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8-K
0002152623false00021526232026-11-042026-11-04

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 04, 2026

 

 

Navient Holdings, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-43525

46-4054283

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

13865 Sunrise Valley Drive

 

Herndon, Virginia

 

20171

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 302 283-8000

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common stock, par value $.01 per share

 

NAVI

 

The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On November 4, 2026, Navient Holdings, Inc. (the “Company”) issued an informational press release announcing its financial results for the quarter ended September 30, 2026 were available on the “Investor” page of its website located at https://www.Navient.com/investors. Additionally, on November 4, 2026, the Company posted its financial results for the quarter ended September 30, 2026 to its above-referenced web location. A copy of each press release is furnished as Exhibit 99.1 and Exhibit 99.2 hereto.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

 

 

Exhibit
Number

Description

 

 

99.1*

Press Release, dated November 4, 2026.

 

 

99.2*

Financial Press Release, dated November 4, 2026.

 104

  Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

NAVIENT HOLDINGS, INC.

 

 

 

 

Date: November 4, 2026

By:

 /s/ STEVE HAUBER

  Steve Hauber

  Chief Financial Officer

 
EX-99.1

Exhibit 99.1


https://cdn.kscope.io/01e5443d1bc36efd9c76da97e532064f-img69174783_0.jpg

 

 

NEWS RELEASE

For immediate release

Navient posts third quarter 2026 financial results

 

HERNDON, Va., Nov. 4, 2026— Navient (Nasdaq: NAVI) today posted its 2026 third quarter financial results. Complete financial results are available on the company’s website at Navient.com/investors. The materials will also be available on a Form 8-K on the SEC’s website at www.sec.gov.

 

Navient will hold a live audio webcast today, Nov. 4, 2026, at 5 p.m. ET, hosted by Edward Bramson, CEO and chair of the board, and Steve Hauber, CFO.

 

The webcast will be available on Navient.com/investors. Supplemental financial information and presentation slides used during the call will be available no later than the start time. A replay of the webcast will be available shortly after the event's conclusion.

 

* * *

 

About Navient

Navient (Nasdaq: NAVI) creates long-term value for customers and investors with responsible lending, flexible refinancing, trusted servicing oversight, and decades of education finance and portfolio management expertise. Through our Earnest business, we help customers confidently achieve financial success through digital financial services. Our employees thrive in a culture of belonging, where they are supported and proud to deliver meaningful outcomes. Learn more on Navient.com.

 

Contact:

Media: Cate Fitzgerald, 703-831-6347, catherine.fitzgerald@navient.com

Investors: Micah Andrews, 571-415-5413, micah.andrews@navient.com

Roger Yankoupe, 571-592-8569, roger.yankoupe@navient.com

 

 

# # #

 

EX-99.2

 

 

Exhibit 99.2

https://cdn.kscope.io/01e5443d1bc36efd9c76da97e532064f-img70098304_0.jpg

NAVIENT REPORTS THIRD-QUARTER

2026 FINANCIAL RESULTS

https://cdn.kscope.io/01e5443d1bc36efd9c76da97e532064f-img70098304_1.jpg

HERNDON, Va., November 4, 2026 — Navient (Nasdaq: NAVI) today announced third-quarter 2026 net income of $15 million ($0.16 per diluted share) on a GAAP basis.

 

Earnings for the period included derivative hedging gains and a tax benefit aggregating $12 million on an after-tax basis ($0.13 per diluted share). Navient’s definition of Core Earnings excludes these items and, accordingly, Core Earnings(1) for the period were $3 million ($0.03 per diluted share).

 

Earnings in the quarter were increased by $23 million ($0.18 per diluted share) as a result of a net fair value increase from applying the fair value option to In-School Loans originated in the quarter and were reduced by loan loss provisions on newly originated Refinance Loans and Personal Loans in the quarter of $16 million ($0.13 per diluted share).

Loan originations for the third quarter, under the Earnest brand, were $1.4 billion, an increase of 77% from the third quarter of the prior year. Third-quarter 2026 originations included $46 million of Personal Loans resulting from Earnest’s continuing test program for this new product, versus no originations in the prior year as the Personal Loan product was launched in the fourth quarter of 2025. Refinance Loan originations in the quarter were $870 million and In-School Loan originations were $479 million, resulting in increases of 65% and 84%, respectively, versus the prior year period.

Average FICO scores for Personal Loans, Refinance Loans and In-School Loans in the quarter were 768, 775, and 770, respectively, reflecting the company’s strategy since 2024 to focus on originating loans to higher credit quality borrowers.

Net income and earnings per diluted share reported for the third quarter 2026 include a number of significant items. These significant items, set forth below, resulted in a net reduction in pre-tax earnings of $34 million ($0.27 per diluted share) and apply both to GAAP and Core Earnings.


PORTFOLIO OPTIMIZATION

$162 million ($1.31 per diluted share) of gains from the sale of approximately $750 million of Legacy Private Education Loans. This gain includes $91 million ($0.73 per diluted share) relating to an original acquisition discount on these loans.

$29 million ($0.23 per diluted share) net reduction in the fair value (reflected in provision for loan losses) of approximately $1.4 billion of Legacy Private Education Loans as a result of classifying them as held for sale as of September 30, 2026. The company had established an allowance for loan losses in the amount of $92 million for these loans.

 

CHANGES IN LOAN LOSS RESERVES (excluding allowance for loan losses on newly originated loans)

$42 million ($0.34 per diluted share) benefit from the release of allowance for loan losses related to classifying approximately $1.0 billion of In-School Loans as held for sale at September 30, 2026.


$178 million ($1.44 per diluted share) of provision for loan losses for Legacy Private Education Loans primarily related to recent and forecasted delinquencies and charge-offs persisting at elevated levels for a longer duration than previously anticipated.


$33 million ($0.27 per diluted share) of provision for loan losses for Refinance Loans. These principally relate to loans originated prior to the change in credit policy for such loan originations beginning in 2024.

$13 million ($0.10 per diluted share) of provision for loan losses for the FFELP government-guaranteed portfolio. This is primarily the result of an increase in premium allocated to future defaults, as well as the continued extension of the portfolio.

 

(1) Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures” on pages 18 – 28.

 

 

 

OTHER ITEMS


$15 million ($0.12 per diluted share) benefit, principally from the receipt of insurance proceeds related to prior litigation.

 

Financial statements for the quarter are attached to this release.


Commenting on the results, Edward Bramson, CEO and chair of the board of directors, said, “These results continue Navient’s trend of growing originations while maintaining high credit quality. During the quarter, we also made further progress in diversifying our origination mix by increasing the proportion of In-School and Personal Loans. We continued the transition of our loan portfolios toward more market-based measures, classifying approximately $2.4 billion of additional loans as held for sale and electing the fair value option for newly originated In-School Loans. We also sold approximately $750 million of Legacy Private Education Loans at a gain as part of our ongoing portfolio optimization strategy. We are evaluating additional loan sales as we continue to optimize the portfolio and reallocate capital toward more strategic uses.”


Navient will hold a live audio webcast today, November 4, 2026, at 5 p.m. ET, hosted by Edward Bramson, CEO and chair of the board, and Steve Hauber, CFO. The webcast will be available on Navient.com/investors. Supplemental financial information and presentation slides used during the call will be available no later than the start time. A replay of the webcast will be available shortly after the event’s conclusion.

 

Definitions for capitalized terms in this release can be found in Navient’s Annual Report on Form 10-K for the year ended December 31, 2025 (filed with the SEC on February 26, 2026).

 

This news release contains “forward-looking statements,” within the meaning of the federal securities law, about our business and prospectus and other information that is based on management’s current expectations as of the date of this release.

 

Statements that are not historical facts, including statements about our beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements and often contain words such as “expect,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “could,” “should,” “goals,” or “target.” Such statements are based on management’s expectations as of the date of this release and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. For Navient, these factors include, among other things: general economic conditions, including the potential impact of artificial intelligence, inflation and interest rates on Navient and its clients and customers and on the creditworthiness of third parties; increased defaults on education loans held by us; unanticipated repayment trends on education loans including prepayments or deferrals resulting from new interpretations or the timing of the execution and implementation of current laws, rules or

regulations or future laws, executive orders or other policy initiatives that operate to encourage or require consolidation, abolish existing or create additional income-based repayment or debt forgiveness programs or establish other policies and programs which may increase or decrease the prepayment rates on education loans and accelerate or slow down the repayment of the bonds in our securitization trusts; a reduction in our credit ratings; changes to applicable laws, rules, regulations and government policies, as well as changing regulatory and governmental oversight; changes in the general interest rate environment, including the availability of any relevant money-market index rate or the relationship between the relevant money-market index rate and the rate at which our assets are priced; the interest rate characteristics of our assets do not always match those of our funding arrangements; adverse market conditions or an inability to effectively manage our liquidity risk or access liquidity could negatively impact us; the cost and availability of funding in the capital markets; our ability to earn Floor Income and our ability to enter into hedges relative to that Floor Income are dependent on the future interest rate environment and therefore are variable; our use of derivatives exposes us to credit and market risk; our ability to continually and effectively align our cost structure with our business operations; a failure or breach of our operating systems, infrastructure or information technology systems; failure by any third party providing us material services or products or a breach or violation of law by one of these third parties; acquisitions, new products, strategic initiatives and investments or divestitures that we pursue; shareholder activism; reputational risk and social factors; and the other factors that are described in the “Risk Factors” section of Navient’s Annual Report on Form 10-K for the year ended December 31, 2025, and in our other reports filed with the Securities and Exchange Commission. The preparation of our consolidated financial statements also requires management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect and actual results could differ materially. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. The company does not undertake any obligation to update or revise these forward-looking statements except as required by law.

 

* * *

 

2

 

About Navient

Navient (Nasdaq: NAVI) creates long-term value for customers and investors with responsible lending, flexible refinancing, trusted servicing oversight, and decades of education finance and portfolio management expertise. Through our Earnest business, we help customers confidently achieve financial success through digital financial services. Our employees thrive in a culture of belonging, where they are supported and proud to deliver meaningful outcomes. Learn more on Navient.com.

 

Contact:

Media: Cate Fitzgerald, 703-831-6347, catherine.fitzgerald@navient.com

Investors: Micah Andrews, 571-415-5413, micah.andrews@navient.com

Roger Yankoupe, 571-592-8569, roger.yankoupe@navient.com

 

# # #

 

3

 

 

 

 

SEGMENT RESULTS — CORE EARNINGS

 

CONSUMER LENDING

In this segment, Navient owns and manages a portfolio of Consumer Loans. Through our Earnest brand, we also originate and refinance Consumer Loans.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

 

(Dollars in millions)

 

3Q26

 

 

2Q26

 

 

3Q25

 

Net interest income

 

$

87

 

 

$

93

 

 

$

98

 

Less: Provision for loan losses

 

 

214

 

 

 

18

 

 

 

155

 

Gains on sales of loans

 

 

162

 

 

 

—

 

 

 

—

 

Net fair value changes of loans

 

 

23

 

 

 

—

 

 

 

—

 

Other revenue

 

 

2

 

 

 

2

 

 

 

3

 

Total revenue

 

 

60

 

 

 

77

 

 

 

(54

)

Expenses

 

 

57

 

 

 

42

 

 

 

45

 

Pre-tax income

 

 

3

 

 

 

35

 

 

 

(99

)

Net income

 

$

2

 

 

$

27

 

 

$

(76

)

 

 

 

 

 

 

 

 

 

 

Segment net interest margin

 

 

2.09

%

 

 

2.26

%

 

 

2.39

%

Private Education Loans (including Refinance Education Loans):

 

 

 

 

 

 

 

 

 

   Private Education Loan spread

 

 

2.20

%

 

 

2.38

%

 

 

2.48

%

   Provision for loan losses

 

$

210

 

 

$

17

 

 

$

155

 

   Net charge-offs

 

$

59

 

 

$

71

 

 

$

96

 

   Net charge-off rate (1)

 

 

1.49

%

 

 

1.84

%

 

 

2.50

%

   Greater than 30-days delinquency rate (1)

 

 

5.1

%

 

 

5.4

%

 

 

6.1

%

   Greater than 90-days delinquency rate (1)

 

 

2.2

%

 

 

2.4

%

 

 

2.8

%

   Forbearance rate (1)

 

 

1.9

%

 

 

1.8

%

 

 

1.5

%

   Average Private Education Loans

 

$

15,980

 

 

$

15,985

 

 

$

15,894

 

   Ending Private Education Loans, net

 

$

15,254

 

 

$

15,674

 

 

$

15,456

 

Refinance Education Loans:

 

 

 

 

 

 

 

 

 

   Net charge-offs

 

$

16

 

 

$

18

 

 

$

19

 

   Greater than 90-day delinquency rate

 

 

.7

%

 

 

.8

%

 

 

.8

%

   Average Refinance Education Loans

 

$

9,575

 

 

$

9,271

 

 

$

8,649

 

   Ending Refinance Education Loans, net

 

$

9,600

 

 

$

9,258

 

 

$

8,571

 

   Refinance Education Loan originations

 

$

870

 

 

$

735

 

 

$

528

 

Personal Loans:

 

 

 

 

 

 

 

 

 

   Originations

 

$

46

 

 

$

15

 

 

$

—

 

   Ending balance, net

 

$

61

 

 

$

20

 

 

$

—

 

(1) Third-quarter 2026 excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-

School Private Education Loans carried at fair value, and their corresponding delinquencies, forbearances and charge-offs. Second-quarter 2026 excludes $528

million of Legacy Private Education Loans that were classified as held for sale as of June 30, 2026, and their corresponding delinquencies, forbearances and

charge-offs.

 

DISCUSSION OF RESULTS — 3Q26 vs. 3Q25

•
Originated $1.4 billion of Consumer Loans, a 77% increase compared to $788 million.
o
Refinance Education Loan originations were $870 million compared to $528 million.
o
In-School Education Loan originations were $479 million compared to $260 million.
o
Personal Loan originations were $46 million compared to $0 million.
•
Net income was $2 million compared to net loss of $76 million.
•
Net interest income decreased $11 million, primarily due to the changing product mix with Refinance Education Loans increasing as a percentage of the portfolio. The Refinance Education Loan portfolio earns a lower net interest margin compared to the non-refinance portfolio, due to lower expected credit losses, which reduces the overall net interest margin.
•
Provision for loan losses increased $59 million. The provision for loan losses of $214 million in the current quarter included $16 million associated with loan originations and $29 million a result of classifying $1.4 billion of Legacy Private Education Loans as held for sale as of September 30, 2026. An additional $211 million of provision in the current quarter primarily relates to recent and forecasted delinquencies and charge-offs persisting at elevated levels for a longer duration than previously anticipated. This was partially offset by a $42 million decrease as a result of classifying $1.0 billion of In-School Education Loans as held for sale as of September 30, 2026. The

4

 

provision for loan losses of $155 million in the year-ago quarter included $17 million associated with loan originations and $138 million primarily the result of elevated delinquency balances as well as our forecasted macroeconomic outlook.
o
Net charge-offs were $59 million, down $37 million compared to $96 million in the year-ago quarter.
o
Private Education Loan delinquencies greater than 90 days: $274 million, down $159 million from $433 million.
o
Private Education Loan forbearances: $244 million, up $5 million from $239 million.
•
There were $162 million of gains on sale in the current period related to the sale of $750 million of Legacy Private Education Loans in connection with our broader effort to redeploy capital and align our balance sheet with today's lending products. There were no sales in the year-ago period.
•
There were $23 million of net fair value changes of loans related to electing the fair value option for In-School Education Loan originations beginning July 1, 2026. Of the $23 million net fair value changes of loans, $11 million relates to loans disbursed and recorded as loans on our balance sheet and $12 million relates to loan commitments to be disbursed in a future period (with the fair value of the lending commitment recorded in Other Assets on our balance sheet).
•
Expenses increased $12 million primarily reflecting seasonal marketing and other expenses associated with the growth of our consumer lending businesses.

 

 

 FEDERAL EDUCATION LOANS

In this segment, Navient owns and manages a portfolio of FFELP federally guaranteed student loans.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)

 

3Q26

 

 

2Q26

 

 

3Q25

 

Net interest income

 

$

47

 

 

$

48

 

 

$

65

 

Less: Provision for loan losses

 

 

13

 

 

 

8

 

 

 

13

 

Other revenue

 

 

8

 

 

 

8

 

 

 

10

 

Total revenue

 

 

42

 

 

 

48

 

 

 

62

 

Expenses

 

 

13

 

 

 

15

 

 

 

16

 

Pre-tax income

 

 

29

 

 

 

33

 

 

 

46

 

Net income

 

$

22

 

 

$

26

 

 

$

35

 

 

 

 

 

 

 

 

 

 

 

Segment net interest margin

 

 

.69

%

 

 

.68

%

 

 

.84

%

FFELP Loans:

 

 

 

 

 

 

 

 

 

      FFELP Loan spread

 

 

.76

%

 

 

.76

%

 

 

.90

%

      Provision for loan losses

 

$

13

 

 

$

8

 

 

$

13

 

      Net charge-offs

 

$

11

 

 

$

10

 

 

$

9

 

      Net charge-off rate

 

 

.20

%

 

 

.18

%

 

 

.15

%

      Greater than 30-days delinquency rate

 

 

15.5

%

 

 

14.7

%

 

 

18.1

%

      Greater than 90-days delinquency rate

 

 

8.0

%

 

 

8.0

%

 

 

10.5

%

      Forbearance rate

 

 

12.4

%

 

 

12.8

%

 

 

13.4

%

      Average FFELP Loans

 

$

26,364

 

 

$

27,045

 

 

$

29,641

 

      Ending FFELP Loans, net

 

$

25,898

 

 

$

26,575

 

 

$

28,952

 

 

DISCUSSION OF RESULTS — 3Q26 vs. 3Q25

•
Net income was $22 million compared to $35 million.
•
Net interest income decreased $18 million primarily due to an $18 million benefit (reduced premium amortization) in the year-ago period from a decrease in prepayment rate assumptions as well as the paydown of the loan portfolio.
•
Provision for loan losses remained unchanged at $13 million. The provision for loan losses of $13 million in the current period was primarily the result of an increase in premium allocated to future defaults, as well as the continued extension of the portfolio. The $13 million of provision for loan losses in the year-ago quarter was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook as well as the continued extension of the portfolio.
o
Net charge-offs were $11 million compared to $9 million.
o
Delinquencies greater than 90 days were $1.7 billion compared to $2.5 billion.
o
Forbearances were $3.1 billion compared to $3.7 billion.
•
Expenses were $3 million lower primarily as a result of the outsourcing of the loan servicing of our portfolio to a third party in 2024. This created a variable cost structure resulting in a reduction in expenses as the portfolio paid down.

 

 

 

 

5

 

 

 SELECTED HISTORICAL FINANCIAL INFORMATION AND RATIOS

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(In millions, except per share data)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

GAAP Basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

15

 

 

$

25

 

 

$

(86

)

 

$

56

 

 

$

(75

)

Diluted earnings per common share

 

$

.16

 

 

$

.26

 

 

$

(.87

)

 

$

.59

 

 

$

(.75

)

Weighted average shares used to compute
   diluted earnings per share

 

 

94

 

 

 

95

 

 

 

98

 

 

 

95

 

 

 

100

 

Return on assets

 

 

.13

%

 

 

.22

%

 

 

(.72

)%

 

 

.17

%

 

 

(.21

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Earnings Basis(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income(1)

 

$

3

 

 

$

27

 

 

$

(83

)

 

$

50

 

 

$

(36

)

Diluted earnings per common share(1)

 

$

.03

 

 

$

.29

 

 

$

(.84

)

 

$

.52

 

 

$

(.36

)

Weighted average shares used to compute
   diluted earnings per share

 

 

94

 

 

 

95

 

 

 

98

 

 

 

95

 

 

 

100

 

Net interest margin, Consumer Lending
   segment

 

 

2.09

%

 

 

2.26

%

 

 

2.39

%

 

 

2.27

%

 

 

2.48

%

Net interest margin, Federal Education Loans
   segment

 

 

.69

%

 

 

.68

%

 

 

.84

%

 

 

.67

%

 

 

.72

%

Return on assets

 

 

.03

%

 

 

.24

%

 

 

(.69

)%

 

 

.15

%

 

 

(.10

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education Loan Portfolios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Private Education Loans, net

 

$

15,254

 

 

$

15,674

 

 

$

15,456

 

 

 

15,254

 

 

 

15,456

 

Ending FFELP Loans, net

 

 

25,898

 

 

 

26,575

 

 

 

28,952

 

 

$

25,898

 

 

$

28,952

 

Ending total education loans, net

 

$

41,152

 

 

$

42,249

 

 

$

44,408

 

 

$

41,152

 

 

$

44,408

 

Average Private Education Loans

 

$

15,980

 

 

$

15,985

 

 

$

15,894

 

 

 

15,974

 

 

 

16,014

 

Average FFELP Loans

 

 

26,364

 

 

 

27,045

 

 

 

29,641

 

 

$

27,097

 

 

$

30,289

 

Average total education loans

 

$

42,344

 

 

$

43,030

 

 

$

45,535

 

 

$

43,071

 

 

$

46,303

 

(1) Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures” on pages 18 – 28.

 

 

6

 

  RESULTS OF OPERATIONS

We present the results of operations below first in accordance with GAAP. Following our discussion of earnings results on a GAAP basis, we present our results on a segment basis. We have three reportable operating segments as of September 30, 2026: Consumer Lending, Federal Education Loans and Other. Prior to the divestiture of our healthcare business in third-quarter 2024 and our government services business in first-quarter 2025, we had a fourth reportable operating segment, Business Processing. Our segments operate in distinct business environments and we manage and evaluate the financial performance of our segments using non-GAAP financial measures we call Core Earnings (see “Non-GAAP Financial Measures — Core Earnings” for further discussion).

  GAAP INCOME STATEMENTS (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

September 30, 2026
   vs.
   June 30, 2026

 

 

September 30, 2026
   vs.
   September 30, 2025

 

 

 

QUARTERS ENDED

 

 

Increase
(Decrease)

 

 

Increase
(Decrease)

 

(In millions, except per share data)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

$

 

 

%

 

 

$

 

 

%

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loans

 

$

270

 

 

$

273

 

 

$

276

 

 

$

(3

)

 

 

(1

)%

 

$

(6

)

 

 

(2

)%

FFELP Loans

 

 

381

 

 

 

391

 

 

 

484

 

 

 

(10

)

 

 

(3

)

 

 

(103

)

 

 

(21

)

Personal Loans

 

 

1

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

100

 

 

 

1

 

 

 

100

 

Cash and investments

 

 

17

 

 

 

18

 

 

 

21

 

 

 

(1

)

 

 

(6

)

 

 

(4

)

 

 

(19

)

Total interest income

 

 

669

 

 

 

682

 

 

 

781

 

 

 

(13

)

 

 

(2

)

 

 

(112

)

 

 

(14

)

Total interest expense

 

 

554

 

 

 

560

 

 

 

639

 

 

 

(6

)

 

 

(1

)

 

 

(85

)

 

 

(13

)

Net interest income

 

 

115

 

 

 

122

 

 

 

142

 

 

 

(7

)

 

 

(6

)

 

 

(27

)

 

 

(19

)

Less: provisions for loan losses

 

 

227

 

 

 

26

 

 

 

168

 

 

 

201

 

 

 

773

 

 

 

59

 

 

 

35

 

Net interest income (loss) after
   provisions for loan losses

 

 

(112

)

 

 

96

 

 

 

(26

)

 

 

(208

)

 

 

(217

)

 

 

(86

)

 

 

(331

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

10

 

 

 

10

 

 

 

13

 

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

(23

)

Other income

 

 

2

 

 

 

17

 

 

 

10

 

 

 

(15

)

 

 

(88

)

 

 

(8

)

 

 

(80

)

Gains on sales of loans

 

 

162

 

 

 

—

 

 

 

—

 

 

 

162

 

 

 

100

 

 

 

162

 

 

 

100

 

Net fair value changes of loans

 

 

23

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

100

 

 

 

23

 

 

 

100

 

Gains (losses) on derivative
    and hedging activities, net

 

 

5

 

 

 

1

 

 

 

(4

)

 

 

4

 

 

 

400

 

 

 

9

 

 

 

225

 

Total other income

 

 

202

 

 

 

28

 

 

 

19

 

 

 

174

 

 

 

621

 

 

 

183

 

 

 

963

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Operating expenses

 

 

75

 

 

 

82

 

 

 

105

 

 

 

(7

)

 

 

(9

)

 

 

(30

)

 

 

(29

)

   Goodwill and acquired
      intangible asset
      impairment and
      amortization expense

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

(100

)

   Restructuring/other
      reorganization expenses

 

 

2

 

 

 

3

 

 

 

4

 

 

 

(1

)

 

 

(33

)

 

 

(2

)

 

 

(50

)

Total expenses

 

 

77

 

 

 

85

 

 

 

110

 

 

 

(8

)

 

 

(9

)

 

 

(33

)

 

 

(30

)

Income (loss) before income tax
   expense

 

 

13

 

 

 

39

 

 

 

(117

)

 

 

(26

)

 

 

(67

)

 

 

130

 

 

 

111

 

Income tax expense (benefit)

 

 

(2

)

 

 

14

 

 

 

(31

)

 

 

(16

)

 

 

(114

)

 

 

29

 

 

 

94

 

Net income (loss)

 

$

15

 

 

$

25

 

 

$

(86

)

 

$

(10

)

 

 

(40

)%

 

$

101

 

 

 

117

%

Basic earnings (loss) per
   common share

 

$

.16

 

 

$

.27

 

 

$

(.87

)

 

$

(.11

)

 

 

(41

)%

 

$

1.03

 

 

 

118

%

Diluted earnings (loss) per
   common share

 

$

.16

 

 

$

.26

 

 

$

(.87

)

 

$

(.10

)

 

 

(38

)%

 

$

1.03

 

 

 

118

%

Dividends per common share

 

$

.16

 

 

$

.16

 

 

$

.16

 

 

$

—

 

 

 

—

%

 

$

—

 

 

 

—

%

 

7

 

 

 

 

NINE MONTHS ENDED
September 30,

 

 

Increase
(Decrease)

 

(In millions, except per share data)

 

2026

 

 

2025

 

 

$

 

 

%

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loans

 

$

820

 

 

$

838

 

 

$

(18

)

 

 

(2

)%

FFELP Loans

 

 

1,173

 

 

 

1,459

 

 

 

(286

)

 

 

(20

)

Personal Loans

 

 

1

 

 

 

—

 

 

 

1

 

 

 

100

 

Cash and investments

 

 

51

 

 

 

64

 

 

 

(13

)

 

 

(20

)

Total interest income

 

 

2,045

 

 

 

2,361

 

 

 

(316

)

 

 

(13

)

Total interest expense

 

 

1,677

 

 

 

1,961

 

 

 

(284

)

 

 

(14

)

Net interest income

 

 

368

 

 

 

400

 

 

 

(32

)

 

 

(8

)

Less: provisions for loan losses

 

 

281

 

 

 

236

 

 

 

45

 

 

 

19

 

Net interest income after
   provisions for loan losses

 

 

87

 

 

 

164

 

 

 

(77

)

 

 

(47

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

31

 

 

 

40

 

 

 

(9

)

 

 

(23

)

Asset recovery and business
    processing revenue

 

 

—

 

 

 

23

 

 

 

(23

)

 

 

(100

)

Other income

 

 

23

 

 

 

44

 

 

 

(21

)

 

 

(48

)

Gains on sales of loans

 

 

162

 

 

 

—

 

 

 

162

 

 

 

100

 

Net fair value changes of loans

 

 

23

 

 

 

—

 

 

 

23

 

 

 

100

 

Gains (losses) on derivative and
    hedging activities, net

 

 

11

 

 

 

(34

)

 

 

45

 

 

 

132

 

Total other income

 

 

250

 

 

 

73

 

 

 

177

 

 

 

242

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

   Operating expenses

 

 

246

 

 

 

333

 

 

 

(87

)

 

 

(26

)

   Goodwill and acquired intangible
      assets impairment and
      amortization expense

 

 

5

 

 

 

2

 

 

 

3

 

 

 

150

 

   Restructuring/other
      reorganization expenses

 

 

4

 

 

 

6

 

 

 

(2

)

 

 

(33

)

Total expenses

 

 

255

 

 

 

341

 

 

 

(86

)

 

 

(25

)

Income (loss) before income tax expense

 

 

82

 

 

 

(104

)

 

 

186

 

 

 

179

 

Income tax expense (benefit)

 

 

26

 

 

 

(29

)

 

 

55

 

 

 

190

 

Net income (loss)

 

$

56

 

 

$

(75

)

 

$

131

 

 

 

175

%

Basic earnings (loss) per
   common share

 

$

.60

 

 

$

(.75

)

 

$

1.35

 

 

 

180

%

Diluted earnings (loss) per
   common share

 

$

.59

 

 

$

(.75

)

 

$

1.34

 

 

 

179

%

Dividends per common share

 

$

.48

 

 

$

.48

 

 

$

—

 

 

 

—

%

8

 

 

  GAAP BALANCE SHEETS (UNAUDITED)

 

(In millions, except per share data)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

Assets

 

 

 

 

 

 

 

 

 

Private Education Loans at amortized cost (net of allowance for
   loan losses of $299, $263 and $406, respectively)

 

$

12,680

 

 

$

15,146

 

 

$

15,456

 

Private Education Loans at fair value

 

 

235

 

 

 

—

 

 

 

—

 

Private Education Loans held for sale

 

 

2,339

 

 

 

528

 

 

 

—

 

FFELP Loans at amortized cost (net of allowance for loan losses
   of $165, $163 and $186, respectively)

 

 

25,898

 

 

 

26,575

 

 

 

28,952

 

Investments

 

 

146

 

 

 

116

 

 

 

147

 

Cash and cash equivalents

 

 

701

 

 

 

770

 

 

 

571

 

Restricted cash and cash equivalents

 

 

1,286

 

 

 

1,369

 

 

 

1,301

 

Goodwill and acquired intangible assets, net

 

 

430

 

 

 

430

 

 

 

435

 

Other assets

 

 

2,413

 

 

 

2,363

 

 

 

2,444

 

Total assets

 

$

46,128

 

 

$

47,297

 

 

$

49,306

 

Liabilities

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

$

5,751

 

 

$

4,214

 

 

$

4,920

 

Long-term borrowings

 

 

37,429

 

 

 

40,123

 

 

 

41,414

 

Other liabilities

 

 

513

 

 

 

562

 

 

 

533

 

Total liabilities

 

 

43,693

 

 

 

44,899

 

 

 

46,867

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Series A Junior Participating Preferred Stock, par value $0.20 per share;
   2 million shares authorized at December 31, 2021; no shares issued
   or outstanding

 

 

—

 

 

 

—

 

 

 

—

 

Common stock, par value $0.01 per share; 1.125 billion shares
   authorized: 468 million, 468 million and 467 million shares,
   respectively, issued

 

 

4

 

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

3,411

 

 

 

3,410

 

 

 

3,398

 

Accumulated other comprehensive income, net of tax

 

 

60

 

 

 

14

 

 

 

(1

)

Retained earnings

 

 

4,562

 

 

 

4,562

 

 

 

4,573

 

Total stockholders’ equity before treasury stock

 

 

8,037

 

 

 

7,990

 

 

 

7,974

 

Less: Common stock held in treasury at cost: 375 million,
374 million and 369 million shares, respectively

 

 

(5,602

)

 

 

(5,592

)

 

 

(5,535

)

Total equity

 

 

2,435

 

 

 

2,398

 

 

 

2,439

 

Total liabilities and equity

 

$

46,128

 

 

$

47,297

 

 

$

49,306

 

 

9

 

 GAAP COMPARISON OF 2026 RESULTS WITH 2025

Three Months Ended September 30, 2026 Compared with Three Months Ended September 30, 2025

For the three months ended September 30, 2026, net income was $15 million, or $0.16 per diluted share, compared with net loss of $86 million, or $0.87 per diluted share, for the year-ago period.

The primary contributors to the change in net income are as follows:

• Net interest income decreased by $27 million primarily due to an $18 million benefit in the year-ago period from a decrease in prepayment rate assumptions on FFELP Loans (reduced premium amortization) as well as the paydown of the FFELP portfolio and the Private Education Loan portfolio's changing product mix with Refinance Education Loans increasing as a percentage of the portfolio. The Refinance Education Loan portfolio earns a lower net interest margin compared to the non-refinance portfolio, due to lower expected credit losses, which reduces the overall net interest margin.

• Provisions for loan losses increased $59 million from $168 million to $227 million.

○ The provision for Private Loan losses increased $59 million from $155 million to $214 million.

○ The provision for FFELP Loan losses remained unchanged at $13 million.

The provision for Private Loan losses of $214 million in the current quarter included $16 million associated with loan originations and $29 million a result of classifying $1.4 billion of Legacy Private Education Loans as held for sale as of September 30, 2026. An additional $211 million of provision in the current quarter primarily relates to recent and forecasted delinquencies and charge-offs persisting at elevated levels for a longer duration than previously anticipated. This was partially offset by a $42 million decrease as a result of classifying $1.0 billion of In-School Education Loans as held for sale as of September 30, 2026. The provision for loan losses of $155 million in the year-ago quarter included $17 million associated with loan originations and $138 million primarily the result of elevated delinquency balances as well as our forecasted macroeconomic outlook.

The provision for FFELP Loan losses of $13 million in the current period was primarily the result of an increase in premium allocated to future defaults, as well as the continued extension of the portfolio. The provision of $13 million in the year-ago quarter was primarily the result of an increase in delinquency balances, our forecasted macroeconomic outlook, as well as the continued extension of the portfolio.

• Other income decreased $8 million primarily related to a $7 million decrease in transition services revenue we had earned related to our various strategic initiatives. The transition services related to the outsourcing of loan servicing and the sale of our healthcare services business ended in May 2025. The transition services related to the sale of our government services business ended in October 2025.

• There were $162 million of gains on sale in the current period related to the sale of $750 million of Legacy Private Education Loans in connection with our broader effort to redeploy capital and align our balance sheet with today's lending products. There were no sales in the year-ago period.

• There were $23 million of net fair value changes of loans related to electing the fair value option for In-School Education Loan originations beginning July 1, 2026. Of the $23 million net fair value changes of loans, $11 million relates to loans disbursed and recorded as loans on our balance sheet and $12 million relates to loan commitments to be disbursed in a future period (with the fair value of the lending commitment recorded in Other Assets on our balance sheet). Valuations of education loans fluctuate based upon many factors including changes in prepayment rates, loss rates and discount rates. As a result, net fair value changes of loans may vary significantly in future periods.

• Net gains on derivative and hedging activities increased $9 million due primarily to interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

• Operating expenses decreased $30 million, $7 million of which was due to a decline in expenses in connection with providing transition services related to our various strategic initiatives. As of October 2025 we had no further obligations to provide these transition services. There was also a $16 million decrease in regulatory-related expenses primarily related to a $16 million benefit in the current period due to insurance proceeds received in connection with prior litigation matters. These decreases were offset by a $12 million increase in seasonal marketing and other expenses associated with the growth of our consumer lending businesses. The remaining $19 million decrease primarily relates to cost saving initiatives implemented, which have reduced our operating costs mostly in connection with our shared service functions and corporate footprint.

• Restructuring and other reorganization expenses decreased $2 million primarily due to a decrease in severance-related costs incurred in connection with the various strategic initiatives that have been and continue to be implemented to simplify the company, continue to reduce our expense base and enhance our flexibility.

• The effective income tax rates for the current and year-ago quarters were (18)% and 27%, respectively. The decrease in the effective income tax rate in the current quarter is due to changes in the valuation allowance attributed to state operating loss carryovers.

 

We repurchased 1.1 million and 2.0 million shares of our common stock during the third quarters of 2026 and 2025, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 4 million common shares (or 4%) from the year-ago period.

 

 

10

 

Nine Months Ended September 30, 2026 Compared with Nine Months Ended September 30, 2025

For the nine months ended September 30, 2026, net income was $56 million, or $0.59 per diluted share, compared with net loss of $75 million, or $0.75 per diluted share, for the year-ago period.

The primary contributors to the change in net income are as follows:

• Net interest income decreased by $32 million primarily due to the paydown of the FFELP portfolio and the Private Education Loan portfolio's changing product mix with Refinance Education Loans increasing as a percentage of the portfolio. The Refinance Education Loan portfolio earns a lower net interest margin compared to the non-refinance portfolio, due to lower expected credit losses, which reduces the overall net interest margin. In addition, there was an $18 million benefit in the year-ago period from a decrease in prepayment rate assumptions on FFELP Loans (reduced premium amortization). This was partially offset by a $21 million increase in mark-to-market gains on fair value hedges recorded in interest expense.

• Provisions for loan losses increased $45 million from $236 million to $281 million.

○ The provision for Private Loan losses increased $44 million from $207 million to $251 million.

○ The provision for FFELP Loan losses increased $1 million from $29 million to $30 million.

The provision for Private Loan losses of $251 million in the current period included $42 million associated with loan originations and $10 million a result of classifying $2.0 billion of Legacy Private Education Loans as held for sale during the period. An additional $241 million of provision in the current period primarily relates to recent and forecasted delinquencies and charge-offs persisting at elevated levels for a longer duration than previously anticipated. This was partially offset by a $42 million decrease as a result of classifying $1.0 billion of In-School Education Loans as held for sale as of September 30, 2026. The provision of $207 million in the year-ago period included $32 million associated with loan originations and $175 million primarily the result of elevated delinquency balances as well as our forecasted macroeconomic outlook.

The provision for FFELP Loan losses of $30 million in the current period was primarily the result of increased charge-offs due to prior disaster forbearance volume, as well as the continued extension of the portfolio. The provision of $29 million in the year-ago period was primarily the result of an increase in delinquency balances, our forecasted macroeconomic outlook, as well as the continued extension of the portfolio.

• Asset recovery and business processing revenue decreased $23 million as a result of the sale of our government services business in February 2025. With the sale of our government services business, Navient no longer provides business processing segment services.

• Other income decreased $21 million primarily related to a $32 million decrease in transition services revenue we had earned related to our various strategic initiatives. The transition services related to the outsourcing of loan servicing and the sale of our healthcare services business ended in May 2025. The transition services related to the sale of our government services business ended in October 2025. This $32 million decrease was partially offset by a $12 million gain on an investment in the current period.

• There were $162 million of gains on sale in the current period related to the sale of $750 million of Legacy Private Education Loans in connection with our broader effort to redeploy capital and align our balance sheet with today's lending products. There were no sales in the year-ago period.

• There were $23 million of net fair value changes of loans related to electing the fair value option accounting model for In-School Education Loan originations beginning July 1, 2026. Of the $23 million net fair value changes of loans, $11 million relates to loans disbursed and recorded as loans on our balance sheet and $12 million relates to loan commitments to be disbursed in a future period (with the fair value of the lending commitment recorded in Other Assets on our balance sheet). Valuations of education loans fluctuate based upon many factors including changes in prepayment rates, loss rates and discount rates. As a result, net fair value changes of loans may vary significantly in future periods.

• Net gains on derivative and hedging activities increased $45 million due primarily to interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

• Operating expenses decreased $87 million, $23 million of which was due to a decline in business processing expenses as a result of the sale of our government services business in February 2025 ($20 million of the reduction is in the Business Processing segment and $3 million of the reduction is in the Other segment). In addition, there was a $30 million decline in expenses in connection with providing transition services related to our various strategic initiatives. As of October 2025, we had no further obligations to provide these transition services. There was also a $17 million decrease in regulatory-related expenses primarily related to a $16 million benefit in the current period due to insurance proceeds received in connection with prior litigation matters. These decreases were offset by a $23 million increase in marketing and other expenses associated with the growth of our consumer lending businesses. The remaining $40 million decrease primarily relates to cost saving initiatives implemented, which have reduced our operating costs mostly in connection with our shared service functions and corporate footprint.

• Restructuring and other reorganization expenses decreased $2 million primarily due to a decrease in severance-related costs incurred in connection with the various strategic initiatives that have been and continue to be implemented to simplify the company, continue to reduce our expense base and enhance our flexibility.

 

We repurchased 3.7 million and 6.4 million shares of our common stock during the nine months ended September 30, 2026 and September 30, 2025, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 5 million common shares (or 5%) from the year-ago period.

 

11

 

 

PRIVATE EDUCATION LOANS PORTFOLIO PERFORMANCE

Private Education Loan Delinquencies and Forbearance

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

 

2026

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

216

 

 

 

 

 

$

357

 

 

 

 

 

$

402

 

 

 

 

Loans in forbearance(2)

 

 

244

 

 

 

 

 

 

271

 

 

 

 

 

 

239

 

 

 

 

Loans in repayment and percentage
   of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

11,881

 

 

 

94.9

%

 

 

13,985

 

 

 

94.6

%

 

 

14,291

 

 

 

93.9

%

Loans delinquent 31-60 days(3)

 

 

233

 

 

 

1.9

 

 

 

279

 

 

 

1.9

 

 

 

315

 

 

 

2.1

 

Loans delinquent 61-90 days(3)

 

 

131

 

 

 

1.0

 

 

 

168

 

 

 

1.1

 

 

 

182

 

 

 

1.2

 

Loans delinquent greater than
    90 days(3)

 

 

274

 

 

 

2.2

 

 

 

349

 

 

 

2.4

 

 

 

433

 

 

 

2.8

 

Total Private Education Loans in
   repayment

 

 

12,519

 

 

 

100

%

 

 

14,781

 

 

 

100

%

 

 

15,221

 

 

 

100

%

Total Private Education Loans, gross (5)

 

 

12,979

 

 

 

 

 

 

15,409

 

 

 

 

 

 

15,862

 

 

 

 

Private Education Loan allowance for
   loan losses

 

 

(299

)

 

 

 

 

 

(263

)

 

 

 

 

 

(406

)

 

 

 

Private Education Loans, net

 

$

12,680

 

 

 

 

 

$

15,146

 

 

 

 

 

$

15,456

 

 

 

 

Percentage of Private Education
  Loans in repayment

 

 

 

 

 

96.5

%

 

 

 

 

 

95.9

%

 

 

 

 

 

96.0

%

Delinquencies as a percentage of
   Private Education Loans in
   repayment

 

 

 

 

 

5.1

%

 

 

 

 

 

5.4

%

 

 

 

 

 

6.1

%

Loans in forbearance as a percentage
  of loans in repayment and
   forbearance

 

 

 

 

 

1.9

%

 

 

 

 

 

1.8

%

 

 

 

 

 

1.5

%

Percentage of Private Education
   Loans with a cosigner(4)

 

 

 

 

 

21

%

 

 

 

 

 

29

%

 

 

 

 

 

32

%

(1) Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their
loans, e.g., loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.

(2) Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making
full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.

(3) The period of delinquency is based on the number of days scheduled payments are contractually past due.

(4) Excluding Refinance Education Loans, the cosigner rate was 65%, 66% and 67% for third-quarter 2026, second-quarter 2026 and third-quarter 2025, respectively.

(5) September 30, 2026 excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value. June 30, 2026 excludes $528 million of Legacy Private Education Loans classified as held for sale as of June 30, 2026.

12

 

ALLOWANCE FOR LOAN LOSSES – EDUCATION LOANS

 

 

 

QUARTER ENDED

 

 

 

September 30, 2026

 

(Dollars in millions)

 

Private Education Loans

 

 

FFELP
Loans

 

 

Total

 

Allowance at beginning of period

 

$

263

 

 

$

163

 

 

$

426

 

Total provision

 

 

210

 

 

 

13

 

 

 

223

 

Charge-offs:

 

 

 

 

 

 

 

 

 

  Gross charge-offs

 

 

(68

)

 

 

(11

)

 

 

(79

)

  Expected future recoveries on current period gross charge-offs

 

 

9

 

 

 

—

 

 

 

9

 

Net charge-offs(1)

 

 

(59

)

 

 

(11

)

 

 

(70

)

Write off in connection with classification of loans as held for sale(2)

 

 

(121

)

 

 

—

 

 

 

(121

)

Decrease in expected future recoveries on previously fully charged-off loans(3)

 

 

6

 

 

 

—

 

 

 

6

 

Allowance at end of period (GAAP)

 

 

299

 

 

 

165

 

 

 

464

 

Plus: expected future recoveries on previously fully charged-off loans(3)

 

 

157

 

 

 

—

 

 

 

157

 

Allowance at end of period excluding expected future recoveries on previously fully
   charged-off loans (Non-GAAP Financial Measure)(4)

 

$

456

 

 

$

165

 

 

$

621

 

Net charge-offs as a percentage of average loans in repayment (annualized) (5)

 

 

1.49

%

 

 

.20

%

 

 

 

Allowance coverage of charge-offs (annualized)(4) (5)

 

 

2.4

 

 

 

3.7

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan balance(4) (5)

 

 

3.5

%

 

 

.6

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in repayment(4) (5)

 

 

3.6

%

 

 

.8

%

 

 (Non-GAAP)

 

Ending total loans(5)

 

$

12,979

 

 

$

26,063

 

 

 

 

Average loans in repayment(5)

 

$

12,613

 

 

$

22,022

 

 

 

 

Ending loans in repayment(5)

 

$

12,519

 

 

$

21,872

 

 

 

 

 

 

 

QUARTER ENDED

 

 

 

June 30, 2026

 

(Dollars in millions)

 

Private Education Loans

 

 

FFELP
Loans

 

 

Total

 

Allowance at beginning of period

 

$

314

 

 

$

165

 

 

$

479

 

Total provision

 

 

17

 

 

 

8

 

 

 

25

 

Charge-offs:

 

 

 

 

 

—

 

 

 

 

  Gross charge-offs

 

 

(82

)

 

 

(10

)

 

 

(92

)

  Expected future recoveries on current period gross charge-offs

 

 

11

 

 

 

—

 

 

 

11

 

Net charge-offs(1)

 

 

(71

)

 

 

(10

)

 

 

(81

)

Decrease in expected future recoveries on previously fully charged-off loans(3)

 

 

3

 

 

 

—

 

 

 

3

 

Allowance at end of period (GAAP)

 

 

263

 

 

 

163

 

 

 

426

 

Plus: expected future recoveries on previously fully charged-off loans(3)

 

 

163

 

 

 

—

 

 

 

163

 

Allowance at end of period excluding expected future recoveries on previously fully
   charged-off loans (Non-GAAP Financial Measure)(4)

 

$

426

 

 

$

163

 

 

$

589

 

Net charge-offs as a percentage of average loans in repayment (annualized) (5)

 

 

1.84

%

 

 

.18

%

 

 

 

Allowance coverage of charge-offs (annualized)(4)(5)

 

 

1.6

 

 

 

4.0

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan balance(4)(5)

 

 

2.8

%

 

 

.6

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in repayment(4)(5)

 

 

2.9

%

 

 

.7

%

 

 (Non-GAAP)

 

Ending total loans(5)

 

$

15,409

 

 

$

26,738

 

 

 

 

Average loans in repayment(5)

 

$

14,803

 

 

$

22,478

 

 

 

 

Ending loans in repayment(5)

 

$

14,781

 

 

$

22,324

 

 

 

 

 

13

 

 

 

QUARTER ENDED

 

 

 

September 30, 2025

 

(Dollars in millions)

 

Private Education Loans

 

 

FFELP
Loans

 

 

Total

 

Allowance at beginning of period

 

$

348

 

 

$

182

 

 

$

530

 

Total provision

 

 

155

 

 

 

13

 

 

 

168

 

Charge-offs:

 

 

 

 

 

 

 

 

 

  Gross charge-offs

 

 

(112

)

 

 

(9

)

 

 

(121

)

  Expected future recoveries on current period gross charge-offs

 

 

16

 

 

 

—

 

 

 

16

 

Net charge-offs(1)

 

 

(96

)

 

 

(9

)

 

 

(105

)

Decrease in expected future recoveries on previously fully charged-off loans(3)

 

 

(1

)

 

 

—

 

 

 

(1

)

Allowance at end of period (GAAP)

 

 

406

 

 

 

186

 

 

 

592

 

Plus: expected future recoveries on previously fully charged-off loans(3)

 

 

173

 

 

 

—

 

 

 

173

 

Allowance at end of period excluding expected future recoveries on previously fully
   charged-off loans (Non-GAAP Financial Measure)(4)

 

$

579

 

 

$

186

 

 

$

765

 

Net charge-offs as a percentage of average loans in repayment (annualized) (5)

 

 

2.50

%

 

 

.15

%

 

 

 

Allowance coverage of charge-offs (annualized)(4)(5)

 

 

1.5

 

 

 

5.1

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan balance(4)(5)

 

 

3.7

%

 

 

.6

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in repayment(4)(5)

 

 

3.8

%

 

 

.8

%

 

 (Non-GAAP)

 

Ending total loans(5)

 

$

15,862

 

 

$

29,138

 

 

 

 

Average loans in repayment(5)

 

$

15,259

 

 

$

24,527

 

 

 

 

Ending loans in repayment(5)

 

$

15,221

 

 

$

24,136

 

 

 

 

 

 

 

NINE MONTHS ENDED

 

 

 

September 30, 2026

 

(Dollars in millions)

 

Private Education Loans

 

 

FFELP
Loans

 

 

Total

 

Allowance at beginning of period

 

$

364

 

 

$

173

 

 

$

537

 

Total provision

 

 

245

 

 

 

30

 

 

 

275

 

Charge-offs:

 

 

 

 

 

 

 

 

 

  Gross charge-offs

 

 

(233

)

 

 

(38

)

 

 

(271

)

  Expected future recoveries on current period gross charge-offs

 

 

31

 

 

 

—

 

 

 

31

 

Net charge-offs(1)

 

 

(202

)

 

 

(38

)

 

 

(240

)

Write off in connection with classification of loans as held for sale(2)

 

 

(121

)

 

 

—

 

 

 

(121

)

Decrease in expected future recoveries on previously fully charged-off loans(3)

 

 

13

 

 

 

—

 

 

 

13

 

Allowance at end of period (GAAP)

 

 

299

 

 

 

165

 

 

 

464

 

Plus: expected future recoveries on previously fully charged-off loans(3)

 

 

157

 

 

 

—

 

 

 

157

 

Allowance at end of period excluding expected future recoveries on previously fully
   charged-off loans (Non-GAAP Financial Measure)(4)

 

$

456

 

 

$

165

 

 

$

621

 

Net charge-offs as a percentage of average loans in repayment (annualized) (5)

 

 

1.65

%

 

 

.23

%

 

 

 

Allowance coverage of charge-offs (annualized)(4) (5)

 

 

2.2

 

 

 

3.2

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan balance(4) (5)

 

 

3.5

%

 

 

.6

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in repayment(4) (5)

 

 

3.6

%

 

 

.8

%

 

 (Non-GAAP)

 

Ending total loans(5)

 

$

12,979

 

 

$

26,063

 

 

 

 

Average loans in repayment(5)

 

$

12,450

 

 

$

22,571

 

 

 

 

Ending loans in repayment(5)

 

$

12,519

 

 

$

21,872

 

 

 

 

 

14

 

 

 

NINE MONTHS ENDED

 

 

 

September 30, 2025

 

(Dollars in millions)

 

Private Education Loans

 

 

FFELP
Loans

 

 

Total

 

Allowance at beginning of period

 

$

441

 

 

$

180

 

 

$

621

 

Total provision

 

 

207

 

 

 

29

 

 

 

236

 

Charge-offs:

 

 

 

 

 

 

 

 

 

  Gross charge-offs

 

 

(287

)

 

 

(23

)

 

 

(310

)

  Expected future recoveries on current period gross charge-offs

 

 

39

 

 

 

—

 

 

 

39

 

Net charge-offs(1)

 

 

(248

)

 

 

(23

)

 

 

(271

)

Decrease in expected future recoveries on previously fully charged-off loans(3)

 

 

6

 

 

 

—

 

 

 

6

 

Allowance at end of period (GAAP)

 

 

406

 

 

 

186

 

 

 

592

 

Plus: expected future recoveries on previously fully charged-off loans(3)

 

 

173

 

 

 

—

 

 

 

173

 

Allowance at end of period excluding expected future recoveries on previously fully
   charged-off loans (Non-GAAP Financial Measure)(4)

 

$

579

 

 

$

186

 

 

$

765

 

Net charge-offs as a percentage of average loans in repayment (annualized) (5)

 

 

2.16

%

 

 

.13

%

 

 

 

Allowance coverage of charge-offs (annualized)(4) (5)

 

 

1.7

 

 

 

5.8

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan balance(4) (5)

 

 

3.7

%

 

 

.6

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in repayment(4) (5)

 

 

3.8

%

 

 

.8

%

 

 (Non-GAAP)

 

Ending total loans(5)

 

$

15,862

 

 

$

29,138

 

 

 

 

Average loans in repayment(5)

 

$

15,368

 

 

$

25,036

 

 

 

 

Ending loans in repayment(5)

 

$

15,221

 

 

$

24,136

 

 

 

 

(1) Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” For FFELP Loans, the recovery is received at the time of charge-off.

 

(2) Three and nine months ended September 30, 2026 include $121 million of write-offs related to $1.4 billion of Legacy Private Education Loans that were classified as held for sale as of September 30, 2026. When loans are first classified as held for sale, if the fair value is lower than the carrying value then the expected losses related to credit are first recorded as provision for loan losses and the allowance for loan losses associated with those items is written off, establishing a new cost basis.

 

(3) At the end of each month, for Private Education Loans that are 212 or more days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Beginning of period expected future recoveries on previously fully charged-off loans

 

$

163

 

 

$

166

 

 

$

172

 

 

$

170

 

 

$

179

 

Expected future recoveries of current period defaults

 

 

9

 

 

 

11

 

 

 

16

 

 

 

31

 

 

 

39

 

Recoveries (cash collected)

 

 

(9

)

 

 

(10

)

 

 

(9

)

 

 

(29

)

 

 

(30

)

Charge-offs (as a result of lower recovery expectations)

 

 

(6

)

 

 

(4

)

 

 

(6

)

 

 

(15

)

 

 

(15

)

End of period expected future recoveries on previously fully charged-off loans

 

$

157

 

 

$

163

 

 

$

173

 

 

$

157

 

 

$

173

 

Change in balance during period

 

$

(6

)

 

$

(3

)

 

$

1

 

 

$

(13

)

 

$

(6

)

 

 

(4) For Private Education Loans, the item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

 

(5) Three and nine months ended September 30, 2026 exclude $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value, and their corresponding charge-offs. Second-quarter 2026 excludes $528 million of Legacy Private Education Loans, and the corresponding charge-offs, that were classified as held for sale as of June 30, 2026.

 

 

 

15

 

LIQUIDITY AND CAPITAL RESOURCES

 

We expect to fund our ongoing liquidity needs, including the repayment of $0.7 billion of senior unsecured notes that mature in the short term (i.e., over the next 12 months) and the remaining $4.6 billion of senior unsecured notes that mature in the long term (from 2027 to 2043 with 78% maturing by 2032), through a number of sources. These sources include our cash on hand, unencumbered FFELP Loan and Refinance Education Loan portfolios (see “Sources of Primary Liquidity” below), the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and the distribution of overcollateralization from our securitization trusts. We may also, depending on market conditions and availability, draw down on our secured FFELP Loan and Private Education Loan asset-backed commercial paper (ABCP) facilities, issue term asset-backed securities (ABS), enter into additional Private Education Loan and FFELP Loan ABS repurchase facilities, or issue additional unsecured debt.

We originate Consumer Loans (a portion of which is obtained through a forward purchase agreement). We also have purchased and may purchase, in future periods, Private Education Loan portfolios from third parties. Those originations and purchases are part of our ongoing liquidity needs. We repurchased 1.1 million shares of common stock for $10 million in the third quarter of 2026.

SOURCES OF LIQUIDITY

Sources of Primary Liquidity

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

Ending Balances:

 

 

 

 

 

 

 

 

 

Unrestricted cash

 

$

701

 

 

$

770

 

 

$

571

 

Unencumbered Refinance Education Loans

 

 

175

 

 

 

314

 

 

 

515

 

Unencumbered In-School Education Loans

 

 

11

 

 

 

5

 

 

 

23

 

Unencumbered FFELP Loans

 

 

45

 

 

 

42

 

 

 

58

 

Total

 

$

932

 

 

$

1,131

 

 

$

1,167

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrestricted cash

 

$

621

 

 

$

686

 

 

$

604

 

 

$

620

 

 

$

640

 

Unencumbered Refinance
   Education Loans

 

 

468

 

 

 

665

 

 

 

592

 

 

 

607

 

 

 

542

 

Unencumbered In-School
   Education Loans

 

 

9

 

 

 

21

 

 

 

14

 

 

 

14

 

 

 

26

 

Unencumbered FFELP Loans

 

 

54

 

 

 

56

 

 

 

52

 

 

 

55

 

 

 

99

 

Total

 

$

1,152

 

 

$

1,428

 

 

$

1,262

 

 

$

1,296

 

 

$

1,307

 

 

16

 

Sources of Additional Liquidity

 

Liquidity may also be available under our secured credit facilities. Maximum borrowing capacity under the FFELP Loan and Private Education Loan ABCP facilities will vary and be subject to each agreement’s borrowing conditions, including, among others, facility size, current usage and availability of qualifying collateral from unencumbered loans. The following tables detail the additional borrowing capacity of these facilities with maturity dates ranging from November 2026 to April 2028.

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

Ending Balances:

 

 

 

 

 

 

 

 

 

Private Education Loan ABCP facilities

 

$

890

 

 

$

1,841

 

 

$

1,882

 

FFELP Loan ABCP facilities

 

 

113

 

 

 

—

 

 

 

178

 

Total

 

$

1,003

 

 

$

1,841

 

 

$

2,060

 

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loan ABCP facilities

 

$

1,607

 

 

$

1,678

 

 

$

1,695

 

 

$

1,648

 

 

$

1,586

 

FFELP Loan ABCP facilities

 

 

90

 

 

 

134

 

 

 

184

 

 

 

129

 

 

 

250

 

Total

 

$

1,697

 

 

$

1,812

 

 

$

1,879

 

 

$

1,777

 

 

$

1,836

 

 

At September 30, 2026, we had a total of $2.5 billion of unencumbered tangible assets inclusive of those listed in the table above as sources of primary liquidity. Total unencumbered education loans comprised $912 million of our unencumbered tangible assets of which $867 million and $45 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of September 30, 2026, we had $5.0 billion of encumbered net assets (i.e., overcollateralization) in our various financing facilities (consolidated variable interest entities). We enter into repurchase facilities at times to borrow against the encumbered net assets of these financing vehicles. As of September 30, 2026, $0.5 billion of repurchase facility borrowings were outstanding.

The following table reconciles encumbered and unencumbered assets and their net impact on total Tangible Equity.

(Dollars in billions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

Net assets of consolidated variable interest entities
   (encumbered assets) — Private Education Loans

 

$

2.5

 

 

$

2.3

 

 

$

2.0

 

Net assets of consolidated variable interest entities
   (encumbered assets) — FFELP Loans

 

 

2.5

 

 

 

2.6

 

 

 

2.7

 

Tangible unencumbered assets(1)

 

 

2.5

 

 

 

2.7

 

 

 

2.8

 

Senior unsecured debt

 

 

(5.3

)

 

 

(5.3

)

 

 

(5.3

)

Mark-to-market on unsecured hedged debt(2)

 

 

.2

 

 

 

—

 

 

 

—

 

Other liabilities, net

 

 

(.4

)

 

 

(.3

)

 

 

(.2

)

Total Tangible Equity (3)

 

$

2.0

 

 

$

2.0

 

 

$

2.0

 

(1) Excludes goodwill and acquired intangible assets.

(2) At September 30, 2026, June 30, 2026, and September 30, 2025, there were $(174) million, $(78) million and $(53) million, respectively, of net gains (losses) on derivatives hedging this debt in unencumbered assets, which partially offset these gains (losses).

(3) Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

 

17

 

  NON-GAAP FINANCIAL MEASURES

In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. We present the following non-GAAP financial measures: (1) Core Earnings, (2) Tangible Equity (as well as the Adjusted Tangible Equity Ratio) and (3) Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans. Definitions for the non-GAAP financial measures and reconciliations are provided below, except that reconciliations of forward-looking non-GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks.

1. Core Earnings

We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also refer to this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide certain Core Earnings disclosures in the notes to our consolidated financial statements for our business segments.

Core Earnings are not a substitute for reported results under GAAP. We use Core Earnings to manage our business segments because Core Earnings reflect adjustments to GAAP financial results for two items, discussed below, that can create significant volatility mostly due to timing factors generally beyond the control of management. Accordingly, we believe that Core Earnings provide management with a useful basis from which to better evaluate results from ongoing operations against the business plan or against results from prior periods. Consequently, we disclose this information because we believe it provides investors with additional information regarding the operational and performance indicators that are most closely assessed by management. When compared to GAAP results, the two items we remove to result in our Core Earnings presentations are:

(1) Mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks that do not qualify for hedge accounting treatment or do qualify for hedge accounting treatment but result in ineffectiveness; and

(2) The accounting for goodwill and acquired intangible assets.

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, our Core Earnings basis of presentation does not. Core Earnings are subject to certain general and specific limitations that investors should carefully consider. For example, there is no comprehensive, authoritative guidance for management reporting. Our Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Accordingly, our Core Earnings presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not be able to compare our performance with that of other financial services companies based upon Core Earnings. Core Earnings results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, our Board of Directors, credit rating agencies, lenders and investors to assess performance.

18

 

The following tables show our consolidated GAAP results, Core Earnings results (including for each reportable segment) along with the adjustments made to the income/expense items to reconcile the consolidated GAAP results to the Core Earnings results as required by GAAP.

 

 

QUARTER ENDED SEPTEMBER 30, 2026

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

270

 

 

$

381

 

 

$

—

 

 

$

—

 

Personal Loans

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash and investments

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

8

 

 

 

—

 

 

 

4

 

Total interest income

 

 

669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

276

 

 

 

389

 

 

 

—

 

 

 

4

 

Total interest expense

 

 

554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

189

 

 

 

342

 

 

 

—

 

 

 

27

 

Net interest income
   (loss)

 

 

115

 

 

$

—

 

 

$

(4

)

 

$

(4

)

 

$

111

 

 

 

87

 

 

 

47

 

 

 

—

 

 

 

(23

)

Less: provisions for loan
   losses

 

 

227

 

 

 

 

 

 

 

 

 

 

 

 

227

 

 

 

214

 

 

 

13

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

(112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(127

)

 

 

34

 

 

 

—

 

 

 

(23

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

8

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Gains on sales of loans

 

 

162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162

 

 

 

—

 

 

 

—

 

 

 

—

 

Net fair value changes of loans

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

Total other income

 

 

202

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

197

 

 

 

187

 

 

 

8

 

 

 

—

 

 

 

2

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

Operating expenses

 

 

75

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

75

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

5

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Total expenses

 

 

77

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

77

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

7

 

Income (loss) before
   income tax expense
   (benefit)

 

 

13

 

 

 

—

 

 

 

(9

)

 

 

(9

)

 

 

4

 

 

 

3

 

 

 

29

 

 

 

—

 

 

 

(28

)

Income tax expense
   (benefit)(2)

 

 

(2

)

 

 

—

 

 

 

3

 

 

 

3

 

 

 

1

 

 

 

1

 

 

 

7

 

 

 

—

 

 

 

(7

)

Net income (loss)

 

$

15

 

 

$

—

 

 

$

(12

)

 

$

(12

)

 

$

3

 

 

$

2

 

 

$

22

 

 

$

—

 

 

$

(21

)

(1) Core Earnings adjustments to GAAP:

 

 

QUARTER ENDED SEPTEMBER 30, 2026

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(4

)

 

$

—

 

 

$

(4

)

Total other income

 

 

(5

)

 

 

—

 

 

 

(5

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

—

 

 

 

—

 

Total Core Earnings adjustments to GAAP

 

$

(9

)

 

$

—

 

 

 

(9

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

3

 

Net income (loss)

 

 

 

 

 

 

 

$

(12

)

 

(2) Income taxes are based on a percentage of net income before tax for the individual reportable segment.

19

 

 

 

QUARTER ENDED JUNE 30, 2026

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments(1)

 

 

Total
Core
Earnings

 

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

273

 

 

$

391

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

8

 

 

 

—

 

 

 

5

 

Total interest income

 

 

682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

278

 

 

 

399

 

 

 

—

 

 

 

5

 

Total interest expense

 

 

560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

185

 

 

 

351

 

 

 

—

 

 

 

26

 

Net interest income
   (loss)

 

 

122

 

 

$

1

 

 

$

(3

)

 

$

(2

)

 

$

120

 

 

 

93

 

 

 

48

 

 

 

—

 

 

 

(21

)

Less: provisions for loan
   losses

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

18

 

 

 

8

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

40

 

 

 

—

 

 

 

(21

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

8

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17

 

Total other income

 

 

28

 

 

 

(1

)

 

 

—

 

 

 

(1

)

 

 

27

 

 

 

2

 

 

 

8

 

 

 

—

 

 

 

17

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

15

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25

 

Operating expenses

 

 

82

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

82

 

 

 

42

 

 

 

15

 

 

 

—

 

 

 

25

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

3

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

Total expenses

 

 

85

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

85

 

 

 

42

 

 

 

15

 

 

 

—

 

 

 

28

 

Income (loss) before
   income tax expense
   (benefit)

 

 

39

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

36

 

 

 

35

 

 

 

33

 

 

 

—

 

 

 

(32

)

Income tax expense
   (benefit)(2)

 

 

14

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

9

 

 

 

8

 

 

 

7

 

 

 

—

 

 

 

(6

)

Net income (loss)

 

$

25

 

 

$

—

 

 

$

2

 

 

$

2

 

 

$

27

 

 

$

27

 

 

$

26

 

 

$

—

 

 

$

(26

)

(1) Core Earnings adjustments to GAAP:

 

 

QUARTER ENDED JUNE 30, 2026

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(2

)

 

$

—

 

 

$

(2

)

Total other income

 

 

(1

)

 

 

—

 

 

 

(1

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

—

 

 

 

—

 

Total Core Earnings adjustments to GAAP

 

$

(3

)

 

$

—

 

 

 

(3

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

(5

)

Net income (loss)

 

 

 

 

 

 

 

$

2

 

 

(2) Income taxes are based on a percentage of net income before tax for the individual reportable segment.

20

 

 

 

QUARTER ENDED SEPTEMBER 30, 2025

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

276

 

 

$

484

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

10

 

 

 

—

 

 

 

6

 

Total interest income

 

 

781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

281

 

 

 

494

 

 

 

—

 

 

 

6

 

Total interest expense

 

 

639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

183

 

 

 

429

 

 

 

—

 

 

 

23

 

Net interest income
   (loss)

 

 

142

 

 

$

4

 

 

$

—

 

 

$

4

 

 

$

146

 

 

 

98

 

 

 

65

 

 

 

—

 

 

 

(17

)

Less: provisions for loan
   losses

 

 

168

 

 

 

 

 

 

 

 

 

 

 

 

168

 

 

 

155

 

 

 

13

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

 

 

52

 

 

 

—

 

 

 

(17

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

10

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue (loss)

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10

 

Total other income

 

 

19

 

 

 

(4

)

 

 

8

 

 

 

4

 

 

 

23

 

 

 

3

 

 

 

10

 

 

 

—

 

 

 

10

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

44

 

Operating expenses

 

 

105

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

105

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

44

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

1

 

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total expenses

 

 

110

 

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

109

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

48

 

Income (loss) before
   income tax expense
   (benefit)

 

 

(117

)

 

 

—

 

 

 

9

 

 

 

9

 

 

 

(108

)

 

 

(99

)

 

 

46

 

 

 

—

 

 

 

(55

)

Income tax expense
   (benefit)(2)

 

 

(31

)

 

 

—

 

 

 

6

 

 

 

6

 

 

 

(25

)

 

 

(23

)

 

 

11

 

 

 

—

 

 

 

(13

)

Net income (loss)

 

$

(86

)

 

$

—

 

 

$

3

 

 

$

3

 

 

$

(83

)

 

$

(76

)

 

$

35

 

 

$

—

 

 

$

(42

)

(1) Core Earnings adjustments to GAAP:

 

 

QUARTER ENDED SEPTEMBER 30, 2025

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

4

 

 

$

—

 

 

$

4

 

Total other income

 

 

4

 

 

 

—

 

 

 

4

 

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(1

)

 

 

(1

)

Total Core Earnings adjustments to GAAP

 

$

8

 

 

$

1

 

 

 

9

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

6

 

Net income (loss)

 

 

 

 

 

 

 

$

3

 

 

(2) Income taxes are based on a percentage of net income before tax for the individual reportable segment.

21

 

 

 

NINE MONTHS ENDED SEPTEMBER 30, 2026

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments(1)

 

 

Total
Core
Earnings

 

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

1,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

820

 

 

$

1,173

 

 

$

—

 

 

$

—

 

Personal Loans

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash and investments

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

24

 

 

 

—

 

 

 

13

 

Total interest income

 

 

2,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

835

 

 

 

1,197

 

 

 

—

 

 

 

13

 

Total interest expense

 

 

1,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

553

 

 

 

1,056

 

 

 

—

 

 

 

79

 

Net interest income
   (loss)

 

 

368

 

 

$

3

 

 

$

(14

)

 

$

(11

)

 

$

357

 

 

 

282

 

 

 

141

 

 

 

—

 

 

 

(66

)

Less: provisions for loan
   losses

 

 

281

 

 

 

 

 

 

 

 

 

 

 

 

281

 

 

 

251

 

 

 

30

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

111

 

 

 

—

 

 

 

(66

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

24

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue

 

 

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

Gains on sales of loans

 

 

162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162

 

 

 

—

 

 

 

—

 

 

 

—

 

Net fair value changes of loans

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

Total other income

 

 

250

 

 

 

(3

)

 

 

(8

)

 

 

(11

)

 

 

239

 

 

 

192

 

 

 

24

 

 

 

—

 

 

 

23

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

182

 

 

 

 

 

 

 

 

 

 

 

 

182

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

64

 

Operating expenses

 

 

246

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

246

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

64

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

5

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total expenses

 

 

255

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

250

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

68

 

Income (loss) before
   income tax expense
   (benefit)

 

 

82

 

 

 

 

 

 

(17

)

 

 

(17

)

 

 

65

 

 

 

85

 

 

 

91

 

 

 

—

 

 

 

(111

)

Income tax expense
   (benefit)(2)

 

 

26

 

 

 

—

 

 

 

(11

)

 

 

(11

)

 

 

15

 

 

 

20

 

 

 

21

 

 

 

—

 

 

 

(26

)

Net income (loss)

 

$

56

 

 

$

—

 

 

$

(6

)

 

$

(6

)

 

$

50

 

 

$

65

 

 

$

70

 

 

$

—

 

 

$

(85

)

 

(1) Core Earnings adjustments to GAAP:

 

 

 

NINE MONTHS ENDED SEPTEMBER 30, 2026

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(11

)

 

$

—

 

 

$

(11

)

Total other income

 

 

(11

)

 

 

—

 

 

 

(11

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(5

)

 

 

(5

)

Total Core Earnings adjustments to GAAP

 

$

(22

)

 

$

5

 

 

 

(17

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

(11

)

Net income (loss)

 

 

 

 

 

 

 

$

(6

)

 

(2) Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

 

 

 

 

22

 

 

 

NINE MONTHS ENDED SEPTEMBER 30, 2025

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

2,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

838

 

 

$

1,459

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

30

 

 

 

—

 

 

 

19

 

Total interest income

 

 

2,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

853

 

 

 

1,489

 

 

 

—

 

 

 

19

 

Total interest expense

 

 

1,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

 

 

1,321

 

 

 

—

 

 

 

72

 

Net interest income
   (loss)

 

 

400

 

 

$

15

 

 

$

6

 

 

$

21

 

 

$

421

 

 

 

306

 

 

 

168

 

 

 

—

 

 

 

(53

)

Less: provisions for loan
   losses

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

236

 

 

 

207

 

 

 

29

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

 

 

139

 

 

 

—

 

 

 

(53

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

32

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

Other revenue (loss)

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

(1

)

 

 

—

 

 

 

44

 

Total other income

 

 

73

 

 

 

(15

)

 

 

49

 

 

 

34

 

 

 

107

 

 

 

9

 

 

 

31

 

 

 

23

 

 

 

44

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

—

 

Unallocated shared
   services expenses

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

144

 

Operating expenses

 

 

333

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

333

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

144

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

2

 

 

 

—

 

 

 

(2

)

 

 

(2

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

Total expenses

 

 

341

 

 

 

—

 

 

 

(2

)

 

 

(2

)

 

 

339

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

150

 

Income (loss) before
   income tax expense
   (benefit)

 

 

(104

)

 

 

—

 

 

 

57

 

 

 

57

 

 

 

(47

)

 

 

(7

)

 

 

116

 

 

 

3

 

 

 

(159

)

Income tax expense
   (benefit)(2)

 

 

(29

)

 

 

—

 

 

 

18

 

 

 

18

 

 

 

(11

)

 

 

(3

)

 

 

27

 

 

 

1

 

 

 

(36

)

Net income (loss)

 

$

(75

)

 

$

—

 

 

$

39

 

 

$

39

 

 

$

(36

)

 

$

(4

)

 

$

89

 

 

$

2

 

 

$

(123

)

 

(1) Core Earnings adjustments to GAAP:

 

 

 

NINE MONTHS ENDED SEPTEMBER 30, 2025

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

21

 

 

$

—

 

 

$

21

 

Total other income

 

 

34

 

 

 

—

 

 

 

34

 

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(2

)

 

 

(2

)

Total Core Earnings adjustments to GAAP

 

$

55

 

 

$

2

 

 

 

57

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

18

 

Net income (loss)

 

 

 

 

 

 

 

$

39

 

 

(2) Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

23

 

The following discussion summarizes the differences between GAAP and Core Earnings net income and details each specific adjustment required to reconcile our GAAP earnings to our Core Earnings segment presentation.

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

GAAP net income

 

$

15

 

 

$

25

 

 

$

(86

)

 

$

56

 

 

$

(75

)

Core Earnings adjustments to GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net impact of derivative accounting

 

 

(9

)

 

 

(3

)

 

 

8

 

 

 

(22

)

 

 

55

 

Net impact of goodwill and acquired
  intangible assets

 

 

—

 

 

 

—

 

 

 

1

 

 

 

5

 

 

 

2

 

Net tax effect

 

 

(3

)

 

 

5

 

 

 

(6

)

 

 

11

 

 

 

(18

)

Total Core Earnings adjustments to GAAP

 

 

(12

)

 

 

2

 

 

 

3

 

 

 

(6

)

 

 

39

 

Core Earnings net income

 

$

3

 

 

$

27

 

 

$

(83

)

 

$

50

 

 

$

(36

)

 

(1) Derivative Accounting: Core Earnings exclude periodic gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0. In our Core Earnings presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.

24

 

The table below quantifies the adjustments for derivative accounting between GAAP and Core Earnings net income.

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Core Earnings derivative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gains) losses on derivative and hedging
   activities, net, included in other income

 

$

(5

)

 

$

(1

)

 

$

4

 

 

$

(11

)

 

$

34

 

Plus: (Gains) losses on fair value hedging
   activity included in interest expense

 

 

(9

)

 

 

(4

)

 

 

(2

)

 

 

(21

)

 

 

—

 

Total (gains) losses in GAAP net income

 

 

(14

)

 

 

(5

)

 

 

2

 

 

 

(32

)

 

 

34

 

Plus: Reclassification of settlement income
   (expense) on derivative and hedging
   activities, net(1)

 

 

—

 

 

 

1

 

 

 

4

 

 

 

3

 

 

 

15

 

Mark-to-market (gains) losses on derivative
   and hedging activities, net(2)

 

 

(14

)

 

 

(4

)

 

 

6

 

 

 

(29

)

 

 

49

 

Other derivative accounting adjustments(3)

 

 

5

 

 

 

1

 

 

 

2

 

 

 

7

 

 

 

6

 

Total net impact of derivative accounting

 

$

(9

)

 

$

(3

)

 

$

8

 

 

$

(22

)

 

$

55

 

(1)
Derivative accounting requires net settlement income/expense on derivatives that do not qualify as hedges to be recorded in a separate income
statement line item below net interest income. Under our Core Earnings presentation, these settlements are reclassified to the income statement line item of the economically hedged item. For our Core Earnings net interest income, this would primarily include reclassifying the net settlement
amounts related to certain of our interest rate swaps to debt interest expense. The table below summarizes these net settlements on derivative and
hedging activities and the associated reclassification on a Core Earnings basis.

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Reclassification of settlements
   on derivative and hedging
   activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net settlement income (expense)
   on interest rate swaps
   reclassified to net interest income

 

$

—

 

 

$

1

 

 

$

4

 

 

$

3

 

 

$

15

 

Total reclassifications of settlement
   income (expense) on derivative
   and hedging activities

 

$

—

 

 

$

1

 

 

$

4

 

 

$

3

 

 

$

15

 

(2) “Mark-to-market (gains) on derivative and hedging activities, net” is comprised of the following:

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Fair value hedges

 

$

(7

)

 

$

(1

)

 

$

2

 

 

$

(10

)

 

$

9

 

Foreign currency hedges

 

 

(2

)

 

 

(3

)

 

 

(4

)

 

 

(11

)

 

 

(9

)

Other (a)

 

 

(5

)

 

 

—

 

 

 

8

 

 

 

(8

)

 

 

49

 

Total mark-to-market (gains)
   losses on derivative and
   hedging activities, net

 

$

(14

)

 

$

(4

)

 

$

6

 

 

$

(29

)

 

$

49

 

 

(a) Primarily derivatives that are used to economically hedge the origination of fixed rate Private Education Loans that don’t qualify for hedge accounting. We believe that these derivatives are effective economic hedges,and as such, are a critical element of our interest rate risk management strategy.

(3) Other derivative accounting adjustments consist of adjustments related to certain terminated derivatives that did not receive hedge accounting treatment under GAAP but were economic hedges under Core Earnings and, as a result, such gains or losses are amortized into Core Earnings over the life of the hedged item:

 

25

 

Cumulative Impact of Derivative Accounting under GAAP compared to Core Earnings

As of September 30, 2026, derivative accounting has increased GAAP equity by approximately $35 million as a result of cumulative net mark-to-market losses (after tax) recognized under GAAP, but not in Core Earnings. The following table rolls forward the cumulative impact to GAAP equity due to these after-tax mark-to-market net gains and losses related to derivative accounting.

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Beginning impact of derivative
   accounting on GAAP equity

 

$

(17

)

 

$

(28

)

 

$

(30

)

 

$

(39

)

 

$

8

 

Net impact of net mark-to-market
   gains (losses) under derivative
   accounting(1)

 

 

52

 

 

 

11

 

 

 

(7

)

 

 

74

 

 

 

(45

)

Ending impact of derivative
   accounting on GAAP equity

 

$

35

 

 

$

(17

)

 

$

(37

)

 

$

35

 

 

$

(37

)

(1)
Net impact of net mark-to-market gains (losses) under derivative accounting is composed of the following:

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Total pre-tax net impact of derivative
   accounting recognized in net
   income(2)

 

$

9

 

 

$

3

 

 

$

(8

)

 

$

22

 

 

$

(55

)

Tax and other impacts of derivative
   accounting adjustments

 

 

(3

)

 

 

(1

)

 

 

2

 

 

 

(6

)

 

 

14

 

Change in mark-to-market gains
   (losses) on derivatives, net of tax
   recognized in other comprehensive
   income

 

 

46

 

 

 

9

 

 

 

(1

)

 

 

58

 

 

 

(4

)

Net impact of net mark-to-market
   gains (losses) under derivative
   accounting

 

$

52

 

 

$

11

 

 

$

(7

)

 

$

74

 

 

$

(45

)

(a) See “Core Earnings derivative adjustments” table above.

Hedging Embedded Floor Income

We use pay-fixed swaps and fixed rate debt to economically hedge embedded Floor Income in our FFELP loans. Historically, we have used these instruments on a periodic basis and depending upon market conditions and pricing, we may enter into additional hedges in the future. Under GAAP, the pay-fixed swaps are accounted for as cash flow hedges. The table below shows the amount of Hedged Floor Income that will be recognized in Core Earnings in future periods based on these hedge strategies.

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

(Dollars in millions)

 

2026

 

 

2026

 

 

2025

 

Total hedged Floor Income, net of tax(1)(2)

 

$

16

 

 

$

20

 

 

$

31

 

(1) $21 million, $26 million and $41 million on a pre-tax basis as of September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

(2) Of the $16 million as of September 30, 2026, approximately $3 million, $7 million and $6 million will be recognized as part of Core
Earnings net income in the remainder of 2026, 2027 and 2028, respectively.

 

(2) Goodwill and Acquired Intangible Assets: Our Core Earnings exclude goodwill and intangible asset impairment and the amortization of acquired intangible assets. The following table summarizes the goodwill and acquired intangible asset adjustments.

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Core Earnings goodwill and acquired
   intangible asset adjustments

 

$

—

 

 

$

—

 

 

$

1

 

 

$

5

 

 

$

2

 

 

26

 

2. Tangible Equity and Adjusted Tangible Equity Ratio

Adjusted Tangible Equity measures the ratio of Navient’s Tangible Equity to its tangible assets. We adjust this ratio to exclude the assets and equity associated with our FFELP Loan portfolio because FFELP Loans are no longer originated and the FFELP Loan portfolio bears a 3% maximum loss exposure under the terms of the federal guaranty. Management believes that excluding this portfolio from the ratio enhances its usefulness to investors. Management uses this ratio, in addition to other metrics, for analysis and decision making related to capital allocation decisions. The Adjusted Tangible Equity Ratio is calculated as:

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

Stockholders' equity

 

$

2,435

 

 

$

2,398

 

 

$

2,439

 

Less: Goodwill and acquired intangible assets

 

 

430

 

 

 

430

 

 

 

435

 

Tangible Equity

 

 

2,005

 

 

 

1,968

 

 

 

2,004

 

Less: Equity held for FFELP Loans

 

 

129

 

 

 

133

 

 

 

145

 

Adjusted Tangible Equity

 

$

1,876

 

 

$

1,835

 

 

$

1,859

 

Divided by:

 

 

 

 

 

 

 

 

 

Total assets

 

$

46,128

 

 

$

47,297

 

 

$

49,306

 

Less:

 

 

 

 

 

 

 

 

 

Goodwill and acquired intangible assets

 

 

430

 

 

 

430

 

 

 

435

 

FFELP Loans

 

 

25,898

 

 

 

26,575

 

 

 

28,952

 

Adjusted tangible assets

 

$

19,800

 

 

$

20,292

 

 

$

19,919

 

Adjusted Tangible Equity Ratio

 

 

9.5

%

 

 

9.0

%

 

 

9.3

%

 

 

 

27

 

3. Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans

The allowance for loan losses on the Private Education Loan portfolio used for the three credit metrics below excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in connection with the loans on balance sheet that have not charged off. As of September 30, 2026, the $456 million Private Education Loan allowance for loan losses excluding expected future recoveries on previously fully charged-off loans represents the current expected credit losses that remain in connection with the $12,979 million Private Education Loan portfolio. The $157 million of expected future recoveries on previously fully charged-off loans, which is collected over an average 15-year period, mechanically is a reduction to the overall allowance for loan losses. However, it is not related to the $12,979 million Private Education Loan portfolio on our balance sheet and, as a result, management excludes this impact to the allowance to better evaluate and assess our overall credit loss coverage on the Private Education Loan portfolio. We believe this provides a more meaningful and holistic view of the available credit loss coverage on our non-charged-off Private Education Loan portfolio. We believe this information is useful to our investors, lenders and rating agencies.

 

Allowance for Loan Losses Metrics – Private Education Loans

 

 

 

QUARTERS ENDED

 

 

NINE MONTHS ENDED

 

(Dollars in millions)

 

September 30, 2026

 

 

June 30, 2026

 

 

September 30, 2025

 

 

September 30, 2026

 

 

September 30, 2025

 

Allowance at end of period (GAAP)

 

$

299

 

 

$

263

 

 

$

406

 

 

$

299

 

 

$

406

 

Plus: expected future recoveries on previously fully
   charged-off loans

 

 

157

 

 

 

163

 

 

 

173

 

 

 

157

 

 

 

173

 

Allowance at end of period excluding expected
   future recoveries on previously fully
   charged-off loans (Non-GAAP Financial
   Measure)

 

$

456

 

 

$

426

 

 

$

579

 

 

$

456

 

 

$

579

 

Ending total loans(1)

 

$

12,979

 

 

$

15,409

 

 

$

15,862

 

 

$

12,979

 

 

$

15,862

 

Ending loans in repayment(1)

 

$

12,519

 

 

$

14,781

 

 

$

15,221

 

 

$

12,519

 

 

$

15,221

 

Net charge-offs

 

$

59

 

 

$

71

 

 

$

96

 

 

$

202

 

 

$

248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance coverage of charge-offs (annualized)(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

1.6

 

 

 

1.0

 

 

 

1.1

 

 

 

1.4

 

 

 

1.2

 

Adjustment(2)

 

 

.8

 

 

 

.6

 

 

 

.4

 

 

 

.8

 

 

 

.5

 

Non-GAAP Financial Measure(2)

 

 

2.4

 

 

 

1.6

 

 

 

1.5

 

 

 

2.2

 

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of the ending total loan
   balance(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

2.3

%

 

 

1.7

%

 

 

2.6

%

 

 

2.3

%

 

 

2.6

%

Adjustment(2)

 

 

1.2

 

 

 

1.1

 

 

 

1.1

 

 

 

1.2

 

 

 

1.1

 

Non-GAAP Financial Measure(2)

 

 

3.5

%

 

 

2.8

%

 

 

3.7

%

 

 

3.5

%

 

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of the ending loans in
   repayment(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

2.4

%

 

 

1.8

%

 

 

2.7

%

 

 

2.4

%

 

 

2.7

%

Adjustment(2)

 

 

1.2

 

 

 

1.1

 

 

 

1.1

 

 

 

1.2

 

 

 

1.1

 

Non-GAAP Financial Measure(2)

 

 

3.6

%

 

 

2.9

%

 

 

3.8

%

 

 

3.6

%

 

 

3.8

%

(1) Three and nine months ended September 30, 2026 exclude $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans held at fair value, and their corresponding charge-offs. Second-quarter 2026 excludes $528 million of Legacy Private Education Loans, and their corresponding charge-offs, that were classified as held for sale as of June 30, 2026.

(2) The allowance used for these credit metrics excludes the expected future recoveries on previously fully charged-off loans. See discussion above.

 

28