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Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2019
Receivables [Abstract]  
Allowance for Loan Losses
Allowance for Loan Losses
Our provision for credit 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 March 31, 2019
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
977

 
$
277,943

 
$
62,201

 
$
341,121

Total provision
 
1,017

 
41,883

 
22,760

 
65,660

Net charge-offs:
 


 


 


 


Charge-offs
 
(234
)
 
(39,577
)
 
(15,251
)
 
(55,062
)
Recoveries
 
—

 
5,697

 
909

 
6,606

Net charge-offs
 
(234
)
 
(33,880
)
 
(14,342
)
 
(48,456
)
Ending Balance
 
$
1,760

 
$
285,946

 
$
70,619

 
$
358,325

Allowance:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
132,442

 
$
—

 
$
132,442

Ending balance: collectively evaluated for impairment
 
$
1,760

 
$
153,504

 
$
70,619

 
$
225,883

Loans:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
1,327,668

 
$
—

 
$
1,327,668

Ending balance: collectively evaluated for impairment
 
$
828,640

 
$
20,463,954

 
$
1,162,874

 
$
22,455,468

Net charge-offs as a percentage of average loans in repayment (annualized)(1)
 
0.14
%
 
0.89
%
 
4.88
%
 

Allowance as a percentage of the ending total loan balance
 
0.21
%
 
1.31
%
 
6.07
%
 

Allowance as a percentage of the ending loans in repayment(1)
 
0.27
%
 
1.87
%
 
6.07
%
 

Allowance coverage of net charge-offs (annualized)
 
1.88

 
2.11

 
1.23

 

Ending total loans, gross
 
$
828,640

 
$
21,791,622

 
$
1,162,874

 

Average loans in repayment(1)
 
$
650,196

 
$
15,165,072

 
$
1,175,356

 

Ending loans in repayment(1)
 
$
641,658

 
$
15,310,560

 
$
1,162,874

 

____________
     
(1) 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 March 31, 2018
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
1,132

 
$
243,715

 
$
6,628

 
$
251,475

Total provision
 
231

 
41,870

 
13,448

 
55,549

Net charge-offs:
 
 
 
 
 
 
 
 
Charge-offs
 
(250
)
 
(37,353
)
 
(1,200
)
 
(38,803
)
Recoveries
 
—

 
5,087

 
31

 
5,118

Net charge-offs
 
(250
)
 
(32,266
)
 
(1,169
)
 
(33,685
)
Loan sales(1)
 
—

 
(1,216
)
 
—

 
(1,216
)
Ending Balance
 
$
1,113

 
$
252,103

 
$
18,907

 
$
272,123

Allowance:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
101,824

 
$
—

 
$
101,824

Ending balance: collectively evaluated for impairment
 
$
1,113

 
$
150,279

 
$
18,907

 
$
170,299

Loans:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
1,043,103

 
$
—

 
$
1,043,103

Ending balance: collectively evaluated for impairment
 
$
907,842

 
$
17,750,909

 
$
675,656

 
$
19,334,407

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.14
%
 
1.01
%
 
0.88
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.12
%
 
1.34
%
 
2.80
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.16
%
 
1.95
%
 
2.80
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.11

 
1.95

 
4.04

 
 
Ending total loans, gross
 
$
907,842

 
$
18,794,012

 
$
675,656

 
 
Average loans in repayment(2)
 
$
718,311

 
$
12,747,929

 
$
531,889

 
 
Ending loans in repayment(2)
 
$
702,965

 
$
12,958,742

 
$
675,656

 
 
____________
(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 collectability of the 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. When we give a borrower facing financial difficulty an interest rate reduction, we temporarily reduce the rate to 2.0 percent for a two-year period and, in the vast majority of cases, permanently extend the final maturity of the loan. The combination of these two loan term changes helps reduce the monthly payment due from the borrower and increases the likelihood the borrower will remain current during the interest rate modification period as well as when the loan returns to its original contractual interest rate. At March 31, 2019 and March 31, 2018, 7.2 percent and 5.7 percent, respectively, of our loans then currently in full principal and interest repayment status were subject to interest rate reductions made under our rate modification program. Once a loan qualifies for TDR status, it remains a TDR for allowance purposes for the remainder of its life. As of March 31, 2019 and December 31, 2018, approximately 55 percent and 57 percent, respectively, of TDRs were classified as such due to their forbearance status. For additional information, see Note 2, “Significant Accounting Policies —Allowance for Loan Losses,” and Note 6, “Allowance for Loan Losses” in our 2018 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 March 31, 2019 and December 31, 2018, 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
 
 
 
 
 
 
 
March 31, 2019
 
 
 
 
 
 
TDR Loans
 
$
1,352,673

 
$
1,327,668

 
$
132,442

 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
TDR Loans
 
$
1,280,713

 
$
1,257,856

 
$
120,110



The following table provides the average recorded investment and interest income recognized for our TDR loans.
 
 
Three Months Ended 
 March 31,
 
 
2019
 
2018
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
1,312,729

 
$
21,566

 
$
1,032,232

 
$
17,847



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

 
 
March 31,
 
December 31,
 
 
2019
 
2018
 
 
Balance
 
%
 
Balance
 
%
TDR loans in in-school/grace/deferment(1)
 
$
77,327

 
 
 
$
69,212

 
 
TDR loans in forbearance(2)
 
79,410

 
 
 
69,796

 
 
TDR loans in repayment(3) and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
1,044,676

 
89.2
%
 
994,411

 
88.9
%
Loans delinquent 31-60 days(4)
 
61,698

 
5.3

 
63,074

 
5.6

Loans delinquent 61-90 days(4)
 
39,349

 
3.4

 
36,804

 
3.3

Loans delinquent greater than 90 days(4)
 
25,208

 
2.1

 
24,559

 
2.2

Total TDR loans in repayment
 
1,170,931

 
100.0
%
 
1,118,848

 
100.0
%
Total TDR loans, gross
 
$
1,327,668

 
 
 
$
1,257,856

 
 
_____
(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 include 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 
 March 31, 2019
 
Three Months Ended 
 March 31, 2018
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
111,208

 
$
16,005

 
$
25,462

 
$
84,174

 
$
15,460

 
$
29,757



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



Private Education Loan Key Credit Quality Indicators
FFELP Loans are at least 97 percent insured and guaranteed as to their principal and accrued interest in the event of default; therefore, there are no key credit quality indicators associated with FFELP Loans.
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
 
 
March 31, 2019
 
December 31, 2018
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
Cosigners:
 
 
 
 
 
 
 
 
With cosigner
 
$
19,531,175

 
90
%
 
$
18,378,398

 
90
%
Without cosigner
 
2,260,447

 
10

 
2,126,067

 
10

Total
 
$
21,791,622

 
100
%
 
$
20,504,465

 
100
%
 
 
 
 
 
 
 
 
 
FICO at Original Approval(2):
 
 
 
 
 
 
 
 
Less than 670
 
$
1,517,014

 
7
%
 
$
1,409,789

 
7
%
670-699
 
3,306,017

 
15

 
3,106,983

 
15

700-749
 
7,186,454

 
33

 
6,759,721

 
33

Greater than or equal to 750
 
9,782,137

 
45

 
9,227,972

 
45

Total
 
$
21,791,622

 
100
%
 
$
20,504,465

 
100
%
 
 
 
 
 
 
 
 
 
FICO-Refreshed(2)(3):
 
 
 
 
 
 
 
 
Less than 670
 
$
2,720,777

 
12
%
 
$
2,416,979

 
12
%
670-699
 
2,721,243

 
13

 
2,504,467

 
12

700-749
 
6,462,874

 
30

 
6,144,489

 
30

Greater than or equal to 750
 
9,886,728

 
45

 
9,438,530

 
46

Total
 
$
21,791,622

 
100
%
 
$
20,504,465

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(4):
 
 
 
 
 
 
 
 
1-12 payments
 
$
5,451,167

 
25
%
 
$
4,969,334

 
24
%
13-24 payments
 
3,543,836

 
16

 
3,481,235

 
17

25-36 payments
 
2,729,369

 
13

 
2,741,954

 
13

37-48 payments
 
2,017,498

 
9

 
1,990,049

 
10

More than 48 payments
 
2,178,899

 
10

 
2,061,448

 
10

Not yet in repayment
 
5,870,853

 
27

 
5,260,445

 
26

Total
 
$
21,791,622

 
100
%
 
$
20,504,465

 
100
%
______
(1) 
Balance represents gross Private Education Loans.
(2) 
Represents the higher credit score of the cosigner or the borrower.
(3) 
Represents the FICO score updated as of the first-quarter 2019.
(4) 
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.
Private Education Loan Delinquencies

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
 
 
March 31,
 
December 31,
 
 
2019
 
2018
 
 
Balance
 
%
 
Balance
 
%
Loans in-school/grace/deferment(1)
 
$
5,870,853

 
 
 
$
5,260,445

 
 
Loans in forbearance(2)
 
610,209

 
 
 
577,164

 
 
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
14,927,591

 
97.5
%
 
14,289,705

 
97.4
%
Loans delinquent 31-60 days(3)
 
216,295

 
1.4

 
231,216

 
1.6

Loans delinquent 61-90 days(3)
 
104,199

 
0.7

 
95,105

 
0.7

Loans delinquent greater than 90 days(3)
 
62,475

 
0.4

 
50,830

 
0.3

Total Private Education Loans in repayment
 
15,310,560

 
100.0
%
 
14,666,856

 
100.0
%
Total Private Education Loans, gross
 
21,791,622

 
 
 
20,504,465

 
 
Private Education Loans deferred origination costs and unamortized premium/(discount)
 
70,858

 
 
 
68,321

 
 
Total Private Education Loans
 
21,862,480

 
 
 
20,572,786

 
 
Private Education Loans allowance for losses
 
(285,946
)
 
 
 
(277,943
)
 
 
Private Education Loans, net
 
$
21,576,534

 
 
 
$
20,294,843

 
 
Percentage of Private Education Loans in repayment
 
 
 
70.3
%
 
 
 
71.5
%
Delinquencies as a percentage of Private Education Loans in repayment
 
 
 
2.5
%
 
 
 
2.6
%
Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance
 
 
 
3.8
%
 
 
 
3.8
%
_______
(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.

Personal Loan Key Credit Quality Indicators
For Personal Loans, the key credit quality indicators are FICO scores, loan seasoning and loan status. 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 Personal Loan portfolio stratified by key credit quality indicators.

 
 
Personal Loans
 
 
Credit Quality Indicators
 
 
March 31, 2019
 
December 31, 2018
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
71,340

 
6
%
 
$
77,702

 
7
%
670-699
 
324,934

 
28

 
339,053

 
28

700-749
 
551,904

 
47

 
554,700

 
47

Greater than or equal to 750
 
214,696

 
19

 
218,636

 
18

Total
 
$
1,162,874

 
100
%
 
$
1,190,091

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
0-12 payments
 
$
832,583

 
72
%
 
$
1,008,758

 
85
%
13-24 payments
 
320,058

 
27

 
181,333

 
15

25-36 payments
 
10,233

 
1

 
—

 
—

37-48 payments
 
—

 
—

 
—

 
—

More than 48 payments
 
—

 
—

 
—

 
—

Total
 
$
1,162,874

 
100
%
 
$
1,190,091

 
100
%
______
(1) 
Balance represents gross Personal Loans.
(2) 
Number of months in active repayment for which a scheduled payment was due.















Personal Loan Delinquencies

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

 
 
Personal Loans
 
 
March 31,
 
December 31,
 
 
2019
 
2018
 
 
Balance
 
%
 
Balance
 
%
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
$
1,141,664

 
98.2
%
 
$
1,172,776

 
98.5
%
Loans delinquent 31-60 days(1)
 
9,224

 
0.8

 
6,722

 
0.6

Loans delinquent 61-90 days(1)
 
5,991

 
0.5

 
5,416

 
0.5

Loans delinquent greater than 90 days(1)
 
5,995

 
0.5

 
5,177

 
0.4

Total Personal Loans in repayment
 
1,162,874

 
100.0
%
 
1,190,091

 
100.0
%
Total Personal Loans, gross
 
1,162,874

 
 
 
1,190,091

 
 
Personal Loans deferred origination costs and unamortized premium/(discount)
 
394

 
 
 
297

 
 
Total Personal Loans
 
1,163,268

 
 
 
1,190,388

 
 
Personal Loans allowance for losses
 
(70,619
)
 
 
 
(62,201
)
 
 
Personal Loans, net
 
$
1,092,649

 
 
 
$
1,128,187

 
 
Delinquencies as a percentage of Personal Loans in repayment
 
 
 
1.8
%
 
 
 
1.5
%
_______
(1) 
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 Loans
 
 
Accrued Interest Receivable
 
 
Total Interest Receivable
 
Greater Than 90 Days Past Due
 
Allowance for Uncollectible Interest
 
 
 
 
 
 
 
March 31, 2019
 
$
1,276,825

 
$
2,374

 
$
4,687

December 31, 2018
 
$
1,168,823

 
$
1,920

 
$
6,322