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Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2016
Receivables [Abstract]  
Allowance for Loan Losses
Allowance for Loan Losses
Our provision for loan losses represents the periodic expense of maintaining an allowance sufficient to absorb incurred probable losses in the held-for-investment loan portfolios. The evaluation of the allowance for loan losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. We believe the allowance for loan losses is appropriate to cover probable losses incurred in the loan portfolios.

Allowance for Loan Losses Metrics

 
 
Allowance for Loan Losses
 
 
Three Months Ended June 30, 2016
 
 
FFELP Loans
 
Private Education
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
Beginning balance
 
$
3,629

 
$
122,620

 
$
126,249

Total provision
 
(985
)
 
42,362

 
41,377

Net charge-offs:
 
 
 
 
 
 
Charge-offs
 
(347
)
 
(23,903
)
 
(24,250
)
Recoveries
 
—

 
3,082

 
3,082

Net charge-offs
 
(347
)
 
(20,821
)
 
(21,168
)
Loan sales(1)
 
—

 
(1,533
)
 
(1,533
)
Ending Balance
 
$
2,297

 
$
142,628

 
$
144,925

Allowance:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
63,370

 
$
63,370

Ending balance: collectively evaluated for impairment
 
$
2,297

 
$
79,258

 
$
81,555

Loans:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
400,969

 
$
400,969

Ending balance: collectively evaluated for impairment
 
$
1,061,517

 
$
11,889,740

 
$
12,951,257

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.18
%
 
1.05
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.22
%
 
1.16
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.30
%
 
1.78
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.65

 
1.71

 
 
Ending total loans, gross
 
$
1,061,517

 
$
12,290,709

 
 
Average loans in repayment(2)
 
$
786,818

 
$
7,894,340

 
 
Ending loans in repayment(2)
 
$
773,321

 
$
8,029,034

 
 

____________
(1) Represents fair value adjustments on loans sold.
(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.

     
 
 
Allowance for Loan Losses
 
 
Three Months Ended June 30, 2015
 
 
FFELP Loans
 
Private Education
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
Beginning balance
 
$
4,569

 
$
85,236

 
$
89,805

Total provision
 
466

 
15,092

 
15,558

Net charge-offs:
 
 
 
 
 
 
Charge-offs
 
(479
)
 
(13,278
)
 
(13,757
)
Recoveries
 
—

 
1,780

 
1,780

Net charge-offs
 
(479
)
 
(11,498
)
 
(11,977
)
Loan sales(1)
 
—

 
(1,520
)
 
(1,520
)
Ending Balance
 
$
4,556

 
$
87,310

 
$
91,866

Allowance:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
32,446

 
$
32,446

Ending balance: collectively evaluated for impairment
 
$
4,556

 
$
54,864

 
$
59,420

Loans:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
187,143

 
$
187,143

Ending balance: collectively evaluated for impairment
 
$
1,178,876

 
$
9,125,794

 
$
10,304,670

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.22
%
 
0.81
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.39
%
 
0.94
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.54
%
 
1.54
%
 
 
Allowance coverage of net charge-offs (annualized)
 
2.38

 
1.90

 
 
Ending total loans, gross
 
$
1,178,876

 
$
9,312,937

 
 
Average loans in repayment(2)
 
$
861,453

 
$
5,712,559

 
 
Ending loans in repayment(2)
 
$
836,545

 
$
5,666,645

 
 
____________
    
(1) Represents fair value adjustments on loans sold.
(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.



    


 
 
Allowance for Loan Losses
 
 
Six Months Ended June 30, 2016
 
 
FFELP Loans
 
Private Education
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
Beginning balance
 
$
3,691

 
$
108,816

 
$
112,507

Total provision
 
(664
)
 
76,201

 
75,537

Net charge-offs:
 
 
 
 
 
 
Charge-offs
 
(730
)
 
(42,907
)
 
(43,637
)
Recoveries
 
—

 
4,125

 
4,125

Net charge-offs
 
(730
)
 
(38,782
)
 
(39,512
)
Loan sales(1)
 
—

 
(3,607
)
 
(3,607
)
Ending Balance
 
$
2,297

 
$
142,628

 
$
144,925

Allowance:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
63,370

 
$
63,370

Ending balance: collectively evaluated for impairment
 
$
2,297

 
$
79,258

 
$
81,555

Loans:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
400,969

 
$
400,969

Ending balance: collectively evaluated for impairment
 
$
1,061,517

 
$
11,889,740

 
$
12,951,257

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.18
%
 
1.01
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.22
%
 
1.16
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.30
%
 
1.78
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.57

 
1.84

 
 
Ending total loans, gross
 
$
1,061,517

 
$
12,290,709

 
 
Average loans in repayment(2)
 
$
794,665

 
$
7,695,889

 
 
Ending loans in repayment(2)
 
$
773,321

 
$
8,029,034

 
 

____________
(1) Represents fair value adjustments on loans sold.
(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.





 
 
Allowance for Loan Losses
 
 
Six Months Ended June 30, 2015
 
 
FFELP Loans
 
Private Education
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
Beginning balance
 
$
5,268

 
$
78,574

 
$
83,842

Total provision
 
901

 
31,275

 
32,176

Net charge-offs:
 
 
 
 
 
 
Charge-offs
 
(1,613
)
 
(22,005
)
 
(23,618
)
Recoveries
 
—

 
3,168

 
3,168

Net charge-offs
 
(1,613
)
 
(18,837
)
 
(20,450
)
Loan sales(1)
 
—

 
(3,702
)
 
(3,702
)
Ending Balance
 
$
4,556

 
$
87,310

 
$
91,866

Allowance:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
32,446

 
$
32,446

Ending balance: collectively evaluated for impairment
 
$
4,556

 
$
54,864

 
$
59,420

Loans:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
187,143

 
$
187,143

Ending balance: collectively evaluated for impairment
 
$
1,178,876

 
$
9,125,794

 
$
10,304,670

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.37
%
 
0.66
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.39
%
 
0.94
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.54
%
 
1.54
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.41

 
2.32

 
 
Ending total loans, gross
 
$
1,178,876

 
$
9,312,937

 
 
Average loans in repayment(2)
 
$
880,953

 
$
5,667,912

 
 
Ending loans in repayment(2)
 
$
836,545

 
$
5,666,645

 
 

____________
(1) Represents fair value adjustments on loans sold.
(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.




Troubled Debt Restructurings (“TDRs”)
All of our loans are collectively assessed for impairment, except for loans classified as TDRs (where we conduct individual assessments of impairment). We modify the terms of loans for certain borrowers when we believe such modifications may increase the ability and willingness of a borrower to make payments and thus increase the ultimate overall amount collected on a loan. These modifications generally take the form of a forbearance, a temporary interest rate reduction or an extended repayment plan. The majority of our loans that are considered TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan. Approximately 24 percent and 23 percent of the loans granted forbearance as of June 30, 2016 and December 31, 2015, respectively, have been classified as TDRs due to their forbearance status. For additional information, see Note 6, “Allowance for Loan Losses” in our 2015 Form 10-K.
Within the Private Education Loan portfolio, loans greater than 90 days past due are considered to be nonperforming. FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment, and continue to accrue interest on those loans through the date of claim.
At June 30, 2016 and December 31, 2015, all of our TDR loans had a related allowance recorded. The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.
 
 
Recorded Investment
 
Unpaid Principal Balance
 
Allowance
 
 
 
 
 
 
 
June 30, 2016
 
 
 
 
 
 
TDR Loans
 
$
406,152

 
$
400,969

 
$
63,370

 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
TDR Loans
 
$
269,628

 
$
265,831

 
$
43,480



The following table provides the average recorded investment and interest income recognized for our TDR loans.
 
 
Three Months Ended
 
Three Months Ended
 
 
June 30, 2016
 
June 30, 2015
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
364,882

 
$
6,697

 
$
155,763

 
$
3,206



    
 
 
Six Months Ended
 
Six Months Ended
 
 
June 30, 2016
 
June 30, 2015
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
332,292

 
$
12,280

 
$
121,690

 
$
5,116




The following table provides information regarding the loan status of TDR loans.

 
 
June 30,
 
December 31,
 
 
2016
 
2015
 
 
Balance
 
%
 
Balance
 
%
TDR loans in in-school/grace/deferment(1)
 
$
12,937

 
 
 
$
6,869

 
 
TDR loans in forbearance(2)
 
59,834

 
 
 
43,756

 
 
TDR loans in repayment(3) and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
292,740

 
89.2
%
 
185,936

 
86.4
%
Loans delinquent 31-60 days(4)
 
17,134

 
5.2

 
14,948

 
6.9

Loans delinquent 61-90 days(4)
 
12,150

 
3.7

 
9,239

 
4.3

Loans delinquent greater than 90 days(4)
 
6,174

 
1.9

 
5,083

 
2.4

Total TDR loans in repayment
 
328,198

 
100.0
%
 
215,206

 
100.0
%
Total TDR loans, gross
 
$
400,969

 
 
 
$
265,831

 
 
_____
(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) 
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.
(4) 
The period of delinquency is based on the number of days scheduled payments are contractually past due.

    
The following table provides the amount of modified loans (which includes forbearance and reductions in interest rates) that became TDRs in the periods presented. Additionally, for the periods presented, the table summarizes charge-offs occurring in the TDR portfolio, as well as TDRs for which a payment default occurred in the relevant period presented and within 12 months of the loan first being designated as a TDR. We define payment default as 60 days past due for this disclosure.
 
 
Three Months Ended 
 June 30, 2016
 
Three Months Ended 
 June 30, 2015
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
92,782

 
$
5,464

 
$
21,388

 
$
75,183

 
$
1,740

 
$
8,394



 
 
Six Months Ended 
 June 30, 2016
 
Six Months Ended 
 June 30, 2015
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
153,848

 
$
10,432

 
$
47,089

 
$
139,091

 
$
2,388

 
$
13,177

_____
(1) 
Represents the principal balance of loans that have been modified during the period and resulted in a TDR.



Key Credit Quality Indicators
For Private Education Loans, the key credit quality indicators are FICO scores, the existence of a cosigner, the loan status and loan seasoning. The FICO scores are assessed at original approval and periodically refreshed/updated through the loan's term. The following table highlights the gross principal balance of our Private Education Loan portfolio stratified by key credit quality indicators.

 
 
Private Education Loans
 
 
Credit Quality Indicators
 
 
June 30, 2016
 
December 31, 2015
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
Cosigners:
 
 
 
 
 
 
 
 
With cosigner
 
$
11,035,215

 
90
%
 
$
9,515,136

 
90
%
Without cosigner
 
1,255,494

 
10

 
1,081,301

 
10

Total
 
$
12,290,709

 
100
%
 
$
10,596,437

 
100
%
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
796,650

 
6
%
 
$
700,779

 
7
%
670-699
 
1,804,573

 
15

 
1,554,959

 
15

700-749
 
3,978,560

 
32

 
3,403,823

 
32

Greater than or equal to 750
 
5,710,926

 
47

 
4,936,876

 
46

Total
 
$
12,290,709

 
100
%
 
$
10,596,437

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
1-12 payments
 
$
3,751,609

 
30
%
 
$
3,059,901

 
29
%
13-24 payments
 
2,299,536

 
19

 
2,096,412

 
20

25-36 payments
 
1,198,402

 
10

 
1,084,818

 
10

37-48 payments
 
567,240

 
4

 
513,125

 
5

More than 48 payments
 
453,680

 
4

 
414,217

 
4

Not yet in repayment
 
4,020,242

 
33

 
3,427,964

 
32

Total
 
$
12,290,709

 
100
%
 
$
10,596,437

 
100
%

(1) 
Balance represents gross Private Education Loans.
(2) 
Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due.


 The following table provides information regarding the loan status of our Private Education Loans. 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.


 
 
Private Education Loans
 
 
 
June 30,
 
December 31,
 
 
 
2016
 
2015
 
 
 
Balance
 
%
 
Balance
 
%
 
Loans in-school/grace/deferment(1)
 
$
4,020,242

 
 
 
$
3,427,964

 
 
 
Loans in forbearance(2)
 
241,433

 
 
 
241,207

 
 
 
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
 
Loans current
 
7,860,994

 
97.9
%
 
6,773,095

 
97.8
%
 
Loans delinquent 31-60 days(3)
 
87,990

 
1.1

 
91,129

 
1.3

 
Loans delinquent 61-90 days(3)
 
56,377

 
0.7

 
42,048

 
0.6

 
Loans delinquent greater than 90 days(3)
 
23,673

 
0.3

 
20,994

 
0.3

 
Total Private Education Loans in repayment
 
8,029,034

 
100.0
%
 
6,927,266

 
100.0
%
 
Total Private Education loans, gross
 
12,290,709

 
 
 
10,596,437

 
 
 
Private Education Loans deferred origination costs
 
35,212

 
 
 
27,884

 
 
 
Total Private Education Loans
 
12,325,921

 
 
 
10,624,321

 
 
 
Private Education Loans allowance for losses
 
(142,628
)
 
 
 
(108,816
)
 
 
 
Private Education Loans, net
 
$
12,183,293

 
 
 
$
10,515,505

 
 
 
Percentage of Private Education Loans in repayment
 
 
 
65.3
%
 
 
 
65.4
%
 
Delinquencies as a percentage of Private Education Loans in repayment
 
 
 
2.1
%
 
 
 
2.2
%
 
Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance
 
 
 
2.9
%
 
 
 
3.4
%
 
(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.
 



 
 
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 greater than 90 days past due as compared to our allowance for uncollectible interest. The allowance for uncollectible interest exceeds the amount of accrued interest on our 90 days past due Private Education Loan portfolio for all periods presented.
 
 
Private Education Loan
 
 
Accrued Interest Receivable
 
 
Total Interest Receivable
 
Greater Than 90 Days Past Due
 
Allowance for Uncollectible Interest
 
 
 
 
 
 
 
June 30, 2016
 
$
695,680

 
$
895

 
$
3,241

December 31, 2015
 
$
542,919

 
$
791

 
$
3,332