Loans Held for Investment

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Loans Held for Investment

Loans Held for Investment

Loans Held for Investment consist of Private Education Loans and FFELP Loans.

Our Private Education Loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, federal loans or customers’ resources. Private Education Loans bear the full credit risk of the customer. We manage this risk through historical risk-performance underwriting strategies and the addition of qualified cosigners. Private Education Loans generally carry a variable rate indexed to LIBOR; as of September 30, 2014, 83 percent of all Private Education Loans were indexed to LIBOR. We provide incentives for customers to include a cosigner on the loan, and the vast majority of loans in our portfolio are cosigned. We also encourage customers to make payments while in school.

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. When a FFELP Loan first disbursed on and after July 1, 2006 defaults, the federal government guarantees 97 percent of the principal balance plus accrued interest (98 percent on loans disbursed before July 1, 2006) and the holder of the loan is at risk for the remaining amount not guaranteed as a Risk Sharing loss on the loan. FFELP Loans originated after October 1, 1993 are subject to Risk Sharing on loan default claim payments unless the default results from the borrower’s death, disability or bankruptcy, in which case the loan is 100 percent guaranteed.

Loans held for investment are summarized as follows:

	September 30,			December 31,
	2014			2013
Private Education Loans	$	7,829,420		$	6,563,342
Deferred origination costs	9,975			5,063
Allowance for loan losses	(59,973		)	(61,763		)
Total Private Education Loans, net	7,779,422			6,506,642
FFELP Loans	1,317,963			1,426,972
Unamortized acquisition costs, net	3,730			4,081
Allowance for loan losses	(5,742		)	(6,318		)
Total FFELP Loans, net	1,315,951			1,424,735
Loans held for investment, net	$	9,095,373		$	7,931,377

The estimated weighted average life of Private Education Loans in our portfolio was approximately 6.7 years and 7.0 years at September 30, 2014 and December 31, 2013, respectively.

The average balance and the respective weighted average interest rates are summarized as follows:

	Three Months Ended September 30, 2014				Three Months Ended September 30, 2013
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	7,407,774	8.20	%	$	5,846,241	8.22	%
FFELP Loans	1,339,748		3.23		1,167,174		3.38
Total portfolio	$	8,747,522			$	7,013,415

	Nine Months Ended September 30, 2014				Nine Months Ended September 30, 2013
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	7,394,985	8.19	%	$	5,860,864	8.15	%
FFELP Loans	1,373,945		3.25		1,099,436		3.33
Total portfolio	$	8,768,930			$	6,960,300