of total Private Education Loans in repayment and forbearance 1.21 % 0.35 % 0.19 % 0.13 % 0.18 % — % 2.06 % As of December 31, 2022 (dollars in millions) Private Education Loans Held for Investment Aged by Number of Months in Active Repayment Status Not Yet in Repayment Total 0 to 12 13 to 24 25 to 36 37 to 48 More than 48 Loans in-school/grace/deferment $ — $ — $ — $ — $ — $ 4,895 $ 4,895 Loans in forbearance 165 43 26 19 26 — 279 Loans in repayment - current 4,131 3,393 2,129 1,603 3,303 — 14,559 Loans in repayment - delinquent 30-59 days 80 58 44 31 74 — 287 Loans in repayment - delinquent 60-89 days 43 30 20 17 38 — 148 Loans in repayment - 90 days or greater past due 41 27 20 14 34 — 136 Total $ 4,460 $ 3,551 $ 2,239 $ 1,684 $ 3,475 $ 4,895 20,304 Deferred origination costs and unamortized premium/(discount) 70 Allowance for loan losses (1,354) Total Private Education Loans, net $ 19,020 Loans in forbearance as a percentage of total Private Education Loans in repayment and forbearance 1.07 % 0.28 % 0.17 % 0.12 % 0.17 % — % 1.81 % 2024 Form 10-K — SLM CORPORATION 67 Private Education Loans Held for Investment Types The following table provides information regarding the loans in repayment balance and total loan balance by Private Education Loan held for investment product type for the years ended December 31, 2024 and 2023. As of December 31, 2024 (dollars in thousands) Smart Option Graduate Loan Other (1) Total $ in repayment (2) $ 14,273,952 $ 1,466,915 $ 365,884 $ 16,106,751 $ in total $ 19,710,266 $ 2,067,468 $ 457,274 $ 22,235,008 As of December 31, 2023 (dollars in thousands) Smart Option Graduate Loan Other (1) Total $ in repayment (2) $ 13,747,153 $ 1,243,129 $ 419,532 $ 15,409,814 $ in total $ 18,764,200 $ 1,750,814 $ 510,830 $ 21,025,844 (1) Other includes our Parent Loan and Career training loan products. In December 2021, we discontinued offering our Parent Loan product. Applications for those loans received before the offering termination date continued to be processed, and final disbursements under those loans occurred in February 2023. In May 2022, we discontinued offering our Career Training loan product. Applications for those loans received before the offering termination date continued to be processed, and final disbursements under those loans occurred in September 2023. (2) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance). Accrued Interest Receivable The following table provides information regarding accrued interest receivable on our Private Education Loans. The table also discloses the amount of accrued interest on loans 90 days or greater past due as compared to our allowance for uncollectible interest. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accruing on that loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school. The allowance for credit losses considers both the collectibility of principal and accrued interest. The allowance for uncollectible interest estimates the additional uncollectible interest that is not captured in the allowance for credit losses. Private Education Loans Accrued Interest Receivable (Dollars in thousands) Total Interest Receivable 90 Days or Greater Past Due Allowance for Uncollectible Interest (1) December 31, 2024 $ 1,549,415 $ 6,420 $ 12,366 December 31, 2023 $ 1,354,565 $ 8,373 $ 9,897 December 31, 2022 $ 1,177,562 $ 6,609 $ 8,121 December 31, 2021 $ 1,187,123 $ 3,635 $ 4,937 December 31, 2020 $ 1,168,895 $ 4,354 $ 4,467 (1) The allowance for uncollectible interest at December 31, 2024, 2023, 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, 2024, 2023, 2022, 2021, and 2020, relates to $164 million, $151 million, $240 million, $240 million, and $196 million, respectively, of accrued interest receivable) that is/was not expected to be capitalized. The accrued interest receivable that is/was expected to be capitalized ($1.4 billion, $1.2 billion, $937 million, $947 million, and $973 million, respectively, at December 31, 2024, 2023, 2022, 2021, and 2020) is/was reserved for in the allowance for credit losses. 2024 Form 10-K — SLM CORPORATION 68 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 our ability to meet any outflows of our Bank deposits. To achieve these objectives, we analyze and monitor our liquidity needs, and maintain excess liquidity and access to diverse funding sources, such as deposits at the Bank, issuance of secured debt primarily through asset-backed securitizations, other financing facilities, and loan sales. At December 31, 2024 and December 31, 2023, our sources of liquidity included liquid investments with unrealized losses of $105.8 million and $128.9 million, respectively. It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan or liquid investment sales under all but the most dire emergency conditions. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed in the Asset and Liability Committee, a management-level committee. These policies take into account the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines. Key risks associated with our liquidity relate to our ability to access the capital markets and the markets for bank deposits at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the marketplace. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses as well as specific stresses that test the resiliency of our balance sheet. We hold a significant liquidity buffer of cash and securities, which we expect to maintain through 2025. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter. Sources of Liquidity and Available Capacity Ending Balances As of December 31, (dollars in thousands) 2024 2023 2022 Sources of primary liquidity: Unrestricted cash and liquid investments: Holding Company and other non-bank subsidiaries $ 3,745 $ 3,224 $ — Sallie Mae Bank (1) 4,696,621 4,146,614 4,617,533 Available-for-sale investments 1,361,431 1,988,295 2,012,901 Total unrestricted cash and liquid investments $ 6,061,797 $ 6,138,133 $ 6,630,434 (1) This amount will be used primarily to originate Private Education Loans at the Bank. Average Balances Years Ended December 31, (dollars in thousands) 2024 2023 2022 Sources of primary liquidity: Unrestricted cash and liquid investments: Holding Company and other non-bank subsidiaries $ 8,698 $ 6,827 $ 7,954 Sallie Mae Bank (1) 4,504,167 4,014,444 4,080,312 Available-for-sale investments 1,647,113 1,975,754 2,230,118 Total unrestricted cash and liquid investments $ 6,159,978 $ 5,997,025 $ 6,318,384 (1) This amount will be used primarily to originate Private Education Loans at the Bank. 2024 Form 10-K — SLM CORPORATION 69 Deposits The following table summarizes total deposits. As of December 31, (dollars in thousands) 2024 2023 Deposits - interest-bearing $ 21,066,752 $ 21,651,657 Deposits - non-interest-bearing 1,816 1,531 Total deposits $ 21,068,568 $ 21,653,188 Our total deposits of $21.1 billion were comprised of $9.5 billion in brokered deposits and $11.6 billion in retail and other deposits at December 31, 2024, compared with total deposits of $21.7 billion, which were comprised of $10.3 billion in brokered deposits and $11.4 billion in retail and other deposits, at December 31, 2023. Interest-bearing deposits as of December 31, 2024 and 2023 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity money market deposit accounts (“MMDAs”), and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $7.0 billion of our deposit total as of December 31, 2024, compared with $7.6 billion at December 31, 2023. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms. Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $11 million, $12 million, and $13 million in the years ended December 31, 2024, 2023, and 2022, respectively. Fees paid to third-party brokers related to brokered CDs were $8 million, $8 million, and $13 million during the years ended December 31, 2024, 2023, and 2022, respectively. Interest-bearing deposits at December 31, 2024 and 2023 are summarized as follows: 2024 2023 As of December 31, (dollars in thousands) Amount Year-End Weighted Average Stated Rate (1) Amount Year-End Weighted Average Stated Rate (1) Money market $ 9,582,290 4.27 % $ 10,258,292 4.85 % Savings 944,034 4.02 945,000 4.35 Certificates of deposit 10,540,428 4.20 10,448,365 3.69 Deposits - interest-bearing $ 21,066,752 $ 21,651,657 (1) Includes the effect of interest rate swaps in effective hedge relationships. As of December 31, 2024 and 2023, there were $567 million and $478 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $92 million and $91 million at December 31, 2024 and 2023, respectively. 2024 Form 10-K — SLM CORPORATION 70 Counterparty Exposure Counterparty exposure related to financial instruments arises from the risk that a lending, investment, or derivative counterparty will not be able to meet its obligations to us. Excess cash is generally invested with the 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. Additionally, our investing activity is governed by Board-approved limits on the amount that is allowed to be invested with any one issuer based on the credit rating of the issuer, further minimizing our counterparty exposure. Counterparty credit risk is considered when valuing investments and considering impairment. Related to derivative transactions, protection against counterparty risk is generally provided by International Swaps and Derivatives Association, Inc. Credit Support Annexes (“CSAs”), or clearinghouses for over-the-counter derivatives. CSAs require a counterparty to post collateral if a potential default would expose the other party to a loss. All derivative contracts entered into by the Bank are covered under CSAs or clearinghouse agreements and require collateral to be exchanged based on the net fair value of derivatives with each counterparty. Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position, less any collateral held by us and plus collateral posted with the counterparty. Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of December 31, 2024, $850 million notional of our derivative contracts were cleared on the CME and $71 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 92.3 percent and 7.7 percent, respectively, of our total notional derivative contracts of $921 million at December 31, 2024. For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of December 31, 2024 was $(22) million and $(1) million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses). Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At December 31, 2024 and 2023, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $5 million and $9 million, respectively. We have liquidity exposure related to collateral movements between us and our derivative counterparties. Movements in the value of the derivatives, which are primarily affected by changes in interest rates, may require us to return cash collateral held or may require us to access primary liquidity to post collateral to counterparties. The table below highlights exposure related to our derivative counterparties as of December 31, 2024. As of December 31, 2024 (dollars in thousands) SLM Corporation and Sallie Mae Bank Contracts Total exposure, net of collateral $ 4,839 Exposure to counterparties with credit ratings, net of collateral $ 4,839 Percent of exposure to counterparties with credit ratings below S&P AA- or Moody’s Aa3 — % Percent of exposure to counterparties with credit ratings below S&P A- or Moody’s A3 — % 2024 Form 10-K — SLM CORPORATION 71 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 position. Under U.S. Basel III and the regulatory framework for prompt corrective action, the Bank must meet specific capital standards that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and its classification under the prompt corrective action framework are also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors. 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 2025. As of December 31, 2024, the Bank’s risk-based and leverage capital ratios exceed the required minimum ratios and the applicable buffers under the fully phased-in U.S. Basel III standards as well as the “well capitalized” standards under the prompt corrective action framework. Under U.S. Basel III, the Bank is required to maintain the following minimum regulatory capital ratios: a Common Equity Tier 1 risk-based capital ratio of 4.5 percent, a Tier 1 risk-based capital ratio of 6.0 percent, a Total risk-based capital ratio of 8.0 percent, and a Tier 1 leverage ratio of 4.0 percent. In addition, the Bank is subject to a Common Equity Tier 1 capital conservation buffer of greater than 2.5 percent. Failure to maintain the buffer will result in restrictions on the Bank’s ability to make capital distributions, including the payment of dividends, and to pay discretionary bonuses to executive officers. Including the buffer, the Bank is required to maintain the following capital ratios under U.S. Basel III in order to avoid such restrictions: a Common Equity Tier 1 risk-based capital ratio of greater than 7.0 percent, a Tier 1 risk-based capital ratio of greater than 8.5 percent, and a Total risk-based capital ratio of greater than 10.5 percent. To qualify as “well capitalized” under the prompt corrective action framework for insured depository institutions, the Bank must maintain a Common Equity Tier 1 risk-based capital ratio of at least 6.5 percent, a Tier 1 risk-based capital ratio of at least 8.0 percent, a Total risk-based capital ratio of at least 10.0 percent, and a Tier 1 leverage ratio of at least 5.0 percent. In July 2023, the federal banking agencies proposed a rule to implement significant changes to the U.S. Basel Ill regulatory capital requirements. The proposed changes to the regulatory capital requirements generally would amend or introduce approaches and methodologies that would apply to banking organizations with total consolidated assets of $100 billion or more or to banking organizations with significant trading activity. The proposed rule therefore would not affect the Bank's capital requirements or the calculation of its capital ratios. 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. 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 each of January 1, 2022, 2023, and 2024, 25 percent of the adjusted transition amounts was phased in for regulatory capital purposes. On January 1, 2025, the remaining 25 percent of the adjusted transition amounts was phased in for regulatory capital purposes, with the phased-in amounts included in regulatory capital at the beginning of the 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 2024 Form 10-K — SLM CORPORATION 72 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, 2024, the adjusted transition amounts that were deferred and are being phased in for regulatory capital purposes are as follows: Adjusted Transition Amounts Phase-In Amounts for the Year Ended Phase-In Amounts for the Year Ended Phase-In Amounts for the Year Ended Remaining Adjusted Transition Amounts to be Phased-In (Dollars in thousands) December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2024 Retained earnings $ 836,351 $ (209,088) $ (209,088) $ (209,088) $ 209,087 Allowance for credit losses 1,038,145 (259,536) (259,536) (259,536) 259,537 Liability for unfunded commitments 104,377 (26,094) (26,094) (26,095) 26,094 Deferred tax asset 306,171 (76,542) (76,542) (76,543) 76,544 The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital. At December 31, 2024 and December 31, 2023, the unrealized loss on available-for-sale investments included in other comprehensive income totaled $83 million and $115 million, net of tax of $27 million and $37 million, respectively. The capital ratios would remain above the well capitalized thresholds, including applicable capital conservation buffers, if the unrealized loss became fully recognized into capital. Actual U.S. Basel III Minimum Requirements Plus Buffer (1)(2) (Dollars in thousands) Amount Ratio Amount Ratio As of December 31, 2024 (3) : Common Equity Tier 1 Capital (to Risk-Weighted Assets) $ 2,957,067 11.3 % $ 1,827,318 > 7.0 % Tier 1 Capital (to Risk-Weighted Assets) $ 2,957,067 11.3 % $ 2,218,886 > 8.5 % Total Capital (to Risk-Weighted Assets) $ 3,294,663 12.6 % $ 2,740,976 > 10.5 % Tier 1 Capital (to Average Assets) $ 2,957,067 9.7 % $ 1,213,505 > 4.0 % As of December 31, 2023 (3) : Common Equity Tier 1 Capital (to Risk-Weighted Assets) $ 3,019,973 12.3 % $ 1,719,621 > 7.0 % Tier 1 Capital (to Risk-Weighted Assets) $ 3,019,973 12.3 % $ 2,088,111 > 8.5 % Total Capital (to Risk-Weighted Assets) $ 3,334,140 13.6 % $ 2,579,432 > 10.5 % Tier 1 Capital (to Average Assets) $ 3,019,973 10.2 % $ 1,184,213 > 4.0 % (1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer. (2) The Bank’s regulatory capital ratios also exceeded all applicable standards for the Bank to qualify as “well capitalized” under the prompt corrective action framework. (3) For December 31, 2024 and 2023, the actual amounts and the actual ratios include the respective adjusted transition amounts discussed above that were phased in at the beginning of 2024 and 2023. 2024 Form 10-K — SLM CORPORATION 73 Dividends The Bank is chartered under the laws of the State of Utah and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $570 million, $550 million, and $700 million in dividends to the Company for the years ended December 31, 2024, 2023, and 2022, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs. See Item 1A. “Risk Factors — GENERAL RISKS” for possible limitations on the payments of our dividends. Borrowings Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term ABS program and our Secured Borrowing Facility. The issuing entities for those secured borrowings are variable interest entities and are consolidated for accounting purposes. The following table summarizes our secured borrowings at December 31, 2024 and 2023. For additional information, see Notes to Consolidated Financial Statements, Note 10, “Borrowings” in this Form 10-K. 2024 2023 As of December 31, (dollars in thousands) Short-Term Long-Term Total Short-Term Long-Term Total Unsecured borrowings: Unsecured debt (fixed-rate) $ — $ 995,420 $ 995,420 $ — $ 992,200 $ 992,200 Total unsecured borrowings — 995,420 995,420 — 992,200 992,200 Secured borrowings: Private Education Loan term securitizations: Fixed-rate — 4,617,743 4,617,743 — 3,585,254 3,585,254 Variable-rate — 827,182 827,182 — 650,058 650,058 Total Private Education Loan term securitizations — 5,444,925 5,444,925 — 4,235,312 4,235,312 Secured Borrowing Facility — — — — — — Total secured borrowings — 5,444,925 5,444,925 — 4,235,312 4,235,312 Total $ — $ 6,440,345 $ 6,440,345 $ — $ 5,227,512 $ 5,227,512 Short-term Borrowings Secured Financings On June 14, 2024, we amended our $2 billion maximum financing Secured Borrowing Facility to extend the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 13, 2025. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 13, 2026 (or earlier, if certain material adverse events occur). The one-year revolving period plus the one-year amortization period results in a contractual maturity that is two years from the date of inception or renewal; however, we classify advances under our Secured Borrowing Facility as short-term borrowings because it is our intention to repay those advances within one year. For the years ended December 31, 2024 and 2023, there were no outstanding short-term borrowings under the Secured Borrowing Facility. For additional information, see Notes to Consolidated Financial Statements, Note 10, “Borrowings” in this Form 10-K. 2024 Form 10-K — SLM CORPORATION 74 Long-term Borrowings Unsecured Financing Transactions On October 29, 2020, we issued at par $500 million of 4.20 percent unsecured Senior Notes due October 29, 2025. This unsecured borrowing remained classified as long-term as of December 31, 2024 in accordance with our ability and intent to refinance the debt on a long-term basis. At December 31, 2024, the outstanding balance was $499 million. On February 18, 2025, we redeemed these Senior Notes. See Notes to Consolidated Financial Statements, Note 23, “Subsequent Events” in this Form 10-K for additional information. On November 1, 2021, we issued $500 million of 3.125 percent unsecured Senior Notes due November 2, 2026, at a price of 99.43 percent. At December 31, 2024, the outstanding balance was $496 million. On January 31, 2025, we issued $500 million of 6.50 percent unsecured Senior Notes due January 31, 2030. For additional information, see Notes to Consolidated Financial Statements, Note 23, “Subsequent Events” in this Form 10-K. Secured Financing Transactions The following summarizes those Private Education Loan Trust term ABS issued in 2023 and 2024 in which we retained 100 percent of the residual class certificates. SMB Private Education Loan Trust Date Closed Loans Transferred to the Trust (1) Notes Issued Gross Proceeds Weighted Average Cost of Funds (2) Weighted Average Life (in years) of Class A and Class B Notes (Dollars in thousands) 2023-A ABS Transaction March 15, 2023 $ 644,573 $ 579,000 $ 571,910 SOFR plus 1.53% 5.06 2023-C ABS Transaction August 16, 2023 647,934 568,000 567,881 SOFR plus 1.69% 4.93 Total 2023 $ 1,292,507 $ 1,147,000 $ 1,139,791 2024-C ABS Transaction May 15, 2024 $ 733,644 $ 668,000 $ 667,888 SOFR plus 1.19% 5.36 2024-E ABS Transaction August 14, 2024 944,645 868,000 867,743 SOFR plus 1.42% 5.17 2024-F ABS Transaction November 6, 2024 732,445 680,000 679,981 SOFR plus 1.08% 5.09 Total 2024 $ 2,410,734 $ 2,216,000 $ 2,215,612 (1) The transfer of such loans did not qualify for sale treatment and thus remain on our consolidated balance sheet. At December 31, 2024, the following Private Education Loan amounts remain encumbered related to these transactions: SMB Private Education Loan Trust Loan Principal Capitalized Interest Total Loans (Dollars in thousands) 2023-A ABS Transaction $ 484,551 $ 32,856 $ 517,407 2023-C ABS Transaction 516,507 35,287 551,794 Total 2023 $ 1,001,058 $ 68,143 $ 1,069,201 2024-C ABS Transaction $ 646,550 52,968 $ 699,518 2024-E ABS Transaction 841,355 69,238 910,593 2024-F ABS Transaction 662,361 55,131 717,492 Total 2024 $ 2,150,266 177,337 $ 2,327,603 (2) Represents SOFR equivalent cost of funds for variable and fixed-rate bonds, excluding issuance costs. 2024 Form 10-K — SLM CORPORATION 75 Pre-2023 Transactions Prior to 2023, we executed a total of $10.38 billion in ABS transactions that were accounted for as secured financings. At December 31, 2024, $3.74 billion of our Private Education Loans, including $3.63 billion of principal and $107 million in capitalized interest, were encumbered as a result of these transactions. Other Borrowing Sources We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at December 31, 2024. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing, and is payable daily. We did not utilize these lines of credit in the years ended December 31, 2024 and 2023. We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Discount Window (the “Window”). The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At December 31, 2024 and December 31, 2023, the value of our pledged collateral at the FRB was $2.2 billion and $1.6 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the years ended December 31, 2024 and 2023. Contractual Loan Commitments When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval, but instead have a commitment to fund a portion of the loan at a later date (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At December 31, 2024, we had $2.3 billion of outstanding contractual loan commitments which we expect to fund during the remainder of the 2024/2025 academic year. At December 31, 2024, we had an $85 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. Contractual Cash Obligations In addition to our contractual loan commitments, we have certain other contractual cash obligations and commitments. These include contractual principal obligations associated with long-term Bank deposits, secured borrowings, unsecured debt, and lease obligations. Our material contractual cash obligations relate to Bank deposits. At December 31, 2024, we had $7.8 billion of principal obligations related to Bank deposits due in the next year, and $7.7 billion due thereafter. At December 31, 2024, our contractual cash obligations due in the next year for secured borrowings, unsecured debt, and lease obligations were $824 million, $500 million, and $7 million, respectively, and our contractual cash obligations due thereafter for our secured borrowings, unsecured debt, and lease obligations were $4.6 billion, $500 million, and $27 million, respectively. Common Stock Our shareholders have authorized the issuance of 1.125 billion shares of common stock (par value of $0.20). At December 31, 2024, 210 million shares were issued and outstanding and 33 million shares were unissued but encumbered for outstanding stock options, restricted stock, restricted stock units, performance stock units, and dividend equivalent units for employee compensation and remaining authority for stock-based compensation plans. See Notes to Consolidated Financial Statements, Note 12, “Stockholders’ Equity” in this Form 10-K for additional details. 2024 Form 10-K — SLM CORPORATION 76 Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with GAAP. Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies” in this Form 10-K includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. Actual results may differ from these estimates under varying assumptions or conditions. On a quarterly basis, management evaluates its estimates, particularly those that include the most difficult, subjective, or complex judgments and are often about matters that are inherently uncertain. The most significant judgments, estimates, and assumptions relate to the following critical accounting policies that are discussed in more detail below. Allowance for Credit Losses Allowance for Credit Losses We maintain an allowance for credit losses for the lifetime expected credit losses on loans in our portfolios, as well as for future loan commitments, at the reporting date. In determining the lifetime expected credit losses on our Private Education Loan portfolio loan segments, we use a discounted cash flow method. This method requires us to project future principal and interest cash flows on our loans in those portfolios. To estimate the future expected cash flows, we use statistical loan-level models that consider life of loan expectations for defaults, prepayments, recoveries, and any other qualitative adjustments deemed necessary, to determine the adequacy of the allowance at each balance sheet date. These cash flows are discounted at the loan’s effective interest rate to calculate the present value of those cash flows. Management adjusts the effective interest rate used to discount expected cash flows to incorporate expected prepayments. The difference between the present value of those cash flows and the amortized cost basis of the underlying loans is the allowance for credit losses. Entities that measure credit losses based on the present value of expected future cash flows are permitted to report the entire change in present value as credit loss expense, but may alternatively report the change in present value due to the passage of time as interest income. We have elected to report the entire change in present value as credit loss expense. We estimate future default rates used in our current expected credit losses at a loan level using historical loss experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period. At the end of the reasonable and supportable forecast period, we immediately revert our forecasted economic factors to long-term historical averages. We estimate future prepayment speeds used in our current expected credit losses at a loan level using historical prepayment experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period. The reasonable and supportable forecast period is meant to represent the period in which we believe we can estimate the impact of forecasted economic factors in our expected losses. We use a two-year reasonable and supportable forecast period, although this period is subject to change as our view evolves on our ability to reasonably forecast economic conditions to estimate future losses. In estimating future default rates and prepayment speeds in our current expected credit losses, we use a combination of expected economic scenarios coupled with our historical experience and adjust for any qualitative factors (as described below). We also develop an adverse and favorable economic scenario. At each reporting date, we determine the appropriate weighting of these alternate scenarios based upon the current economic conditions and our view of the risks of alternate outcomes. This weighting of expectations is used in calculating our current expected credit losses recorded each period. We obtain forecasts for 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, 2024, December 31, 2023, and December 31, 2022, we used the Baseline (50th percentile likelihood of occurring)/S1 (stronger near-term growth scenario - 10 percent likelihood of occurring)/S3 (unfavorable (or downside) scenario - 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. In estimating recoveries, we use both estimates of what we expect to receive from the sale of defaulted loans as well as historical borrower payment behavior to estimate the timing and amount of future recoveries on charged-off loans. 2024 Form 10-K — SLM CORPORATION 77 In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses, which could result in management overlays (increases or decreases to the allowance for credit losses). These management overlays can encompass a broad array of factors not captured by model inputs, including, but not limited to, changes in lending policies and procedures, including changes in underwriting standards, changes in servicing policies and collection administration practices, including the loan modification program changes implemented in the fourth quarter of 2023, state law changes that could impact servicing and collection practices, charge-offs, recoveries not already included in the analysis, the effect of other external factors such as legal and regulatory requirements on the level of estimated current expected credit losses, the performance of the model over time versus actual losses, and any other operational or regulatory changes that could affect our estimate of future losses. The evaluation of the allowance for credit losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. If actual future performance in delinquency, charge-offs, and recoveries is significantly different than estimated, or management assumptions or practices were to change, this could materially affect the estimate of the allowance for credit losses, the timing of when losses are recognized, and the related provision for credit losses in our consolidated statements of income. When calculating our allowance for credit losses and liability for unfunded commitments, we incorporate several inputs that are subject to change period to period. These include, but are not limited to, CECL model inputs and any overlays deemed necessary by management. The most impactful CECL model inputs include: • Economic forecasts; • Weighting of economic forecasts; and • Recovery rates. Of the model inputs outlined above, economic forecasts, weighting of economic forecasts, and recovery rates are subject to estimation uncertainty, and changes in these inputs could have a material impact to our allowance for credit losses and the related provision for credit losses. In the fourth quarter of 2022, we changed our loss model to include forecasts of college graduate unemployment, retail sales, 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. In 2023, we experienced slower prepayment rates due to the rising interest rate environment. Historically, when rates rise, loan prepayments decline due to a reduction in consolidation activity of our borrowers to third party lenders, and when rates decline, loan prepayments rise due to an increase in consolidation activity of our borrowers to third party lenders. During 2023, our estimates of future prepayment speeds reflected the then current interest rate environment and future expectations of increased prepayment speeds in line with market expectations of a decline in interest rates based on the scenarios produced by Moody's Analytics described above. Slower prepayment speeds increase the allowance for credit losses because the loss rates applied in the future periods are applied to higher loan balances. In the second quarter of 2024, we implemented a loan-level future default rate model that includes current portfolio characteristics and forecasts of real gross domestic product and college graduate unemployment. In the second quarter of 2024, we also implemented a future prepayment speeds model to include forecasts of real gross domestic product, retail sales, SOFR, and the U.S. 10-year treasury rate. These models reduce the reliance on certain qualitative overlays compared to the previous default rate and prepayment speeds models. Prior to these changes, our default rate and prepayment speeds models used forecasts of college graduate unemployment, retail sales, home price index, and median family income. Both the future default rate model and the future prepayment speeds model are used in determining the adequacy of the allowance for credit losses. The combined impact upon implementation of these model enhancements and the changes in the related qualitative overlays did not have a material impact on the overall level of our allowance for credit losses. 2024 Form 10-K — SLM CORPORATION 78 To demonstrate the sensitivity of the allowance for credit losses for our Private Education Loan portfolio to a more pessimistic forecast of expected economic outcomes, we considered what our allowance for credit losses would be if we applied a 100 percent probability weighting to the S3 unfavorable (or downside/90th percentile) scenario (with a concurrent 0 percent weighting for both the Baseline and S1 stronger near-term growth scenarios) under the range of scenarios noted above. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our allowance for credit losses as of December 31, 2024 of $177 million or 11.6 percent. In addition, we also considered a 100 percent probability weighting to the S4 unfavorable (or downside/96th percentile) scenario (with a concomitant 0 percent weighting for both the Baseline and S1 stronger near-term growth scenarios) under the range of scenarios noted above. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our allowance for credit losses as of December 31, 2024 of $274 million or 18.0 percent. These scenarios do not reflect our current expectations as of December 31, 2024, nor do they capture other qualitative adjustments or all the potential unknown variables that could arise in the forecast periods, but they provide an approximation of possible outcomes under hypothetical pessimistic conditions. The estimated impacts were calculated for the two-year reasonable and supportable periods, but were not calculated for the remaining periods since long-term assumptions used to calculate the allowance for the remaining periods are based on longer term averages and only change when we determine there is a fundamental change that will affect the long-term rate. Below we describe in further detail our policies and procedures for the allowance for credit losses as they relate to our Private Education Loan portfolio. During the fourth quarter of 2024, we sold our remaining FFELP Loan portfolio to an unaffiliated third party. During the third quarter of 2022, we reclassified our Credit Card loan portfolio to loans held-for-sale and subsequently sold the Credit Card portfolio to a third party in May 2023. Allowance for Private Education Loan Losses In addition to the key assumptions/estimates described above, some estimates are unique to our Private Education Loan portfolio. Estimates are made on our Private Education Loans regarding when each borrower will separate from school. The cash flow timing of when a borrower will begin making full principal and interest payments is dependent upon when the student either graduates or leaves school. These dates can change based upon many factors. We receive information regarding projected graduation dates from a third-party clearinghouse. The separation from school date is updated quarterly based on updated information received from the clearinghouse. Additionally, when we have a contractual obligation to fund a loan or a portion of a loan at a later date, we make an estimate regarding the percentage of this obligation that will be funded. This estimate is based on historical experience. For unfunded commitments, we recognize the related life of loan allowance as a liability. Once the loan is funded, that liability transfers to the allowance for Private Education Loan losses. 2024 Form 10-K — SLM CORPORATION 79 Key Credit Quality Indicators - Private Education Loans We determine the collectability of our Private Education Loan portfolio by evaluating certain risk characteristics. 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 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. Additionally, loans in the deferred payment status have different credit risk profiles compared with those in current pay status. Loan seasoning affects credit risk because a loan with a history of making payments generally has a lower incidence of default than a loan with a history of making infrequent or no payments. The existence of a cosigner lowers the likelihood of default as well. We monitor and update these credit quality indicators in the analysis of the adequacy of our allowance for credit losses on a quarterly basis. In the second quarter of 2023, we changed how we collect on defaulted loans. Previously, we used a mix of in-house collectors and sales to third parties. We continue to sell a segment of defaulted loans immediately after charge-off but no longer sell retained defaulted loans (that have been subject to internal collection attempts for six months) to third parties and instead continue our collection efforts using in-house collectors and third-party collectors. This improved our estimate of recovery rates for the year ended December 31, 2023. When we estimate the timing and amount of future recoveries on charged-off loans, we no longer include expectations of future sales on retained defaulted loans. We continue to monitor how we collect on defaulted loans and may modify the approach from time to time based on performance, industry conventions, and/or regulatory feedback. For December 31, 2022, we used both an estimate of recovery rates from in-house collections as well as expectations of future sales of defaulted loans to estimate the timing and amount of future recoveries on charged-off loans. Private Education Loans generally do not require borrowers to begin principal and interest repayment until at least six months after the borrowers have graduated or otherwise separated from school. Consequently, the loss estimates for these loans are generally low while the borrower is in school and then increase upon the end of the grace period after separation from school. At December 31, 2024 and 2023, 26 percent and 25 percent, respectively, of the principal balance of the Private Education Loan portfolio was related to borrowers who were then in an in-school (fully deferred), grace, or other deferment status and not required to make payments. Our collection policies for Private Education Loans allow for periods of nonpayment (forbearance) for certain borrowers requesting an extended grace period upon leaving school or experiencing temporary difficulty meeting payment obligations. 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 the metrics considered are the allowance coverage of net charge-offs ratio; the allowance as a percentage of ending total loans plus unfunded loan commitments and total accrued interest receivable; and delinquency 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. Off-Balance Sheet Exposure for Contractual Loan Commitments When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval, but instead have a commitment to fund a portion of the loan at a later date (usually the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. The discounted cash flow approach described above includes expected future contractual disbursements. 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. 2024 Form 10-K — SLM CORPORATION 80 Uncollectible Interest The majority of the total accrued interest receivable on our Private Education Loan portfolio represents accrued interest on deferred loans where no payments are due while the borrower is in school and on fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accrued on the loan in that month. The accrued interest on these loans will be capitalized and increase the unpaid principal balance of the loans when the borrower exits the grace period after separation from school. The discounted cash flow approach and the allowance for credit losses described above consider both the collectability of principal and accrued interest. The allowance for uncollectible interest estimates the additional uncollectible interest that is not captured in the allowance for credit losses. The allowance for uncollectible interest uses historical experience to estimate the uncollectible interest on loans for which payment in full of principal or interest is not expected. This amount is recorded as a reduction of interest income. Accrued interest receivable is separately disclosed on the face of the balance sheet. Allowance for FFELP Loan Losses During the third quarter of 2024, we transferred our FFELP Loan portfolio to loans held for sale as we planned to sell our FFELP Loan portfolio. At that time, we wrote down this loan portfolio to its estimated fair value through an adjustment to the allowance for credit losses of $8 million. We subsequently sold the FFELP Loan portfolio to a third party in the fourth quarter of 2024. FFELP Loans are insured as to their principal and accrued interest in the event of default, subject to a risk-sharing level based on the date of loan disbursement. These insurance obligations are supported by contractual rights against the United States. For loans disbursed on or after July 1, 2006, owners receive 97 percent reimbursement on all qualifying claims. For loans disbursed after October 1, 1993, and before July 1, 2006, owners receive 98 percent reimbursement on all qualifying claims. For loans disbursed prior to October 1, 1993, owners receive 100 percent reimbursement. Because owners bear a maximum of three percent loss exposure due to this federal guarantee, our allowance for credit losses for FFELP Loans and related periodic provision expense were relatively small. For the years ended December 31, 2023 and 2022, we used the gross loss approach when estimating the allowance for credit losses for the unguaranteed portion of our FFELP Loans. We maintained an allowance for credit losses for our FFELP Loans at a level sufficient to cover lifetime expected credit losses. The allowance for FFELP Loan losses used historical experience of customer default behavior. We applied the default rate projections, net of applicable risk sharing, to our FFELP Loans for the relevant period to perform our quantitative calculation. Once the quantitative calculation was performed, we reviewed the adequacy of the allowance for credit losses and determined if qualitative adjustments needed to be considered. 2024 Form 10-K — SLM CORPORATION 81 Risk Management Our Approach Risk is inherent in our business activities and the specialized lending industry we serve. 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 Our Board of Directors oversees our overall strategic direction, including our risk management capability and effectiveness. The Board of Directors has oversight of key policies as well as the risk management framework developed and administered by the management team. We also have a process that is designed 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 and appropriately mitigated. To this end, we have adopted the “three lines of defense” approach to governance. Specifically, the business units form the “first line of defense” and are the “owners” of risks in their business activities. 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). 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. Risk Management Policy and Risk Appetite Standard The Risk Management Policy and Risk Appetite Standard 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, monitored, and reported. The Risk Management Policy, the Risk Appetite Standard, 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 category. The management-level Enterprise Risk Committee provides oversight of the risk appetite standard with escalation to the Board of Directors, as appropriate. Board of Directors Committee Structure We have a 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 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 statements, metrics, and associated limits 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 its oversight responsibilities relating to the major non-financial risks, including compliance risks, operational risks, information and cyber 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 statements, metrics, and associated limits and thresholds, and the promotion of our risk 2024 Form 10-K — SLM CORPORATION 82 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 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 public accounting firm. • Nominations and Governance Committee. The Nominations and Governance Committee recommends to the Board of Directors 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 of Directors, the qualifications and independence of directors, nominations to the Board of Directors, and compliance with the corporate governance standards. • Compensation Committee . 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. • Preferred Stock Committee. The Preferred Stock Committee monitors and evaluates proposed actions that may impact the rights of holders of our preferred stock. Management-Level Committee Structure Executive Committee . The EC is authorized by the Board of Directors to assist the CEO in the general supervision of the business of the Company. Specifically, the EC will (i) provide to the CEO advice and counsel, subject matter expertise, and recommendations as requested, and (ii) through its subcommittees, facilitate the evaluation and decision-making on routine cross-functional matters, and assist management in the fulfillment of management’s duties related to specific risks. The EC has established the following sub-committees to assist in fulfilling its duties. • 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 . The Credit Committee is responsible for credit and counterparty risk, product pricing, and credit and collections operations. • Operational and Compliance Risk Committee . The OCRC is the oversight body for the identification, assessment, remediation, measurement, and reporting of operational and compliance risks. • Asset and Liability Committee (“ALCO”). ALCO is responsible for the strategy, processes, and authorities with which the Bank’s interest rate risk, liquidity, and capital adequacy are managed. • Policy Management Committe e (“PMC”) The PMC is responsible for the effective and efficient administration of the Company’s policies, standards, 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. 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. Internal Audit Internal Audit provides independent assurance to the Audit Committee of the Board of Directors as to the adequacy and effectiveness of our risk management, control, and governance processes. Internal Audit also assists management by providing objective assurance, credible challenge, and consulting services around matters involving risk management. Internal Audit regularly 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 2024 Form 10-K — SLM CORPORATION 83 independent risk assessment to evaluate the risk of all significant components of the Company and uses the results to develop an annual, risk-based Internal Audit plan to provide the assurance services noted above. 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 of: adverse impacts to enterprise value, current or anticipated earnings, capital, or franchise value arising from the Company’s competitive and market position and evolving forces in the industry that can affect that position; lack of responsiveness to these conditions; strategic decisions to change the Company’s scale, market position, or operating model; or failure to appropriately consider implementation risks inherent in the Company’s strategy. The overall development of the Company’s strategic plan includes extensive engagement with the Board of Directors. Similarly, the Board of Directors provides oversight and effective challenge on performance relative to the strategic plan. Credit Risk . 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. The credit risk related to Private Education Loans is managed within a credit risk infrastructure that includes: (i) a well-defined underwriting, asset quality, and collection policy framework; (ii) an ongoing monitoring and review process of portfolio composition and trends; (iii) assignment and management of credit authorities and responsibilities; and (iv) establishment of an allowance for credit losses that covers estimated future losses based upon an analysis of portfolio metrics and economic factors. Credit risk related to derivative contracts is managed by reviewing counterparties for credit strength on an ongoing basis and through our credit policies, which place limits on the amount of exposure we may take with any one counterparty and require collateral to secure the position. 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. 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. Market risk is the risk of adverse impacts to earnings, capital, or reputation resulting from fluctuations in market conditions such as changes in interest rates, foreign exchange rates, commodity prices, equity prices, and other financial market factors. 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. Market risk exposures are managed primarily through ALCO. These activities are closely tied to those related to the management of our funding and liquidity risks. The Financial Risk Committee of our Board of Directors periodically reviews and approves the investment and asset and liability management policies and contingency funding plan developed and administered by ALCO. The Chief Financial Officer provides reports to the Financial Risk Committee of the Board of Directors on market risk management. Liquidity Risk . 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, whether due to a lack of available funding or the inability to liquidate assets in a timely and cost-effective manner. Our primary liquidity needs include our ongoing ability to: meet our funding needs through market cycles, including periods of financial stress; manage the relative maturities of assets and liabilities on our balance sheet; fund disbursements of Private Education Loans and other loans; 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 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. We analyze and monitor our liquidity risk, maintain excess liquidity, and access diverse funding sources depending on current market conditions. Liquidity risks are overseen and recommendations approved primarily through ALCO. The Financial Risk Committee of our Board of Directors is 2024 Form 10-K — SLM CORPORATION 84 responsible for periodically reviewing the liquidity positions and contingency funding plan developed and administered by ALCO. Operational 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. 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. The OCRC is the management committee responsible for operational risk, and it supports the EC in its oversight duties. The OCRC is responsible for escalation to the EC, as appropriate. 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. Cybersecurity risk is one of our significant operational risks. We provide more detailed information on our cybersecurity risk management, strategy, and governance in Part I, Item 1C. of this Form 10-K. Compliance Risk. Compliance risk is 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. Our Compliance function 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. 2024 Form 10-K — SLM CORPORATION 85