Borrowings

9 Months Ended

Sep. 30, 2020

Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term asset-backed securitization (“ABS”) program and our Private Education Loan multi-lender secured borrowing facility (the “Secured Borrowing Facility,” which was previously called the asset-backed commercial paper facility or ABCP Facility). The following table summarizes our borrowings at September 30, 2020 and December 31, 2019.


	September 30, 2020										December 31, 2019
	Short-Term		Long-Term		Total		Short-Term		Long-Term		Total
Unsecured borrowings:
Unsecured debt (fixed-rate)	$	—	$	198,768	$	198,768	$	—	$	198,159	$	198,159
Total unsecured borrowings	—		198,768		198,768		—		198,159		198,159
Secured borrowings:
Private Education Loan term securitizations:
Fixed-rate	—		3,398,239		3,398,239		—		2,629,902		2,629,902
Variable-rate	—		1,350,640		1,350,640		—		1,525,976		1,525,976
Total Private Education Loan term securitizations	—		4,748,879		4,748,879		—		4,155,878		4,155,878
Secured Borrowing Facility	—		—		—		289,230		—		289,230
Total secured borrowings	—		4,748,879		4,748,879		289,230		4,155,878		4,445,108
Total	$	—	$	4,947,647	$	4,947,647	$	289,230	$	4,354,037	$	4,643,267

Short-term Borrowings

Secured Borrowing Facility

On February 19, 2020, we amended our Secured Borrowing Facility to, among other things, increase the amount that can be borrowed under the facility to $2 billion (from $750 million) and extend the maturity of the facility. We hold 100 percent of the residual interest in the Secured Borrowing Facility trust. Under the amended Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstandings. The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay and reborrow funds, until February 17, 2021. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on February 17, 2022 (or earlier, if certain material adverse events occur). At September 30, 2020, there were no borrowings outstanding under the Secured Borrowing Facility and at December 31, 2019, there were $289 million borrowings outstanding under the Secured Borrowing Facility.

Long-term Borrowings

Secured Financings

2020 Transactions

On February 12, 2020, we executed our $636 million SMB Private Education Loan Trust 2020-A term ABS transaction, which was accounted for as a secured financing. We sold $636 million of notes to third parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $634 million of gross proceeds. The Class A and Class B notes had a weighted average life of 4.18 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 0.88 percent. At September 30, 2020, $626 million of our Private Education Loans, including $582 million of principal and $44 million in capitalized interest, were encumbered because of this transaction.

On August 12, 2020, we executed our $707 million SMB Private Education Loan Trust 2020-B term ABS transaction, which was accounted for as a secured financing. We sold $707 million of notes to third parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $705 million of gross proceeds. The Class A and Class B notes had a weighted average life of 4.14 years and priced at a weighted average LIBOR equivalent cost of 1-month LIBOR plus 1.30 percent. At September 30, 2020, $775 million of our Private Education Loans, including $720 million of principal and $55 million in capitalized interest, were encumbered because of this transaction.

Secured Financings at Issuance

The following summarizes our secured financings issued in 2019 and through September 30, 2020:


Issue	Date Issued	Total Issued		Weighted Average Cost of Funds⁽¹⁾		Weighted Average Life (in years)

Private Education:














2019-A	March 2019	$	453,000	1-month LIBOR plus 0.92%		4.26
2019-B	June 2019	657,000		1-month LIBOR plus 1.01%		4.41
Total notes issued in 2019				$	1,110,000

Total loan and accrued interest amount securitized at inception in 2019				$	1,208,963

2020-A	February 2020	$	636,000	1-month LIBOR plus 0.88%		4.18
2020-B	August 2020	707,000		1-month LIBOR plus 1.30%		4.14
Total notes issued in 2020				$	1,343,000

Total loan and accrued interest amount securitized at inception in 2020				$	1,463,230

____________

⁽¹⁾ Represents LIBOR equivalent cost of funds for floating and fixed-rate bonds, excluding issuance costs.

Consolidated Funding Vehicles

We consolidate our financing entities that are VIEs as a result of our being the entities’ primary beneficiary. As a result, these financing VIEs are accounted for as secured borrowings. We consolidate the following financing VIEs as of September 30, 2020 and December 31, 2019, respectively:


	September 30, 2020
	Debt Outstanding										Carrying Amount of Assets Securing Debt Outstanding
	Short-Term		Long-Term		Total		Loans		Restricted Cash		Other Assets⁽¹⁾		Total
Secured borrowings:
Private Education Loan term securitizations	$	—	$	4,748,879	$	4,748,879	$	5,865,487	$	162,448	$	426,404	$	6,454,339
Secured Borrowing Facility	—		—		—		—		—		1,248		1,248
Total	$	—	$	4,748,879	$	4,748,879	$	5,865,487	$	162,448	$	427,652	$	6,455,587

____

(1) Other assets primarily represent accrued interest receivable.


	December 31, 2019
	Debt Outstanding										Carrying Amount of Assets Securing Debt Outstanding
	Short-Term		Long-Term		Total		Loans		Restricted Cash		Other Assets⁽¹⁾		Total
Secured borrowings:
Private Education Loan term securitizations	$	—	$	4,155,878	$	4,155,878	$	5,246,986	$	145,760	$	333,173	$	5,725,919
Secured Borrowing Facility	289,230		—		289,230		339,666		8,803		23,832		372,301
Total	$	289,230	$	4,155,878	$	4,445,108	$	5,586,652	$	154,563	$	357,005	$	6,098,220

____

(1) Other assets primarily represent accrued interest receivable.

Other Borrowing Sources

We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at September 30, 2020. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing and is payable daily. We did not utilize these lines of credit in the nine months ended September 30, 2020 or in the year ended December 31, 2019.

We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Discount Window (the “Window”). The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as FFELP Loans and Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At September 30, 2020 and December 31, 2019, the value of our pledged collateral at the FRB totaled $3.7 billion and $3.2 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the nine months ended September 30, 2020 or in the year ended December 31, 2019.