Fair Value Measurements

6 Months Ended

Jun. 30, 2021

We use estimates of fair value in applying various accounting standards for our consolidated financial statements.

We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. For additional information regarding our policies for determining fair value and the hierarchical framework, see Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies - Fair Value Measurement” in our 2020 Form 10-K.

During the six months ended June 30, 2021, there were no significant transfers of financial instruments between levels or changes in our methodology or assumptions used to value our financial instruments.

The following table summarizes the valuation of our financial instruments that are marked to fair value on a recurring basis.


	Fair Value Measurements on a Recurring Basis
	June 30, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets
Trading investments	$	—	$	—	$	35,908	$	35,908	$	—	$	—	$	16,923	$	16,923
Available-for-sale investments	—		2,072,309		—		2,072,309		—		1,996,634		—		1,996,634
Derivative instruments	—		459		—		459		—		729		—		729
Total	$	—	$	2,072,768	$	35,908	$	2,108,676	$	—	$	1,997,363	$	16,923	$	2,014,286

Liabilities
Derivative instruments	$	—	$	(360)	$	—	$	(360)	$	—	$	(287)	$	—	$	(287)
Total	$	—	$	(360)	$	—	$	(360)	$	—	$	(287)	$	—	$	(287)

The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.


	June 30, 2021						December 31, 2020
	Fair Value		Carrying Value		Difference		Fair Value		Carrying Value		Difference
Earning assets:
Loans held for investment, net:
Private Education Loans	$	22,528,229	$	19,389,089	$	3,139,140	$	22,124,171	$	18,436,968	$	3,687,203
FFELP Loans	727,713		714,609		13,104		748,657		735,208		13,449
Credit Cards	12,802		11,446		1,356		12,249		10,967		1,282
Loans held for sale	—		—		—		3,226,029		2,885,640		340,389
Cash and cash equivalents	4,497,310		4,497,310		—		4,455,292		4,455,292		—
Trading investments	35,908		35,908		—		16,923		16,923		—
Available-for-sale investments	2,072,309		2,072,309		—		1,996,634		1,996,634		—
Accrued interest receivable	1,433,379		1,323,448		109,931		1,527,816		1,387,305		140,511
Tax indemnification receivable	12,842		12,842		—		18,492		18,492		—
Derivative instruments	459		459		—		729		729		—
Total earning assets	$	31,320,951	$	28,057,420	$	3,263,531	$	34,126,992	$	29,944,158	$	4,182,834
Interest-bearing liabilities:
Money-market and savings accounts	$	11,921,904	$	11,868,807	$	(53,097)	$	11,136,560	$	11,067,633	$	(68,927)
Certificates of deposit	9,377,702		9,253,003		(124,699)		11,799,223		11,597,266		(201,957)
Short-term borrowings	204,768		199,379		(5,389)		—		—		—
Long-term borrowings	5,162,367		4,989,060		(173,307)		5,398,309		5,189,217		(209,092)
Accrued interest payable	51,980		51,980		—		60,272		60,272		—
Derivative instruments	360		360		—		287		287		—
Total interest-bearing liabilities	$	26,719,081	$	26,362,589	$	(356,492)	$	28,394,651	$	27,914,675	$	(479,976)

Excess of net asset fair value over carrying value					$	2,907,039					$	3,702,858

Please refer to Notes to Consolidated Financial Statements, Note 16, “Fair Value Measurements” in our 2020 Form 10-K for a full discussion of the methods and assumptions used to estimate the fair value of each class of financial instruments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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