Securities Available For Sale

3 Months Ended

Mar. 31, 2013

Available-for-sale Securities [Abstract]

Securities Available For Sale

Securities Available For Sale

The Company’s securities available for sale consist of auction rate securities, which represent (i) interests in pools of student loans guaranteed by the U.S. government under the Federal Family Education Loan Program and (ii) a structured finance security. The structured finance security has an attached credit default swap under which the principal value of the structured finance security would be partially or fully forfeited at net default rates on the underlying corporate debt obligations ranging from 8% to 9%. The net default rate as of March 31, 2013 was estimated to be 6.22%. The structured finance security is fully collateralized by investment grade credit-linked notes made up of floating rate international bank notes, which are alternatively available to cover potential claims under the credit default swap in case of forfeiture.

Due to liquidity issues in the auction rate securities market, there was insufficient observable market data to determine the fair values of the Company’s auction rate securities as of March 31, 2013 or December 31, 2012. Therefore, their respective fair values were estimated by an independent valuation firm, Houlihan Capital Advisors, LLC, using a probability weighted discounted cash flow model. The valuation of these securities is sensitive to market conditions and management’s judgment and can change significantly based on the assumptions used. The following tables, which may contain summation differences due to rounding, set forth the fair values of the Company’s auction rate securities by type of security and underlying credit rating as of the dates indicated (in millions):

	Underlying Credit Rating (1)
As of March 31, 2013	AA-		BB		CCC		Total
Student loans	$	9.2	$	2.6	$	—	$	11.7
Structured finance securities	—		—		3.0		$	3.0
Total auction rate securities	$	9.2	$	2.6	$	3.0	$	14.8

	Underlying Credit Rating (1)
As of December 31, 2012	AA-		BB		CCC		Total
Student loans	$	9.2	$	2.6	$	—	$	11.7
Structured finance securities	—		—		2.7		$	2.7
Total auction rate securities	$	9.2	$	2.6	$	2.7	$	14.4

(1) The Company’s auction rate securities maintain split ratings. For purposes of this table, securities are categorized according to their lowest rating.

The weighted average yields on the Company’s auction-rate securities ranged from 1.43% to 2.46% for the three months ended March 31, 2013. These yields represent the predetermined “maximum” reset rates that occur upon auction failures according to the specific terms within each security’s governing documents.

Auction Rate Securities – Reconciliation of Cost Basis to Fair Value    

The Company's student loan auction rate securities have been in a continuous unrealized loss position for over twelve months. The following table, which may contain summation differences due to rounding, presents the cost basis, gross cumulative unrealized (losses) gains and estimated fair values of the Company’s auction rate securities as of the dates indicated (in millions):

	March 31, 2013
	Adjusted Cost Basis (1)		Gross Cumulative Unrealized (Losses)/Gains			Fair Value
Auction rate securities – student loans	$	12.9	$	(1.1	)	$	11.7
Auction rate securities – structured finance securities	1.7		1.3			3.0
Total auction rate securities	$	14.6	$	0.2		$	14.8
	December 31, 2012
	Adjusted Cost Basis (1)		Gross Cumulative    Unrealized (Losses)/Gains			Fair Value
Auction rate securities – student loans	$	12.9	$	(1.1	)	$	11.7
Auction rate securities – structured finance securities	1.7		0.9			2.7
Total auction rate securities	$	14.6	$	(0.2	)	$	14.4

(1) Adjusted cost basis reflects adjustments for credit and other losses recognized in earnings on our structured finance security. Cumulative adjustments to the cost basis of securities held as of both March 31, 2013 and December 31, 2012 totaled $3.3 million. Par value of securities held as of both March 31, 2013 and December 31, 2012 totaled $17.9 million.

As of March 31, 2013, contractual maturities of the Company’s student loan auction rate securities ranged from 15 to 35 years, and for the structured finance security, was 4 years.