FINANCING RECEIVABLES

6 Months Ended

Dec. 31, 2016

Receivables [Abstract]

FINANCING RECEIVABLES

NOTE 7: FINANCING RECEIVABLES

DeVry Group’s institutional loan programs are available to students at its AUC, RUSM, RUSVM, Chamberlain, Carrington and DeVry University institutions. These loan programs are designed to assist students who are unable to completely cover educational costs consisting of tuition, books and fees and are available only after all other student financial assistance has been applied toward those purposes. In addition, AUC, RUSM and RUSVM loans may be used for students’ living expenses. Repayment plans for institutional loan program balances are developed to address the financial circumstances of the particular student. Interest charges accrue each month on the unpaid balance. Chamberlain, Carrington and DeVry University require that students begin repaying loans while they are still in school with a minimum payment level designed to demonstrate their capability to repay and reduce the possibility of over borrowing and targeted to minimize interest being accrued on the loan balance. Payments may increase upon completing or departing the program. After a student leaves school, the student typically will have a monthly installment repayment plan. In addition, the Becker CPA Review Course can be financed through Becker with an 18-month term loan program.

Reserves for uncollectible loans are determined by analyzing the current aging of accounts receivable and historical loss rates of loans at each institution. Management performs this analysis periodically throughout the year. Since all of DeVry Group’s financing receivables are generated through the extension of credit to fund educational costs, all such receivables are considered part of the same loan portfolio.

The following table details the institutional loan balances along with the related allowances for credit losses (in thousands).

	December 31, 2016				June 30, 2016				December 31, 2015
Gross Institutional Loans			$	55,782			$	69,825			$	71,712
Allowance for Credit Losses:
Balance at July 1	$	(20,800)			$	(20,630)			$	(20,630)
Charge-offs and Adjustments		16,281				7,388				4,856
Recoveries		(438)				(461)				(434)
Additional Provision		(4,843)				(7,097)				(5,957)
Balance at End of Period				(9,800)				(20,800)				(22,165)
Net Institutional Loans			$	45,982			$	49,025			$	49,547

During the second quarter of fiscal year 2017, certain institutional loan balances were forgiven as part of the FTC settlement as discussed in “Note 3: Regulatory Settlements” and “Note 14: Commitments and Contingencies.” The amounts related to this settlement were $17.5 million in active outstanding balances which carried related allowance for credit loss reserves of $13.4 million. Also forgiven were $12.9 million of inactive loan balances and accrued interest which had previously been removed from the Net Institutional Loans balance.

Of the net balances above, $18.8 million, $21.7 million and $23.6 million was classified as Accounts Receivable, Net on the Consolidated Balance Sheets at December 31, 2016, June 30, 2016 and December 31, 2015, respectively, and $27.2 million, $27.3 million and $25.9 million, representing amounts due beyond one year, was classified as Other Assets on the Consolidated Balance Sheets at December 31, 2016, June 30, 2016 and December 31, 2015, respectively.

 

The following tables detail the credit risk profiles of the institutional loan balances based on payment activity and an aging analysis of past due institutional loans (in thousands).

	December 31,		June 30,		December 31,
	2016		2016		2015
Institutional Loans:
Performing	$	48,010	$	50,045	$	52,669
Nonperforming		7,772		19,780		19,043
Total Institutional Loans	$	55,782	$	69,825	$	71,712

	30-59 Days Past Due		60-89 Days Past Due		90-119 Days Past Due		Greater Than 120 Days Past Due		Total Past Due		Current		Total Institutional Loans
Institutional Loans:
December 31, 2016	$	5,863	$	2,998	$	1,917	$	7,772	$	18,550	$	37,232	$	55,782
June 30, 2016	$	8,038	$	1,512	$	924	$	19,780	$	30,254	$	39,571	$	69,825
December 31, 2015	$	6,303	$	2,004	$	1,623	$	19,043	$	28,973	$	42,739	$	71,712

Loans are considered nonperforming if they are more than 120 days past due. At December 31, 2016, nonperforming loans totaled $7.8 million, of which $7.7 million had a specific allowance for credit losses. At June 30, 2016, nonperforming loans totaled $19.8 million, of which $19.7 million had a specific allowance for credit losses. At December 31, 2015, nonperforming loans totaled $19.0 million, of which $17.2 million had a specific allowance for credit losses.