Sallie Mae 2015 Annual Report Download - page 117

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, unless otherwise noted)
5. Loans Held for Investment (Continued)
F-27
The average balance and the respective weighted average interest rates are summarized as follows:
Years Ended December 31,
2015 2014 2013
Average
Balance
Weighted
Average
Interest
Rate Average Balance
Weighted
Average
Interest
Rate Average Balance
Weighted
Average
Interest
Rate
Private Education Loans. . . $ 9,819,053 7.93% $ 7,563,356 8.16% $5,996,651 8.16%
FFELP Loans . . . . . . . . . . . 1,179,723 3.26 1,353,497 3.24 1,142,979 3.32
Total portfolio. . . . . . . . . . . $ 10,998,776 $ 8,916,853 $7,139,630
Certain Collection Tools — Private Education Loans
Forbearance involves granting the customer a temporary cessation of payments (or temporary acceptance of smaller than
scheduled payments) for a specified period of time. Using forbearance extends the original term of the loan. Forbearance does
not grant any reduction in the total repayment obligation (principal or interest). While in forbearance status, interest continues
to accrue and is capitalized to principal when the loan re-enters repayment status. Our forbearance policies include limits on the
number of forbearance months granted consecutively and the total number of forbearance months granted over the life of the
loan. In some instances, we require good-faith payments before granting forbearance. Exceptions to forbearance policies are
permitted when such exceptions are judged to increase the likelihood of collection of the loan. Forbearance as a collection tool
is used most effectively when applied based on a customer’s unique situation, including historical information and judgments.
We leverage updated customer information and other decision support tools to best determine who will be granted forbearance
based on our expectations as to a customer’s ability and willingness to repay their obligation. This strategy is aimed at
mitigating the overall risk of the portfolio as well as encouraging cash resolution of delinquent loans.
Forbearance may be granted to customers who are exiting their grace period to provide additional time to obtain
employment and income to support their obligations, or to current customers who are faced with a hardship and request
forbearance time to provide temporary payment relief. In these circumstances, a customer’s loan is placed into a forbearance
status in limited monthly increments and is reflected in the forbearance status at month-end during this time. At the end of the
granted forbearance period, the customer will enter repayment status as current and is expected to begin making scheduled
monthly payments on a go-forward basis.
Forbearance may also be granted to customers who are delinquent in their payments. If specific requirements are met, the
forbearance can cure the delinquency and the customer is returned to a current repayment status. In more limited instances,
delinquent customers will also be granted additional forbearance time.
We also have an interest rate reduction program to assist customers in repaying their Private Education Loans through
reduced payments, while continuing to reduce their outstanding principal balance. This program is offered in situations where
the potential for principal recovery, through an interest rate reduction that results in a lower monthly payment amount, is more
suitable than other alternatives currently available. As part of demonstrating the ability and willingness to pay, the customer
must make three consecutive monthly payments at the reduced rate to qualify for the program. Once the customer has made the
initial three payments, the loan’s status is returned to current and the interest rate is reduced for a twenty-four month period.