Sallie Mae 2015 Annual Report Download - page 122

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, unless otherwise noted)
6. Allowance for Loan Losses (Continued)
F-32
Troubled Debt Restructurings
All of our loans are collectively assessed for impairment, except for loans classified as TDRs (where we conduct
individual assessments of impairment). We modify the terms of loans for certain borrowers when we believe such modifications
may increase the ability and willingness of a borrower to make payments and thus increase the ultimate overall amount
collected on a loan. These modifications generally take the form of a forbearance, a temporary interest rate reduction or an
extended repayment plan. In the first nine months after a loan enters full principal and interest repayment, the loan may be in
forbearance for up to six months without it being classified as a TDR. Once the initial nine-month period described above is
over, however, any loan that receives more than three months of forbearance in a twenty-four month period is classified as a
TDR. Also, a loan becomes a TDR when it is modified to reduce the interest rate on the loan (regardless of when such
modification occurs and/or whether such interest rate reduction is temporary). The majority of our loans that are considered
TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan. Once a loan
qualifies for TDR status, it remains a TDR for allowance purposes for the remainder of its life. Approximately 23 percent and
10 percent of the loans granted forbearance as of December 31, 2015 and 2014, respectively, have been classified as TDRs due
to their forbearance status.
Prior to the Spin-Off, we did not have TDR loans because the loans generally were sold to a now unrelated affiliate in the
same month that the terms were restructured. Subsequent to May 1, 2014, we have individually assessed $307.2 million of
Private Education Loans as TDRs. When these TDR loans are determined to be impaired, we provide for an allowance for
losses sufficient to cover life-of-loan expected losses through an impairment calculation based on the difference between the
loan's basis and the present value of expected future cash flows (which would include life-of-loan default and recovery
assumptions) discounted at the loan's original effective interest rate.
Within the Private Education Loan portfolio, loans greater than 90 days past due are considered to be nonperforming.
FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event
of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk standpoint at any point in their life
cycle prior to claim payment, and continue to accrue interest through the date of claim.
At December 31, 2015 and 2014, all of our TDR loans had a related allowance recorded. The following table provides
the recorded investment, unpaid principal balance and related allowance for our TDR loans.
Recorded
Investment
Unpaid
Principal
Balance Allowance
December 31, 2015
TDR Loans. . . . . . . . . . . . $ 269,628 $ 265,831 $ 43,480
December 31, 2014
TDR Loans. . . . . . . . . . . . $ 60,278 $ 59,402 $ 9,815