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): April 29, 2016
Navient Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-36228 | 46-4054283 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 123 Justison Street, Wilmington, Delaware | 19801 | |||
| (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)) |
| ITEM 7.01 | REGULATION FD DISCLOSURE. |
Navient Corporation (the “Company”) frequently provides relevant information to its investors via posting to its corporate website. On April 29, 2016, a presentation entitled “2016 1st Quarter Investor Deck” was made available on the Company’s website at https://www.navient.com/about/investors/webcasts/. In addition, the presentation is being furnished herewith as Exhibit 99.1
The information contained in, or incorporated into, this Item 7.01, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| ITEM 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit |
Description | |
| 99.1* | 2016 1st Quarter Investor Deck. | |
| * | 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 CORPORATION | ||||||
| Date: April 29, 2016 | By: | /s/ Mark L. Heleen | ||||
| Mark L. Heleen | ||||||
| Executive Vice President, Chief Legal Officer and Secretary | ||||||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1* | 2016 1st Quarter Investor Deck. | |
| * | Furnished herewith. |
2016 1st Quarter Investor Deck April 29, 2016 Exhibit 99.1
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of April 29, 2016 (unless otherwise noted) and should be read in connection with Navient Corporation’s (Navient) Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”), filed by Navient with the Securities and Exchange Commission (the “SEC”) on February 25, 2016 and subsequent reports filed by Navient with the SEC. Definitions for capitalized terms in this presentation not defined herein can be found in our 2015 Form 10-K. This presentation contains “forward-looking” statements and other information that is based on management’s current expectations as of the date of this report. 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,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in such forward-looking statements. For us, these factors include, among others, the risks and uncertainties associated with: • increases in financing costs; • the availability of financing; • limits on liquidity resulting from disruptions in the capital markets or other factors; • unanticipated increases in costs associated with compliance with laws and regulations; • changes in the marketplaces in which we compete (including changes in demand or changes resulting from new laws and regulations); • changes in accounting standards pertaining to loan loss reserves and estimates or other accounting standards that may impact our operations; • adverse outcomes in any significant litigation to which we are a party; • credit risk associated with our exposure to third parties, including counterparties to hedging or other derivative transactions; and • changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: • unanticipated deferrals in our FFELP securitization trusts that would delay repayment of the bonds beyond their legal final maturity date; • reductions to our credit ratings, the credit ratings of asset-backed securitizations we sponsor or the credit ratings of the United States of America; • failures of our operating systems or infrastructure, or those of third-party vendors; • risks related to cybersecurity including the potential disruption of our systems or potential disclosure of confidential customer information; • damage to our reputation resulting from the politicization of student loan servicing; • failures to successfully implement cost-cutting initiatives and adverse effects of such initiatives on our business; • delays or errors in converting portfolio acquisitions to our servicing platform • risks associated with restructuring initiatives; • changes in law and regulations with respect to the student lending business and financial institutions generally; • increased competition from banks and other consumer lenders who are not subject to the same level of regulation; • the creditworthiness of our customers; • changes in the general interest rate environment, including the relationship between the relevant money-market index rate and the rate at which our assets are priced; • our ability to successfully effectuate any acquisitions and other strategic initiatives; • changes in the demand for debt management services; • changes in general economic conditions; and • the other factors that are described in the “Risk Factors” section of the Annual Report on Form 10-K and in our future reports filed with the Securities and Exchange Commission (“SEC”). 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 presentation are qualified by these cautionary statements and are made only as of the date of this document. We do not undertake any obligation to update or revise these forward-looking statements except as required by law. Navient reports financial results on a GAAP basis and also provides certain non-GAAP core earnings performance measures. When compared to GAAP results, core earnings exclude the impact of: (1) the financial results of the consumer banking business for historical periods prior to the April 30, 2014 spin-off as well as related restructuring and reorganization expenses incurred in connection with the spin-off, including the restructuring initiated in the second quarter of 2015; (2) unrealized, mark-to-market gains/losses on derivatives; and (3) goodwill and acquired intangible asset amortization and impairment. Navient provides core earnings measures because this is what management uses when making management decisions regarding Navient’s performance and the allocation of corporate resources. Navient core earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. For additional information, see “Core Earnings — Definition and Limitations” in Navient’s fourth quarter earnings release for a further discussion and a complete reconciliation between GAAP net income and core earnings.
Key Businesses Highlights Asset Management FFELP Loan Portfolio Private Education Loan Portfolio $95 Billion FFELP Portfolio $26 Billion Private Education Loan Portfolio Asset Servicing FFELP Loans Private Education Loans Department of Education Servicing Contract Guarantor Servicing Over 12 Million Borrowers Over $300 Billion of Education Loans Market leading federal default prevention – 38% better than peers Asset Recovery & Business Processing Education loans & Schools Government Receivables Taxes Court/Municipal Health Care Processing $19 Billion of Receivables Over 1,000 clients Growing processing business As of March 31, 2016 We are the leading loan management, servicing and asset recovery company
Operating Results “Core Earnings” Basis (In millions, except per share amounts) Q1 16 Q4 15 Q1 15 Adjusted Core EPS before regulatory-related costs $0.44 $0.49 $0.48 Regulatory-related costs ($0.01) ($0.01) - Reported Core EPS $0.43 $0.48 $0.48 Operating expenses (excluding regulatory-related costs) $243 $228 $230 Regulatory-related costs $4 $7 - Operating expenses $247 $235 $230 Provision $111 $115 $125 Average total education loans $122,298 $125,023 $133,722
High Quality Education Loan Portfolio Note: Financial data as of 3/31/2016 Private Education Portfolio Balance ($bn, net of allowance) $26 Avg. Loan Size $9,931 Avg. Recent FICO 716 % Cosigner 64% Largest holder of FFELP loans 97-98% of portfolio is government guaranteed 77% of portfolio funded to term with securitizations Fully integrated servicing and asset recovery support operations FFELP Portfolio Largest holder of Private Education loans Seasoned portfolio with 95% of loans in repayment status having made more than 12 payments Typically non-dischargeable in bankruptcy Balance ($bn, net of allowance) $95 % Consolidation Loans 62% % Stafford & Other 38% FFELP Portfolio Statistics Private Education Portfolio Statistics
(In millions) Q1 16 Q4 15 Q1 15 Net income $66 $74 $85 Average FFELP Loans $95,721 $97,472 $103,617 Net interest margin 0.81% 0.84% 0.88% Annualized charge-off rate 0.08% 0.07% 0.03% Greater than 90-day delinquency rate 7.0% 8.3% 8.4% FFELP Loans Segment “Core Earnings” Basis
FFELP Loans Segment Credit Quality “Core Earnings” Basis (1) Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships. (2) Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors. (3) The period of delinquency is based on the number of days scheduled payments are contractually past due. ($'s in millions) FFELP Education Loan Portfolio March 31, 2016 March 31, 2015 Balance % Balance % Loans in-school/grace/deferment (1) $7,986 $10,555 Loans in forbearance (2) 12,389 14,037 Loans in repayment and percentage of each status Loans current 63,333 85.9% 64,522 84.1% Loans delinquent 31-60 days (3) 3,559 4.8% 3,656 4.8% Loans delinquent 61-90 days (3) 1,657 2.3% 2,087 2.7% Loans delinqent greater than 90 days (3) 5,150 7.0% 6,490 8.4% Total FFELP Loans in repayment 73,699 100% 76,755 100% Total FFELP Loans, gross $94,074 $101,347 Percentage of FFELP Loans in repayment 78.3% 75.7% Delinquencies as a percentage of FFELP Loans in repayment 14.1% 15.9% Loans in forbearance as a percentage of loans in repayment and forbearance 14.4% 15.5%
Private Education Loans Segment “Core Earnings” Basis (In millions) Q1 16 Q4 15 Q1 15 Net income $61 $56 $77 Average Private Education Loans $26,577 $27,551 $30,105 Net interest margin 3.56% 3.61% 3.74% Provision for loan losses $104 $110 $120 Charge-offs $144 $141 $190 Annualized charge-off rate 2.4% 2.3% 2.9% Total delinquency rate 6.2% 7.2% 6.9% Greater than 90-day delinquency rate 3.2% 3.4% 3.6% Forbearance rate 3.7% 3.8% 3.8%
Private Education Loans Segment Credit Quality “Core Earnings” Basis (1) Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation. (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, 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.
Private Education Loans Segment Seasoning Drives Improved Credit Quality Private Education Loan Charge-Off Rate by Segment Private Education Loan Total Delinquencies by Segment Private Education Loan Recent FICO Score by Segment
Private Education Loans Segment Default Performance As of March 31, 2016 Private Education Loan Historical Defaults by Payments Made Private Education Loans Outstanding by Payments Made The average number of payments made for the Private Education Loan Portfolio is 55 The probability of default substantially diminishes as the number of payments made increases As of March 31, 2016, 58% of the portfolio has made more than 48 payments compared with 36% two years ago
Loan Seasoning – “Core Earnings” Basis March 31, 2016 Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 1,756 Loans in Forbearance 259 20.7% 108 7.2% 108 4.6% 100 3.0% 234 1.6% 809 3.6% Loans in Repayment- Current 772 61.6% 1,223 81.6% 2,038 86.7% 3,007 91.4% 13,633 95.2% 20,673 91.0% Loans in Repayment- Delinq 31-60 days 55 4.4% 43 2.9% 59 2.5% 54 1.6% 160 1.1% 371 1.6% Loans in Repayment- Delinq 61-90 days 43 3.4% 34 2.3% 40 1.7% 37 1.1% 91 0.6% 245 1.1% Loans in Repayment- Delinq 90 + days 125 10.0% 90 6.0% 106 4.5% 92 2.8% 199 1.4% 612 2.7% Total Loans in Repayment or Forbearance $ 1,254 100% $ 1,498 100% $ 2,351 100% $ 3,290 100% $ 14,317 100% $ 22,710 100% Charge-offs as a % of loans in repayment 12.4% 4.7% 3.1% 1.8% 0.9% 2.1% Non-Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 171 Loans in Forbearance 42 23.3% 17 8.7% 15 5.5% 11 3.9% 22 2.0% 107 5.4% Loans in Repayment- Current 87 48.7% 137 70.8% 204 76.8% 240 84.3% 972 91.0% 1,640 82.3% Loans in Repayment- Delinq 31-60 days 12 6.9% 8 3.9% 11 4.3% 9 3.2% 23 2.2% 63 3.2% Loans in Repayment- Delinq 61-90 days 9 4.8% 8 4.3% 9 3.3% 5 1.9% 14 1.3% 45 2.3% Loans in Repayment- Delinq 90 + days 30 16.8% 24 12.3% 27 10.1% 19 6.8% 37 3.4% 137 6.9% Total Loans in Repayment or Forbearance $ 180 100% $ 194 100% $ 266 100% $ 284 100% $ 1,068 100% $ 1,992 100% Charge-offs as a % of loans in repayment 25.9% 9.8% 6.9% 4.7% 2.4% 6.0% Total Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 1,927 Loans in Forbearance 301 21.0% 125 7.4% 123 4.7% 111 3.1% 256 1.7% 916 3.7% Loans in Repayment- Current 859 59.9% 1,360 80.4% 2,242 85.6% 3,247 90.8% 14,605 94.9% 22,313 90.3% Loans in Repayment- Delinq 31-60 days 67 4.7% 51 3.0% 70 2.7% 63 1.8% 183 1.2% 434 1.8% Loans in Repayment- Delinq 61-90 days 52 3.7% 42 2.5% 49 1.9% 42 1.2% 105 0.7% 290 1.2% Loans in Repayment- Delinq 90 + days 155 10.8% 114 6.7% 133 5.1% 111 3.1% 236 1.5% 749 3.0% Total Loans in Repayment or Forbearance $ 1,434 100% $ 1,692 100% $ 2,617 100% $ 3,574 100% $ 15,385 100% $ 24,702 100% Charge-offs as a % of loans in repayment 14.0% 5.2% 3.4% 2.0% 1.0% 2.4%
Loan Seasoning – “Core Earnings” Basis March 31, 2015 Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 2,630 Loans in Forbearance 361 17.5% 138 5.5% 127 3.4% 109 2.8% 174 1.4% 909 3.6% Loans in Repayment- Current 1,336 64.9% 2,103 84.0% 3,319 89.5% 3,597 91.8% 12,351 95.6% 22,706 90.5% Loans in Repayment- Delinq 31-60 days 90 4.4% 69 2.8% 80 2.1% 69 1.8% 136 1.1% 444 1.8% Loans in Repayment- Delinq 61-90 days 71 3.4% 49 1.9% 48 1.3% 40 1.0% 78 0.6% 286 1.1% Loans in Repayment- Delinq 90 + days 202 9.8% 146 5.8% 136 3.7% 102 2.6% 168 1.3% 754 3.0% Total Loans in Repayment or Forbearance $ 2,060 100% $ 2,505 100% $ 3,710 100% $ 3,917 100% $ 12,907 100% $ 25,099 100% Charge-offs as a % of loans in repayment 12.7% 4.3% 2.3% 1.6% 0.8% 2.4% Non-Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 264 Loans in Forbearance 58 19.8% 19 6.4% 14 4.4% 12 3.9% 18 1.9% 121 5.5% Loans in Repayment- Current 146 49.4% 212 71.6% 265 79.6% 249 82.9% 873 90.3% 1,745 79.7% Loans in Repayment- Delinq 31-60 days 21 7.1% 16 5.3% 14 4.2% 10 3.4% 23 2.4% 84 3.8% Loans in Repayment- Delinq 61-90 days 15 5.1% 11 3.7% 9 2.6% 7 2.2% 13 1.4% 55 2.5% Loans in Repayment- Delinq 90 + days 55 18.6% 38 13.0% 31 9.2% 23 7.6% 39 4.0% 186 8.5% Total Loans in Repayment or Forbearance $ 295 100% $ 296 100% $ 333 100% $ 301 100% $ 966 100% $ 2,191 100% Charge-offs as a % of loans in repayment 30.3% 11.0% 6.5% 5.0% 2.6% 8.1% Total Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 2,894 Loans in Forbearance 419 17.8% 157 5.6% 141 3.5% 121 2.8% 192 1.4% 1,030 3.8% Loans in Repayment- Current 1,482 62.9% 2,315 82.7% 3,584 88.7% 3,846 91.2% 13,224 95.3% 24,451 89.6% Loans in Repayment- Delinq 31-60 days 111 4.7% 85 3.0% 94 2.3% 79 1.9% 159 1.1% 528 1.9% Loans in Repayment- Delinq 61-90 days 86 3.7% 60 2.1% 57 1.4% 47 1.1% 91 0.7% 341 1.3% Loans in Repayment- Delinq 90 + days 257 10.9% 184 6.6% 167 4.1% 125 3.0% 207 1.5% 940 3.4% Total Loans in Repayment or Forbearance $ 2,355 100% $ 2,801 100% $ 4,043 100% $ 4,218 100% $ 13,873 100% $ 27,290 100% Charge-offs as a % of loans in repayment 15.2% 5.0% 2.7% 1.9% 0.9% 2.9%
Business Services Segment “Core Earnings” Basis (In millions) Q1 16 Q4 15 Q1 15 Net income $75 $81 $86 Federal Loans serviced ($’s in billions) $291 $288 $282 Intercompany loan servicing revenue $101 $103 $111 Third-Party Loan servicing revenue $54 $54 $44 Asset recovery & business processing revenue $90 $92 $89 Department of Education accounts serviced 6.3 6.3 6.2 Contingency asset recovery receivables ($’s in billions) $19.2 $20.2 $20.2
Business Services Segment Federal Loan Servicing
Business Services Segment Asset Recovery & Business Processing Non Federal Student Loan Related Revenues Strong business franchise Large sophisticated operating infrastructure Compliance focused Industry leading performance Total contingent collections receivables inventory of $19.2 billion1 Over 1,000 business processing clients Total 2015 revenues of $367 million Diverse portfolio of customers and services Focused on growing non-education related business Key Characteristics 1 As of March 31, 2016 143% Growth
Higher Education Industry
Navient’s Role is to Help Student Borrowers Successfully Repay Their Loans
The Majority of Student Loan Balances Are Less Than $25,000 Distribution Of Student Loan Balances, 4Q 2014 Federal Reserve Bank Of New York, "Student Loan Borrowing and Repayment Trends, 2015," 4/16/15
On an Individual Basis, Student Debt is More Reasonable Than May Be Evident Source: College Board: "Trends in Student Aid 2015", "Average Cumulative Debt in 2014 Dollars: Bachelor’s Degree Recipients at Public and Private Nonprofit Four-Year Institutions, 2003-04, 2008-09, and 2013-14"; National Center for Education Statistics, "Degrees/certificates conferred by postsecondary institutions, by control of institution and level of degree: 1969-70 through 2012-13" Average Debt Of 4-Year Bachelor's Degree Recipients (2014 USD) Dollars, $ (2014) 2013-14 $26,900 $22,717 Dollars, $ (2014) Monthly Payments Over Time The average debt of bachelor's degree holders is now around $27,000 in real terms … … This translates to an increase in monthly payments of about $50 compared to 1999-00 graduates.
Defaults Are a Bigger Problem For Students Who Drop Out Than For Degree Holders Percent Of Students In Default Federal Loan Default Rates By Attainment One of the strongest indicators of whether a borrower will default is whether they make it to graduation Dropouts are over four times more likely to default than graduates Source: Education Sector, "Degreeless in Debt: What Happens to Borrowers Who Drop Out"
Source: Federal Reserve Bank Of New York, "The Labor Market for Recent College Graduates: Wages," last updated January 29, 2016. Notes: Annual wages are expressed in constant 2015 dollars. Recent college graduates are those aged 22 to 27 with a bachelor's degree only; high school graduates are those aged 22 to 27 with a high school diploma only. Figures are for full-time workers and exclude those currently enrolled in school. Recent College Graduates Have Seen Wages Increase Substantially Since the Great Recession Dollars, $ (2015) Median Wages For Recent Graduates By Degree Type Median wages for recent college graduates have continued to rise since the Great Recession, increasing more than 7 percent since 2008. Since 2012, recent college graduates have seen median wages rise even more quickly, by 9.8 percent. Median wages for workers with only a high school diploma have fallen 9 percent over that same time period.
Navient Customer Success Has Improved Every Year Since End of the Recession in 2009 January 2010 To May 2015 Federal Loan Delinquency Rates Six Months After End of Grace Period and Unemployment for Bachelor's Degree Holders Delinquency Rate (%) Unemployment Rate (%) Unemployment Source: Navient data and Federal Reserve Bank of St. Louis FRED data, unemployment levels for college graduates (bachelor’s degree or higher), ages 25-34. Excludes consolidation loans which have lower delinquency rates.
Navient’s Default Prevention Expertise Was a Key Factor in the Decline of the National Default Rate 2012 Three-Year Cohort Default Rate Default Rate (%) The cohort default rate (CDR) measures the percent of borrowers who defaulted on a student loan within three years of entering repayment. In 2015, the Department of Education announced the 2012 three-year CDR fell from 13.7% to 11.8%. The three-year CDR for Navient-serviced customers was 8.0%, 38% lower than the national rate excluding Navient-serviced borrowers. Navient serviced 22% of all federal borrowers entering repayment in the 2012 cohort period, meaning Navient’s performance had a significant impact on the overall cohort default rate. Source: Department of Education Cohort Default Rate released Sept. 29, 2015, http://www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html and company data. The 2012 Cohort Default Rate analyzes data from the group of borrowers who entered repayment between Oct. 1, 2011, and Sept. 30, 2012, and who defaulted in a three-year window by fall of 2014. To isolate the difference in defaults between Navient borrowers and others, the difference is calculated by removing Navient’s marketshare from the overall national cohort default rate. Navient-Serviced Borrowers Navient CDR is 38% lower than all others All Borrowers
The Benefits of Obtaining a College Degree Outweigh the Costs by a Wide Margin Source: College Board: Education Pays 2013, NYT Upshot, Georgetown University Center on Education and the Workforce Cumulative Earnings Net Of College Repayment Costs Cumulative Earnings (2011 USD) Age A college degree pays for itself by age 35 "Having some postsecondary education, even without earning a degree, adds nearly one-quarter of a million dollars to lifetime earnings…" Anthony Carnevale, Georgetown Yes, college is worth it, and it’s not even close… a four-year degree has probably never been more valuable." - David Leonhardt, New York Times
Money Under 35 finds that 30% of millennials have a college degree Yet, 31% of millennials have some college but no degree More than half of them (53%) borrowed to pay for college Money Under 35 finds that borrowing for no credential affects young adults in many aspects of their lives Report the lowest level of financial health Only one in three report being financially stable, the lowest level of all educational levels Most likely to report having trouble meeting their bills Most likely to live with their parents or other relatives Initiatives to enhance student education before borrowing and to increase graduation rates are critical. Borrowing Status of Non-completers College Completion: The Key to Financial Health Degree Level "Money Under 35," a recent study from Navient and Ipsos, highlighted the importance of college completion given the difficulties that borrowers face when they do not complete a degree. Educational Attainment and Borrowing History of Money Under 35 Participants Some college, no degree Did not borrow 53% 47%
More Bachelor’s and Advanced Degree Holders Have Paid Off College Debt Even Though Borrowing is Higher Those without a degree have borrowed less but fewer have paid off their borrowing (ages 22-35) Source: Navient/Ipsos “Money Under 35,”a national study of 3,000 Americans ages 22 to 35, December 2015.
Program Complexity Can Be Streamlined Forbearance Discretionary Forbearance Hardship Forbearance Mandatory Forbearance Medical or Dental Internship Residency Department of Defense Student Loan Repayment Programs National Service Active Military State Duty Student Loan Debt Burden Teacher Loan Forgiveness Mandatory Administrative Forbearance Local or National Emergency Military Mobilization Designated Disaster Area Repayment Accommodation Death Teacher Loan Forgiveness Deferment School (1) School Full-Time (2) School Half-Time (2) Post Enrollment (1) Graduate Fellowship (3) Unemployment Deferment – 2 years (2) Unemployment Deferment – 3 years (1) Economic Hardship (1) Rehabilitation Training Program (3) Military Service (3) Post-Active Duty Student (3) Teacher Shortage(2) Internship/Residency Training (2) Temporary Total Disability (2) Armed Forces or Public Health Services (2) National Oceanic and Atmospheric Administration Corps (2) Peace Corps, ACTION Program, and Tax-Exempt Organization Volunteer (2) Parental Leave (2) Mother Entering/Re-entering Work Force (2) Forgiveness Teacher Loan Forgiveness Loan Forgiveness for Service in Areas of National Need Civil Legal Assistance Attorney Student Loan Repayment Program Income Contingent Repayment Plan Forgiveness Income Based Repayment Plan Forgiveness Pay As You Earn Repayment Plan Forgiveness Income Based 2014 Repayment Plan Forgiveness Public Service Loan Forgiveness Repayment Plans DL Standard Pre-HERA FFELP/DL Standard Post-HERA (4) DL Graduated Pre-HERA FFELP/DL Graduated Post –HERA (4) DL Extended Pre-HERA FFELP/DL Extended Post-HERA (4) Income-Sensitive Income-Contingent Ver. 1 (5) Income-Contingent Ver. 2 (5) Income-Contingent Ver. 3 Forced Income-Driven Income-Based Pay As You Earn Income-Based 2014 Alternative (6) REPAYE Effective Date Details (1) Limited to FFELP borrowers with all new loans made on or after July 1, 1993; All DL are eligible. (2) Limited to FFELP borrowers with all loans made on or after July 1, 1987 and prior to July 1, 1993; DL eligible if borrower has FFELP loan made during this period. (3) All FFELP and DL loans eligible regardless of disbursement date (4) HERA aligned FFELP and DL repayment plans for loans first entering repayment on or after July 1, 2006. (5) Pre July 1, 1996, ICR plans, the DL borrower can choose between ICR1 - the Formula Amount, or ICR2 – the Capped Amount. (6) The DL borrower can request from 4 alternative repayment plans: Fixed Payment Amount, Fixed Term, Graduated Repayment, or Negative Amortization. 2015
Funding and Liquidity
Acquired $1.5 billion of student loans Issued $1.1 billion of FFELP ABS On April 14, 2016 Navient issued an additional $497 million of FFELP ABS Extended the legal final maturity date for 3 Navient-sponsored FFELP securitization trusts totaling $2.2 billion of bonds In April, Navient extended the legal final maturity dates for an additional $1.6 billion of bonds1 In total, Navient has extended the legal final maturity dates for $4.9 billion of bonds1 Extended FFELP ABCP facility to 2018 Current maximum financing capacity of $7.5 billion in this facility Issued $488 million of Private Education Loan ABS On April 15, we added 3 trusts to our existing Private Education Loan repurchase facility providing an additional $478 million of financings Reduced outstanding unsecured debt maturities by $1.0 billion and returned $254 million to shareholders through share repurchases and dividends Maintained strong capital position Q1 2016 Capital Markets Summary 1 As of April 27, 2016
Secured Funding Navient is among the largest issuers of ABS globally, having issued over $275 billion of Private Education and FFELP ABS transactions to date Nearly $93 billion1 of securitizations on balance sheet Available capacity under FFELP secured facilities is $1.2 billion1 Available capacity under Private Education Loan secured facilities is $630 million1 Table Source: J.P. Morgan, as of March 31, 2016 1 As of March 31, 2016 2016 Issuance ($mm) 1 Ford 3,996 Auto / Floorplans 2 Ally 3,060 Auto 3 AmeriCredit/GM Financial 2,229 Auto 4 Navient 1,598 Student Loan 5 Hyundai 1,581 Auto 6 Onemain 1,390 Consumer 7 Mercedes 1,298 Auto 8 Toyota 1,250 Auto 9 CarMax 1,140 Auto 10 Hertz 1,060 Auto 11 Santander 1,059 Auto 12 BMW 1,000 Auto 13 Discover 1,000 Credit Card 14 Honda 1,000 Auto 15 Nissan 1,000 Auto 16 World Omni 859 Auto 17 CNH 850 Equipment 18 Synchrony 821 Credit Card 19 Enterprise 799 Auto 20 John Deere 756 Equipment
NAVSL 2016-2 NAVSL 2016-1 Priced: Settled: April 5, 2016 April 14, 2016 February 26, 2016 March 10, 2016 Issuance Amount: $497M $1,110M Collateral: US Govt. Guaranteed FFELP Stafford, Plus and Consolidation Loans US Govt. Guaranteed FFELP Stafford1 and Consolidation Loans Prepayment Speed (2): 6% CPR Stafford / 4% CPR Consolidation 4% CPR Consolidation Tranching: Class Rating (M) Amt. ($M) WAL (2) Pricing (3) Class Rating (M) Amt. ($M) WAL (2) Pricing (3) A1 Aaa $153 1.3 L+75 A Aaa $1,081 8.3 L+109 A2 Aaa $104 3.8 L+105 B A2 $29 17.5 L+265 A3 Aaa $240 8.3 L+150 Recent FFELP ABS Transactions Represents less than 0.05% of the pool Estimated based on a variety of assumptions concerning loan repayment behavior, as more fully described in the related prospectus, which may be obtained at https://www.navient.com/about/investors/debtasset/. Actual average life may vary significantly from estimates. Pricing represents the yield to expected call.
Recent Private Education Loan ABS Transactions Estimated based on a variety of assumptions concerning loan repayment behavior, as more fully described in the related prospectus, which may be obtained at https://www.navient.com/about/investors/debtasset/slmsltrusts/. Actual average life may vary significantly from estimates. Yield on fixed rate tranches A2A and B for 2016-A and B for 2015-C were 3.95%, 5.72% and 4.03% respectively. NAVSL Trust 2016-A NAVSL Trust 2015-C Priced: Settled: January 28, 2016 February 4, 2016 December 1, 2015 December 10, 2015 Issuance Amount: $488M $359M Collateral: Private Education Loans Private Education Loans Prepayment Speed(1): 4% Constant Prepayment Rate 4% Constant Prepayment Rate Tranching: Class Rating (M) Amt. ($M) WAL (1) Pricing Class Rating (S&P) Amt. ($M) WAL (1) Pricing (2) A1 Aaa $130 1.0 L+110 A AAA $309 1.6 L+150 A2A Aaa $150 6.6 S+240 B A $50 3.5 S+275 A2B Aaa $150 6.6 L+255 B Aa3 $58 10.9 S+380
Unsecured Debt Maturities Fitch Moody’s S&P Long-Term Rating BB Ba3 BB Outlook Stable Stable Negative
Conservative Unsecured Debt Profile December 31, 2006 December 31, 2010 March 31, 2016 Total Managed Student Loans $142.1 Billion $184.3 Billion $120.6 Billion Unsecured Debt Outstanding $48.7 Billion $20.1 Billion $14.1 Billion Tangible Equity Ratio 1.9% 2.2% 2.4% Tangible Net Asset Ratio 1.06x 1.19x 1.25x Unsecured Debt Rating (F / M / S) A+ / A2 / A BBB- / Ba1 / BBB- BB / Ba3 / BB- The tangible net asset ratio equals GAAP tangible assets less secured debt and other liabilities adjusted for the impact of derivative accounting under GAAP and unamortized net floor premiums divided by unsecured debt *Quarter ending 3/31/2016
Projected Life of Loan Cash Flows over ~20 Years These projections are based on internal estimates and assumptions and are subject to ongoing review and modification. These projections may prove to be incorrect. Enhancing Cash Flows1 Education Loan Portfolio Generates Significant Cash Flows Reduced unsecured debt by $1.0 billion and returned $0.3 billion to shareholders through share repurchases and dividends in the first quarter 2016 Acquired $1.5 billion of student loans in the first quarter 2016 $31 billion of estimated future cash flows over ~ 20 years Includes over $11 billion of overcollateralization (O/C) to be released from residuals $3.8 billion of unencumbered student loans Decreasing FFELP CPR assumptions by 1% would increase projected FFELP cash flows by $0.4 billion Over $1 billion of hedged FFELP Loan embedded floor income 1 As of March 31, 2016 Projected Life of Loan Cash Flows over ~20 Years $’s in Billions FFELP Cash Flows 3/31/16 12/31/15 Secured Residual (including O/C) $7.1 $7.0 Floor Income 2.2 2.1 Servicing 3.4 3.5 Total Secured $12.7 $12.6 Unencumbered 0.9 1.1 Total FFELP Cash Flows $13.6 $13.7 Private Credit Cash Flows Secured Residual (including O/C) $12.5 $12.6 Servicing 1.1 1.2 Total Secured $13.6 $13.8 Unencumbered 4.0 4.2 Total Private Cash Flows $17.6 $18.0 Combined Cash Flows before Unsecured Debt $31.2 $31.7
Total Cash Flows from Projected Excess Spread = $7.1 Billion Total Cash Flows from Projected Servicing Revenues = $3.4 Billion FFELP Cash Flows Highly Predictable Assumptions No Floor Income, CPR/CDR = 4% These projections are based on internal estimates and assumptions and are subject to ongoing review and modification. These projections may prove to be incorrect. *Numbers may not add due to rounding $’s in millions
Secured Cash Flow Note: Totals may not add due to rounding 1 Net residual represents excess distribution, net of payments on floor contracts and receipts from basis swaps 2 Total FFELP cash flows were reduced by floor payments of $96 million that occurred on March 31, 2016 that would typically occur on April 1, 2016
FFELP ABS
Legal Final Maturity Date Update Sponsor Support Activities Exercise Optional Servicer Clean-Up Calls: In 2015, Navient exercised cleanup call options related to 12 FFELP ABS trusts totaling $1.1 billion of bonds outstanding Exercise Optional Servicer Purchases: We amended the servicing agreements for 34 Navient-sponsored FFELP ABS trusts to incorporate a servicer right to purchase trust student loans aggregating up to 10% of the trust’s initial pool balance. In 2015, Navient exercised loan repurchase rights on 10 FFELP ABS trusts totaling $400 million of FFELP loans from those trusts Amend to Add Revolving Credit Agreements: We amended the administration agreements and indentures for 84 Navient-sponsored FFELP ABS trusts to incorporate a subordinated revolving credit agreement pursuant to which Navient Corporation can provide liquidity financing to the trust Extend Legal Final Maturity Dates: With the consent of the noteholders, we amended the transaction documents to extend the legal final maturity dates of bonds issued by 20 Navient-sponsored FFELP ABS trusts totaling 4.9 billion1 at investors request 1 As of April 27, 2016
Legal Final Maturity Date Update Sponsor Support Activities Disclosure of Loan Performance Data: Enhanced our quarterly reporting spreadsheets for Navient-sponsored FFELP ABS trusts to provide additional information on: The level of enrollment in the IDR program The payments owed by FFELP loans enrolled in the IDR program The distribution of FFELP loans in deferment status between school deferment and hardship deferment The distribution of FFELP loans in a forbearance status between discretionary forbearance and other types of forbearance Released a FFELP loan repayment data package disclosing performance trends in deferment, forbearance, defaults, prepayments, and income-driven repayment Enhanced Means for Investor Communication: We launched a new online investor forum designed to facilitate communication with investors in Navient-sponsored FFELP ABS. Through this online forum, investors can register to receive notifications regarding their FFELP ABS and can also communicate with Navient and directly with other investors through identity-protected messages
Recent FFELP ABS Issuance Characteristics FFELP ABS Transaction Features Collateral Characteristics (1) Principal and accrued interest on underlying FFELP loan collateral carry insurance or guarantee of 97%-100% dependent on origination year and on meeting the servicing requirements of the U.S. Department of Education. Issue size of $500M to $1.5B Tranches or pass-through denominated in US$ Triple-A rated senior notes make up to 97% of issue structure Floating rate tied to 1 month LIBOR Amortizing tranches with 1 to 15(+) year average lives Navient Solutions, Inc. is master servicer Insurance or guarantee of underlying collateral insulates bondholders from virtually any loss of principal(1) Typically non-dischargeable in bankruptcy Offer significantly higher yields than government agency securities with comparable risk profiles
FFELP Loan Program Characteristics (1) Aggregate loan limit for a Dependent Undergraduate is $31,000 Note: As of July 1, 2011 . Parameter Subsidized Stafford Unsubsidized Stafford PLUS/Grad PLUS Subsidized Consolidation Unsubsidized Consolidation Borrower Student Student Parents or Graduate Students Student or Parents Student or Parents Needs Based Yes No No N/A N/A Federal Guarantee of Principal and Accrued Interest 97 - 100% 97 - 100% 97 - 100% 97 - 100% 97 - 100% Interest Subsidy Payments Yes No No Yes No Special Allowance Payments (SAP) Yes Yes If cap is reached Yes Yes Repayment Term 120 months 120 months 120 months Up to 360 months Up to 360 months Aggregate Loan Limit Undergraduate: $23,000 Graduate: $65,500 Undergraduate1: $57,500 Graduate: $138,500 None None None
Annualized CPRs for Stafford/PLUS ABS trusts have decreased from pre-2008 levels as incentives for borrowers to consolidate have declined Higher prepayment activity in mid 2012 was related to the short term availability of the Special Direct Consolidation Loan program Prepayments increased beginning in 2014 as we purchased assets from selected transactions to mitigate the risk that certain tranches might remain outstanding past their legal final maturity dates Navient Stafford & PLUS Loan Prepayments * Quarterly CPR assumes School and Grace loans are not scheduled to make payments. Deferment, Forbearance and Repayment loans are scheduled to make payments.
CPRs for Consolidation ABS trusts declined significantly following legislation effective in 2006 that prevented in-school and re-consolidation of borrowers’ loans Higher prepayment activity in mid 2012 was related to the short term availability of the Special Direct Consolidation Loan program Navient Consolidation Loan Prepayments * Quarterly CPR assumes School and Grace loans are not scheduled to make payments. Deferment, Forbearance and Repayment loans are scheduled to make payments.
Private Education Loan ABS
Recent Private Education Loan ABS Issuance Characteristics Private Education Loan ABS Transaction Features Collateral Characteristics Issue size of $500M to $1.5B Triple-A rated senior notes, Single-A rated subordinated notes 20-40% Triple-A overcollateralization Amortizing tranches with 1 to 10 year average lives Fixed rate or floating rate tied to 1 month LIBOR Complies with European risk retention (5% retention) Navient Solutions, Inc. is master servicer Collateralized by loans made to students and parents to fund college tuition, room and board Underwritten using FICO, Custom Scorecard & judgmental criteria w/risk based pricing Up to 80% with cosigners, typically a parent Many seasoned assets benefiting from proven payment history Typically non-dischargeable in bankruptcy
Smart Option Undergraduate/Graduate/ Med/Law/MBA Direct-to-Consumer (DTC) Consolidation Career Training Origination Channel School School Direct-to-Consumer Lender School Typical Borrower Student Student Student College Graduates Student Typical Co-signer Parent Parent Parent Parent Parent, Spouse Typical Loan $10k avg orig bal, 10 yr avg term, in-school payments of interest only, $25 or fully deferred $10k avg orig bal, 15 yr term, deferred payments $12k avg orig bal, 15 yr term, deferred payments $43k avg orig bal, 15-30 year term depending on balance, immediate repayment $9k avg orig bal, up to 15 yr term, immediate payments Origination Period March 2009 to April 2014 All history through 2014 2004 through 2008 2006 through 2008 1998 through 2014 Certification and Disbursement School certified and disbursed School certified and disbursed Borrower self-certified, disbursed to borrower Proceeds to lender to pay off loans being consolidated School certified and disbursed Borrower Underwriting FICO, custom credit score model, and judgmental underwriting Primarily FICO Primarily FICO FICO and Debt-to-Income FICO, Debt-to-Income and judgmental underwriting Borrowing Limits $200,000 $100,000 Undergraduate, $150,000 Graduate $130,000 $400,000 Cost of attendance plus up to $6,000 for expenses Typical ABS Sec. Criteria For-Profit; FICO ≥ 670 For-Profit; FICO ≥ 670 FICO ≥ 670 For-Profit; FICO ≥ 670 FICO ≥ 670 Non-Profit; FICO ≥ 640 Non-Profit; FICO ≥ 640 Non-Profit; FICO ≥ 640 School UW No No No No Yes Historical Risk-Based Pricing L + 2% to L + 14% P-1.5% to P+7.5% P+1% to P+6.5% P - 0.5% to P + 6.5% P+0% to P+9% L+0% to L+15% L+6% to L+12% L+6.5% to L+14% Dischargeable in Bankruptcy No No No No Yes Additional Characteristics Made to students and parents primarily through college financial aid offices to fund 2-year, 4-year and graduate school college tuition, room and board Also available on a limited basis to students and parents to fund non-degree granting secondary education, including community college, part time, technical and trade school programs Both Title IV and non-Title IV schools (1) Made to students and parents through college financial aid offices to fund 2-year, 4-year and graduate school college tuition, room and board Signature, Excel, Law, Med and MBA Loan brands Title IV schools only (1) Freshmen must have a co-signer with limited exceptions Co-signer stability test (minimum 3 year repayment history) Terms and underwriting criteria similar to Undergraduate, Graduate, Med/Law/MBA with primary differences being: Marketing channel No school certification Disbursement of proceeds directly to borrower Title IV schools only(1) Freshmen must have a co-signer with limited exceptions Co-signer stability test (minimum 3 year repayment history) Loans made to students and parents to refinance one or more private education loans Student must provide proof of graduation in order to obtain loan Loans made to students and parents to fund non-degree granting secondary education, including community college, part time, technical, trade school and tutorial programs Both Title IV and non-Title IV schools(1) Navient Private Education Loan Programs (1) Title IV Institutions are post-secondary institutions that have a written agreement with the Secretary of Education that allows the institution to participate in any of the Title IV federal student financial assistance programs and the National Early Intervention Scholarship and Partnership (NEISP) programs.
Navient Private Education Trusts (1) Assumes Prime/LIBOR spread of 3.00% for all transactions.
Navient Portfolio Transition to Seasoned Collateral Securitized collateral will continue to season as the company transitions from originations to portfolio acquisition and management Most defaults occur early in repayment; loan performance improves as loans season As of March 2016, the private securitized loan portfolio is approximately 77 months into repayment; about 75% of total expected defaults have already occurred Trust Portfolio Average Time in Repayment as of each Year End
Constant prepayment rates increased in 2007 due to the introduction of Private Education Consolidation loans, then declined following our decision to suspend our consolidation loan program in 2008 Navient Private Education Loan Trusts – Prepayment Analysis
Cohort Default Triangles The following cohort default triangles provide loan performance information for certain Private Education Loans of Navient Corporation and its consolidated subsidiaries that meet such subsidiaries’ securitization criteria (including those criteria listed below): Program types include Undergraduate/Graduate(1), Direct-to-Consumer (“DTC”)(2), Career Training(3) and Private Consolidation Loans FICO scores are based on the greater of the borrower and cosigner scores as of a date near the loan application and must be at least 640 The cohort default triangles are not representative of the characteristics of the portfolio of Private Education Loans of Navient Corporation and its consolidated subsidiaries as a whole or any particular securitization trust Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Direct-to-Consumer Loans marketed under the Tuition Answer brand. Career Training loans provide eligible borrowers financing at technical, trade, K-12 or tutoring schools.
Cohort Default Triangles The cohort default triangles featured on subsequent slides are segmented by loan program type, FICO score, cosigner status, and school type Terms and calculations used in the cohort default triangles are defined below: Repayment Year – The calendar year loans entered repayment Disbursed Principal Entering Repayment – The amount of principal entering repayment in a given year, based on disbursed principal prior to any interest capitalization Years in Repayment – Measured in years between repayment start date and default date. Zero represents defaults that occurred prior to the start of repayment. Periodic Defaults – Defaulted principal in each Year in Repayment as a percentage of the disbursed principal entering repayment in each Repayment Year Defaulted principal includes any interest capitalization that occurred prior to default Defaulted principal is not reduced by any amounts recovered after the loan defaulted Because the numerator includes capitalized interest while the denominator does not, default rates are higher than if the numerator and denominator both included capitalized interest Total – The sum of Periodic Defaults across Years in Repayment for each Repayment Year
Cohort Default Triangles Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Undergraduate/Graduate(1)
Cohort Default Triangles Undergraduate/Graduate(1) With Co-signer Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year.
Cohort Default Triangles Undergraduate/Graduate(1) Without Co-signer Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year.
Cohort Default Triangles Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Undergraduate/Graduate(1) Non-Profit
Cohort Default Triangles Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Undergraduate/Graduate(1) For-Profit
Cohort Default Triangles Undergraduate/Graduate(1) Loans, FICO 740-850(2) Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year.
Cohort Default Triangles Undergraduate/Graduate(1) Loans, FICO 700-739(2) Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year.
Cohort Default Triangles Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Undergraduate/Graduate(1) Loans, FICO 670-699(2)
Cohort Default Triangles Note: Data as of 3/31/16. Undergraduate/Graduate loans marketed under the Signature Student Loan brand. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Undergraduate/Graduate(1) Loans, FICO 640-669(2)
Cohort Default Triangles Private Consolidation Loans Without Co-signer Private Consolidation Loans With Co-signer Note: Data as of 3/31/16. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year.
Cohort Default Triangles Note: Data as of 3/31/16. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. DTC With Co-signer DTC Without Co-signer
Cohort Default Triangles Note: Data as of 3/31/16. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. DTC Loans, FICO 740-850(1) DTC Loans, FICO 700-739(1)
Cohort Default Triangles Note: Data as of 3/31/16. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. DTC Loans, FICO 670-699(1) DTC Loans, FICO 640-669(1)
Cohort Default Triangles Note: Data as of 3/31/16. FICO scores are based on the greater of the borrower and co-borrower scores as of a date near the loan application. Periodic Defaults for the most recent calendar Year in Repayment are for a partial year. Numerator is the amount of principal in each cohort that defaulted in each Year in Repayment. Denominator is the amount of disbursed principal for that Repayment Year. Career Training Loans (1)
Navient Corporation Appendix
GAAP Results (In millions, except per share amounts) Q1 16 Q4 15 Q1 15 Net income $181 $286 $292 EPS $0.53 $0.79 $0.72 Operating expenses $247 $235 $230 Provision $111 $115 $125 Average Student Loans $122,298 $125,023 $133,722
Quarter ended March 31, 2016 ($ in millions) Differences between “Core Earnings” and GAAP “Core Earnings” adjustments to GAAP: GAAP net income $ 181 Net impact of derivative accounting (54) Net impact of goodwill and acquired intangible assets 4 Net income tax effect 16 Total “Core Earnings” adjustments to GAAP (34) “Core Earnings” net income $147
Investor Relations Website SLM / NAVI student loan trust data (Debt/asset backed securities – SLM / NAVI Student Loan Trusts) Static pool information – detailed portfolio stratifications by trust as of the cutoff date Accrued interest factors Quarterly distribution factors Historical trust performance – monthly charge-off, delinquency, loan status, CPR, etc. by trust Since issued CPR – monthly CPR data by trust since issuance SLM / NAVI student loan performance by trust – Issue details Current and historical monthly distribution reports Distribution factors Current rates Prospectus for public transactions and Rule 144A transactions are available through underwriters Additional information (Webcasts and presentations) Archived and historical webcasts, transcripts and investor presentations www.navient.com/investors www.navient.com/abs
