Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Reconciliations of statutory U.S. federal income tax rates to our effective tax rate

Reconciliations of the statutory U.S. federal income tax rates to our effective tax rate for continuing operations follow:

 

Years ended December 31,	2021		2020		2019
Statutory rate	21.0	%	21.0	%	21.0	%
State tax, net of federal benefit	3.1		2.9		3.9
Business tax credits	(0.8)		(2.2)		(3.5)
Reverse federal impact of indemnification adjustments	0.1		0.2		0.3
Unrecognized tax benefits, U.S. federal and state, net of federal benefit	0.4		0.7		(0.1)
Other, net	0.9		1.1		0.7
Effective tax rate	24.7	%	23.7	%	22.3	%

Components of provision for income tax expense (benefit)

Income tax expense consists of:

 

As of December 31, (dollars in thousands)	2021		2020		2019
Current provision (benefit):
Federal	$	259,536	$	172,153	$	150,800
State	64,843		28,387		24,378
Total current provision (benefit)	324,379		200,540		175,178
Deferred provision (benefit):
Federal	47,240		58,003		(8,240)
State	8,132		14,773		(1,474)
Total deferred provision (benefit)	55,372		72,776		(9,714)
Provision for income tax expense	$	379,751	$	273,316	$	165,464

Schedule of deferred tax assets and liabilities

The tax effect of temporary differences that give rise to deferred tax assets and liabilities is summarized below.

As of December 31, (dollars in thousands)	2021		2020
Deferred tax assets:
Loan reserves	$	300,538	$	356,296
Stock-based compensation plans	10,174		10,914
Deferred revenue	1,318		1,441
Operating loss carryovers	394		83
Accrued expenses not currently deductible	14,307		13,139
Net unrealized losses	—		9,047
Unrecorded tax benefits	11,016		6,997
Other	1,097		1,003
Total deferred tax assets	338,844		398,920
Deferred tax liabilities:
Fixed assets	10,131		11,098
Acquired intangible assets	8,710		7,767
Market value adjustments on student loans, investments and derivatives	33		5,651
Net unrealized gains	6,459		—
Federal deferred for state receivable	1,921		7,456
Student loan premiums and discounts, net	12,396		11,336
Other	363		307
Total deferred tax liabilities	40,013		43,615
Net deferred tax assets	$	298,831	$	355,305

Summary of changes in unrecognized tax benefits

The following table summarizes changes in unrecognized tax benefits:

 

As of December 31, (dollars in thousands)	2021		2020		2019
Unrecognized tax benefits at beginning of year	$	63,134	$	53,509	$	52,159
Increases resulting from tax positions taken during a prior period	1,496		12,723		12,333
Decreases resulting from tax positions taken during a prior period	(1,481)		(817)		(851)
Increases resulting from tax positions taken during the current period	20,743		7,815		4,572
Decreases related to settlements with taxing authorities	(3,682)		(148)		(8,670)
Increases related to settlements with taxing authorities	96		—		—
Reductions related to the lapse of statute of limitations	(4,978)		(9,948)		(6,034)
Unrecognized tax benefits at end of year	$	75,328	$	63,134	$	53,509