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Consumer Loans - Education Lending
by Bob Kula
Derivation of Education Lending Loans:
A prior analysis which split out the student lending portfolio by Product and Guarantee type resulted in a capital factor of 2.64%.
Based on the relative consistency in Net losses (annualized rate of less than 20bp over the last 2 years), it was determined that this capital factor would remain the same.
When multiplied by a "regulatory tax" factor of 1.20, the final capital rate is 3.17%.
The total allocated capital as a % of receivables on-balance-sheet is 6.47%, as $2.5 billion of outstandings has been securitized.
Capital Factors for Education Lending Loans were derived as follows:
EDUCATION LOANS |
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Outstandings ($000) |
Product |
Federal |
Guarantee Self |
Other |
Total |
Access |
605,850 |
- |
308,453 |
914,303 |
|
National Undergraduate |
387,751 |
87,140 |
- |
474,891 |
|
Federal Consolidation |
32,313 |
- |
- |
32,313 |
|
National Grad/Achiever |
- |
337,646 |
- |
337,646 |
|
National Grad/Other |
207,071 |
9,979 |
- |
217,050 |
|
Total |
1,232,985 |
434,765 |
308,453 |
1,976,203 |
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X |
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Capital Factors (bp) |
Product |
Federal |
Guarantee Self |
Other |
Wtd. Avg. |
Access |
200 |
450 |
260 |
220 |
|
National Undergraduate |
200 |
450 |
260 |
246 |
|
Federal Consolidation |
200 |
450 |
260 |
200 |
|
National Grad/Achiever |
200 |
450 |
260 |
450 |
|
National Grad/Other |
200 |
450 |
260 |
211 |
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= |
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Capital ($000) |
Product |
Federal |
GuaranteeSelf |
Other |
Total |
Access |
12,117 |
- |
8,020 |
20,137 |
|
National Undergraduate |
7,755 |
3,921 |
- |
11,676 |
|
Federal Consolidation |
646 |
- |
- |
646 |
|
National Grad/Achiever |
- |
15,194 |
- |
15,194 |
|
National Grad/Other |
4,141 |
449 |
- |
4,590 |
|
Total |
24,660 |
19,564 |
8,020 |
52,244 |
|
Total Capital Rate |
2.64% |
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After applying "regulatory tax" factor of 1.20 |
3.17% |
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KEY CONSUMER FINANCE - Education Lending (on-balance-sheet) |
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| $(M) | Outstandings |
$ 30+ days Delinquent |
30+ $ Del. Rate |
Gross Losses |
Annualized Gross Loss rate |
Net Losses |
Annualized Net Loss rate |
Jan '97 |
$ 2,304,035 |
$ 34,594 |
1.50% |
$ 199 |
0.10% |
$ 133 |
0.07% |
Feb |
$ 2,357,438 |
$ 33,931 |
1.44% |
$ 193 |
0.10% |
$ 173 |
0.09% |
Mar |
$ 2,417,761 |
$ 35,297 |
1.46% |
$ - |
0.00% |
$ (30) |
-0.01% |
Apr |
$ 2,430,087 |
$ 38,363 |
1.58% |
$ 215 |
0.11% |
$ 181 |
0.09% |
May |
$ 2,466,007 |
$ 38,982 |
1.58% |
$ 8 |
0.00% |
$ (9) |
0.00% |
Jun |
$ 2,514,287 |
$ 37,547 |
1.49% |
$ 686 |
0.33% |
$ 664 |
0.32% |
Jul |
$ 2,446,775 |
$ 41,490 |
1.70% |
$ 230 |
0.11% |
$ 211 |
0.10% |
Aug |
$ 2,638,854 |
$ 30,496 |
1.16% |
$ 308 |
0.14% |
$ 264 |
0.12% |
Sep |
$ 2,705,604 |
$ 37,994 |
1.40% |
$ 165 |
0.07% |
$ 149 |
0.07% |
Oct |
$ 1,976,203 |
$ 33,268 |
1.68% |
$ 358 |
0.22% |
$ 250 |
0.15% |
Nov |
$ 2,007,473 |
$ 32,086 |
1.60% |
$ 114 |
0.07% |
$ 104 |
0.06% |
Dec |
$ 2,105,588 |
$ 27,362 |
1.30% |
$ 391 |
0.22% |
$ 369 |
0.21% |
Jan '98 |
$ 2,311,915 |
$ 29,816 |
1.29% |
$ 397 |
0.21% |
$ 370 |
0.19% |
Feb |
$ 2,374,108 |
$ 25,293 |
1.07% |
$ 311 |
0.16% |
$ 299 |
0.15% |
Mar |
$ 2,399,674 |
$ 30,229 |
1.26% |
$ 379 |
0.19% |
$ 364 |
0.18% |
Apr |
$ 2,399,829 |
$ 30,627 |
1.28% |
$ - |
0.00% |
$ (27) |
-0.01% |
May |
$ 2,399,829 |
$ 30,627 |
1.28% |
$ 694 |
0.35% |
$ 680 |
0.34% |
Summary |
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1997 |
$ 2,364,176 |
$ 2,867 |
0.12% |
$ 2,459 |
0.10% |
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1998 ytd |
$ 2,377,071 |
$ 1,781 |
0.18% |
$ 1,686 |
0.17% |
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| Source: Retail Lending Executive Summary Report | |||||||
To view line of business capital allocation, click here.