Loans Held for Investment

9 Months Ended

Sep. 30, 2015

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

“Private Education Loans” are education loans to students or their families that are not issued, insured, or guaranteed by any state or federal government. Our Private Education Loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, government loans, or customers’ resources. Private Education Loans bear the full credit risk of the borrower and any cosigners. We manage this risk through risk-performance underwriting strategies and the addition of qualified cosigners. Our Private Education Loans generally carry a variable interest rate indexed to LIBOR. As of September 30, 2015, 82 percent of all Private Education Loans were indexed to LIBOR. We provide incentives for customers to include a cosigner on our Private Education Loans, and the vast majority of Private Education Loans in our portfolio are cosigned. We also encourage our Private Education Loan customers to make payments while in school.

FFELP Loans are insured by the federal government 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, we receive 97 percent reimbursement on all qualifying claims. For loans disbursed after October 1, 1993, and before July 1, 2006, we receive 98 percent reimbursement on all qualifying claims. For loans disbursed prior to October 1, 1993, we receive 100 percent reimbursement on all qualifying claims.

Loans held for investment are summarized as follows:



	September 30,			December 31,
	2015			2014
Private Education Loans	$	10,840,261		$	8,311,376
Deferred origination costs	26,283			13,845
Allowance for loan losses	(100,033		)	(78,574		)
Total Private Education Loans, net	10,766,511			8,246,647

FFELP Loans	1,143,595			1,264,807
Unamortized acquisition costs, net	3,212			3,600
Allowance for loan losses	(4,170		)	(5,268		)
Total FFELP Loans, net	1,142,637			1,263,139

Loans held for investment, net	$	11,909,148		$	9,509,786

The estimated weighted average life of education loans in our portfolio was approximately 6.3 years and 6.2 years at September 30, 2015 and December 31, 2014, respectively.

The average balance and the respective weighted average interest rates of education loans in our portfolio are summarized as follows:



	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2015				2014				2015				2014
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	9,869,025	7.87	%	$	7,407,774	8.20	%	$	9,563,290	7.96	%	$	7,394,985	8.19	%
FFELP Loans	1,161,288		3.27		1,339,748		3.23		1,196,491		3.22		1,373,945		3.25
Total portfolio	$	11,030,313			$	8,747,522			$	10,759,781			$	8,768,930