Business [Overview and Fundamentals of Our Business](index=5&type=section&id=Overview%20and%20Fundamentals%20of%20Our%20Business) Navient manages federal and private education loan portfolios, originates new private loans, and prioritizes cash flow and capital returns - Navient's business is centered on two main areas: managing a **$29.6 billion** portfolio of Federal Family Education Loan Program (FFELP) Loans and a **$15.5 billion** portfolio of Private Education Loans[21](index=21&type=chunk)[22](index=22&type=chunk) - Through its Earnest brand, Navient originated **$1.0 billion** of Private Education Loans in the first half of 2025, an **87%** increase from the prior year, signaling a key growth area[22](index=22&type=chunk) | (Dollars in millions) | Q2-25 | Q2-24 | | :--- | :--- | :--- | | **Shares repurchased** | 1.9 | 2.5 | | **Total repurchases in dollars** | $24 | $38 | | **Dividends paid** | $16 | $17 | | **Total Capital Returned** | $40 | $55 | | **GAAP equity-to-asset ratio** | 5.1% | 4.9% | | **Adjusted Tangible Equity Ratio** | 9.8% | 8.2% | - As of June 30, 2025, **$52 million** remained under the company's **$1 billion** share repurchase program authorized in December 2021[26](index=26&type=chunk) [Recent Business Developments](index=7&type=section&id=Recent%20Business%20Developments) Navient simplified operations and reduced costs by outsourcing loan servicing and divesting its Business Processing segment, focusing on private loan originations - The company completed the divestiture of its Business Processing segment by selling its healthcare services business in September 2024 and its government services business in February 2025[33](index=33&type=chunk) - As part of its restructuring, Navient outsourced its loan portfolio servicing to MOHELA, which began in July 2024[33](index=33&type=chunk) - Strategic actions have resulted in a significant headcount reduction of over **80%** since the beginning of 2024, with **$42 million** in restructuring charges recognized[33](index=33&type=chunk) - The company is focusing on growing its Private Education Loan originations, which nearly doubled to **$1.0 billion** in H1 2025 compared to **$538 million** in H1 2024[36](index=36&type=chunk) [How We Organize Our Business](index=7&type=section&id=How%20We%20Organize%20Our%20Business) Navient now operates with Federal Education Loans and Consumer Lending segments, following Business Processing divestiture, and anticipates private graduate loan growth from new legislation - Navient's business is structured into two main operating segments: Federal Education Loans and Consumer Lending[34](index=34&type=chunk) - The Business Processing segment was fully divested as of February 2025, following the sale of its government and healthcare services businesses[34](index=34&type=chunk)[41](index=41&type=chunk) - The passage of the "Big Beautiful Bill" on July 3, 2025, which eliminates the GradPLUS loan program effective July 1, 2026, is expected to increase demand for private in-school graduate loans, presenting a growth opportunity for Navient[40](index=40&type=chunk) - The "Other" segment handles the corporate liquidity portfolio, unallocated shared services, restructuring expenses, and transition services revenue/expenses related to recent divestitures and outsourcing[43](index=43&type=chunk) Management's Discussion and Analysis of Financial Condition and Results of Operations [Selected Historical Financial Information and Ratios](index=9&type=section&id=Selected%20Historical%20Financial%20Information%20and%20Ratios) This section summarizes key historical financial data and ratios for Q2 and H1 2025/2024, covering GAAP and non-GAAP metrics and loan portfolio balances | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **GAAP Net income** | $14 | $36 | $11 | $109 | | **GAAP Diluted EPS** | $0.13 | $0.32 | $0.11 | $0.97 | | **Core Earnings Net income** | $21 | $33 | $47 | $86 | | **Core Earnings Diluted EPS** | $0.20 | $0.29 | $0.46 | $0.77 | | **Ending total education loans, net** | $45,148 | $49,178 | $45,148 | $49,178 | [The Quarter in Review](index=10&type=section&id=The%20Quarter%20in%20Review) Navient's Q2 2025 net income declined due to increased loan loss provisions and strategic divestitures, offset by capital returns and transition services | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP Net Income** | $14M | $36M | | **GAAP Diluted EPS** | $0.13 | $0.32 | | **Core Earnings Net Income** | $21M | $33M | | **Core Earnings Diluted EPS** | $0.20 | $0.29 | - Provision for loan losses increased by **$23 million** YoY to **$37 million**, attributed to increased originations, a weaker economic forecast, and higher delinquencies[50](index=50&type=chunk) - In the Consumer Lending segment, **$500 million** of Private Education Loans were originated[50](index=50&type=chunk) - The company repurchased **$24 million** of common shares and paid **$16 million** in dividends[50](index=50&type=chunk) - Operating expenses were **$100 million**, including **$13 million** for transition services related to strategic initiatives, which also generated **$14 million** in revenue[51](index=51&type=chunk) [Results of Operations](index=11&type=section&id=Results%20of%20Operations) This section compares GAAP financial results for Q2 and H1 2025 vs 2024, detailing changes in net income driven by net interest income, loan loss provisions, and divested business revenue [GAAP Comparison of Second-Quarter 2025 Results with Second-Quarter 2024](index=12&type=section&id=GAAP%20Comparison%20of%20Second-Quarter%202025%20Results%20with%20Second-Quarter%202024) Q2 2025 GAAP net income decreased to $14 million, driven by lower business processing revenue, higher loan loss provisions, and reduced derivative gains, partially offset by lower operating and restructuring expenses - Net interest income decreased by **$2 million**, as portfolio paydowns were largely offset by a **$22 million** decline in premium amortization on FFELP loans due to significantly lower prepayments[57](index=57&type=chunk) - Provisions for loan losses increased by **$23 million**, from **$14 million** to **$37 million**, due to higher delinquencies and a weaker macroeconomic outlook[57](index=57&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - Asset recovery and business processing revenue dropped by **$81 million** due to the sale of the healthcare and government services businesses[57](index=57&type=chunk) - Operating expenses decreased by **$66 million**, with **$74 million** of the reduction attributed to the sale of the business processing segment[57](index=57&type=chunk) [GAAP Comparison of Six Months Ended June 30, 2025 Results with Six Months Ended June 30, 2024](index=13&type=section&id=GAAP%20Comparison%20of%20Six%20Months%20Ended%20June%2030%2C%202025%20Results%20with%20Six%20Months%20Ended%20June%2030%2C%202024) H1 2025 GAAP net income sharply decreased to $11 million from $109 million, primarily due to lower business processing revenue, reduced derivative gains, and higher loan loss provisions, partially offset by lower operating expenses - Net interest income decreased by **$24 million**, primarily due to portfolio paydowns and interest rate impacts, partially offset by a **$40 million** decline in FFELP premium amortization[62](index=62&type=chunk) - Provisions for loan losses increased by **$41 million**, from **$26 million** to **$67 million**, driven by higher delinquencies and a weaker economic forecast[62](index=62&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Asset recovery and business processing revenue fell by **$135 million** due to the sale of the healthcare and government services businesses[62](index=62&type=chunk) - Net gains on derivative and hedging activities decreased by **$76 million** due to interest rate fluctuations[62](index=62&type=chunk) - Operating expenses decreased by **$123 million**, with **$132 million** of the reduction attributed to the sale of the business processing segment[62](index=62&type=chunk) [Segment Results](index=14&type=section&id=Segment%20Results) This section details Core Earnings performance by segment, with Federal Education Loans showing increased net income, Consumer Lending decreased, Business Processing divested, and Other segment's net loss reduced [Federal Education Loans Segment](index=14&type=section&id=Federal%20Education%20Loans%20Segment) The Federal Education Loans segment reported increased Q2 2025 Core Earnings net income of $30 million, driven by higher net interest income from lower premium amortization, despite increased loan loss provisions | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income** | $30 | $28 | | **Net interest income** | $55 | $33 | | **Provision for loan losses** | $8 | $(2) | | Key Performance Metrics | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Segment net interest margin** | 0.70% | 0.36% | | **Greater than 90-days delinquency rate** | 10.1% | 7.0% | | **Forbearance rate** | 12.8% | 16.8% | | **Average FFELP Loans ($M)** | $30,327 | $34,741 | - The **34 basis point** increase in net interest margin was primarily due to premium amortization being **$22 million** higher in the prior-year period, as prepayments fell from **$2.5 billion** in Q2 2024 to **$228 million** in Q2 2025[68](index=68&type=chunk) - As of June 30, 2025, **$14.5 billion** of education loans were eligible to earn Floor Income after rebates and hedges, compared to **$15.2 billion** a year ago[72](index=72&type=chunk) [Consumer Lending Segment](index=17&type=section&id=Consumer%20Lending%20Segment) The Consumer Lending segment's Q2 2025 Core Earnings net income decreased to $26 million due to lower net interest income and higher loan loss provisions, despite significant growth in loan originations | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income** | $26 | $60 | | **Net interest income** | $95 | $126 | | **Provision for loan losses** | $29 | $16 | | **Private Education Loan Originations** | $500 | $278 | | Key Performance Metrics | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Segment net interest margin** | 2.32% | 2.89% | | **Net charge-off rate** | 2.06% | 1.65% | | **Greater than 90-days delinquency rate** | 3.0% | 2.2% | | **Average Private Education Loans ($M)** | $15,992 | $16,936 | - The **57 basis point** decrease in net interest margin was primarily caused by an **$11 million** increase in reserves for delinquent accrued interest and a portfolio shift towards lower-margin refinance loans[83](index=83&type=chunk) - The provision for loan losses of **$29 million** included **$7 million** for new originations and **$22 million** for a general reserve build due to higher delinquencies and a weaker economic outlook[85](index=85&type=chunk) [Business Processing Segment](index=19&type=section&id=Business%20Processing%20Segment) Navient's Business Processing segment reported no Q2 2025 revenue or net income following its full divestiture in February 2025, with related transition services now reported in the Other segment - Navient no longer provides business processing services after the sale of its government services business in February 2025[89](index=89&type=chunk) | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Business processing revenue** | $0 | $81 | | **Net income** | $0 | $15 | | **EBITDA** | $0 | $20 | [Other Segment](index=20&type=section&id=Other%20Segment) The Other segment's Q2 2025 net loss improved to $35 million due to lower restructuring and unallocated shared services expenses, partially offset by increased revenue from transition services | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net loss** | $(35) | $(70) | | **Other revenue (loss)** | $20 | $2 | | **Unallocated shared services operating expenses** | $47 | $54 | | **Restructuring/other reorganization expenses** | $0 | $16 | - The increase in Other Revenue is primarily from transition services related to the outsourcing of servicing and divestiture of the Business Processing segment[94](index=94&type=chunk) - Unallocated shared services expenses decreased by **$7 million**, mainly due to an **$11 million** decrease in regulatory-related expenses compared to Q2 2024, which included a contingency loss accrual[95](index=95&type=chunk) - Restructuring expenses decreased by **$16 million** due to lower severance-related costs as strategic initiatives to simplify the company near completion[97](index=97&type=chunk) [Financial Condition](index=21&type=section&id=Financial%20Condition) This section details Navient's **$45.1 billion** education loan portfolio composition and performance, including breakdowns by loan type, status, activity, and an analysis of the allowance for loan losses [Summary of Our Education Loan Portfolio](index=21&type=section&id=Summary%20of%20Our%20Education%20Loan%20Portfolio) Navient's total net education loan portfolio was **$45.1 billion** as of June 30, 2025, comprising **66%** FFELP and **34%** Private Education loans, a decrease from **$49.2 billion** in 2024 | (Dollars in millions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total FFELP Loans, net** | $29,618 | $32,940 | | **Total Private Education Loans, net** | $15,530 | $16,238 | | **Total education loan portfolio, net** | $45,148 | $49,178 | [Education Loan Activity](index=22&type=section&id=Education%20Loan%20Activity) The education loan portfolio decreased by **$0.8 billion** in Q2 2025 due to repayments and refinancings outpacing new originations, a smaller decline than the **$3.3 billion** decrease in Q2 2024 | (Dollars in millions) | Beginning Balance (Q2'25) | Acquisitions | Repayments/Refi | Ending Balance (Q2'25) | | :--- | :--- | :--- | :--- | | **FFELP Loans** | $30,244 | $0 | $(885) | $29,618 | | **Private Education Loans** | $15,690 | $472 | $(674) | $15,530 | | **Total Portfolio** | $45,934 | $472 | $(1,559) | $45,148 | [FFELP Loan Portfolio Performance](index=23&type=section&id=FFELP%20Loan%20Portfolio%20Performance) The FFELP loan portfolio showed increased credit stress as of June 30, 2025, with delinquency rates rising to **19.0%** from **13.5%**, while the forbearance rate decreased to **12.8%** from **16.8%** | (Dollars in millions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total FFELP Loans** | $29,800 | $33,134 | | **Loans in forbearance** | $3,653 | $5,320 | | **Loans delinquent > 90 days** | $2,526 | $1,857 | | **Delinquency % of loans in repayment** | 19.0% | 13.5% | | **Forbearance % of loans in repayment & forbearance** | 12.8% | 16.8% | [Private Education Loan Portfolio Performance](index=23&type=section&id=Private%20Education%20Loan%20Portfolio%20Performance) The Private Education Loan portfolio showed increased credit stress as of June 30, 2025, with delinquency rates rising to **6.4%** from **5.2%**, while the forbearance rate slightly decreased to **1.6%** | (Dollars in millions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Private Education Loans** | $15,878 | $16,731 | | **Loans in forbearance** | $250 | $294 | | **Loans delinquent > 90 days** | $459 | $351 | | **Delinquency % of loans in repayment** | 6.4% | 5.2% | | **Forbearance % of loans in repayment & forbearance** | 1.6% | 1.8% | [Allowance for Loan Losses](index=24&type=section&id=Allowance%20for%20Loan%20Losses) The total allowance for loan losses was **$530 million** in Q2 2025, with a **$37 million** provision and **$88 million** in net charge-offs, reflecting portfolio amortization and increased credit costs | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Allowance at end of period (GAAP)** | $530 | $687 | | **Total provision** | $37 | $14 | | **Net charge-offs** | $88 | $77 | | *FFELP Net charge-offs* | *$8* | *$10* | | *Private Education Net charge-offs* | *$80* | *$67* | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Navient manages funding and liquidity risk, with primary needs for debt servicing and operations, holding **$1.27 billion** in primary liquidity, and sourcing future liquidity from cash, operating flows, and capital markets [Funding and Liquidity Risk Management](index=26&type=section&id=Funding%20and%20Liquidity%20Risk%20Management) Navient manages liquidity for debt servicing, operations, and growth, facing capital market access risks due to its below-investment-grade credit ratings, and plans to fund needs via cash, operating flows, and financing facilities - Primary liquidity needs are servicing debt and funding operations, while secondary needs include originating Private Education Loans and returning capital to shareholders[108](index=108&type=chunk) - The company's ability to access capital markets is impacted by its credit ratings; as of June 30, 2025, its long-term unsecured debt is rated below investment grade by three credit rating agencies[110](index=110&type=chunk) - Future funding sources include cash on hand, operating cash flows, principal repayments on unencumbered loans, overcollateralization distributions, and access to ABCP facilities, term ABS, and unsecured debt markets[111](index=111&type=chunk) [Sources of Primary and Additional Liquidity](index=27&type=section&id=Sources%20of%20Primary%20and%20Additional%20Liquidity) Navient's primary liquidity totaled **$1.27 billion** as of June 30, 2025, supplemented by **$1.94 billion** in secured credit facility borrowing capacity and **$4.8 billion** in encumbered net assets | Primary Liquidity Sources (Ending Balances, $M) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Unrestricted cash | $712 | $722 | | Unencumbered FFELP Loans | $51 | $232 | | Unencumbered Private Education Refinance Loans | $510 | $242 | | **Total** | **$1,273** | **$1,196** | | Additional Liquidity (Borrowing Capacity, $M) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | FFELP Loan ABCP facilities | $190 | $424 | | Private Education Loan ABCP facilities | $1,754 | $1,490 | | **Total** | **$1,944** | **$1,914** | - As of June 30, 2025, the company had a total of **$2.9 billion** of unencumbered tangible assets and **$4.8 billion** of encumbered net assets (overcollateralization) in its financing facilities[115](index=115&type=chunk) [Borrowings](index=28&type=section&id=Borrowings) Navient's total GAAP borrowings were **$47.1 billion** as of June 30, 2025, comprising **$5.3 billion** unsecured and **$41.9 billion** secured debt, with an average Q2 2025 interest rate of **5.48%** | Borrowings Ending Balances ($M) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total unsecured borrowings** | $5,303 | $5,359 | | **Total secured borrowings** | $41,860 | $43,306 | | **Total GAAP basis borrowings** | $47,097 | $48,318 | [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Detailed critical accounting policies and estimates, including allowance for loan losses and goodwill impairment, are available in the company's 2024 Form 10-K - The company's critical accounting policies, including allowance for loan losses, goodwill impairment, and premium/discount amortization, are detailed in the 2024 Form 10-K[121](index=121&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) Navient uses non-GAAP measures like Core Earnings, Adjusted Tangible Equity Ratio, and EBITDA to evaluate performance and provide investors with additional operational insight [Core Earnings](index=29&type=section&id=Core%20Earnings) Core Earnings is a non-GAAP measure used by Navient to manage segments, adjusting GAAP net income by excluding derivative mark-to-market impacts and goodwill accounting - Core Earnings adjusts GAAP results for two main items: mark-to-market gains/losses on derivatives that don't qualify for hedge accounting, and the accounting for goodwill and acquired intangible assets[124](index=124&type=chunk) | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP net income** | $14 | $36 | | Net impact of derivative accounting | $8 | $(8) | | Net impact of goodwill and intangible assets | $1 | $3 | | Net income tax effect | $(2) | $2 | | **Core Earnings net income** | $21 | $33 | [Tangible Equity and Adjusted Tangible Equity Ratio](index=37&type=section&id=Tangible%20Equity%20and%20Adjusted%20Tangible%20Equity%20Ratio) The Adjusted Tangible Equity Ratio, a non-GAAP metric for capital allocation, was **9.8%** as of June 30, 2025, reflecting tangible equity relative to tangible assets excluding FFELP loans | (Dollars in millions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Tangible Equity | $2,128 | $2,058 | | Adjusted Tangible Equity | $1,980 | $1,893 | | Adjusted tangible assets | $20,168 | $22,992 | | **Adjusted Tangible Equity Ratio** | **9.8%** | **8.2%** | [EBITDA](index=37&type=section&id=EBITDA) EBITDA, a non-GAAP measure for the divested Business Processing segment, was zero in Q2 2025 following its full sale in February 2025 | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Pre-tax income | $0 | $19 | | Depreciation and amortization | $0 | $1 | | **EBITDA** | **$0** | **$20** | [Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans](index=38&type=section&id=Allowance%20for%20Loan%20Losses%20Excluding%20Expected%20Future%20Recoveries%20on%20Previously%20Fully%20Charged-off%20Loans) This non-GAAP metric adjusts the Private Education Loan allowance for loan losses by excluding expected future recoveries on fully charged-off loans, providing a **$520 million** allowance as of June 30, 2025 | (Dollars in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Allowance at end of period (GAAP) | $348 | $493 | | Plus: expected future recoveries | $172 | $211 | | **Allowance (Non-GAAP)** | **$520** | **$704** | Quantitative and Qualitative Disclosures about Market Risk [Interest Rate Sensitivity Analysis](index=40&type=section&id=Interest%20Rate%20Sensitivity%20Analysis) Navient's interest rate sensitivity analysis indicates a **$38 million** increase in annual pre-tax income for a **100 basis point** rate rise, driven by asset-liability mismatches and derivative impacts, with foreign currency risk managed via swaps | (Dollars in millions) | Impact on Annual Earnings if Rates Increase 100 bps | Impact on Annual Earnings if Rates Decrease 100 bps | | :--- | :--- | :--- | | **Change in pre-tax net income** | $38 | $(15) | | **Change in net income after taxes** | $29 | $(12) | - The company's primary interest rate risk arises from mismatches in indices and reset frequencies between its assets and liabilities, and from FFELP loans earning fixed-rate Floor Income while being funded with variable-rate debt[152](index=152&type=chunk)[158](index=158&type=chunk) - Foreign currency exchange risk is managed by using cross-currency interest rate swaps to convert all foreign currency denominated debt payments to USD, resulting in an immaterial impact on earnings from exchange rate fluctuations[154](index=154&type=chunk) [Asset and Liability Funding Gap](index=42&type=section&id=Asset%20and%20Liability%20Funding%20Gap) Navient's asset and liability funding gap analysis shows a matched **$50.2 billion** position as of June 30, 2025, with a net short position in fixed-rate instruments and exposure to basis and repricing risk from index mismatches | Index (Dollars in billions) | Assets | Funding | Funding Gap | | :--- | :--- | :--- | :--- | | Overnight SOFR (daily) | $27.9 | $28.6 | $(0.7) | | Fixed Rate | $12.7 | $15.2 | $(2.5) | | **Total** | **$50.2** | **$50.2** | **$0** | - The company's strategy is to match assets with similarly indexed debt, but mismatches in indices (e.g., 30-day average SOFR assets vs. daily SOFR funding) and reset frequencies create basis and repricing risk[158](index=158&type=chunk) Part II. Other Information [Legal Proceedings](index=39&type=page&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims, lawsuits, and regulatory actions in the normal course of business, which management does not believe will have a material adverse effect - Navient and its subsidiaries are subject to various claims and lawsuits in the normal course of business, but management believes they will not have a material adverse effect on the company's financial condition[147](index=147&type=chunk) [Risk Factors](index=39&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2024 Form 10-K[148](index=148&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=page&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Navient repurchased **1.9 million** shares for **$24 million** in Q2 2025, with **$52 million** remaining under the share repurchase program as of June 30, 2025 | (In millions, except per share data) | Total second-quarter 2025 | | :--- | :--- | | **Total Number of Shares Purchased** | 1.9 | | **Average Price Paid per Share** | $12.56 | | **Total Value of Shares Purchased** | $24 | | **Approximate Dollar Value of Shares That May Yet Be Purchased** | $52 | [Controls and Procedures](index=44&type=page&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - As of June 30, 2025, the Principal Executive and Principal Financial Officers concluded that the company's disclosure controls and procedures were effective[162](index=162&type=chunk) - No material changes to the internal control over financial reporting occurred during the quarter ended June 30, 2025[163](index=163&type=chunk) Financial Statements [Consolidated Balance Sheets](index=46&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Navient reported total assets of **$50.2 billion**, total liabilities of **$47.7 billion**, and total equity of **$2.6 billion**, with asset reduction due to loan portfolio amortization | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | $50,222 | $51,789 | | *FFELP Loans, net* | *$29,618* | *$30,852* | | *Private Education Loans, net* | *$15,530* | *$15,716* | | **Total liabilities** | $47,658 | $49,148 | | **Total equity** | $2,564 | $2,641 | [Consolidated Statements of Income](index=47&type=section&id=Consolidated%20Statements%20of%20Income) Navient reported Q2 2025 net income of **$14 million** (**$0.13** per diluted share), a decline driven by lower revenue from divested businesses, higher loan loss provisions, and unfavorable derivative valuations | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net interest income** | $128 | $130 | | **Provisions for loan losses** | $37 | $14 | | **Total other income** | $28 | $117 | | **Total expenses** | $101 | $185 | | **Net income** | $14 | $36 | | **Diluted earnings per common share** | $0.13 | $0.32 | [Consolidated Statements of Comprehensive Income](index=48&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Navient reported total comprehensive income of **$12 million** in Q2 2025, comprising **$14 million** net income and a **$2 million** net loss from cash flow hedges, compared to **$31 million** in Q2 2024 | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net income** | $14 | $36 | | **Net changes in cash flow hedges, net of tax** | $(2) | $(5) | | **Total comprehensive income** | $12 | $31 | [Consolidated Statements of Changes in Stockholders' Equity](index=49&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity decreased from **$2.64 billion** to **$2.56 billion** by June 30, 2025, primarily due to common stock dividends and repurchases, partially offset by net income | (In millions) | Six Months Ended June 30, 2025 | | :--- | :--- | | **Balance at December 31, 2024** | $2,641 | | Net income | $11 | | Other comprehensive loss | $(3) | | Cash dividends | $(34) | | Common stock repurchased | $(65) | | Stock-based compensation & other | $14 | | **Balance at June 30, 2025** | $2,564 | [Consolidated Statements of Cash Flows](index=51&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash provided by operating activities was **$197 million**, investing activities **$1.41 billion**, and net cash used in financing activities was **$1.63 billion**, resulting in a **$26 million** net decrease in cash | (In millions) | Six Months Ended June 30, 2025 | | :--- | :--- | | **Net cash provided by operating activities** | $197 | | **Net cash provided by investing activities** | $1,406 | | **Net cash used in financing activities** | $(1,629) | | **Net decrease in cash and cash equivalents** | $(26) | [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures supporting financial statements, covering allowance for loan losses, borrowings, divestitures, derivatives, fair value, legal contingencies, and segment reporting with non-GAAP reconciliations [Note 2. Allowance for Loan Losses](index=53&type=section&id=Note%202.%20Allowance%20for%20Loan%20Losses) This note details the allowance for loan losses, which was **$530 million** in Q2 2025 with a **$37 million** provision and **$88 million** net charge-offs, and provides credit quality indicators for loan portfolios | Allowance Roll Forward (Q2 2025, $M) | FFELP Loans | Private Education Loans | Total | | :--- | :--- | :--- | :--- | | **Beginning Allowance** | $182 | $397 | $579 | | **Total provision** | $8 | $29 | $37 | | **Net charge-offs** | $(8) | $(80) | $(88) | | **Ending Allowance** | $182 | $348 | $530 | - For Private Education Loans modified in Q2 2025 due to borrower financial difficulty, the amortized cost was **$295 million** for interest rate reductions and **$568 million** for payment delays[214](index=214&type=chunk) - Of the Private Education Loans that had been modified within the last 12 months, **$15 million** were charged-off and **$111 million** were in payment default during Q2 2025[223](index=223&type=chunk) [Note 3. Borrowings](index=62&type=section&id=Note%203.%20Borrowings) Total borrowings were **$47.1 billion** as of June 30, 2025, comprising **$5.3 billion** unsecured and **$41.9 billion** secured debt, primarily from consolidated Variable Interest Entities | Borrowings (June 30, 2025, $M) | Short Term | Long Term | Total | | :--- | :--- | :--- | :--- | | **Unsecured borrowings** | $505 | $4,798 | $5,303 | | **Secured borrowings** | $4,250 | $37,610 | $41,860 | | **Total** | $4,755 | $42,408 | $47,163 | - Consolidated VIEs held **$43.8 billion** in loans and **$1.4 billion** in cash, securing **$41.7 billion** of the company's debt as of June 30, 2025[230](index=230&type=chunk) [Note 4. Divestitures](index=64&type=section&id=Note%204.%20Divestitures) This note details the divestiture of the Business Processing segment, with the healthcare services business sold in September 2024 for a **$219 million** gain and government services in February 2025 - The sale of the healthcare services business (Xtend) in September 2024 resulted in a **$219 million** gain[232](index=232&type=chunk) - The sale of the government services businesses was completed in February 2025 for net consideration of **$44 million**, marking the full exit from the Business Processing segment[233](index=233&type=chunk) [Note 5. Derivative Financial Instruments](index=65&type=section&id=Note%205.%20Derivative%20Financial%20Instruments) As of June 30, 2025, Navient held **$47 million** in derivative assets and **$79 million** in liabilities, with a **$7.5 billion** notional value, using derivatives to manage interest rate and foreign currency risk | (June 30, 2025, $M) | Fair Value | Notional Value | | :--- | :--- | :--- | | **Derivative Assets** | $47 | - | | **Derivative Liabilities** | $(79) | - | | **Total Notional Value** | - | $7,500 | - For Q2 2025, fair value hedges had a net gain of **$4 million**, while trading derivatives had a net loss of **$5 million**, resulting in a total mark-to-market loss of **$1 million** recognized in the income statement[241](index=241&type=chunk) [Note 9. Fair Value Measurements](index=69&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note details the fair value hierarchy for financial instruments, showing **$47 million** in derivative assets and **$79 million** in liabilities, and a **$671 million** difference between the loan portfolio's fair value and carrying value | Recurring Fair Value (June 30, 2025, $M) | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Derivative assets** | $0 | $43 | $4 | $47 | | **Derivative liabilities** | $0 | $0 | $(79) | $(79) | | Financial Instruments (June 30, 2025, $M) | Fair Value | Carrying Value | Difference | | :--- | :--- | :--- | :--- | | **Total earning assets** | $46,689 | $47,360 | $(671) | | **Total interest-bearing liabilities** | $46,436 | $47,097 | $661 | [Note 10. Commitments, Contingencies and Guarantees](index=71&type=section&id=Note%2010.%20Commitments%2C%20Contingencies%20and%20Guarantees) Navient is involved in various legal and regulatory matters, including class actions and agency inquiries, but management does not believe these will have a material adverse effect on its financial position - The company is a defendant in numerous legal proceedings, including class actions alleging violations of consumer protection laws (TCPA, FCRA, FDCPA)[264](index=264&type=chunk)[273](index=273&type=chunk) - The company is subject to ongoing examinations and information requests from regulators like the SEC, CFPB, and ED, which have normalized at elevated levels[266](index=266&type=chunk)[274](index=274&type=chunk) - Due to the uncertainty of litigation, it is not possible to estimate a range of potential exposure for certain matters, and loss contingency accruals have not been established for them[273](index=273&type=chunk) [Note 11. Segment Reporting](index=73&type=section&id=Note%2011.%20Segment%20Reporting) This note outlines Navient's reportable segments (Federal Education Loans, Consumer Lending, Other) and their Core Earnings profitability, including reconciliation to GAAP net income - As of February 2025, Navient's reportable segments are Federal Education Loans, Consumer Lending, and Other, as the Business Processing segment has been divested[276](index=276&type=chunk) | Core Earnings Net Income (Q2 2025, $M) | | |:--- |:--- | | Federal Education Loans | $30 | | Consumer Lending | $26 | | Business Processing | $0 | | Other | $(35) | | **Total Core Earnings** | **$21** | | Reconciliation to GAAP (Q2 2025, $M) | | |:--- |:--- | | **Core Earnings net income** | $21 | | Net impact of derivative accounting | $(8) | | Net impact of goodwill/intangibles | $(1) | | Net tax effect | $2 | | **GAAP net income** | $14 |

Core Insights - Navient Corporation (NAVI) reported second-quarter 2025 adjusted earnings per share (EPS) of 21 cents, missing the Zacks Consensus Estimate of 29 cents and down from 48 cents in the prior-year quarter [1][8] - The results were impacted by a decrease in net interest income (NII) and other income, alongside higher provisions for loan losses, although lower expenses provided some support [2][10] Financial Performance - Navient's GAAP net income was $14 million, compared to $36 million in the prior-year quarter [2] - NII declined 3.7% year over year to $131 million, missing the Zacks Consensus Estimate by 9.2% [3] - Total other income decreased 76.1% year over year to $28 million [3] - Provision for loan losses increased to $37 million from $14 million in the prior-year quarter [3] - Total expenses decreased 45.4% year over year to $101 million [3][8] Segment Performance - Federal Education Loans segment generated a net income of $30 million, up 7.1% year over year, with net FFELP loans at $29.6 billion, down 2.1% sequentially [4] - Consumer Lending segment reported a net income of $26 million, down 56.7% from the year-ago quarter, with a private education loan delinquency rate greater than 30 days at 6.4%, compared to 5.2% in the prior-year quarter [4] - As of June 30, 2025, private education loans were $15.5 billion, a decrease of 1% from the prior quarter [5] Liquidity and Capital Management - As of June 30, 2025, the company had $712 million in total unrestricted cash and liquid investments [7] - To meet liquidity needs, NAVI plans to utilize various sources, including cash, investment portfolio, and operating cash flows, and may draw down on secured loan facilities or issue additional debt [6] Capital Distribution Activities - In the second quarter, the company paid $16 million in common stock dividends and repurchased shares for $35 million, with $52 million remaining in share-repurchase authority as of June 30, 2025 [9]

Core Insights - Navient (NAVI) reported $131 million in revenue for the quarter ended June 2025, reflecting a year-over-year decline of 3.7% and an EPS of $0.21 compared to $0.48 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $141.8 million, resulting in a surprise of -7.62%, while the EPS also missed the consensus estimate of $0.27 by -22.22% [1] Financial Performance Metrics - Net interest margin for the Consumer Lending segment was 2.3%, below the estimated 2.8% [4] - Net interest margin for the Federal Education Loan segment was 0.7%, slightly above the average estimate of 0.6% [4] - Total Non-Interest Income (Core) was $33 million, exceeding the estimated $25.12 million [4] - Other income reached $19 million, surpassing the average estimate of $13.44 million [4] - Servicing revenue was reported at $14 million, compared to the average estimate of $9.97 million [4] - Net Interest Income (Core) was $131 million, below the average estimate of $144.35 million [4] - Total core other income for Consumer Lending was $3 million, slightly below the estimated $3.06 million [4] - Net interest income (loss) for Federal Education Loans (Core) was $49 million, slightly above the average estimate of $48.59 million [4] - Total core other income for Federal Education Loans was $10 million, significantly above the average estimate of $4.38 million [4] - Net interest income (loss) for Other (Core) was reported at -$18 million, worse than the average estimate of -$14.87 million [4] - Net interest income (loss) for Consumer Lending (Core) was $113 million, slightly above the average estimate of $111.47 million [4] - Total core other income for Other was $20 million, exceeding the estimated $13.88 million [4] Stock Performance - Shares of Navient have returned -5.5% over the past month, contrasting with the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Navient has released its financial results for the second quarter of 2025, indicating ongoing efforts to manage the cost of higher education for students and families [1]. Financial Results - Complete financial results for the second quarter of 2025 are available on Navient's investor website [1]. - Supplemental financial information and presentation slides will be accessible before the start of the live audio webcast [3]. Webcast Information - A live audio webcast is scheduled for July 30, 2025, at 8 a.m. ET, hosted by the CEO and CFO of Navient [1]. - Analysts and investors must pre-register for the Q&A session, while others can join in listen-only mode without pre-registration [2]. Company Overview - Navient focuses on helping students and families manage higher education costs through responsible lending and flexible refinancing [4]. - The company emphasizes creating long-term value for customers and investors through trusted servicing and portfolio management expertise [4].

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Overall Results](index=1&type=section&id=Overall%20Results) Navient's Q2 2025 GAAP net income was $14 million, Core Earnings $21 million, impacted by higher loan loss provisions despite strong loan origination Q2 2025 Overall Results | Metric | Value | Diluted EPS | | :--- | :--- | :--- | | **GAAP Net Income** | $14 million | $0.13 | | **Core Earnings (Non-GAAP)** | $21 million | $0.20 | - GAAP and Core Earnings included a provision for loan losses of **$37 million**, a **$23 million** increase from Q2 2024, due to increased originations, a weakening macroeconomic forecast, higher delinquencies, and the extension of the FFELP portfolio[2](index=2&type=chunk) - CEO David Yowan noted strong loan origination growth, with over **$1 billion** in the first half of 2025, nearly double the same period last year, and the company is on track to meet its expense reduction targets[2](index=2&type=chunk) [Second-Quarter Highlights](index=1&type=section&id=Second-Quarter%20Highlights) Q2 2025 highlights include $30 million net income for Federal Education Loans, $500 million in private loan originations, and $24 million in share repurchases Q2 2025 Segment & Capital Highlights | Category | Highlight | Value | | :--- | :--- | :--- | | **Federal Education Loans** | Net Income | $30 million | | | Net Interest Margin | 0.70% | | **Consumer Lending** | Net Income | $26 million | | | Private Education Loan Originations | $500 million | | **Business Processing** | Status | No longer provides services after Feb 2025 sale | | **Capital & Funding** | Share Repurchases | $24 million | | | Common Stock Dividends Paid | $16 million | | | Unsecured Debt Issued | $500 million | | **Operating Expenses** | Total | $100 million | [Segment Performance](index=2&type=section&id=Segment%20Performance) [Federal Education Loans](index=2&type=section&id=Federal%20Education%20Loans) Federal Education Loans reported Q2 2025 net income of $30 million, driven by higher net interest income from reduced prepayments, despite increased loan loss provisions Federal Education Loans Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $30 million | $28 million | | Net Interest Income | $55 million | $33 million | | Segment Net Interest Margin | 0.70% | 0.36% | | Provision for Loan Losses | $8 million | $(2) million | | >90-days Delinquency Rate | 10.1% | 7.0% | | Ending FFELP Loans, net | $29.6 billion | $32.9 billion | - Net interest income increased by **$22 million** YoY, mainly because of lower premium amortization as prepayments fell sharply from **$2.5 billion** to **$228 million**[6](index=6&type=chunk) - The provision for loan losses increased by **$10 million** YoY, primarily due to a rise in delinquency balances[6](index=6&type=chunk) [Consumer Lending](index=3&type=section&id=Consumer%20Lending) Consumer Lending net income declined to $26 million in Q2 2025 due to lower net interest income and higher loan loss provisions, despite strong loan origination growth Consumer Lending Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $26 million | $60 million | | Private Education Loan Originations | $500 million | $278 million | | Net Interest Income | $95 million | $126 million | | Segment Net Interest Margin | 2.32% | 2.89% | | Provision for Loan Losses | $29 million | $16 million | | >90-days Delinquency Rate | 3.0% | 2.2% | - Net interest income fell by **$31 million** YoY, attributed to the paydown of the loan portfolio and increased reserves for accrued interest on delinquent loans[9](index=9&type=chunk) - The provision for loan losses increased by **$13 million** YoY, with the current quarter's provision including **$7 million** for new originations and **$22 million** for a general reserve build, prompted by higher delinquencies and a weaker macroeconomic forecast[9](index=9&type=chunk) [Business Processing](index=4&type=section&id=Business%20Processing) The Business Processing segment reported no Q2 2025 revenue or net income following strategic divestitures of its government and healthcare services businesses Business Processing Financial Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $— | $81 million | | Net Income | $— | $15 million | | EBITDA | $— | $20 million | - Navient no longer provides business processing services following the sale of its government services business in February 2025[12](index=12&type=chunk) - Transition services for the sold healthcare business ended in May 2025, while those for the government services business are expected to be mostly finished by the end of 2025[12](index=12&type=chunk) [Financial Statements and Analysis](index=6&type=section&id=Financial%20Statements%20and%20Analysis) [Selected Historical Financial Information](index=6&type=section&id=Selected%20Historical%20Financial%20Information) Key financial data shows Q2 2025 GAAP net income at $14 million, a decline from Q2 2024, with the total education loan portfolio decreasing to $45.1 billion Selected Historical Financial Data (in millions, except per share) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **GAAP Net Income** | $14 | $36 | $11 | $109 | | **GAAP Diluted EPS** | $0.13 | $0.32 | $0.11 | $0.97 | | **Core Earnings Net Income** | $21 | $33 | $47 | $86 | | **Core Earnings Diluted EPS** | $0.20 | $0.29 | $0.46 | $0.77 | | **Ending Total Education Loans, net** | $45,148 | $49,178 | $45,148 | $49,178 | [GAAP Financial Statements](index=7&type=section&id=GAAP%20Financial%20Statements) GAAP financial statements show total assets decreased to $50.2 billion and liabilities to $47.7 billion, with Q2 2025 net income at $14 million due to higher loan loss provisions and lower revenue [GAAP Income Statement](index=7&type=section&id=GAAP%20Income%20Statement) Q2 2025 GAAP net income decreased 61% to $14 million, primarily due to increased loan loss provisions and reduced asset recovery revenue, partially offset by lower expenses GAAP Income Statement Summary (in millions) | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $128 | $130 | $258 | $282 | | Provisions for Loan Losses | $37 | $14 | $67 | $26 | | Total Other Income | $28 | $117 | $53 | $252 | | Total Expenses | $101 | $185 | $232 | $372 | | **Net Income** | **$14** | **$36** | **$11** | **$109** | [GAAP Balance Sheet](index=9&type=section&id=GAAP%20Balance%20Sheet) As of June 30, 2025, total assets decreased to **$50.2 billion** and total liabilities to **$47.7 billion**, primarily due to reductions in loan portfolios and long-term borrowings GAAP Balance Sheet Summary (in millions) | Line Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$50,222** | **$56,622** | | FFELP Loans, net | $29,618 | $32,940 | | Private Education Loans, net | $15,530 | $16,238 | | **Total Liabilities** | **$47,658** | **$53,874** | | Long-term borrowings | $42,345 | $47,545 | | **Total Equity** | **$2,564** | **$2,748** | [GAAP Comparison of Results](index=10&type=section&id=GAAP%20Comparison%20of%20Results) The year-over-year decline in GAAP net income for Q2 and H1 2025 was primarily due to higher loan loss provisions and reduced revenue from divested businesses, partially offset by lower expenses [Three Months Ended June 30, 2025 vs. 2024](index=10&type=section&id=Q2%202025%20vs.%20Q2%202024) Q2 2025 GAAP net income decreased to $14 million, driven by increased loan loss provisions and lower revenue from divested businesses, partially offset by reduced operating and restructuring expenses - Provisions for loan losses increased by **$23 million**, with a **$10 million** increase for FFELP Loans and a **$13 million** increase for Private Education Loans[28](index=28&type=chunk) - Asset recovery and business processing revenue decreased by **$81 million** due to the sale of the healthcare and government services businesses[28](index=28&type=chunk) - Operating expenses decreased by **$66 million**, largely due to the business sales, and restructuring expenses also decreased by **$16 million**[28](index=28&type=chunk) [Six Months Ended June 30, 2025 vs. 2024](index=11&type=section&id=H1%202025%20vs.%20H1%202024) H1 2025 net income sharply declined to $11 million, primarily due to increased loan loss provisions, reduced revenue from sold businesses, and lower derivative gains, partially offset by decreased operating expenses - Provisions for loan losses increased by **$41 million**, with a **$17 million** increase for FFELP Loans and a **$24 million** increase for Private Education Loans[31](index=31&type=chunk) - Asset recovery and business processing revenue decreased by **$135 million** due to business sales[31](index=31&type=chunk) - Net gains on derivative and hedging activities decreased by **$76 million** due to interest rate fluctuations[31](index=31&type=chunk) - Operating expenses decreased by **$123 million**, primarily from the business sales[31](index=31&type=chunk) [Credit Quality and Allowance for Loan Losses](index=12&type=section&id=Credit%20Quality%20and%20Allowance%20for%20Loan%20Losses) Private Education Loan delinquency rates increased, with over 90-day delinquencies at **3.0%**, while the total allowance for loan losses stood at **$530 million** with a **$37 million** provision for the quarter [Private Education Loan Portfolio Performance](index=12&type=section&id=Private%20Education%20Loan%20Portfolio%20Performance) Private Education Loan portfolio credit quality deteriorated, with total delinquencies over 30 days increasing to **6.4%** and over 90 days to **3.0%** of loans in repayment Private Education Loan Delinquency and Forbearance | Status | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Delinquencies as a % of Loans in Repayment** | | | | 31-90 days | 3.4% | 3.0% | | > 90 days | 3.0% | 2.2% | | **Total > 30 days** | **6.4%** | **5.2%** | | **Forbearance Rate** | 1.6% | 1.8% | [Allowance for Loan Losses](index=13&type=section&id=Allowance%20for%20Loan%20Losses) Q2 2025 total provision for loan losses was **$37 million**, with net charge-offs of **$88 million**, resulting in an ending allowance of **$530 million** Allowance for Loan Losses Roll-Forward - Q2 2025 (in millions) | Description | FFELP Loans | Private Education Loans | Total | | :--- | :--- | :--- | :--- | | Allowance at beginning of period | $182 | $397 | $579 | | Total provision | $8 | $29 | $37 | | Net charge-offs | $(8) | $(80) | $(88) | | **Allowance at end of period (GAAP)** | **$182** | **$348** | **$530** | [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) Navient maintains liquidity through cash, operating flows, and capital markets, with primary liquidity at **$1.3 billion** and **$1.9 billion** in secured credit facilities, while repurchasing **$24 million** in shares - Ongoing liquidity needs include repaying **$0.5 billion** of short-term and **$4.8 billion** of long-term senior unsecured notes, funding loan originations, and share repurchases[41](index=41&type=chunk)[42](index=42&type=chunk) Sources of Liquidity (in millions) | Source | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Primary Liquidity** | | | | Unrestricted cash | $712 | $1,088 | | Unencumbered Loans | $561 | $486 | | **Total Primary Liquidity** | **$1,273** | **$1,574** | | **Additional Liquidity (Capacity)** | | | | Secured Credit Facilities | $1,944 | $2,504 | - The company repurchased **1.9 million** shares for **$24 million** in Q2 2025 and has **$52 million** of unused share repurchase authority remaining[42](index=42&type=chunk) [Non-GAAP Financial Measures](index=18&type=section&id=Non-GAAP%20Financial%20Measures) [Core Earnings](index=18&type=section&id=Core%20Earnings) Core Earnings, a non-GAAP measure, adjusts GAAP results for derivative volatility and goodwill, with Q2 2025 Core Earnings at **$21 million**, **$7 million** higher than GAAP net income - Core Earnings are used by management to evaluate performance by removing volatility from two main items: mark-to-market gains/losses on derivatives and the accounting for goodwill and acquired intangible assets[51](index=51&type=chunk) Reconciliation of GAAP Net Income to Core Earnings (in millions) | Description | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **GAAP Net Income (Loss)** | **$14** | **$(2)** | **$36** | | Net impact of derivative accounting | $8 | $39 | $(8) | | Net impact of goodwill/intangibles | $1 | $1 | $3 | | Net tax effect | $(2) | $(12) | $2 | | **Total Core Earnings Adjustments** | **$7** | **$28** | **$(3)** | | **Core Earnings Net Income** | **$21** | **$26** | **$33** | [Tangible Equity and Adjusted Tangible Equity Ratio](index=27&type=section&id=Tangible%20Equity%20and%20Adjusted%20Tangible%20Equity%20Ratio) The Adjusted Tangible Equity Ratio, a non-GAAP metric, was **9.8%** as of June 30, 2025, indicating a stronger capital position relative to non-FFELP assets compared to the prior year Adjusted Tangible Equity Ratio Calculation | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | **Adjusted Tangible Equity** | **$1,980 M** | **$2,001 M** | **$1,893 M** | | **Adjusted Tangible Assets** | **$20,168 M** | **$20,269 M** | **$22,992 M** | | **Adjusted Tangible Equity Ratio** | **9.8%** | **9.9%** | **8.2%** | [EBITDA (Business Processing Segment)](index=27&type=section&id=EBITDA%20%28Business%20Processing%20Segment%29) The Business Processing segment reported no Q2 2025 revenue or EBITDA following divestitures, compared to **$20 million** EBITDA and **25%** margin in Q2 2024 Business Processing Segment EBITDA (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Core Earnings Pre-tax Income | $— | $19 | | Depreciation & Amortization | $— | $1 | | **EBITDA** | **$—** | **$20** | | **EBITDA Margin** | **—%** | **25%** | [Allowance for Loan Losses (Non-GAAP)](index=28&type=section&id=Allowance%20for%20Loan%20Losses%20%28Non-GAAP%29) Navient's non-GAAP Private Education Loan allowance, excluding future recoveries, was **$520 million** (3.3% coverage) as of June 30, 2025, compared to **$348 million** (2.2% coverage) on a GAAP basis - This non-GAAP measure excludes the **$172 million** of expected future recoveries on previously charged-off loans to better reflect the current expected credit losses on the existing **$15.9 billion** loan portfolio[79](index=79&type=chunk) Private Education Loan Allowance Metrics (Non-GAAP vs. GAAP) - Q2 2025 | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | **Allowance at end of period** | **$348 M** | **$520 M** | | **Allowance as a % of total loans** | **2.2%** | **3.3%** | | **Allowance as a % of loans in repayment** | **2.3%** | **3.4%** |

Core Viewpoint - Navient Corporation (NAVI) is expected to report a rise in quarterly revenues but a decline in earnings year-over-year for Q2 2025 [1][8] Revenue Expectations - The consensus estimate for revenues is $142.8 million, indicating a 5% increase compared to the previous year [2] - Consumer loan demand remained stable due to a strong labor market, which is expected to positively impact the Consumer Lending segment [3] - However, elevated prepayment due to student loan forgiveness and subdued origination volume are likely to limit revenue growth in the Federal Education Loans segment [3] Earnings Expectations - The Zacks Consensus Estimate for earnings is 29 cents per share, reflecting a 39.6% decline from the year-ago figure [2] - NAVI's earnings surprise history shows an average surprise of 27.10%, with earnings exceeding estimates in four of the last five quarters [2] Net Interest Income (NII) - The consensus estimate for Core NII is $142.9 million, indicating a sequential decline of 0.8% [4] - NII for Federal Education loans is estimated at $48.6 million, suggesting a slight rise, while consumer lending NII is expected to decline by 1.4% to $111.5 million [4] Non-Interest Income - The consensus estimate for servicing revenues is $10 million, indicating a 23.3% fall from the prior quarter [5] - Total non-interest income is estimated at $25.1 million, reflecting a 50.7% sequential decline [5] Expense Management - Cost-control measures are anticipated to enhance operating efficiency and lower expenses in Q2 2025 [6] - Strategic actions taken last year are expected to contribute to a further decline in operating expenses [6] Earnings ESP and Zacks Rank - NAVI has an Earnings ESP of -7.66%, indicating a lower likelihood of an earnings beat [7] - The company currently holds a Zacks Rank of 3 (Hold) [9]

Group 1 - The article discusses Navient Corporation (NASDAQ: NAVI) and the financial instruments it offers, particularly focusing on over-the-counter bonds and baby bonds [1] - The investing group Trade With Beta provides features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1] - The article emphasizes the opportunity for active investors to join a free trial and engage in discussions with sophisticated traders and investors [1]

Core Viewpoint - The market anticipates a year-over-year decline in Navient's earnings despite an increase in revenues when it reports its results for the quarter ended June 2025 [1] Company Summary - Navient is expected to report quarterly earnings of $0.29 per share, reflecting a year-over-year decrease of 39.6% [3] - Revenue projections stand at $142.8 million, which is a 5% increase from the same quarter last year [3] - The consensus EPS estimate has been revised down by 3.94% over the last 30 days, indicating a bearish sentiment among analysts [4] Earnings Surprise Prediction - The Most Accurate Estimate for Navient is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -17.22% [12] - The stock currently holds a Zacks Rank of 3, making it challenging to predict a beat on the consensus EPS estimate [12] - Historically, Navient has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +47.37% in the last reported quarter [13][14] Industry Context - In comparison, Capital One is expected to post earnings of $3.83 per share for the same quarter, indicating a year-over-year increase of 22% [18] - Capital One's revenue is projected to be $12.22 billion, up 28.6% from the previous year, with a slight upward revision of 0.6% in the consensus EPS estimate over the last 30 days [19] - Capital One also has an Earnings ESP of -1.47% and a Zacks Rank of 3, complicating predictions for beating the consensus EPS estimate [20]

Core Viewpoint - Navient will host an audio webcast to discuss its second quarter 2025 financial results on July 30, 2025, at 8:00 a.m. Eastern Time, with results released earlier that day at 7:00 a.m. [1] Group 1 - The financial results will be available on the company's investor website and filed with the SEC on a Form 8-K [1][2] - Analysts and investors can pre-register for questions, while others can join in listen-only mode without pre-registration [2] - A replay of the webcast will be accessible approximately two hours after the event concludes [3] Group 2 - Navient focuses on helping students and families manage the cost of higher education through responsible lending and trusted servicing [4] - The company aims to create long-term value for customers and investors with its portfolio management expertise [4]

Core Insights - The "Big and Beautiful" Act signed by Trump is expected to create growth opportunities for private student loan institutions, potentially generating around $2.5 billion in benefits [1] Summary by Categories Market Impact - The act limits or eliminates federal government sources for certain graduate loans, shifting up to $14 billion of the student loan market to the private sector [1] - In contrast to the $1.2 billion in private loans issued to graduate students in 2024, this represents a significant growth opportunity for private lenders [1] Company Opportunities - Companies like SoFi, Sallie Mae, and Navient are anticipated to experience substantial increases in interest and fee income due to this market shift [1]