Core Insights - Navient (NAVI) reported quarterly earnings of $0.29 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and showing a slight increase from $0.28 per share a year ago, resulting in an earnings surprise of +61.11% [1] - The company generated revenues of $146 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.64% and up from $140 million year-over-year [2] Earnings Performance - Over the last four quarters, Navient has exceeded consensus EPS estimates three times, indicating a positive trend in earnings performance [2] - The company had a previous earnings expectation of $0.27 per share but reported only $0.21, resulting in a surprise of -22.22% [1][2] Future Outlook - The sustainability of Navient's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3] - Current consensus EPS estimate for the upcoming quarter is $0.35 on revenues of $140.07 million, and for the current fiscal year, it is $0.98 on revenues of $556.98 million [7] Industry Context - The Financial - Consumer Loans industry, to which Navient belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Navient's stock performance [5][6]

Core Viewpoint - Navient has released its financial results for the third quarter of 2025, indicating ongoing efforts to manage the cost of higher education for students and families [1]. Financial Results - The complete financial results for the third quarter of 2025 are available on Navient's investor website [1]. - A live audio webcast discussing these results will be hosted by the CEO and CFO on October 29, 2025, at 8 a.m. ET [1]. Company Overview - Navient focuses on helping students and families manage higher education costs through responsible lending, flexible refinancing, and trusted servicing [3]. - The company emphasizes creating long-term value for customers and investors, supported by decades of portfolio management expertise [3].

Financial Performance - Navient reported a GAAP net loss of $86 million, translating to a diluted loss per share of $0.87 for Q3 2025[3]. - Core Earnings net loss was $83 million, with a diluted loss per share of $0.84[3]. - Net income for Q3 2025 was $(86) million, a decrease from $14 million in Q2 2025 and $(2) million in Q3 2024[19]. - Diluted earnings per share for Q3 2025 was $(0.87), compared to $0.13 in Q2 2025 and $(0.02) in Q3 2024[21]. - The company reported a significant increase in net income (loss) before income tax expense to $(117) million in Q3 2025, down from $18 million in Q2 2025 and $12 million in Q3 2024[21]. - Net loss for the nine months ended September 30, 2025, was $75 million, or $0.75 diluted loss per share, compared to net income of $107 million, or $0.95 diluted earnings per share for the same period last year[29]. Loan Loss Provisions - The company recorded a provision for loan losses of $168 million, with $155 million attributed to Consumer Lending due to elevated delinquency balances[3]. - Provisions for loan losses increased significantly to $168 million in Q3 2025, compared to $37 million in Q2 2025 and $42 million in Q3 2024[21]. - The allowance for loan losses increased to $186 million for FFELP Loans and $406 million for Private Education Loans as of September 30, 2025[23]. - The total provision for loan losses was $68 million, with a charge-off of $301 million during the period[39]. - The provision for FFELP Loan losses was $29 million in the current period, up from $(6) million in the year-ago period, reflecting elevated delinquency balances[29]. Interest Income and Expenses - Total interest income for Q3 2025 was $781 million, a slight increase from $778 million in Q2 2025 but a decrease of $167 million (18%) from $948 million in Q3 2024[21]. - Total interest income for the quarter ended September 30, 2025, was $781 million, with education loans contributing $760 million[54]. - The total interest expense for the quarter was $639 million, leading to a net interest income (loss) of $142 million before provisions[54]. - Net interest income after provisions for loan losses was $(26) million in Q3 2025, down from $91 million in Q2 2025 and $78 million in Q3 2024[21]. - Net interest income decreased by $1 million primarily due to the paydown of loan portfolios and decreasing interest rates, despite a $54 million decline in net premium amortization[31]. Share Repurchase and Equity - The company repurchased $26 million of common shares and authorized a new $100 million share repurchase program[4]. - The company repurchased 2.0 million shares of common stock for $26 million in Q3 2025, with $26 million of unused share repurchase authority remaining[43]. - The total stockholders' equity before treasury stock was $7.974 billion as of September 30, 2025, down from $8.071 billion a year prior[23]. Asset and Liability Management - Total assets decreased to $49.306 billion as of September 30, 2025, down from $53.440 billion a year earlier[23]. - Total liabilities were $46.867 billion as of September 30, 2025, compared to $50.746 billion a year prior[23]. - The company’s cash and cash equivalents decreased to $571 million as of September 30, 2025, down from $1.143 billion a year earlier[23]. - The company has $2.8 billion of unencumbered tangible assets, including $1.3 billion in unencumbered education loans[46]. Delinquency and Charge-Off Rates - The net charge-off rate for Private Education Loans increased to 2.48% in Q3 2025, up from 1.87% in Q3 2024[9][10]. - Private Education Loan delinquencies as a percentage of loans in repayment increased to 6.1% as of September 30, 2025, compared to 5.3% a year earlier[33]. - Net charge-offs for the quarter were $105 million, with $9 million for FFELP loans and $96 million for Private Education loans, resulting in a net charge-off percentage of 0.15% and 2.50% respectively[37]. Business Operations and Strategic Focus - The company plans to continue focusing on market expansion and new product development to drive future growth[66]. - The financial results indicate a need for strategic adjustments in response to the significant losses reported in the quarter[54]. - Core Earnings adjustments to GAAP resulted in an increase of $9 million for the quarter, primarily due to derivative accounting and goodwill adjustments[56].

HERNDON, Va., Oct. 27, 2025 (GLOBE NEWSWIRE) -- Navient (Nasdaq: NAVI) today announced its designation as a Champion of Board Diversity by The Forum of Executive Women, the Greater Philadelphia Region’s premier women’s professional organization. The Forum of Executive Women annually honors the top public companies in the region with 30% or more women on their respective boards. This is the eleventh time that Navient has been recognized as a Champion of Board Diversity. The Forum of Executive Women's annual ...

Core Insights - Navient Corporation (NAVI) is set to report its third-quarter 2025 results on October 29, with expectations of revenue growth but a decline in earnings year-over-year [1][9] Revenue Expectations - Quarterly revenues are projected to rise by 1.6% to $142.2 million, while earnings per share (EPS) are expected to drop by 35.7% to 18 cents [3][9] - The Consumer Lending segment is anticipated to show a decent rise in revenues due to solid consumer loan demand, while the Federal Education Loans segment may face pressure from lower prepayment levels and subdued originations [4] - The consensus estimate for net interest income (NII) is $142.2 million, reflecting an 8.6% sequential increase, with specific estimates of $50.3 million for Federal Education loans (up 2.7%) and $107.8 million for consumer lending (down 4.6%) [5] - Total non-interest income is estimated to decline by 27.5% sequentially to $23.9 million [6] Expense Management - Ongoing cost-control initiatives are expected to enhance operating efficiency and reduce expenses, aided by strategic actions such as divestitures and workforce reductions [7][9] Earnings Surprise History - NAVI has a notable earnings surprise history, having outperformed estimates in three of the last four quarters, with an average earnings surprise of 17.97% [2] Earnings ESP and Zacks Rank - The Earnings ESP for Navient is -3.44%, indicating a lower likelihood of an earnings beat, and the company currently holds a Zacks Rank of 3 (Hold) [8][10]

Core Viewpoint - Navient will host an audio webcast to discuss its third quarter 2025 financial results on October 29, 2025, at 8:00 a.m. Eastern Time [1] Company Information - Navient (Nasdaq: NAVI) assists students and families in managing the costs of higher education through responsible lending, flexible refinancing, and trusted servicing oversight [3] - The company aims to create long-term value for customers and investors, leveraging decades of portfolio management expertise [3] - Navient promotes a culture of belonging among its employees, emphasizing support and pride in delivering meaningful outcomes [3] Financial Reporting - The financial results and presentation slides will be available on the company's investor website by 7:00 a.m. on the same day as the webcast [1] - Results will also be filed with the SEC on a Form 8-K, accessible at SEC.gov [2]

Core Insights - Navient has been recognized for the fourth consecutive year as a Best Place to Work for Working Daughters, highlighting its commitment to supporting caregivers in the workplace [1] - The growing segment of caregivers, now one in three U.S. workers, emphasizes the importance of caregiver-friendly policies for employee wellbeing and retention [2] - Navient's total wellbeing programs aim to provide holistic support for employees, addressing both personal and professional growth, including dependent care assistance and mental health programs [3] Company Overview - Navient specializes in helping students and families manage the costs of higher education through responsible lending, flexible refinancing, and trusted servicing oversight [3] - The company focuses on creating long-term value for customers and investors while fostering a culture of belonging among its employees [3]

Core Insights - Navient 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 [2] - The company's GAAP net income was $14 million compared to $36 million in the prior-year quarter [3] - The decline in net interest income (NII) and higher provisions for loan losses were significant factors affecting performance [2][4] Financial Performance - NII decreased by 3.7% year over year to $131 million, missing estimates by 9.2% [4] - Total other income fell 76.1% year over year to $28 million [4] - Provision for loan losses increased to $37 million from $14 million in the prior-year quarter [4] - Total expenses decreased by 45.4% year over year to $101 million [4] Segment Performance - Federal Education Loans segment generated a net income of $30 million, up 7.1% year over year [5] - Consumer Lending segment reported a net income of $26 million, down 56.7% from the year-ago quarter [5] - The private education loan delinquency rate greater than 30 days increased to 6.4% from 5.2% in the prior-year quarter [5] Liquidity and Capital Management - As of June 30, 2025, the company had $712 million in total unrestricted cash and liquid investments [8] - In the second quarter, Navient paid $16 million in common stock dividends and repurchased shares for $35 million [9] 2025 Outlook - Core EPS is now expected to be in the range of $0.95–$1.05, down from the previous range of $1.00–$1.20 [10] - FFELP segment NIM is now expected to be 55–65 basis points, an increase from the previous guidance of 45–60 basis points [10] - Full-year loan originations are now expected to be between $1.8 billion and $2.2 billion, compared to earlier expectations of 30% growth [11] Market Sentiment - Since the earnings release, there has been a downward trend in estimates revision, with a consensus estimate shift of -8.74% [12] - Navient has a subpar Growth Score of D and a value score of B, resulting in an aggregate VGM Score of D [13] - The stock has a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [14] Industry Comparison - Navient belongs to the Zacks Financial - Consumer Loans industry, where Capital One has gained 5.7% over the past month [15] - Capital One reported revenues of $12.49 billion, representing a year-over-year change of +31.4% [15] - The overall direction of estimate revisions for Capital One translates into a Zacks Rank 2 (Buy) [17]

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]