Loans Held for Investment

3 Months Ended

Mar. 31, 2019

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.

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 March 31, 2019, and December 31, 2018, 63 percent and 67 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 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. 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.

In 2016, we began to acquire Personal Loans from a marketplace lender, but discontinued those purchases in July 2018. In 2018, we began to originate and service Personal Loans.

Loans held for investment are summarized as follows:

	March 31,			December 31,
	2019			2018
Private Education Loans:
Fixed-rate	$	8,025,846		$	6,759,019
Variable-rate	13,765,776			13,745,446
Total Private Education Loans, gross	21,791,622			20,504,465
Deferred origination costs and unamortized premium/(discount)	70,858			68,321
Allowance for loan losses	(285,946		)	(277,943		)
Total Private Education Loans, net	21,576,534			20,294,843
FFELP Loans	828,640			846,487
Deferred origination costs and unamortized premium/(discount)	2,323			2,379
Allowance for loan losses	(1,760		)	(977		)
Total FFELP Loans, net	829,203			847,889
Personal Loans (fixed-rate)	1,162,874			1,190,091
Deferred origination costs and unamortized premium/(discount)	394			297
Allowance for loan losses	(70,619		)	(62,201		)
Total Personal Loans, net	1,092,649			1,128,187
Loans held for investment, net	$	23,498,386		$	22,270,919

The estimated weighted average life of education loans in our portfolio was approximately 5.4 years at both March 31, 2019 and December 31, 2018, respectively.

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

	Three Months Ended
	March 31,
	2019				2018
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	21,732,826	9.50	%	$	18,659,717	8.84	%
FFELP Loans	837,950		4.94		919,717		4.25
Personal Loans	1,176,466		11.81		528,644		10.64
Total portfolio	$	23,747,242			$	20,108,078