FINANCING RECEIVABLES

3 Months Ended

Sep. 30, 2017

NOTE 6: FINANCING RECEIVABLES

Adtalem’s institutional loan programs are available to students at its Chamberlain, AUC, RUSM, RUSVM, DeVry University and Carrington 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, DeVry University and Carrington 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 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 Exam 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 institutional loans and historical loss rates of loans at each institution. Management performs this analysis periodically throughout the year. Since all of Adtalem’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).

	September 30, 2017				June 30, 2017				September 30, 2016
Gross Institutional Loans			$	59,788			$	59,489			$	71,669
Allowance for Credit Losses:
Balance at July 1	$	(12,071)			$	(20,800)			$	(20,800)
Charge-offs and Adjustments		651				17,949				2,513
Recoveries		(44)				(573)				(316)
Additional Provision		(1,499)				(8,647)				(2,854)
Balance at End of Period				(12,963)				(12,071)				(21,457)
Net Institutional Loans			$	46,825			$	47,418			$	50,212

During the second quarter of fiscal year 2017, certain institutional loan balances were forgiven as part of a regulatory settlement with the FTC. 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, $19.9 million, $20.8 million and $23.0 million was classified as Accounts Receivable, Net on the Consolidated Balance Sheets at September 30, 2017, June 30, 2017 and September 30, 2016, respectively, and $26.9 million, $26.6 million and $27.2 million, representing amounts due beyond one year, was classified as Other Assets, Net on the Consolidated Balance Sheets at September 30, 2017, June 30, 2017 and September 30, 2016, 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).

	September 30,		June 30,		September 30,
	2017		2017		2016
Institutional Loans:
Performing	$	48,131	$	48,731	$	51,234
Nonperforming		11,657		10,758		20,435
Total Institutional Loans	$	59,788	$	59,489	$	71,669

							Greater
	30-59		60-89		90-119		Than 120						Total
	Days Past		Days Past		Days Past		Days Past		Total				Institutional
	Due		Due		Due		Due		Past Due		Current		Loans
Institutional Loans:
September 30, 2017	$	7,536	$	2,068	$	1,266	$	11,657	$	22,527	$	37,261	$	59,788
June 30, 2017	$	7,538	$	2,234	$	651	$	10,758	$	21,181	$	38,308	$	59,489
September 30, 2016	$	7,892	$	2,680	$	1,782	$	20,435	$	32,789	$	38,880	$	71,669

Loans are considered nonperforming if they are more than 120 days past due. At September 30, 2017, nonperforming loans totaled $11.7 million, of which $11.5 million had a specific allowance for credit losses. At June 30, 2017, nonperforming loans totaled $10.8 million, of which $10.7 million had a specific allowance for credit losses. At September 30, 2016, nonperforming loans totaled $20.4 million, of which $20.2 million had a specific allowance for credit losses.

- 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.

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