Loans Held for Investment

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loans Held for Investment

Loans Held for Investment

Loans Held for Investment consist of Private Education Loans and FFELP Loans. We use “Private Education Loans” to mean education loans to students or their families that are not made, insured or guaranteed by any state or federal government. Private Education Loans do not include loans insured or guaranteed under the previously existing Federal Family Education Loan Program (“FFELP”).

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 and customers’ resources. Private Education Loans bear the full credit risk of the customer. We manage this risk through risk-performance underwriting strategies and qualified cosigners. Private Education Loans generally carry a variable rate indexed to LIBOR. As of June 30, 2016, 81 percent of all of our 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 provide total cost incentives for 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. 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:

	June 30,			December 31,
	2016			2015
Private Education Loans	$	12,290,709		$	10,596,437
Deferred origination costs	35,212			27,884
Allowance for loan losses	(142,628		)	(108,816		)
Total Private Education Loans, net	12,183,293			10,515,505
FFELP Loans	1,061,517			1,115,663
Unamortized acquisition costs, net	2,913			3,114
Allowance for loan losses	(2,297		)	(3,691		)
Total FFELP Loans, net	1,062,133			1,115,086
Loans held for investment, net	$	13,245,426		$	11,630,591

The estimated weighted average life of education loans in our portfolio was approximately 6.0 years and 6.2 years at June 30, 2016 and December 31, 2015, respectively.

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

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2016				2015				2016				2015
	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	$	12,217,890	7.98	%	$	9,361,711	7.96	%	$	12,017,799	8.00	%	$	9,407,888	8.01	%
FFELP Loans	1,076,419		3.48		1,194,309		3.22		1,089,836		3.45		1,214,384		3.20
Total portfolio	$	13,294,309			$	10,556,020			$	13,107,635			$	10,622,272