Navient : 1st Quarter 2026 Financial Results

Published: 2026-04-29 06:29:15 ET NAVI

Published on 04/29/2026 at 06:29 am EDT

GAAP net income of $17 million ($0.17 diluted earnings per share).

Core Earnings(1) net income of $19 million ($0.20 diluted earnings per share).

FIRST-QUARTER HIGHLIGHTS

Net income of $35 million.

Net interest margin of 2.48%.

Originated $818 million of Private Education Loans, a 61% increase from a year ago.

Net income of $22 million.

Net interest margin of 0.65%.

FFELP Loan prepayments of $208 million compared to $256 million in first-quarter 2025.

GAAP equity-to-asset ratio of 4.9% and adjusted tangible equity ratio(1) of 8.9%.

Repurchased $23 million of common shares.

Paid $15 million in common stock dividends.

Issued $683 million of asset-backed securities.

Incurred operating expenses of $89 million.

(1) Item is a non-GAAP financial measure. For a description and reconciliation, see "Non-GAAP Financial Measures" on pages 15 - 23.

SEGMENT RESULTS - CORE EARNINGS

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

CONSUMER LENDING

Net interest income $ 100 $ 104 $ 113

(Dollars in millions) 1Q26 4Q25 1Q25

Other revenue 3 3 3

Provision for loan losses 18 43 22

Expenses 39 32 35

Total revenue 85 64 94

Net income $ 35 $ 25 $ 46

Pre-tax income 46 32 59

Segment net interest margin 2.48% 2.51% 2.76%

Private Education Loan spread 2.60% 2.60% 2.87%

Private Education Loans (including Refinance Loans):

Net charge-offs $ 72 $ 87 $ 72

Provision for loan losses $ 18 $ 43 $ 22

Greater than 30-days delinquency rate 5.5% 6.3% 6.4%

Net charge-off rate 1.91% 2.26% 1.89%

Forbearance rate 1.5% 1.5% 1.8%

Greater than 90-days delinquency rate 2.5% 2.9% 2.6%

Ending Private Education Loans, net $ 15,649 $ 15,451 $ 15,690

Average Private Education Loans $ 15,958 $ 15,907 $ 16,159

Net charge-offs $ 16 $ 20 $ 15

Private Education Refinance Loans:

Average Private Education Refinance Loans $ 9,017 $ 8,838 $ 8,464

Greater than 90-day delinquency rate .8% .9% .7%

Ending Private Education Refinance Loans, net $ 9,029 $ 8,755 $ 8,413

Private Education Refinance Loan originations $ 778 $ 634 $ 470

Originated $818 million of Private Education Loans, a 61% increase compared to $508 million.

Refinance Loan originations were $778 million compared to $470 million.

In-school loan originations were $40 million compared to $38 million.

Net income was $35 million compared to $46 million.

Net interest income decreased $13 million, primarily due to the changing product mix of the loan portfolio (Refinance Loans increased as a percentage of the portfolio), as well as the impact of decreasing interest rates on the different index resets for the segment assets and debt.

Provision for loan losses decreased $4 million. The provision of $18 million in the current quarter included $11 million associated with loan originations. The provision for loan losses of $22 million in the year-ago quarter included $7 million associated with loan originations and $15 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

Net charge-offs remained unchanged at $72 million compared to the year-ago quarter.

Private Education Loan delinquencies greater than 90 days: $386 million, down $9 million from $395 million.

Private Education Loan forbearances: $235 million, down $48 million from $283 million.

Operating expenses increased $4 million primarily reflecting marketing and other expenses associated with the growth of our consumer lending businesses.

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

FEDERAL EDUCATION LOANS

(Dollars in millions)

1Q26

4Q25

1Q25

Net interest income

$ 46

$ 44

$ 49

Provision for loan losses

Other revenue

Total revenue

Expenses

Pre-tax income

Net income

$ 22

$ 27

$ 24

Segment net interest margin

.65%

.58%

.61%

FFELP Loans:

FFELP Loan spread

.72%

.64%

.67%

Provision for loan losses

$ 9

$ 1

$ 8

Net charge-offs

$ 17

$ 14

$ 6

Net charge-off rate

.29%

.23%

.10%

Greater than 30-days delinquency rate

15.2%

17.5%

20.5%

Greater than 90-days delinquency rate

8.5%

10.0%

10.2%

Forbearance rate

13.0%

14.4%

Average FFELP Loans

$ 27,898

$ 28,924

$ 30,914

Ending FFELP Loans, net

$ 27,237

$ 28,141

$ 30,244

Net income was $22 million compared to $24 million.

Net interest income decreased $3 million primarily due to the paydown of the loan portfolio. Prepayments were $208 million in first-quarter 2026 compared to $256 million in first-quarter 2025.

Provision for loan losses increased $1 million. The provision for loan losses of $9 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 $8 million of provision for loan losses in the year-ago quarter was primarily the result of an increase in delinquency balances.

Net charge-offs were $17 million compared to $6 million.

Delinquencies greater than 90 days were $1.9 billion compared to $2.5 billion.

Forbearances were $3.4 billion compared to $4.2 billion.

Expenses were $3 million lower primarily as a result of the outsourcing of the loan servicing of our portfolio to a third party on July 1, 2024. This created a variable cost structure resulting in a reduction in expenses as the portfolio paid down.

In this segment, Navient performed business processing services for non-education related government and healthcare clients prior to the divestiture of our healthcare services business in third-quarter 2024 and our government services business in first-quarter 2025.

BUSINESS PROCESSING

(Dollars in millions)

1Q26

4Q25

1Q25

Revenue from government services

Revenue from healthcare services

Total fee revenue

Expenses

Pre-tax income

Net income

$ -

$ 2

With the sale of our government services business in February 2025, Navient no longer provides business processing segment services. Navient provided certain transition services in connection with the sale of our business processing businesses. As of October 2025 we had no further obligations to provide these transition services.

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).

Navient will hold a live audio webcast today, April 29, 2026, at 8 a.m. ET, hosted by David Yowan, president and CEO, 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.

* * *

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.

Media: Cate Fitzgerald, 703-831-6347, [email protected] Investors: Jen Earyes, 571-592-8582, [email protected]

# # #

SELECTED HISTORICAL FINANCIAL INFORMATION AND RATIOS

QUARTERS ENDED

(In millions, except per share data) March 31, 2026 December 31, 2025 March 31, 2025

GAAP Basis

Net income (loss) $

(5)

(2)

Diluted earnings (loss) per common share $

.17

(.06)

(.02)

Weighted average shares used to compute diluted earnings per share

102

Return on assets

.15%

(.05)%

(.02)%

Core Earnings Basis(1)

Net income(1)

Diluted earnings per common share(1)

.20

.02

.25

Weighted average shares used to compute diluted earnings per share

103

Net interest margin, Consumer Lending segment

2.48%

2.51%

2.76%

Net interest margin, Federal Education Loans segment

.65%

.58%

.61%

Return on assets

.17%

.01%

.22%

Education Loan Portfolios

Ending Private Education Loans, net

$ 15,649

$ 15,451

$ 15,690

Ending FFELP Loans, net

27,237

28,141

30,244

Ending total education loans, net

$ 42,886

$ 43,592

$ 45,934

Average Private Education Loans

$ 15,958

$ 15,907

$ 16,159

Average FFELP Loans

27,898

28,924

30,914

Average total education loans

$ 43,856

$ 44,831

$ 47,073

(1) Item is a non-GAAP financial measure. For a description and reconciliation, see "Non-GAAP Financial Measures" on pages 15 - 23.

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 March 31, 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)

(In millions, except per share

QUARTERS ENDED

December 31,

March 31, 2026 vs.

December 31, 2025 Increase

(Decrease)

March 31, 2026 vs.

March 31, 2025 Increase

(Decrease)

data)

March 31, 2026

2025

March 31, 2025

Interest income:

Private Education Loans

$ 277

$ 283

$ 289

$ (6)

(2)%

$ (12)

(4)%

FFELP Loans

401

444

493

(43)

(10)

(92)

(19)

Cash and investments

(2)

(11)

(3)

(15)

Total interest income

695

746

802

(51)

(7)

(107)

(13)

Total interest expense

564

628

672

(64)

(10)

(108)

(16)

Net interest income

131

118

130

Less: provisions for loan losses

(17)

(39)

(3)

(10)

Net interest income after provisions for loan losses

104

100

Other income (loss):

Servicing revenue

(2)

(15)

Asset recovery and business

processing revenue

(23)

(100)

Other income 5

(10)

(67)

Gains (losses) on derivative and

hedging activities, net 5

(25)

120

Total other income 21

(5)

(19)

Expenses:

Operating expenses 89

127

(38)

(30)

Goodwill and acquired

intangible asset

impairment and amortization expense

300

Restructuring/other

reorganization expenses

(11)

(100)

(3)

(100)

Total expenses

100

131

(7)

(38)

(29)

Income (loss) before income tax expense (benefit)

(7)

(5)

557

740

Income tax expense (benefit)

(2)

(3)

850

600

Net income (loss)

$ 17

$ (5)

$ (2)

$ 22

440%

$ 19

950%

Basic earnings (loss) per common share

$ .18

$ (.06)

$ (.02)

$ .24

400%

$ .20

1000%

Diluted earnings (loss) per

common share

.17

(.06)

(.02)

.23

383%

.19

950%

Dividends per common share

$ .16

$ - -%

$ -

GAAP BALANCE SHEETS (UNAUDITED)

(In millions, except per share data)

March 31, 2026

December 31, 2025

March 31, 2025

Assets

Private Education Loans (net of allowance for loan losses of $314, $364 and $397, respectively)

$ 15,649

$ 15,451

$ 15,690

FFELP Loans (net of allowance for loan losses of $165, $173 and $182,

respectively)

27,237

28,141

30,244

Investments

148

166

125

Cash and cash equivalents

621

637

642

Restricted cash and cash equivalents

1,510

1,467

1,413

Goodwill and acquired intangible assets, net

430

434

437

Other assets

2,409

2,385

2,399

Total assets

$ 48,004

$ 48,681

$ 50,950

Liabilities

Short-term borrowings

$ 5,870

$ 5,073

$ 4,855

Long-term borrowings

39,240

40,633

42,872

Other liabilities

515

576

634

Total liabilities 45,625

46,282

48,361

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

authorized: 468 million, 467 million and 467 million shares,

respectively, issued

Additional paid-in capital

3,407

3,403

3,390

Accumulated other comprehensive income, net of tax

Retained earnings

4,552

4,677

Total stockholders' equity before treasury stock

7,968

7,961

8,073

Less: Common stock held in treasury at cost: 374 million, 371 million and 365 million shares, respectively

(5,589)

(5,562)

(5,484)

Total equity

2,379

2,399

2,589

Total liabilities and equity

$ 48,004

$ 48,681

$ 50,950

Common stock, par value $0.01 per share; 1.125 billion shares

GAAP COMPARISON OF 2026 RESULTS WITH 2025

For the three months ended March 31, 2026, net income was $17 million, or $0.17 diluted earnings per common share, compared with net loss of $2 million, or $0.02 diluted loss per common share, for the year-ago period.

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

Net interest income increased by $1 million primarily due to an increase in mark-to-market gains on fair value hedges recorded in interest expense. This was partially offset by the paydown of the FFELP portfolio, the Private Education Loan portfolio's changing product mix with Refinance Loans increasing as a percentage of the portfolio, and the impact of decreasing interest rates on the different index resets for the Private Education Loans and related funding.

Provisions for loan losses decreased $3 million from $30 million to $27 million:

The provision for Private Education Loan losses decreased $4 million from $22 million to $18 million.

The provision for FFELP Loan losses increased $1 million from $8 million to $9 million.

The provision for Private Education Loan losses of $18 million in the current period included $11 million associated with loan originations. The provision of $22 million in the year-ago quarter included $7 million associated with loan originations and $15 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

The provision for FFELP Loan losses of $9 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 $8 million in the year-ago quarter was primarily the result of an increase in delinquency balances.

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 $10 million primarily related to the transition services we had provided 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.

Net gains on derivative and hedging activities increased $30 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 $38 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 an $11 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 a $7 million increase in marketing and other expenses associated with the growth of our consumer lending businesses. The remaining $11 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 $3 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 periods were 48% and 54%, respectively. The effective income tax rates were elevated in both periods primarily due to changes in the valuation allowances attributed to disallowed interest expense and operating loss carryovers.

We repurchased 2.3 million and 2.6 million shares of our common stock during the first quarters of 2026 and 2025, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 6 million common shares (or 6%) from the year-ago period.

PRIVATE EDUCATION LOANS PORTFOLIO PERFORMANCE

(Dollars in millions)

March 31,

2026

Balance %

December 31,

2025

Balance %

March 31,

2025

Balance %

Loans in-school/grace/deferment(1)

$ 393

$ 395

$ 384

Loans in forbearance(2)

235

236

283

Loans in repayment and percentage

of each status:

Loans current 14,489

94.5%

14,230

93.7%

14,440

93.6%

Loans delinquent 31-60 days(3) 294

1.9

326

2.1

373

2.4

Loans delinquent 61-90 days(3) 166

1.1

194

1.3

212

1.4

Loans delinquent greater than

90 days(3) 386

2.5

434

2.9

395

2.6

Total Private Education Loans in repayment

15,335

100%

15,184

100%

15,420

100%

Total Private Education Loans, gross

15,963

15,815

16,087

Private Education Loan allowance for

loan losses

(314)

(364)

(397)

Private Education Loans, net

$ 15,649

$ 15,451

$ 15,690

Percentage of Private Education

Loans in repayment

96.1%

96.0%

95.9%

Delinquencies as a percentage of

Private Education Loans in

repayment

5.5%

6.3%

6.4%

Loans in forbearance as a percentage

of loans in repayment and forbearance

1.5%

1.8%

Percentage of Private Education

Loans with a cosigner(4)

31%

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 Private Education Refinance Loans, the cosigner rate was 67%, 67% and 66% for first-quarter 2026, fourth-quarter 2025 and first-quarter 2025, respectively.

ALLOWANCE FOR LOAN LOSSES

QUARTER ENDED

March 31, 2026 Private

(Dollars in millions)

Education

Loans

FFELP

Loans

Total

Allowance at beginning of period

$ 364

$ 173

$ 537

Total provision

Charge-offs:

Gross charge-offs

(83)

(17)

(100)

Expected future recoveries on current period gross charge-offs

Net charge-offs(1)

(72)

(17)

(89)

Decrease in expected future recoveries on previously fully charged-off loans(2)

Allowance at end of period (GAAP)

314

165

479

Plus: expected future recoveries on previously fully charged-off loans(2)

166

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(3)

$ 480

$ 165

$ 645

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

1.91%

.29%

Allowance coverage of charge-offs (annualized)(3)

1.7

2.4

(Non-GAAP)

Allowance as a percentage of the ending total loan balance(3)

3.0%

.6%

(Non-GAAP)

Allowance as a percentage of the ending loans in repayment(3)

3.1%

.7%

(Non-GAAP)

Ending total loans

$ 15,963

$ 27,402

Average loans in repayment

$ 15,326

$ 23,226

Ending loans in repayment

$ 15,335

$ 22,786

QUARTER ENDED

December 31, 2025 Private

(Dollars in millions)

Education

Loans

FFELP

Loans

Total

Allowance at beginning of period

$ 406

$ 186

$ 592

Total provision

Charge-offs:

Gross charge-offs

(101)

(14)

(115)

Expected future recoveries on current period gross charge-offs

Net charge-offs(1)

(87)

(14)

(101)

Decrease in expected future recoveries on previously fully charged-off loans(2)

Allowance at end of period (GAAP)

364

173

537

Plus: expected future recoveries on previously fully charged-off loans(2)

170

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(3)

$ 534

$ 173

$ 707

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

2.26%

.23%

Allowance coverage of charge-offs (annualized)(3)

1.6

3.1

(Non-GAAP)

Allowance as a percentage of the ending total loan balance(3)

3.4%

.6%

(Non-GAAP)

Allowance as a percentage of the ending loans in repayment(3)

3.5%

.7%

(Non-GAAP)

Ending total loans

$ 15,815

$ 28,314

Average loans in repayment

$ 15,268

$ 24,006

Ending loans in repayment

$ 15,184

$ 23,572

QUARTER ENDED

March 31, 2025 Private

(Dollars in millions)

Education

Loans

FFELP

Loans

Total

Allowance at beginning of period

$ 441

$ 180

$ 621

Total provision

Charge-offs:

Gross charge-offs

(83)

(6 )

(89)

Expected future recoveries on current period gross charge-offs

Net charge-offs(1)

(72)

(6 )

(78)

Decrease in expected future recoveries on previously fully charged-off loans(2)

Allowance at end of period (GAAP)

397

182

579

Plus: expected future recoveries on previously fully charged-off loans(2)

174

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(3)

$ 571

$ 182

$ 753

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

1.89%

.10%

Allowance coverage of charge-offs (annualized)(3)

2.0

7.3

(Non-GAAP)

Allowance as a percentage of the ending total loan balance(3)

3.6%

.6%

(Non-GAAP)

Allowance as a percentage of the ending loans in repayment(3)

3.7%

.7%

(Non-GAAP)

Ending total loans

$ 16,087

$ 30,426

Average loans in repayment

$ 15,472

$ 25,459

Ending loans in repayment

$ 15,420

$ 24,930

(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) 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

(Dollars in millions)

March 31,

2026

December 31,

2025

March 31,

2025

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

$ 170

$ 172

$ 179

Expected future recoveries of current period defaults

Recoveries (cash collected)

(11)

(10)

(11)

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

(4 )

(6 )

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

$ 166

$ 170

$ 174

Change in balance during period

$ (4 )

$ (2 )

$ (6 )

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

LIQUIDITY AND CAPITAL RESOURCES

We expect to fund our ongoing liquidity needs, including the repayment of $1.2 billion of senior unsecured notes that mature in the short term (i.e., over the next 12 months) and the remaining $4.1 billion of senior unsecured notes that mature in the long term (from 2027 to 2043 with 76% maturing by 2032), through a number of sources. These sources include our cash on hand, unencumbered FFELP Loan and Private Education Refinance 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 Private Education 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 2.3 million shares of common stock for $23 million in the first quarter of 2026.

SOURCES OF LIQUIDITY

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Ending Balances:

Unrestricted cash

$ 621

$ 637

$ 642

Unencumbered Private Education Refinance Loans

442

529

488

Unencumbered FFELP Loans

Total

$ 1,107

$ 1,249

$ 1,191

QUARTERS ENDED

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Average Balances:

Unrestricted cash

$ 553

$ 589

$ 572

Unencumbered Private Education Refinance Loans

689

684

403

Unencumbered FFELP Loans

173

Total

$ 1,297

$ 1,344

$ 1,148

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 June 2026 to April 2029.

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Ending Balances:

Private Education Loan ABCP facilities

$ 1,461

$ 1,689

$ 1,626

FFELP Loan ABCP facilities

143

193

223

Total

$ 1,604

$ 1,882

$ 1,849

QUARTERS ENDED

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Average Balances:

Private Education Loan ABCP facilities

$ 1,661

$ 2,051

$ 1,447

FFELP Loan ABCP facilities

163

184

349

Total

$ 1,824

$ 2,235

$ 1,796

At March 31, 2026, we had a total of $2.8 billion of unencumbered tangible assets inclusive of those listed in the table above as sources of primary liquidity. Total unencumbered education loans comprised $1.2 billion of our unencumbered tangible assets of which

$1.2 billion and $44 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of March 31, 2026, we had $4.8 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 March 31, 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)

March 31,

2026

December 31,

2025

March 31,

2025

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

$ 2.2

$ 2.1

$ 2.0

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

2.6

2.8

Tangible unencumbered assets(1)

2.8

2.9

2.8

Senior unsecured debt

(5.3)

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

Other liabilities, net

(.4)

(.3)

(.2)

Total Tangible Equity (3)

$ 1.9

$ 2.0

$ 2.2

(1) Excludes goodwill and acquired intangible assets.

(2) At March 31, 2026, December 31, 2025, and March 31, 2025, there were $(60) million, $(50) million and $(123) 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."

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.

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:

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

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.

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 MARCH 31, 2026

Adjustments

Total

Reportable Segments

Federal

Total

Reclassi-

Additions/

Total

Core

Consumer

Education

Business

(Dollars in millions)

GAAP

fications

(Subtractions)

Adjustments (1)

Earnings

Lending

Loans

Processing

Other

Interest income:

Education loans

$ 678

$ 277

$ 401

$ - $ -

Cash and investments

- 5

Total interest income

695

281

409

Total interest expense

564

181

363

Net interest income

(loss)

131

$ 2

$ (7 )

$ (5 )

$ 126

100

(20 )

Less: provisions for loan

losses

Net interest income

(loss) after provisions

for loan losses

104

(20 )

Other income (loss):

Servicing revenue

Asset recovery and

business processing

revenue

Other revenue

Total other income

(2 )

(3 )

(5 )

Expenses:

Direct operating

expenses

Unallocated shared

services expenses

Operating expenses

Goodwill and acquired

intangible asset

impairment and

amortization

(4 )

Restructuring/other

reorganization

expenses

Total expenses

(4 )

Income (loss) before

income tax expense

(benefit)

(6 )

(49 )

Income tax expense (benefit)(2)

(8 )

(11 )

Net income (loss)

$ 17

$ -

$ 2

$ 19

$ 35

$ 22

$ -

(38 )

(1) Core Earnings adjustments to GAAP:

QUARTER ENDED MARCH 31, 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 $ (5 ) $ - $ (5 )

Total other income (loss) (5 ) - (5 )

Goodwill and acquired intangible asset impairment and amortization - (4 ) (4 ) Total Core Earnings adjustments to GAAP $ (10 ) $ 4 (6 )

Income tax expense (benefit)

(8 )

Net income (loss) $ 2

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

QUARTER ENDED DECEMBER 31, 2025

(Dollars in millions)

Total

GAAP

Adjustments

Reclassi- Additions/ Total

fications (Subtractions) Adjustments(1)

Total Core

Earnings

Reportable Segments

Federal

Consumer Education Business

Lending Loans Processing Other

Interest income:

Education loans

$ 727

$ 283

$ 444

$ -

Cash and investments

Total interest income

746

288

453

Total interest expense

628

184

409

Net interest income (loss)

118

$ 3 $ 8 $ 11

$ 129

104

(19 )

Less: provisions for loan losses

Net interest income (loss) after provisions for loan losses

(19 )

Other income (loss):

Servicing revenue

Asset recovery and business processing revenue

Other revenue

Total other income

(3 ) (1 ) (4 )

Expenses:

Direct operating expenses

Unallocated shared services expenses

Operating expenses

- - -

Goodwill and acquired intangible asset impairment and amortization

- (1 ) (1 )

Restructuring/other reorganization expenses

- - -

Total expenses

100

- (1 ) (1 )

Income (loss) before income tax expense

(benefit)

(7 )

- 8 8

(66 )

Income tax expense (benefit)(2)

(2 )

- 1 1

(1 )

(16 )

Net income (loss)

$ (5 )

$ - $ 7 $ 7

$ 2

$ 25

$ 27

$ -

$ (50 )

(1) Core Earnings adjustments to GAAP:

QUARTER

ENDED DECEMBER

31, 2025

Net Impact of

Net Impact of Goodwill and

(Dollars in millions)

Derivative

Accounting

Acquired

Intangibles

Total

Net interest income (loss) after provisions for loan losses

$ 11

$ -

$ 11

Total other income

(4 )

Goodwill and acquired intangible asset impairment and amortization

(1 )

Total Core Earnings adjustments to GAAP

$ 7

$ 1

Income tax expense (benefit)

Net income (loss)

$ 7

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

QUARTER ENDED MARCH 31, 2025

(Dollars in millions)

Total

GAAP

Adjustments

Reclassi- Additions/ Total

fications (Subtractions) Adjustments (1)

Total Core

Earnings

Reportable Segments

Federal

Consumer Education Business

Lending Loans Processing Other

Interest income:

Education loans

$ 782

$ 289

$ 493

$ -

Cash and investments

Total interest income

802

294

503

Total interest expense

672

181

454

Net interest income (loss)

130

$ 6 $ 8 $ 14

$ 144

113

(18 )

Less: provisions for loan losses

Net interest income (loss) after provisions for loan losses

100

(18 )

Other income (loss):

Servicing revenue

Asset recovery and business processing revenue

Other revenue (loss)

(10 )

Total other income

(6 ) 31 25

Expenses:

Direct operating expenses

Unallocated shared services expenses

Operating expenses

127

- - -

127

Goodwill and acquired intangible asset impairment and amortization

- (1 ) (1 )

Restructuring/other reorganization expenses

- - -

Total expenses

131

- (1 ) (1 )

130

Income (loss) before income tax expense (benefit)

(5 )

- 40 40

(59 )

Income tax expense (benefit)(2)

(3 )

- 12 12

(13 )

Net income (loss)

$ (2 )

$ - $ 28 $ 28

$ 26

$ 46

$ 24

$ 2

$ (46 )

(1) Core Earnings adjustments to GAAP:

QUA

RTER ENDED MARCH 31

, 2025

Net Impact of

Net Impact of Goodwill and

(Dollars in millions)

Derivative

Accounting

Acquired

Intangibles

Total

Net interest income (loss) after provisions for loan losses

$ 14

$ -

$ 14

Total other income

Goodwill and acquired intangible asset impairment and amortization

(1 )

Total Core Earnings adjustments to GAAP

$ 39

$ 1

Income tax expense (benefit)

Net income (loss)

$ 28

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

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

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

GAAP net income (loss)

$ 17

$ (5)

$ (2)

Core Earnings adjustments to GAAP:

Net impact of derivative accounting

(10)

Net impact of goodwill and acquired intangible assets

Net tax effect

(1)

(12)

Total Core Earnings adjustments to GAAP

Core Earnings net income

$ 19

$ 2

$ 26

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

QUARTERS ENDED

(Dollars in millions) March 31, 2026 December 31, 2025 March 31, 2025

Core Earnings derivative adjustments:

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

income $ (5) $ (4) $ 25

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

(8)

Total (gains) losses in GAAP net income

(13)

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

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

(11)

Amortization of net premiums on Floor Income Contracts in net interest

income for Core Earnings

Other derivative accounting adjustments(3)

Total net impact of derivative accounting

(10)

(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

(Dollars in millions) March 31, 2026 December 31, 2025 March 31, 2025

Reclassification of settlements on derivative and hedging activities:

Net settlement income (expense) on interest rate swaps

reclassified to net interest income $ 2 $ 3 $ 6

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

2 $

3 $

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

QUARTERS ENDED

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Fair value hedges

$ (2)

$ -

$ 3

Foreign currency hedges

(6)

Other (a)

(3)

(1)

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

$ (11)

$ 6

$ 37

(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:

Cumulative Impact of Derivative Accounting under GAAP compared to Core Earnings

As of March 31, 2026, derivative accounting has decreased GAAP equity by approximately $28 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

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

Beginning impact of derivative accounting on GAAP equity

(39 )

$ (37)

$ 8

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

(2)

(30)

Ending impact of derivative accounting on GAAP equity

(28 )

$ (39)

$ (22)

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

QUARTERS ENDED

(Dollars in millions)

March 31, 2026

December 31, 2025

March 31, 2025

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

$ 10

$ (7 )

$ (39)

Tax and other impacts of derivative accounting adjustments

(2)

Change in mark-to-market gains (losses) on derivatives, net of

tax recognized in other comprehensive income

(1)

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

derivative accounting

$ 11

$ (2 )

$ (30)

(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.

March 31,

December 31,

March 31,

(Dollars in millions)

2026

2025

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

$ 23

$ 27

$ 40

(1) $31 million, $36 million and $52 million on a pre-tax basis as of March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

(2) Of the $23 million as of March 31, 2026, approximately $10 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.

QUARTERS ENDED

(Dollars in millions) March 31, 2026 December 31, 2025 March 31, 2025

Core Earnings goodwill and acquired intangible asset adjustments $ 4 $ 1 $ 1

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)

March 31, 2026

December 31, 2025

March 31, 2025

Navient Corporation's stockholders' equity

$ 2,379

$ 2,399

$ 2,589

Less: Goodwill and acquired intangible assets

430

434

437

Tangible Equity

1,949

1,965

2,152

Less: Equity held for FFELP Loans

136

141

151

Adjusted Tangible Equity

$ 1,813

$ 1,824

$ 2,001

Divided by:

Total assets

$ 48,004

$ 48,681

$ 50,950

Less:

Goodwill and acquired intangible assets

430

434

437

FFELP Loans

27,237

28,141

30,244

Adjusted tangible assets

$ 20,337

$ 20,106

$ 20,269

Adjusted Tangible Equity Ratio

8.9%

9.1%

9.9%

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 March 31, 2026, the $480 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 $15,963 million Private Education Loan portfolio. The $166 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 $15,963 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

(Dollars in millions) March 31, 2026 December 31, 2025 March 31, 2025

Allowance at end of period (GAAP) $ 314 $ 364 $ 397

Plus: expected future recoveries on previously fully

charged-off loans 166 170 174

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

480

534

571

Ending loans in repayment $ 15,335 $ 15,184 $ 15,420

Ending total loans $ 15,963 $ 15,815 $ 16,087

Allowance coverage of charge-offs:

Net charge-offs $ 72 $ 87 $ 72

Adjustment(1) .6 .5 .6

GAAP 1.1 1.1 1.4

Non-GAAP Financial Measure(1) 1.7 1.6 2.0

Allowance as a percentage of the ending total loan balance:

Adjustment(1) 1.0 1.1 1.1

GAAP 2.0% 2.3% 2.5%

Non-GAAP Financial Measure(1) 3.0% 3.4% 3.6%

Allowance as a percentage of the ending loans in repayment:

Adjustment(1) 1.1 1.1 1.1

GAAP 2.0% 2.4% 2.6%

Non-GAAP Financial Measure(1) 3.1% 3.5% 3.7%

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

Disclaimer

Navient Corporation published this content on April 29, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2026 at 10:28 UTC.