UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-36228
Navient Corporation
(Exact name of registrant as specified in its charter)
Delaware
46-4054283
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
13865 Sunrise Valley Drive, Herndon, Virginia 20171
(302) 283-8000
(Address of principal executive offices)
(Telephone Number)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☒
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Securities registered pursuant to Section 12(b) of the Act.
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common stock, par value $.01 per share
NAVI
The NASDAQ Global Select Market
6% Senior Notes due December 15, 2043
JSM
Preferred Stock Purchase Rights
None
As of March 31, 2026, there were 93,979,984 shares of common stock outstanding.
TABLE OF CONTENTS
Organization of Our Form 10-Q
The order and presentation of content in our Quarterly Report on Form 10-Q (Form 10-Q) differs from the traditional Securities and Exchange Commission (SEC) Form 10-Q format. Our format is designed to improve readability and to better present how we organize and manage our business. See Appendix A, "Form 10-Q Cross-Reference Index" for a cross-reference index to the traditional SEC Form 10-Q format.
Page
Number
Forward-Looking and Cautionary Statements
1
Use of Non-GAAP Financial Measures
2
Business
3
Overview and Fundamentals of Our Business
Recent Business Developments
5
How We Organize Our Business
Management’s Discussion and Analysis of Financial Condition and Results of Operations
7
Selected Historical Financial Information and Ratios
The Quarter in Review
8
Results of Operations
9
Segment Results
11
Financial Condition
18
Liquidity and Capital Resources
22
Critical Accounting Policies and Estimates
25
Non-GAAP Financial Measures
Legal Proceedings
32
Risk Factors
Quantitative and Qualitative Disclosures about Market Risk
33
Unregistered Sales of Equity Securities and Use of Proceeds
36
Controls and Procedures
37
Exhibits
38
Financial Statements
39
Signatures
69
Appendix A – Form 10-Q Cross-Reference Index
70
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This Form 10-Q 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,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “could,” “should,” “goals,” or “target.” Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties are discussed more fully under the section titled “Risk Factors” and include, but are not limited to, the following:
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-K and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.
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 report are qualified by these cautionary statements and are made only as of the date of this report. We do not undertake any obligation to update or revise these forward-looking statements except as required by law.
Through this discussion and analysis, we intend to provide the reader with some narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity and cash flows.
USE OF NON-GAAP FINANCIAL MEASURES
We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present our financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings, which is a non-GAAP financial measure. 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 include this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation is our measure of profit or loss for our segments, we are required by GAAP to provide Core Earnings disclosures in the notes to our consolidated financial statements for our business segments.
In addition to Core Earnings, we present the following other non-GAAP financial measures: Tangible Equity, Adjusted Tangible Equity Ratio, and 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.
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 brand's 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.
Navient’s business consists of:
We own and manage a portfolio of $15.6 billion of Private Education Loans. Through our Earnest brand we help students and families succeed with education lending and digital financial services, originating Earnest branded in-school student loans and refinancing products. In the first quarter of 2026, we originated $818 million of Private Education Loans.
We own and manage a portfolio of $27.2 billion of federally guaranteed Federal Family Education Loan Program (FFELP) Loans. We support the success of our customers and ensure a compliant, efficient customer experience.
Navient previously provided both healthcare and government business processing services. Our healthcare services business was sold in September 2024 and our government services business was sold in February 2025, marking the end of Navient providing business processing solutions. See "Recent Business Developments" for more detail.
Maximizing Cash Flows from Loan Portfolios and Maintaining a Strong Balance Sheet
The cash flows from our education loan portfolios continue to demonstrate the strength of our balance sheet, our efficient financings, credit risk management and underwriting of high-quality private education loans with attractive economics.
By optimizing capital adequacy and allocating capital to highly accretive opportunities, including organic growth, we remain well positioned to pay dividends and repurchase stock, while maintaining appropriate leverage that supports our credit ratings and ensures ongoing access to capital markets.
In October 2025, the Board authorized a new $100 million share repurchase program. At March 31, 2026, $77 million remained in available share repurchase authorization.
To inform our capital allocation decisions, we use the Adjusted Tangible Equity Ratio(1) in addition to other metrics. Our GAAP equity-to-asset ratio was 4.9% and our Adjusted Tangible Equity Ratio(1) was 8.9% as of March 31, 2026.
(Dollars and shares in millions)
Q1-26
Q1-25
Shares repurchased
2.3
2.6
Reduction in shares outstanding
%
Total repurchases in dollars
$
23
35
Dividends paid
15
16
Total Capital Returned(2)
51
GAAP equity-to-asset ratio
4.9
5.1
Adjusted Tangible Equity Ratio(1)
8.9
9.9
Commitment to Corporate Social Responsibility and Compliance
We maintain a robust, multi-layered compliance management system and thoroughly understand and comply with applicable federal, state, and local laws. We follow the industry-leading “Three Lines Model” compliance framework. This framework and other compliance protocols ensure we adhere to key industry laws and regulations; state laws; and state and city licensing requirements.
We are committed to contributing to the social and economic wellbeing of our communities; fostering the success of our customers; supporting a culture of integrity and belonging in our workforce to ensure employees feel valued, supported, and connected; and embracing sustainable business practices. Navient has earned recognition from a variety of leading organizations for our continued commitment to social responsibility. Our employees are engaged in our communities through volunteering and philanthropic programs.
Navient is committed to a sustainable future. We leverage technologies that minimize energy and promote use of “paperless” digital customer communications.
4
On January 30, 2024, as a result of an in-depth review of our business, Navient announced strategic actions to simplify our company, reduce our expense base, and enhance our flexibility. We have made substantial progress on these actions:
We continue to consider various strategic actions to optimize shareholder value, such as divestitures, acquisitions, restructurings and similar transactions. We have no current plans for such actions and there can be no assurance when, if at all, such actions could occur.
Today we operate our business in two primary segments: Consumer Lending and Federal Education Loans. As of February 2025, we divested our Business Processing segment.
Consumer Lending Segment
Navient owns and manages Private Education Loans and is the master servicer for these portfolios. Through our Earnest brand, we originate in-school Private Education Loans, including undergraduate and graduate products, we refinance education loans for high-quality borrowers and we intend to expand into adjacent lending products over time. "Refinance" Private Education Loans are loans where a borrower has refinanced their education loans, and "In-school" Private Education Loans are loans originally made to borrowers while they are attending school. We generate revenue primarily through net interest income on our Private Education Loan portfolio.
Through our Earnest brand, we build long-term relationships with high-lifetime-value customers and support them across key stages of their financial journey. We believe our differentiated product design, data‑driven digital marketing, and best‑in‑class origination capabilities deliver flexible, transparent lending solutions. We believe Navient’s decades of experience in education lending, capital markets, and servicing, combined with Earnest’s technology and customer‑centric platform, position us with a unique competitive advantage. We see meaningful growth opportunities across Private Education Loans and adjacent lending markets, with a focus on generating attractive, long-term, risk-adjusted returns.
The passage of the One Big Beautiful Bill Act (the "Big Beautiful Bill") on July 3, 2025 marks a significant shift in federal student lending programs, notably eliminating the GradPLUS loan program effective July 1, 2026. This development is anticipated to drive increased demand for private in-school graduate loans, presenting a unique loan origination growth opportunity for Navient. With our disciplined approach to growing in-school volume with a focus on graduate borrowers, we believe we are well-positioned to capture our share of this expanded market.
Federal Education Loans Segment
Navient owns and manages FFELP Loans and is the master servicer on this portfolio. We generate revenue primarily through net interest income on our FFELP Loans.
Business Processing Segment
In September 2024, Navient completed the sale of Xtend, which comprised the Company's healthcare services business in its Business Processing segment. In February 2025, Navient completed the sale of its government services businesses, which constituted the remainder of the Business Processing segment. Prior to the sale of its healthcare and government services businesses, Navient provided business processing solutions such as omnichannel contact center services, workflow processing, and revenue cycle optimization.
Other Segment
This segment consists of our corporate liquidity portfolio, gains and losses incurred on the repurchase of debt, unallocated shared services which include certain corporate and IT costs as well as regulatory expenses, and restructuring/other reorganization expenses. Additionally, the segment contains the revenue and expenses in connection with the transition services we performed related to the outsourcing of loan servicing and divestiture of our Business Processing segment discussed under "Recent Business Developments."
6
Three Months Ended March 31,
(In millions, except per share data)
2026
2025
GAAP Basis
Net income (loss)
17
(2
)
Diluted earnings (loss) per common share
.17
(.02
Weighted average shares used to compute diluted earnings per share
96
102
Return on assets
.15
)%
Core Earnings Basis(1)
Net income(1)
19
26
Diluted earnings per common share(1)
.20
.25
103
Net interest margin, Consumer Lending segment
2.48
2.76
Net interest margin, Federal Education Loans segment
.65
.61
.22
Education Loan Portfolios
Ending Private Education Loans, net
15,649
15,690
Ending FFELP Loans, net
27,237
30,244
Ending total education loans, net
42,886
45,934
Average Private Education Loans
15,958
16,159
Average FFELP Loans
27,898
30,914
Average total education loans
43,856
47,073
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 include 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. See “Non-GAAP Financial Measures — Core Earnings” for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.
First-quarter 2026 net income was $17 million ($0.17 diluted earnings per share), compared with net loss of $2 million ($0.02 diluted loss per share) for the year-ago quarter. See “Results of Operations — GAAP Comparison of First-Quarter 2026 Results with First-Quarter 2025” for a discussion of the primary contributors to the change in GAAP earnings between periods.
First-quarter 2026 Core Earnings net income was $19 million ($0.20 diluted Core Earnings per share), compared with $26 million ($0.25 diluted Core Earnings per share) for the year-ago quarter. See “Segment Results” for a discussion of the primary contributors to the change in Core Earnings between periods.
Financial highlights of first-quarter 2026 include:
Consumer Lending segment:
Federal Education Loans segment:
Capital, funding and liquidity:
Operating Expenses:
GAAP Income Statements (Unaudited)
Increase(Decrease)
Interest income
Private Education Loans
277
289
(12
(4
FFELP Loans
401
493
(92
(19
Cash and investments
20
(3
(15
Total interest income
695
802
(107
(13
Total interest expense
564
672
(108
(16
Net interest income
131
130
Less: provisions for loan losses
27
30
(10
Net interest income after provisions for loan losses
104
100
Other income (loss):
Servicing revenue
13
Asset recovery and business processing revenue
—
(23
(100
Other income
(67
Gains (losses) on derivative and hedging activities, net
(25
120
Total other income
21
(5
Expenses:
Operating expenses
89
127
(38
(30
Goodwill and acquired intangible assets impairment and amortization expense
300
Restructuring/other reorganization expenses
Total expenses
93
(29
Income (loss) before income tax expense (benefit)
740
Income tax expense (benefit)
600
950
Basic earnings (loss) per common share
.18
1000
.19
Dividends per common share
.16
GAAP Comparison of First-Quarter 2026 Results with First-Quarter 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.
10
The following table presents Core Earnings results for our Consumer Lending segment.
% Increase(Decrease)
(Dollars in millions)
2026 vs. 2025
Interest income:
(20
281
294
Interest expense
181
113
Less: provision for loan losses
(18
Net interest income after provision for loan losses
82
91
Direct operating expenses
Income before income tax expense
46
59
(22
Income tax expense
Net income
(24
Comparison of First-Quarter 2026 Results with First-Quarter 2025
Key performance metrics are as follows:
Segment net interest margin
Private Education Loans (including Refinance Loans):
Private Education Loan spread
2.60
2.87
Provision for loan losses
Net charge-offs
72
Net charge-off rate
1.91
1.89
Greater than 30-days delinquency rate
5.5
6.4
Greater than 90-days delinquency rate
2.5
Forbearance rate
1.5
1.8
Private Education Refinance Loans:
.8
.7
Average balance of Private Education Refinance Loans
9,017
8,464
Ending balance of Private Education Refinance Loans
9,029
8,413
Private Education Refinance Loan originations
778
470
Net Interest Margin
The following table details the net interest margin.
Private Education Loan yield
7.04
7.26
Private Education Loan cost of funds
(4.44
(4.39
Other interest-earning asset spread impact
(.12
(.11
Net interest margin(1)
Other interest-earning assets
532
489
Total Private Education Loan interest-earning assets
16,490
16,648
The 28 basis point decrease in the net interest margin in first-quarter 2026 is primarily the result of the continued shift of the Refinance Loan portfolio becoming a higher percentage of the overall Private Education Loan portfolio. The Refinance Loan portfolio earns a lower net interest margin compared to the non-refinance loan portfolio which reduces the overall net interest margin. Also contributing to the decrease was the impact of decreasing interest rates on the different index resets for the segment assets and liabilities.
As of March 31, 2026, our Private Education Loan portfolio totaled $15.6 billion, comprised of $9.0 billion of refinance loans and $6.6 billion of non-refinance loans. The weighted-average life of these portfolios as of March 31, 2026 was 5 years and 4 years, respectively, assuming a Constant Prepayment Rate (CPR) of 10% and 8%, respectively. As of March 31, 2025, the CPR assumption was 10% for both refinance and non-refinance loans.
Provision for Loan Losses
The provision for Private Education Loan losses decreased $4 million. The provision for loan losses of $18 million in first quarter 2026 included $11 million associated with loan originations. The provision for loan losses of $22 million in the year-ago period 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).
12
Operating Expenses
Operating expenses for our consumer lending segment include costs to originate, acquire, service and collect on our consumer loan portfolio. Operating expenses increased $4 million primarily reflecting marketing and other expenses associated with the growth of our consumer lending businesses.
The following table presents Core Earnings results for our Federal Education Loans segment.
409
503
363
454
49
(6
41
29
(9
24
(8
FFELP Loans:
FFELP Loan spread
.72
.67
.29
.10
15.2
20.5
8.5
10.2
13.0
14.4
FFELP Loan yield
5.59
6.21
Floor Income
.24
FFELP Loan net yield
5.83
6.46
FFELP Loan cost of funds
(5.11
(5.79
(.07
(.06
921
889
Total FFELP Loan interest-earning assets
28,819
31,803
As of March 31, 2026, our FFELP Loan portfolio totaled $27.2 billion. The weighted-average life of this portfolio as of March 31, 2026 was 8 years assuming a CPR of 3% through 2028 and 5% thereafter. As of March 31, 2025, the CPR assumption was 5%.
14
The following table analyzes, on a Core Earnings basis, the ability of the FFELP Loans in our portfolio to earn Floor Income after March 31, 2026 and 2025, based on interest rates as of those dates.
(Dollars in billions)
March 31, 2026
March 31, 2025
Education loans eligible to earn Floor Income
27.1
30.1
Less: post-March 31, 2006 disbursed loans required to rebate Floor Income
(13.1
(14.5
Less: economically hedged Floor Income
(.6
(.8
Education loans eligible to earn Floor Income after rebates and economically hedged
13.4
14.8
Education loans earning Floor Income
5.2
5.0
The following table presents a projection of the average balance of FFELP Consolidation Loans for which Fixed Rate Floor Income has been economically hedged with derivatives for the period April 1, 2026 to December 31, 2028.
April 1, 2026toDecember 31, 2026
2027
2028
Average balance of FFELP Consolidation Loans whose Floor Income is economically hedged
.6
.3
.2
Provision for loan losses increased $1 million. The $9 million in the current period was 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.
Operating expenses for the Federal Education Loans segment primarily include costs incurred to perform servicing on our FFELP Loan portfolio and federal education loans held by other institutions. 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.
The following table presents Core Earnings results for our Business Processing segment.
Business processing revenue
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.
Revenue from government services
Revenue from healthcare services
Total fee revenue
The following table presents Core Earnings results for our Other segment.
Net interest loss after provision for loan losses
Other revenue
Unallocated shared services operating expenses:
Unallocated information technology costs
(52
Unallocated corporate costs
Total unallocated shared services operating expenses
34
53
(36
56
(39
Loss before income tax benefit
(49
(59
(17
Income tax benefit
(11
Net loss
(46
Net Interest Loss after Provision for Loan Losses
Net interest loss after provision for loan losses is due to the negative carrying cost of our corporate liquidity portfolio. The amount of the net interest loss is primarily a result of the size of the liquidity portfolio as well as the cost of funds of the debt funding the corporate liquidity portfolio.
Other Revenue
All revenue and expense in connection with the transition services we performed related to the outsourcing of loan servicing and divestiture of our Business Processing segment are included in the Other segment. Other revenue 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.
Unallocated Shared Services Operating Expenses
Unallocated shared services operating expenses are costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management, the Board of Directors, and transition services discussed above under "Other Revenue." Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters. Operating expenses decreased $19 million from first-quarter 2025, primarily as a result of cost reduction efforts in connection with the various strategic initiatives that have been and continue to be implemented to simplify the Company, reduce our expense base and enhance our flexibility. Regulatory-related expenses were $2 million and $1 million in first quarters 2026 and 2025, respectively.
See “Note 10 – Commitments, Contingencies and Guarantees” for a discussion of legal and regulatory matters where it is reasonably possible that a loss contingency exists. The Company is unable to anticipate the timing of a resolution or the impact that certain matters may have on the Company’s consolidated financial position, liquidity, results of operation or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that may be payable in connection with certain matters and reserves have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.
Restructuring/Other Reorganization Expenses
These 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, reduce our expense base and enhance our flexibility.
This section provides information regarding the balances, activity and credit performance metrics of our education loan portfolio.
Summary of Our Education Loan Portfolio
Ending Education Loan Balances, net
PrivateEducationLoans
FFELPLoans
TotalPortfolio
Total education loan portfolio:
In-school(1)
125
132
Grace, repayment and other(2)
15,838
27,395
43,233
Total
15,963
27,402
43,365
Allowance for loan losses
(314
(165
(479
Total education loan portfolio
% of total
64
December 31, 2025
108
115
15,707
28,307
44,014
15,815
28,314
44,129
(364
(173
(537
15,451
28,141
43,592
65
114
123
15,973
30,417
46,390
16,087
30,426
46,513
(397
(182
(579
66
Education Loan Activity
Three Months Ended March 31, 2026
Beginning balance
Acquisitions (originations and purchases)(1)
947
Capitalized interest and premium/discount amortization
48
198
246
Refinancings and consolidations to third parties
(103
(205
(308
Repayments and other
(694
(897
(1,591
Ending balance
Three Months Ended March 31, 2025
15,716
30,852
46,568
630
260
309
(54
(202
(256
(651
(666
(1,317
Private Education Loan Portfolio Performance
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)
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
434
2.9
Total Private Education Loans in repayment
15,335
15,184
15,420
Total Private Education Loans
Private Education Loan allowance for losses
Private Education Loans, net
Percentage of Private Education Loans in repayment
96.1
96.0
95.9
Delinquencies as a percentage of Private Education Loans in repayment
6.3
Loans in forbearance as a percentage of loans in repayment and forbearance
Percentage of Private Education Loans with a cosigner(4)
31
FFELP Loan Portfolio Performance
1,219
1,210
1,304
3,397
3,532
4,192
19,326
84.8
19,441
82.4
19,825
79.5
903
4.0
1,075
4.6
1,395
5.6
624
2.7
706
3.0
1,180
4.7
1,933
2,350
10.0
2,530
Total FFELP Loans in repayment
22,786
23,572
24,930
Total FFELP Loans
FFELP Loan allowance for losses
FFELP Loans, net
Percentage of FFELP Loans in repayment
83.2
83.3
81.9
Delinquencies as a percentage of FFELP Loans in repayment
17.5
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance
Allowance for Loan Losses
Allowance at beginning of period
364
173
537
441
180
621
Total provision
Charge-offs:
Gross charge-offs
(83
(89
Expected future recoveries on current period gross charge-offs
Net charge-offs(1)
(72
(78
Decrease in expected future recoveries on previously fully charged-off loans(2)
Allowance at end of period (GAAP)
314
165
479
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)
480
645
571
753
Net charge-offs as a percentage of average loans in repayment (annualized)
Allowance coverage of charge-offs (annualized)(3)
1.7
(Non-GAAP)
2.0
7.3
Allowance as a percentage of the ending total loan balance(3)
3.6
Allowance as a percentage of the ending loans in repayment(3)
3.1
3.7
Ending total loans
Average loans in repayment
15,326
23,226
15,472
25,459
Ending loans in repayment
Beginning of period expected future recoveries on previously fully charged-off loans
170
179
Expected future recoveries of current period defaults
Recoveries (cash collected)
Charge-offs (as a result of lower recovery expectations)
End of period expected future recoveries on previously fully charged-off loans
Change in balance during period
Funding and Liquidity Risk Management
The following “Liquidity and Capital Resources” discussion concentrates primarily on our Consumer Lending and Federal Education Loans segments. Our Business Processing segment required minimal liquidity and funding.
We define liquidity as cash and high-quality liquid assets that we can use to meet our cash requirements. Our two primary liquidity needs are: (1) servicing our debt and (2) our ongoing ability to meet our cash needs for running the operations of our businesses (including derivative collateral requirements) throughout market cycles, including during periods of financial stress. Secondary liquidity needs, which can be adjusted as needed, include the origination of Private Education Loans, acquisitions of Private Education Loan portfolios, acquisitions of companies, the payment of common stock dividends and the repurchase of our common stock. To achieve these objectives, we analyze and monitor our liquidity needs and maintain excess liquidity and access to diverse funding sources including the issuance of unsecured debt and the issuance of secured debt primarily through asset-backed securitizations and/or other financing facilities.
We define our liquidity risk as the potential inability to meet our obligations when they become due without incurring unacceptable losses or inability to invest in future asset growth and business operations at reasonable market rates. Our primary liquidity risk relates to our ability to service our debt, meet our other business obligations and to continue to grow our business. The ability to access the capital markets is impacted by general market and economic conditions, our credit ratings, as well as the overall availability of funding sources in the marketplace. In addition, credit ratings may be important to customers or counterparties when we compete in certain markets and when we seek to engage in certain transactions.
Credit ratings and outlooks are opinions subject to ongoing review by the rating agencies and may change, from time to time, based on our financial performance, industry and market dynamics and other factors. Other factors that influence our credit ratings include the rating agencies’ assessment of the general operating environment, our relative positions in the markets in which we compete, reputation, liquidity position, the level and volatility of earnings, corporate governance and risk management policies, capital position and capital management practices. A negative change in our credit rating could have a negative effect on our liquidity because it might raise the cost and availability of funding and potentially require additional cash collateral or restrict cash currently held as collateral on existing borrowings or derivative collateral arrangements. It is our objective to improve our credit ratings so that we can continue to efficiently access the capital markets even in difficult economic and market conditions. We have unsecured debt totaling $5.3 billion at March 31, 2026. Three credit rating agencies currently rate our long-term unsecured debt at below investment grade.
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 Private Education Refinance Loan and FFELP 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 Private Education Loan and FFELP 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 purchased 2.3 million shares of common stock for $23 million in the first quarter of 2026 and have $77 million of unused share repurchase authority as of March 31, 2026.
Sources of Primary Liquidity
Ending Balances:
Unrestricted cash
637
642
Unencumbered Private Education Refinance Loans
442
529
488
Unencumbered FFELP Loans
44
83
61
1,107
1,249
1,191
Three Months Ended
Average Balances:
553
589
572
689
684
403
55
71
1,297
1,344
1,148
Sources of Additional Liquidity
Liquidity may also be available under our secured credit facilities. Maximum borrowing capacity under the Private Education Loan and FFELP 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.
Private Education Loan ABCP facilities
1,461
1,689
1,626
FFELP Loan ABCP facilities
143
193
223
1,604
1,882
1,849
1,661
2,051
1,447
163
184
349
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.
Net assets of consolidated variable interest entities (encumbered assets) — Private Education Loans
2.2
Net assets of consolidated variable interest entities (encumbered assets) — FFELP Loans
Tangible unencumbered assets(1)
2.8
Senior unsecured debt
(5.3
Mark-to-market on unsecured hedged debt(2)
Other liabilities, net
(.4
(.3
Total Tangible Equity (3)
Borrowings
Ending Balances
ShortTerm
LongTerm
Unsecured borrowings:
1,225
4,084
5,309
525
4,782
5,307
Total unsecured borrowings
Secured borrowings:
Private Education Loan securitizations
432
10,303
10,735
469
10,250
10,719
FFELP Loan securitizations
105
24,525
24,630
109
25,302
25,411
2,145
1,942
1,811
347
2,158
1,869
299
2,168
Other
205
160
199
Total secured borrowings
4,659
35,214
39,873
4,549
35,890
40,439
Core Earnings basis borrowings(1)
5,884
39,298
45,182
5,074
40,672
45,746
Adjustment for GAAP accounting treatment
(14
(58
(1
(40
GAAP basis borrowings
5,870
39,240
45,110
5,073
40,633
45,706
Average Balances
AverageBalance
AverageRate
5,308
7.93
5,324
8.51
10,656
3.89
10,738
3.63
25,016
4.97
28,013
5.64
1,960
5.66
2,304
6.32
2,171
5.13
1,723
5.88
197
4.04
.14
40,000
4.72
42,871
5.17
45,308
5.09
48,195
5.54
(.05
.12
5.04
Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). A discussion of our critical accounting policies, which includes the allowance for loan losses, goodwill impairment assessment, and premium and discount amortization, can be found in our 2025 Form 10-K.
In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. We present the following non-GAAP financial measures: (1) Core Earnings, (2) Tangible Equity (as well as the Adjusted Tangible Equity Ratio), and (3) Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans. Definitions for the non-GAAP financial measures and reconciliations are provided below, except that reconciliations of forward-looking non-GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks.
1. Core Earnings
We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also refer to this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide certain Core Earnings disclosures in the notes to our consolidated financial statements for our business segments.
Core Earnings are not a substitute for reported results under GAAP. We use Core Earnings to manage our business segments because Core Earnings reflect adjustments to GAAP financial results for two items, discussed below, that can create significant volatility mostly due to timing factors generally beyond the control of management. Accordingly, we believe that Core Earnings provide management with a useful basis from which to better evaluate results from ongoing operations against the business plan or against results from prior periods. Consequently, we disclose this information because we believe it provides investors with additional information regarding the operational and performance indicators that are most closely assessed by management. When compared to GAAP results, the two items we remove to result in our Core Earnings presentations are:
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 and reported in “Note 11 — Segment Reporting.”
Adjustments
Reportable Segments
TotalGAAP
Reclassi-fications
Additions/(Subtractions)
TotalAdjustments (1)
TotalCoreEarnings
Consumer Lending
Federal Education Loans
Business Processing
Education loans
678
Net interest income (loss)
(7
126
Net interest income (loss) after provisions for loan losses
Unallocated shared services expenses
Goodwill and acquired intangible asset impairment and amortization
Income tax expense (benefit)(2)
Net Impact ofDerivativeAccounting
Net Impact ofGoodwill andAcquiredIntangibles
Total other income (loss)
Total Core Earnings adjustments to GAAP
782
144
Other revenue (loss)
74
40
28
The following discussion summarizes the differences between Core Earnings and GAAP net income and details each specific adjustment required to reconcile our Core Earnings segment presentation to our GAAP earnings.
GAAP net income (loss)
Core Earnings adjustments to GAAP:
Net impact of derivative accounting
Net impact of goodwill and acquired intangible assets
Net income tax effect
Core Earnings net income
(1) Derivative Accounting: Core Earnings exclude periodic gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0. In our Core Earnings presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.
The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. The gains and losses recorded in “Gains (losses) on derivative and hedging activities, net” and interest expense (for qualifying fair value hedges) are primarily caused by interest rate and foreign currency exchange rate volatility and changing credit spreads during the period as well as the volume and term of derivatives not receiving hedge accounting treatment. We believe that our derivatives are effective economic hedges, and as such, are a critical element of our interest rate and foreign currency risk management strategy. However, some of our derivatives do not qualify for hedge accounting treatment and the stand-alone derivative is adjusted to fair value in the income statement with no consideration for the corresponding change in fair value of the hedged item.
The table below quantifies the adjustments for derivative accounting between GAAP and Core Earnings net income.
Core Earnings derivative adjustments:
(Gains) losses on derivative and hedging activities, net, included in other income
Plus: (Gains) losses on fair value hedging activity included in interest expense
Total (gains) losses in GAAP net income
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)
Other derivative accounting adjustments(3)
Total net impact of derivative accounting
Reclassification of settlements on derivative and hedging activities:
Net settlement income (expense) on interest rate swaps reclassified to net interest income
Total reclassifications of settlement income (expense) on derivative and hedging activities
Fair value hedges
Foreign currency hedges
Other (a)
Total mark-to-market (gains) losses on derivative and hedging activities, net
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.
Beginning impact of derivative accounting on GAAP equity
Net impact of net mark-to-market gains (losses) under derivative accounting(1)
Ending impact of derivative accounting on GAAP equity
(28
Total pre-tax net impact of derivative accounting recognized in net income(2)
Tax and other impacts of derivative accounting adjustments
Change in mark-to-market gains (losses) on derivatives, net of tax recognized in other comprehensive income
Net impact of net mark-to-market gains (losses) under derivative accounting
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.
Total hedged Floor Income, net of tax(1)(2)
(2) Goodwill and Acquired Intangible Assets: Our Core Earnings exclude goodwill and intangible asset impairment and the amortization of acquired intangible assets. The following table summarizes the goodwill and acquired intangible asset adjustments.
Core Earnings goodwill and acquired intangible asset adjustments
2. Tangible Equity and Adjusted Tangible Equity Ratio
Adjusted Tangible Equity Ratio 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:
Navient Corporation's stockholders' equity
2,379
2,589
Less: Goodwill and acquired intangible assets
430
437
Tangible Equity
1,949
2,152
Less: Equity held for FFELP Loans
136
151
Adjusted Tangible Equity
1,813
2,001
Divided by:
Total assets
48,004
50,950
Less:
Goodwill and acquired intangible assets
Adjusted tangible assets
20,337
20,269
Adjusted Tangible Equity Ratio
3. Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off
Loans
The allowance for loan losses on the Private Education Loan portfolio used for the three credit metrics below excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in connection with the loans on balance sheet that have not charged off. As of 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
Plus: expected future recoveries on previously fully charged-off loans
Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)
Allowance coverage of charge-offs (annualized):
GAAP
Adjustment(1)
Non-GAAP Financial Measure(1)
Allowance as a percentage of the ending total loan balance:
1.0
Allowance as a percentage of the ending loans in repayment:
For a discussion of legal matters as of March 31, 2026, please refer to “Note 10 – Commitments, Contingencies and Guarantees” to our consolidated financial statements included in this report, which is incorporated into this item by reference.
The risk factors disclosed in our 2025 Form 10-K should be considered together with information included in this Form 10-Q. We believe there have been no material changes to the risk factors previously disclosed in our 2025 Form 10-K.
Interest Rate Sensitivity Analysis
Our interest rate risk management seeks to limit the impact of movements in interest rates on our results of operations and financial position. The following tables summarize the potential effect on earnings over the next 12 months and the potential effect on fair values of balance sheet assets and liabilities at March 31, 2026 and 2025, based upon a sensitivity analysis performed by management assuming a hypothetical increase and decrease in market interest rates of 100 basis points. The earnings sensitivities assume an immediate increase and decrease in market interest rates of 100 basis points and are applied only to financial assets and liabilities, including hedging instruments, that existed at the balance sheet date and do not take into account any new assets, liabilities or hedging instruments that may arise over the next 12 months.
As of March 31, 2026
As of March 31, 2025
Impact on Annual Earnings If:
Interest Rates
(Dollars in millions, except per share amounts)
Increase100 BasisPoints
Decrease100 BasisPoints
Effect on Earnings:
Change in pre-tax net income before mark-to -market gains (losses) on derivative and hedging activities
Mark-to-market gains (losses) on derivative and hedging activities
(75
Increase (decrease) in income before taxes
62
(56
Increase (decrease) in net income after taxes
(43
Increase (decrease) in diluted earnings per common share
(.08
.47
(.42
At March 31, 2026
Interest Rates:
Change fromIncrease of100 BasisPoints
Change fromDecrease of100 BasisPoints
Fair Value
Effect on Fair Values:
Assets
Education Loans
42,165
(76
119
Other earning assets
2,279
Other assets
2,839
73
Total assets gain/(loss)
47,283
192
Liabilities
Interest-bearing liabilities
44,139
(208
220
Other liabilities
515
Total liabilities (gain)/loss
44,654
(126
At December 31, 2025
43,147
(71
98
2,270
2,819
86
48,236
(48
45,204
(223
238
576
79
45,780
(144
266
A primary objective in our funding is to minimize our sensitivity to changing interest rates by generally funding our floating rate education loan portfolio with floating rate debt and our fixed rate education loan portfolio with fixed rate debt although we can have a mismatch at times. In addition, we can have a mismatch in the index (including the frequency of reset) of floating rate debt versus floating rate assets. In addition, due to the ability of some FFELP Loans to earn Floor Income, we can have a fixed versus floating mismatch in funding if the education loan earns at the fixed borrower rate and the funding remains floating. 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. The result of these hedging transactions is to fix the relative spread between the education loan asset rate and the funding instrument rate.
In the preceding tables, under the scenario where interest rates increase or decrease by 100 basis points, the change in pre-tax net income before the mark-to-market gains (losses) on derivative and hedging activities is primarily due to the impact of (i) a portion of our unhedged FFELP Loans being in a fixed-rate mode due to Floor Income, while being funded with variable rate debt; (ii) certain FFELP fixed rate loans becoming variable interest rate loans when variable interest rates rise above a certain level (Special Allowance Payment or “SAP”). When these loans are funded with fixed rate debt (as we do for a portion of the portfolio to economically hedge Floor Income) we earn additional interest income when earning the higher variable rate that is in effect; and (iii) a portion of our variable rate assets being funded with fixed rate liabilities. Item (i) will generally cause income to decrease when interest rates increase and income to increase when interest rates decrease. Item (ii) and (iii) have the opposite effect. The change due to the interest rate scenario where interest rates increase by 100 basis points in the current period is primarily a result of item (i) having a more significant impact than item (ii) and (iii) as a result of interest rates being lower compared to the prior period. The change due to the interest scenario where interest rates decrease by 100 basis points in the current period is primarily a result of item (i) having a more significant impact than item (ii) and (iii) as a result of interest rates being lower compared to the prior period.
In the preceding tables, under the scenario where interest rates increase or decrease by 100 basis points, the change in mark-to-market gains (losses) on derivative and hedging activities in both periods is primarily due to (i) the notional amount and remaining term of our derivative portfolio and related hedged debt and (ii) the interest rate environment. In both periods, the mark-to-market gains (losses) are primarily related to derivatives that don’t qualify for hedge accounting that are used to economically hedge the origination of fixed rate Private Education Loans. As a result of not qualifying for hedge accounting, there is not an offsetting mark-to-market adjustment of the hedged item in this analysis. The decline in impact from the prior year is primarily due to a decline in the notional of derivatives that don't qualify for hedge accounting.
In addition to interest rate risk addressed in the preceding tables, we are also exposed to risks related to foreign currency exchange rates. Foreign currency exchange risk is primarily the result of foreign currency denominated debt issued by us. When we issue foreign denominated corporate unsecured and securitization debt, our policy is to use cross-currency interest rate swaps to swap all foreign currency denominated debt payments (fixed and floating) to USD SOFR using a fixed exchange rate. In the tables above, there would be an immaterial impact on earnings if exchange rates were to decrease or increase, due to the terms of the hedging instrument and hedged items matching. The balance sheet interest-bearing liabilities would be affected by a change in exchange rates; however, the change would be materially offset by the cross-currency interest rate swaps in other assets or other liabilities. In certain economic environments, volatility in the spread between spot and forward foreign exchange rates has resulted in mark-to-market impacts to current period earnings which have not been factored into the above analysis. The earnings impact is noncash, and at maturity of the instruments the cumulative mark-to-market impact will be zero. Navient has not issued foreign currency denominated debt since 2008.
Asset and Liability Funding Gap
The table below presents our assets and liabilities (funding) arranged by underlying indices as of March 31, 2026. Management analyzes interest rate risk and in doing so includes all derivatives that are economically hedging our debt whether they qualify as effective hedges or not (Core Earnings basis). Accordingly, we present the asset and liability funding gap on a Core Earnings basis. The difference between the asset and the funding is the funding gap for the specified index. This represents our exposure to interest rate risk in the form of basis risk and repricing risk, which is the risk that the different indices may reset at different frequencies or may not move in the same direction or at the same magnitude.
Index(Dollars in billions)
Frequency ofVariableResets
Funding
FundingGap
3 month Treasury bill
weekly
annual
.1
Prime
quarterly
monthly
3 month Term SOFR
.9
.4
1 month Term SOFR
1.6
.5
Overnight SOFR(1)
daily
25.6
26.0
Non Discrete reset
(4.6
daily/weekly
Fixed Rate (2)
13.7
15.6
(1.9
48.0
We use interest rate swaps and other derivatives to achieve our risk management objectives. Our asset liability management strategy is to match assets with debt (in combination with derivatives) that have the same underlying index and reset frequency or, when economical, have interest rate characteristics that we believe are highly correlated. Interest earned on our FFELP Loans is primarily indexed to 30-day average overnight SOFR, which is reset daily, and our cost of funds is primarily indexed to overnight SOFR but resetting at different times than the asset. A source of variability in FFELP net interest income could also be Floor Income we earn on certain FFELP Loans. Pursuant to the terms of the FFELP, certain FFELP Loans can earn interest at the stated fixed rate of interest as underlying debt interest rate expense remains variable. We refer to this additional spread income as “Floor Income.” Floor Income can be volatile since it is dependent on interest rate levels. At times, we hedge this volatility to lock in the value of the Floor Income over the term of the contract. Interest earned on our Private Education Refinance Loans and in-school loans originated after 2020 is generally fixed rate with the related cost of funds generally fixed rate as well. Interest earned on the remaining Private Education Loans is generally indexed to either one-month Prime or term SOFR rates and our cost of funds is primarily indexed to one-month or three-month term SOFR. The use of funding with index types and reset frequencies that are different from our assets exposes us to interest rate risk in the form of basis and repricing risk. This could result in our cost of funds not moving in the same direction or with the same magnitude as the yield on our assets. While we believe this risk is low, as all of these indices are short-term with rate movements that are highly correlated over a long period of time, market disruptions (which have occurred in prior years) can lead to a temporary divergence between indices resulting in a negative impact to our earnings.
Issuer Purchases of Equity Securities
The following table provides information relating to our purchases of shares of our common stock in the three months ended March 31, 2026.
Total Numberof SharesPurchased(1)
Average PricePaid perShare
Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs(1)(2)
Approximate DollarValue of SharesThat May Yet BePurchased UnderPublicly AnnouncedPlans orPrograms(1)
Period:
January 1 — January 31, 2026
11.42
95
February 1 — February 28, 2026
9.74
March 1 — March 31, 2026
8.30
77
Total first-quarter 2026
9.91
Other Information
Director and Officer Trading Arrangements
During the quarter ended March 31, 2026, none of the Company’s directors or officers who are subject to the filing requirements of Section 16 of the Securities and Exchange Act of 1934, as amended (the Exchange Act), adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive and Principal Financial Officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2026. Based on this evaluation, our Principal Executive and Principal Financial Officers concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
10.1*
Form of Navient Corporation 2024 Omnibus Incentive Plan Performance Stock Unit Agreement.
10.2*
Form of Navient Corporation 2024 Omnibus Incentive Plan Restricted Stock Unit Agreement.
10.3*
Agreement and Release, effective as of January 30, 2026, by and between Navient Corporation and its affiliates and Joe Fisher.
31.1*
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
32.1**
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
101.INS*
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith
** Furnished herewith
NAVIENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
(Unaudited)
Private Education Loans (net of allowance for losses of $314 and $364, respectively)
FFELP Loans (net of allowance for losses of $165 and $173, respectively)
Investments
148
Cash and cash equivalents
Restricted cash and cash equivalents
1,510
1,467
Goodwill and acquired intangible assets, net
2,409
2,385
48,681
Short-term borrowings
Long-term borrowings
Total liabilities
45,625
46,282
Commitments and contingencies
Equity
Series A Junior Participating Preferred Stock, par value $0.20 per share; 2 million shares authorized at December 31, 2021; no shares issued or outstanding
Common stock, par value $0.01 per share, 1.125 billion shares authorized: 468 million and 467 million shares issued, respectively
Additional paid-in capital
3,407
3,403
Accumulated other comprehensive income (net of tax expense of $2 and $1, respectively)
Retained earnings
4,552
Total stockholders’ equity before treasury stock
7,968
7,961
Less: Common stock held in treasury at cost: 374 million and 371 million shares, respectively
(5,589
(5,562
Total equity
2,399
Total liabilities and equity
Supplemental information — assets and liabilities of consolidated variable interest entities:
14,437
14,133
27,194
28,057
Restricted cash
1,508
1,466
Other assets, net
1,316
1,300
4,493
4,389
35,139
35,835
Net assets of consolidated variable interest entities
4,823
4,732
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Salaries and benefits
Other operating expenses
57
78
Total operating expenses
Goodwill and acquired intangible asset impairment and amortization expense
Average common shares outstanding
Average common and common equivalent shares outstanding
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net changes in cash flow hedges, net of tax(1)
Total comprehensive income (loss)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions, except share and per share amounts)
Accumulated
Common Stock Shares
Additional
Common
Paid-In
Comprehensive
Retained
Treasury
Issued
Outstanding
Stock
Capital
Income (Loss)
Earnings
Balance at December 31, 2024
465,308,901
(362,283,344
103,025,557
3,380
4,697
(5,443
2,641
Comprehensive income (loss):
Other comprehensive income (loss), net of tax
Cash dividends:
Common stock ($.16 per share)
Dividend equivalent units related to employee stock-based compensation plans
Issuance of common shares
1,272,533
Stock-based compensation expense
Common stock repurchased
(2,552,500
(35
Shares repurchased related to employee stock-based compensation plans
(411,112
Balance at March 31, 2025
466,581,434
(365,246,956
101,334,478
3,390
4,677
(5,484
Balance at December 31, 2025
466,792,895
(371,281,553
95,511,342
1,211,212
(2,347,925
(394,645
Balance at March 31, 2026
468,004,107
(374,024,123
93,979,984
42
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Mark-to-market (gains) losses on derivative and hedging activities, net
52
Provisions for loan losses
Decrease in accrued interest receivable
(Decrease) in accrued interest payable
(42
(55
(Increase) decrease in other assets
(51
(Decrease) in other liabilities
Total adjustments
(64
Net cash (used in) provided by operating activities
(47
Cash flows from investing activities
Education loans originated and acquired
(947
(630
Proceeds from payments on education loans
1,622
1,239
Other investing activities, net
Disposal of subsidiaries, net of cash and restricted cash disposed of
Net cash provided by investing activities
691
661
Cash flows from financing activities
Borrowings collateralized by loans in trust - issued
680
547
Borrowings collateralized by loans in trust - repaid
(1,456
(1,217
Asset-backed commercial paper conduits, net
Long-term unsecured notes repaid
(50
Other financing activities, net
Common dividends paid
Net cash used in financing activities
(617
(780
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
2,104
2,103
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
2,131
2,055
Supplemental disclosure of cash flow information:
Cash disbursements made (refunds received) for:
Interest paid
591
703
Income taxes paid
Income taxes refunds received
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:
Restricted cash and restricted cash equivalents
1,413
Total cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information at March 31, 2026 and for the three months ended
March 31, 2026 and 2025 is unaudited)
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, consolidated financial statements of Navient have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements include the accounts of Navient and its majority-owned and controlled subsidiaries and those Variable Interest Entities (VIEs) for which we are the primary beneficiary, after eliminating the effects of intercompany accounts and transactions. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or for any other period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our 2025 Form 10-K. Definitions for certain capitalized terms used but not otherwise defined in this Form 10-Q can be found in our 2025 Form 10-K.
2. Allowance for Loan Losses
Allowance for Loan Losses Roll Forward
Allowance at end of period
Net charge-offs as a percentage of average loans in repayment
45
2. Allowance for Loan Losses (Continued)
The key credit quality indicators are credit scores (FICO scores), loan status, loan seasoning, certain loan modifications, the existence of a cosigner and school type. The FICO score is the higher of the borrower or co-borrower score and is updated at least every six months while school type is assessed at origination. The other Private Education Loan key quality indicators are updated quarterly.
Private Education Loan Credit Quality Indicators by Origination Year
2024
2023
2022
Prior
% of Total
Credit Quality Indicators
FICO Scores:
640 and above
811
2,102
936
989
8,675
14,016
88
Below 640
1,697
1,947
815
2,134
993
555
1,094
10,372
Loan Status:
In-school/grace/ deferment/forbearance
47
338
628
Current/90 days or less delinquent
801
2,026
502
1,030
9,687
14,949
94
Greater than 90 days delinquent
Seasoning(1):
1-12 payments
803
1,910
2,824
13-24 payments
828
1,086
25-36 payments
435
107
667
37-48 payments
760
273
1,056
More than 48 payments
9,743
9,937
Loans in-school/ grace/deferment
80
67
175
Certain Loan Modifications(2):
Modified
121
4,916
5,120
Non-Modified
2,130
960
509
973
5,456
10,843
68
Cosigners:
With cosigner(3)
111
486
185
3,784
4,980
Without cosigner
704
1,648
693
370
980
6,588
10,983
School Type:
Not-for-profit
766
2,023
938
524
1,036
9,214
14,501
For-profit
58
1,158
1,462
Total loans, net
Charge-Offs
2021
506
1,230
692
3,148
7,435
14,260
150
1,530
1,827
514
1,253
725
1,332
3,298
8,965
92
75
498
1,157
1,266
3,200
8,243
15,025
1,101
1,714
605
832
966
159
1,252
241
2,886
187
3,314
155
8,436
8,591
171
196
5,199
5,509
1,251
1,241
3,102
3,766
10,578
350
145
4,327
5,221
426
1,187
3,223
4,638
10,866
1,183
685
1,261
3,104
7,779
14,515
90
1,186
1,572
(62
Private Education Loan Delinquencies
Total loans in repayment
Total loans
Allowance for losses
Loans, net
Percentage of loans in repayment
Delinquencies as a percentage of loans in repayment
FFELP Loans are substantially insured and guaranteed as to their principal and accrued interest in the event of default. The key credit quality indicators are loan status and loan type.
FFELP Loan Delinquencies
Loan type:
Change
Stafford Loans
9,006
9,853
(847
Consolidation Loans
15,621
17,500
(1,879
Rehab Loans
2,775
3,073
(298
Total loans, gross
(3,024
Loan Modifications to Borrowers Experiencing Financial Difficulty
We adjust the terms of Private Education Loans for certain borrowers when we believe such changes will help our customers better manage their student loan obligations, achieve better outcomes and increase the collectability of the loans. These changes generally take the form of a temporary interest rate reduction, a temporary forbearance of payments, a temporary interest-only payment, and a temporary interest rate reduction with a permanent extension of the loan term. The effect of modifications of loans made to borrowers who are experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The model design predicts borrowers that will have financial difficulty in the future and require loan modification and increased life of loan default risk.
Under our current forbearance practices, temporary hardship forbearance of payments generally cannot exceed 12 months over the life of the loan. However, exceptions can be made in cases where borrowers have shown the ability to make a substantial number of monthly principal and interest payments and in those cases borrowers can be granted up to 24 months of hardship forbearance over the life of the loan. We offer other administrative forbearances (e.g., death and disability, bankruptcy, military service, and disaster forbearance) that are either required by law (such as the Servicemembers Civil Relief Act) or are considered separate from our active loss mitigation programs and therefore are not considered to be loan modifications requiring disclosure under ASU No. 2022-02.
FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment and continue to accrue interest on those loans through the date of claim. Further, FFELP loan modification events are either legal entitlements subject to regulatory-driven eligibility criteria or addressed in the promissory note terms, so we do not consider these events as a component of our loan modification programs.
The following tables show the amortized cost basis as of March 31, 2026 and 2025 of the loans to borrowers experiencing financial difficulty that were modified during the respective period.
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Interest Rate Reductions(1)
More Than an Insignificant Payment Delay (2)
Combination Rate Reduction and Term Extension
Loan Type
Amortized Cost
% of Loan Type
609
3.8
293
50
For those loans modified in the three months ended March 31, 2026 and 2025, the following tables show the impact of such modification.
Interest Rate Reductions
More Than an Insignificant Payment Delay
Reduced the weighted average contractual rate from 11.6% to 5.2%
Added an average 5 months to the remaining life of the loans
Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from11.2% to 5.1%.
Reduced the weighted average contractual rate from 12.4% to 5.4%
Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from 11.9% to 5.5%.
The following table provides the amount of loan modifications for which a charge-off or payment default occurred in the respective period and within 12 months of the loan receiving a loan modification. We define payment default as 60 days or more past due for purposes of this disclosure. We closely monitor performance of the loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of the modification efforts.
Modified loans (amortized cost) (1)
Payment default (par)
122
Charge-offs (par)
The following table provides the performance and related loan status of Private Education Loans that have been modified within the 12 months prior to March 31, 2026 and the 12 months prior to December 31, 2025, respectively.
Payment Status (Amortized Cost)
Twelve Months Ended
Loan Status
Loans in school/deferment
Loans in forbearance
2,099
2,056
Loans delinquent 31 - 60 days
191
Loans delinquent 61 - 90 days
Loans delinquent greater than 90 days
211
Total modified loans
2,670
2,680
3. Goodwill
The following table summarizes our goodwill for our reporting units and reportable segments.
Consumer Lending reportable segment:
Private Education Legacy In-School Loans
106
Private Education Refinance Loans
Private Education Recent In-School Loans
Federal Education Loans reportable segment:
227
Federal Education Loan Servicing
232
Total goodwill
428
The Company performs its annual goodwill impairment test as of October 1. As of October 1, 2025, a quantitative test was performed, and the fair value of each reporting unit with goodwill exceeded its carrying value. In January 2026, Navient’s stock price experienced a decline and sustained volatility after Navient reduced its 2026 EPS guidance. The Company determined the decline in stock price constituted a triggering event requiring an interim goodwill impairment assessment.
Accordingly, management performed a qualitative impairment assessment as of March 31, 2026. The assessment included an analysis of the amount of cushion that existed (difference between the fair value and carry value of the reporting unit) when the quantitative test was last completed in the fourth quarter of 2025, and a review of macroeconomic conditions, including stock price volatilities within our industry and the broader market, the regulatory and legislative environment and the performance of each reporting unit relative to the key assumptions used in the previous October 1, 2025 quantitative test. We also considered our market capitalization in relation to book equity. We concluded it was more likely than not on March 31, 2026, that the fair value of each reporting unit with goodwill continued to exceed their respective carrying values and therefore goodwill was not impaired. Therefore, a quantitative impairment test was not required. The Company will continue to monitor its reporting units for any future triggering events.
4. Borrowings
The following table summarizes our borrowings.
Private Education Loan securitizations(1)
FFELP Loan securitizations(2)(3)
Private Education Loan ABCP facilities(4)
FFELP Loan ABCP facilities(4)
Other(5)
Total before hedge accounting adjustments
Hedge accounting adjustments
4. Borrowings (Continued)
Variable Interest Entities
We consolidated the following financing VIEs as of March 31, 2026 and December 31, 2025, as we are the primary beneficiary. As a result, these VIEs are accounted for as secured borrowings.
Debt Outstanding
Carrying Amount of Assets Securing Debt Outstanding
Cash
OtherAssets
Secured Borrowings — VIEs:
12,067
399
12,591
25,089
955
1,117
27,161
2,370
2,493
2,105
2,299
35,175
39,668
41,631
1,405
44,544
39,632
44,455
Carrying Amount of Assets SecuringDebt Outstanding
11,960
12,451
25,942
1,096
27,988
2,173
2,285
2,115
84
2,307
35,851
40,240
42,190
1,375
45,031
40,224
44,956
54
5. Derivative Financial Instruments
Summary of Derivative Financial Statement Impact
The following tables summarize the fair values and notional amounts of all derivative instruments and their impact on net income and other comprehensive income.
Impact of Derivatives on Balance Sheet
Cash Flow
Fair Value(3)
Hedged RiskExposure
Mar 31, 2026
Dec 31, 2025
Fair Values(1)
Derivative Assets:
Interest rate swaps
Interest rate
Cross-currency interest rate swaps
Foreign currency and interest rate
Total derivative assets(2)
Derivative Liabilities:
(91
(79
Total derivative liabilities(2)
Net total derivatives
(37
Other Assets
Other Liabilities
Derivative values (as carried on balance sheet)
Cash collateral (held) pledged
(27
(44
Net position
As of December 31, 2025
Carrying Value
Hedge Basis Adjustments
499
3,918
(60
4,675
5. Derivative Financial Instruments (Continued)
The above fair values include adjustments when necessary for counterparty credit risk.
Notional Values:
4.1
6.1
1.2
Total derivatives
5.3
7.5
Mark-to-Market Impact of Derivatives on Statements of Income
Total Gains (Losses)
Fair Value Hedges:
Interest Rate Swaps
Gains (losses) recognized in net income on derivatives
Gains (losses) recognized in net income on hedged items
(61
Net fair value hedge ineffectiveness gains (losses)
(57
Total fair value hedges(1)(2)
Cash Flow Hedges:
Total cash flow hedges(2)
Trading:
Total trading derivatives(3)
Mark-to-market gains (losses) recognized
(31
Impact of Derivatives on Other Comprehensive Income (Equity)
Total gains (losses) on cash flow hedges
Reclassification adjustments for derivative (gains) losses included in net income (interest expense)(1)
Net changes in cash flow hedges, net of tax
Collateral
The following table details collateral held and pledged related to derivative exposure between us and our derivative counterparties:
Collateral held:
Cash (obligation to return cash collateral is recorded in short-term borrowings)
Securities at fair value — corporate derivatives (not recorded in financial statements)(1)
Securities at fair value — on-balance sheet securitization derivatives (not recorded in financial statements)(2)
Total collateral held
Derivative asset at fair value including accrued interest
Collateral pledged to others:
Cash (right to receive return of cash collateral is recorded in investments)
Total collateral pledged
Derivative liability at fair value including accrued interest and premium receivable
Our corporate derivatives contain credit contingent features. At our current unsecured credit rating, we have fully collateralized our corporate liability position (including accrued interest and net of premiums receivable) of $0 with our counterparties. Downgrades in our unsecured credit rating would not result in any additional collateral requirements. Trust related derivatives do not contain credit contingent features related to our or the trusts' credit ratings. At March 31, 2026 and December 31, 2025, we have a net positive exposure (derivative gain positions to us less collateral which has been posted by counterparties to us) related to Navient Corporation derivatives of $8 million and $4 million, respectively. The trusts are not required to post collateral to the counterparties. At March 31, 2026 and December 31, 2025, the net positive exposure on swaps in securitization trusts was $1 million and $3 million, respectively.
6. Other Assets
The following table provides the detail of our other assets.
Accrued interest receivable
1,620
1,658
Benefit and insurance-related investments
460
458
Income tax asset, net
134
Derivatives at fair value
Fixed assets
Accounts receivable
7. Stockholders’ Equity
The following table summarizes our common share repurchases, issuances and dividends paid.
(Dollars and shares in millions, except per share amounts)
Common stock repurchased(1)
Common stock repurchased (in dollars)(1)
Average purchase price per share(1)
13.71
Remaining common stock repurchase authority(1)
76
Shares repurchased related to employee stock-based compensation plans(2)
Average purchase price per share(2)
9.78
13.75
Common shares issued(3)
Dividends per share
The closing price of our common stock on March 31, 2026 was $8.18.
8. Earnings (Loss) per Common Share
Basic earnings (loss) per common share (EPS) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations on a GAAP basis follows.
Numerator:
Denominator:
Weighted average shares used to compute basic EPS
Effect of dilutive securities:
Dilutive effect of restricted stock, restricted stock units, performance stock units, and Employee Stock Purchase Plan (ESPP)(1)
Dilutive potential common shares(2)
Weighted average shares used to compute diluted EPS
9. Fair Value Measurements
We use estimates of fair value in applying various accounting standards in our financial statements. We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. The fair value of the items discussed below are separately disclosed in this footnote.
During the three months ended March 31, 2026, there were no significant transfers of financial instruments between levels, or changes in our methodology used to value our financial instruments.
The following table summarizes the valuation of our financial instruments that are marked-to-market on a recurring basis. During the first quarters of 2026 and 2025, there were no significant transfers of financial instruments between levels.
Fair Value Measurements on a Recurring Basis
Level 1
Level 2
Level 3
Derivative instruments:(1)
Liabilities(3)
Derivative instruments(1)
9. Fair Value Measurements (Continued)
The following tables summarize the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.
Derivative instruments
InterestRate Swaps
CrossCurrencyInterestRate Swaps
TotalDerivativeInstruments
Balance, beginning of period
(244
Total gains/(losses):
Included in earnings(1)
Included in other comprehensive income
Settlements
Transfers in and/or out of level 3
Balance, end of period
(190
Change in mark-to- market gains/ (losses) relating to instruments still held at the reporting date(2)
60
The following table presents the significant inputs that are unobservable or from inactive markets used in the recurring valuations of the level 3 financial instruments detailed above.
Fair Value at March 31, 2026
ValuationTechnique
Input
Range and WeightedAverage
Derivatives
Discounted cash flow
Constant Prepayment Rate
5%
The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.
FairValue
CarryingValue
Difference
Earning assets
15,091
(558
15,051
(400
27,074
(163
28,096
(45
Total earning assets
44,444
45,165
(721
45,417
45,862
(445
5,876
5,084
38,263
977
40,120
513
Total interest-bearing liabilities
971
Derivative financial instruments
Excess of net asset fair value over carrying value
250
10. Commitments, Contingencies and Guarantees
We and our subsidiaries and affiliates are subject to various claims, lawsuits and other actions that arise in the normal course of business. We believe that these claims, lawsuits and other actions will not, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations, except as otherwise disclosed. Most of these matters are claims including individual and class action lawsuits relating to loan servicing or business processing and which allege violations of state or federal laws in connection with servicing or collection activities on education loans and other debts.
In the ordinary course of our business, the Company and our subsidiaries and affiliates receive information and document requests and investigative demands from various entities including State Attorneys General, U.S. Attorneys, legislative committees, individual members of Congress and administrative agencies. These requests may be informational, regulatory or enforcement in nature and may relate to our business practices, the industries in which we operate, or companies with whom we conduct business. Generally, our practice has been and continues to be to cooperate with these bodies and to be responsive to any such requests.
The number of these inquiries and the volume of related information demands have normalized at elevated levels and therefore the Company must continue to expend time and resources to timely respond to these requests which may, depending on their outcome, result in payments of restitution, fines and penalties.
Contingencies
In the ordinary course of business, we and our subsidiaries are defendants in or parties to pending and threatened legal actions and proceedings including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment and other laws. In certain of these actions and proceedings, claims for substantial monetary damage are asserted against us and our subsidiaries. We and our subsidiaries are also subject to potential unasserted claims by third parties.
10. Commitments, Contingencies and Guarantees (Continued)
In the ordinary course of business, we and our subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. In connection with formal and informal inquiries in these cases, we and our subsidiaries receive requests, subpoenas and orders for documents, testimony and information in connection with various aspects of our regulated activities.
In view of the inherent difficulty of predicting the outcome of litigation and regulatory matters, we may not be able to predict what the eventual outcome of the pending matters will be, what the timing or the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties, if any, related to each pending matter may be.
The Company accrues a liability for litigation, regulatory matters, and unasserted contract claims when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, we do not accrue a liability. Based on current knowledge, management does not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our consolidated financial position, liquidity, results of operations or cash flows, except as otherwise disclosed.
The Company evaluates its outstanding legal and regulatory matters each reporting period and makes adjustments to the accrued liabilities for such matters, upward or downward, as appropriate, based on the relevant facts and circumstances. The Company's accrued liabilities and estimated range of possible losses pertaining to certain matters can involve significant judgment given factors such as: the varying stages of the proceedings; the existence of numerous yet to be resolved issues; the breadth of the claims (often spanning multiple years and wide ranges of business activities); unspecified damages, civil money penalties or fines and/or the novelty of the legal issues presented; and the attendant uncertainty of the various potential outcomes of such proceedings, including where the Company has made assumptions concerning future rulings by the court or other adjudicator, or about the behavior or incentives of adverse parties or regulatory authorities. Various aspects of the legal proceedings underlying these estimates will change from time to time. Actual losses therefore may vary significantly from any estimates.
Regulatory Matters
The Company has been named as defendant in a number of putative class action and other cases alleging violations of various state and federal consumer protection laws including the Telephone Consumer Protection Act (TCPA), the Consumer Financial Protection Act of 2010 (CFPA), the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), in adversarial proceedings under the U.S. Bankruptcy Code, and various state consumer protection laws. At this point in time, the Company is unable to anticipate the timing of a resolution or the impact that these legal proceedings may have on the Company’s consolidated financial position, liquidity, results of operations or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that
may be payable in connection with these matters and loss contingency accruals have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.
In addition, Navient and its subsidiaries are subject to examination or regulation by various federal regulatory, state licensing or other regulatory agencies as part of its ordinary course of business including the SEC, CFPB, FFIEC and ED. Items or matters similar to or different from those described above may arise during the course of those examinations. We also routinely receive inquiries or requests from various regulatory entities or bodies or government agencies concerning our business or our assets. Generally, the Company endeavors to cooperate with each such inquiry or request.
11. Segment Reporting
We monitor and assess our ongoing operations and results based on the following three reportable operating segments: Consumer Lending, Federal Education Loans, and Other. As of February 2025, we had divested our Business Processing segment.
These segments meet the quantitative thresholds for reportable operating segments. Accordingly, the results of operations of these reportable operating segments are presented separately. The underlying operating segments are used by the Company’s chief operating decision maker, our chief executive officer, to manage the business, review operating performance and allocate resources, and qualify to be aggregated as part of the primary reportable operating segments. As discussed further below, we measure the profitability of our operating segments based on Core Earnings net income. Accordingly, information regarding our reportable operating segments' net income is provided on a Core Earnings basis.
The following table includes asset information for our Consumer Lending segment.
Cash and investments(1)
520
562
565
16,731
16,545
The following table includes asset information for our Federal Education Loans segment.
1,035
1,034
1,702
1,681
29,974
30,856
63
11. Segment Reporting (Continued)
At March 31, 2026 and December 31, 2025, the Business Processing segment had total assets of $0 and $0, respectively.
This segment consists of our corporate liquidity portfolio, gains and losses incurred on the repurchase of debt, unallocated shared services which include certain corporate and IT costs as well as regulatory expenses, and restructuring/other reorganization expenses. Additionally, the segment contains the revenue and expenses in connection with the transition services we performed related to the outsourcing of loan servicing and divestiture of our Business Processing segment.
Unallocated shared services expenses are comprised of costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management and the Board of Directors. Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters.
At March 31, 2026 and December 31, 2025, the Other segment had total assets of $1.3 billion and $1.3 billion, respectively.
Measure of Profitability
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 Core Earnings disclosure in the notes to our consolidated financial statements for our business segments.
Segment Results and Reconciliations to GAAP
Operating expenses(2)
Income tax expense (benefit)(3)
Servicing expenses
Information technology expenses
Corporate expenses
Other/remaining expenses
Summary of Core Earnings Adjustments to GAAP
Net impact of derivative accounting(1)
Net impact of goodwill and acquired intangible assets(2)
Net tax effect(3)
Core Earnings net income (loss)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
(Registrant)
By:
/s/ STEVE HAUBER
Steve Hauber
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: April 29, 2026
APPENDIX A
form 10-Q cross-reference index
Part I. Financial Information
Item 1.
39-68
Item 2.
7-32
Item 3.
33-36
Item 4.
Part II. Other Information
32, 61
Item 1A.
Defaults Upon Senior Securities
Not Applicable
Mine Safety Disclosures
Item 5.
Item 6.