Loans Held for Investment

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Loans Held for Investment

Loans Held for Investment

Loans held for investment consist of Private Education Loans, FFELP Loans and Personal 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”). We use “Personal Loans” to mean those unsecured loans to individuals that may be used for non-educational purposes. We began to opportunistically acquire Personal Loans in the fourth quarter of 2016.

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 may be fixed rate or may carry a variable interest rate indexed to LIBOR. As of September 30, 2017 and December 31, 2016, 78.2 percent and 81.4 percent, respectively, 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:

	September 30,			December 31,
	2017			2016
Private Education Loans	$	17,132,907		$	14,251,675
Deferred origination costs	53,501			44,206
Allowance for loan losses	(227,167		)	(182,472		)
Total Private Education Loans, net	16,959,241			14,113,409
FFELP Loans	949,180			1,010,908
Unamortized acquisition costs, net	2,696			2,941
Allowance for loan losses	(1,352		)	(2,171		)
Total FFELP Loans, net	950,524			1,011,678
Personal Loans	132,100			12,893
Allowance for loan losses	(1,400		)	(58		)
Total Personal Loans, net	130,700			12,835
Loans held for investment, net	$	18,040,465		$	15,137,922

The estimated weighted average life of education loans in our portfolio was approximately 5.6 years and 6.0 years at September 30, 2017 and December 31, 2016, respectively.

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

	Three Months Ended
	September 30,
	2017				2016
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	16,228,751	8.50	%	$	12,881,890	8.00	%
FFELP Loans	960,185		4.02		1,049,803		3.52
Personal Loans	86,441		9.66		—		—
Total portfolio	$	17,275,377			$	13,931,693

	Nine Months Ended
	September 30,
	2017				2016
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	15,791,557	8.37	%	$	12,307,932	8.00	%
FFELP Loans	981,106		3.86		1,076,394		3.48
Personal Loans	61,263		9.44		—		—
Total portfolio	$	16,833,926			$	13,384,326