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Loans Held for Investment | 6 Months Ended
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Jun. 30, 2022
Receivables [Abstract] |
Loans Held for Investment | Loans Held for Investment Loans held for investment consist of Private Education Loans, FFELP Loans, and Credit Cards. We use “Private Education Loans” to mean education loans to students or their families that are not made, insured, or guaranteed by any state or federal government. Private Education Loans do not include loans insured or guaranteed under the previously existing Federal Family Education Loan Program (“FFELP”). We use “Credit Cards” to refer to our suite of Credit Cards with bonus rewards. Our Private Education Loans are made largely to bridge the gap between the cost of higher education and the amount funded through financial aid, government loans, and customers’ resources. Private Education Loans bear the full credit risk of the customer. We manage this risk through risk-performance underwriting strategies and qualified cosigners. Private Education Loans may be fixed-rate or may carry a variable interest rate indexed to LIBOR, the London interbank offered rate, or SOFR, the Secured Overnight Financing Rate. As of June 30, 2022 and December 31, 2021, 50 percent and 52 percent, respectively, of all of our Private Education Loans were indexed to LIBOR or SOFR. We provide incentives for customers to include a cosigner on the loan, and the vast majority of Private Education Loans in our portfolio are cosigned. We also encourage customers to make payments while in school. FFELP Loans are insured as to their principal and accrued interest in the event of default, subject to a risk-sharing level based on the date of loan disbursement. These insurance obligations are supported by contractual rights against the United States. For loans disbursed on or after July 1, 2006, we receive 97 percent reimbursement on all qualifying claims. For loans disbursed after October 1, 1993, and before July 1, 2006, we receive 98 percent reimbursement on all qualifying claims. For loans disbursed prior to October 1, 1993, we receive 100 percent reimbursement on all qualifying claims. In the first six months of 2022, we recognized $250 million in gains from the sale of approximately $2.24 billion of our Private Education Loans, including $2.10 billion of principal and $142 million in capitalized interest, to unaffiliated third parties. In the first six months of 2021, we recognized $403 million in gains from the sale of approximately $3.19 billion of our Private Education Loans, including $2.99 billion of principal and $195 million in capitalized interest, to an unaffiliated third party. There were VIEs created in the execution of certain of these loan sales; however, based on our consolidation analysis, we are not the primary beneficiary of these VIEs. These transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information, see Notes to Consolidated Financial Statements, Note 8, “Borrowings - Unconsolidated VIEs.” Loans held for investment are summarized as follows:
|  | June 30, |  | December 31,
(Dollars in thousands) |  | 2022 |  | 2021
Private Education Loans: |  |  |  |
Fixed-rate |  | $ | 9,748,824 |  |  | $ | 9,920,547 |
Variable-rate |  | 9,770,361 |  |  | 10,796,316 |
Total Private Education Loans, gross |  | 19,519,185 |  |  | 20,716,863 |
Deferred origination costs and unamortized premium/(discount) |  | 66,809 |  |  | 67,488 |
Allowance for credit losses |  | (1,074,744) |  |  | (1,158,977) |
Total Private Education Loans, net |  | 18,511,250 |  |  | 19,625,374 |
FFELP Loans |  | 665,666 |  |  | 695,216 |
Deferred origination costs and unamortized premium/(discount) |  | 1,715 |  |  | 1,815 |
Allowance for credit losses |  | (3,929) |  |  | (4,077) |
Total FFELP Loans, net |  | 663,452 |  |  | 692,954 |
Credit Cards (fixed-rate) |  | 28,900 |  |  | 25,014 |
Deferred origination costs and unamortized premium/(discount) |  | 119 |  |  | 222 |
Allowance for credit losses |  | (2,393) |  |  | (2,281) |
Total Credit Cards, net |  | 26,626 |  |  | 22,955 |
Loans held for investment, net |  | $ | 19,201,328 |  |  | $ | 20,341,283 |
The estimated weighted average life of education loans in our portfolio was approximately 4.8 years and 4.7 years at June 30, 2022 and December 31, 2021, respectively. The average balance and the respective weighted average interest rates of loans in our portfolio are summarized as follows:
|  | 2022 |  | 2021
Three Months Ended June 30, (dollars in thousands) |  | Average Balance |  | Weighted Average Interest Rate |  | Average Balance |  | Weighted Average Interest Rate
Private Education Loans |  | $ | 20,259,956 |  |  | 8.69 | % |  | $ | 20,654,285 |  |  | 8.22 | %
FFELP Loans |  | 675,081 |  |  | 4.01 |  |  | 723,391 |  |  | 3.41 |
Credit Cards |  | 28,220 |  |  | 4.00 |  |  | 11,694 |  |  | 6.64 |
Total portfolio |  | $ | 20,963,257 |  |  |  |  | $ | 21,389,370 |  |  |
|  | 2022 |  | 2021
Six Months Ended June 30, (dollars in thousands) |  | Average Balance |  | Weighted Average Interest Rate |  | Average Balance |  | Weighted Average Interest Rate
Private Education Loans |  | $ | 21,054,698 |  |  | 8.53 | % |  | $ | 20,818,476 |  |  | 8.22 | %
FFELP Loans |  | 682,768 |  |  | 3.76 |  |  | 728,810 |  |  | 3.41 |
Credit Cards |  | 27,425 |  |  | 3.97 |  |  | 11,767 |  |  | 3.71 |
Total portfolio |  | $ | 21,764,891 |  |  |  |  | $ | 21,559,053 |  |  |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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