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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company is subject to income taxes in the United States and certain foreign countries. Significant judgment is required in evaluating the Company's tax positions and determining the provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.
As required by the ASC Topic 740, Income Taxes, the Company recognizes in the consolidated financial statements only those tax positions determined to be more likely than not of being sustained upon examination, based on the technical merits of the positions. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of such change.
As of December 31, 2024, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $18.2 million, which is included in “other liabilities” on the consolidated balance sheet. Of this total, $14.4 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. The Company currently anticipates uncertain tax positions will decrease by $4.4 million prior to December 31, 2025 as a result of a lapse of applicable statutes of limitations, settlements, correspondence with examining authorities, and recognition or measurement considerations with federal and state jurisdictions; however, actual developments in this area could differ from those expected. Of the anticipated $4.4 million decrease, $3.5 million, if recognized, would favorably affect the Company's effective tax rate. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows:
Year ended December 31,
20242023
Gross balance - beginning of year$17,084 16,835 
Additions based on tax positions of prior years2,081 819 
Additions based on tax positions related to the current year2,397 2,242 
Settlements with taxing authorities— (247)
Reductions for tax positions of prior years(885)(460)
Reductions due to lapse of applicable statutes of limitations(2,495)(2,105)
Gross balance - end of year$18,182 17,084 
All the reductions shown in the table above that are due to prior year tax positions and the lapse of statutes of limitations impacted the effective tax rate.
The Company's policy is to recognize interest and penalties accrued on uncertain tax positions as part of interest expense and other expense, respectively. As of December 31, 2024 and 2023, $5.6 million and $4.8 million in accrued interest and penalties, respectively, were included in “other liabilities” on the consolidated balance sheets. The Company recognized interest expense of $0.9 million and $0.8 million, and interest benefits of $1.1 million related to uncertain tax positions for the years ended December 31, 2024, 2023, and 2022, respectively. The impact to the consolidated statements of income related to penalties for uncertain tax positions was not significant for the years 2024, 2023, and 2022. The impact of timing differences and tax attributes are considered when calculating interest and penalty accruals associated with the unrecognized tax benefits.
The Company and its subsidiaries file a consolidated federal income tax return in the U.S. and the Company or one of its subsidiaries files income tax returns in various state, local, and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2021. The Company is no longer subject to U.S. state and local income tax examinations by tax authorities prior to 2018.
The provision for income taxes consists of the following components:
Year ended December 31,
202420232022
Current:
Federal$66,295 65,952 67,649 
State7,849 5,732 10,984 
Foreign146 32 (49)
Total current provision74,290 71,716 78,584 
Deferred:
Federal(18,716)(42,073)32,298 
State(2,786)(10,270)2,198 
Foreign(119)12 20 
Total deferred provision(21,621)(52,331)34,516 
Provision for income tax expense$52,669 19,385 113,100 
The differences between the income tax provision computed at the statutory federal corporate tax rate and the financial statement provision for income taxes are shown below:
Year ended December 31,
202420232022
Tax expense at federal rate21.0 %21.0 %21.0 %
Increase (decrease) resulting from:
State tax, net of federal income tax benefit2.1 (0.6)2.8 
Tax credits(1.8)(4.1)(0.6)
Change in valuation allowance0.1 0.4 (0.5)
Other0.9 1.1 (0.9)
Effective tax rate22.3 %17.8 %21.8 %
The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:
As of December 31,
20242023
Deferred tax assets:
Tax credit carryforwards$30,252 12,190 
Student loans20,354 16,489 
Deferred revenue18,322 17,399 
Accrued expenses15,129 9,623 
Stock compensation6,541 6,584 
Intangible assets4,778 987 
Net operating losses4,556 4,563 
Lease liability2,685 2,929 
Other428 — 
Total gross deferred tax assets103,045 70,764 
Less state tax valuation allowance(703)(562)
Net deferred tax assets102,342 70,202 
Deferred tax liabilities:
Partnership basis71,509 71,423 
Debt and equity investments12,015 4,711 
Basis in certain derivative contracts11,614 26,139 
Depreciation6,229 9,526 
Prepaid expenses5,615 — 
Lease right of use asset2,573 2,770 
Loan origination services2,026 2,635 
Securitization170 267 
Other— 3,784 
Total gross deferred tax liabilities111,751 121,255 
Net deferred tax asset (liability)$(9,409)(51,053)
The Company has performed an evaluation of the recoverability of deferred tax assets. In assessing the realizability of the Company's deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible or eligible for utilization of a tax credit carryforward. Management considers the scheduled reversals of deferred tax liabilities, projected taxable income, carry back opportunities, and tax planning strategies in making the assessment of the amount of the valuation allowance. With the exception of a portion of the Company's state net operating losses, it is management's opinion that it is more likely than not that the deferred tax assets will be realized and should not be reduced by a valuation allowance. The amount of deferred tax assets considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
As of December 31, 2024 and 2023, net deferred tax liabilities of $30.4 million and $72.9 million, respectively, and net deferred tax assets of $21.0 million and $21.8 million, respectively, were included in “other liabilities” and “other assets,” respectively, on the consolidated balance sheets.
As of December 31, 2024 and 2023, the Company had a current income tax receivable of $61.8 million and $67.4 million, respectively, that is included in “other assets" on the consolidated balance sheets.