NAVIENT CORP (NAVI)

CIK: 0001593538. SIC: 6211 Security Brokers, Dealers & Flotation Companies. Latest 10-K as of: 2026-02-26.

SIC breadcrumb: Finance, Insurance, And Real Estate > Security And Commodity Brokers, Dealers, Exchanges, And Services > SIC 6211 Security Brokers, Dealers & Flotation Companies

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1593538. Latest filing source: 0001193125-26-076753.

Informational only - descriptive public-record data, not investment advice.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	3,108,000,000	USD	2025	2026-02-26
Net income	-80,000,000	USD	2025	2026-02-26
Assets	48,681,000,000	USD	2025	2026-02-26

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001593538.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Revenue			4,908,000,000	4,673,000,000	3,298,000,000	2,648,000,000	3,223,000,000	4,419,000,000	3,809,000,000	3,108,000,000
Net income	681,000,000	292,000,000	395,000,000	597,000,000	412,000,000	717,000,000	645,000,000	228,000,000	131,000,000	-80,000,000
Diluted EPS	2.12	1.04	1.49	2.56	2.12	4.18	4.49	1.85	1.18	-0.81
Operating cash flow	1,347,000,000	1,158,000,000	1,140,000,000	1,019,000,000	987,000,000	702,000,000	305,000,000	676,000,000	459,000,000	441,000,000
Dividends paid	201,000,000	176,000,000	166,000,000	147,000,000	123,000,000	107,000,000	91,000,000	78,000,000	70,000,000	63,000,000
Share buybacks	755,000,000	440,000,000	220,000,000	440,000,000	400,000,000	600,000,000	400,000,000	310,000,000	179,000,000	111,000,000
Assets	121,136,000,000	114,991,000,000	104,176,000,000	94,903,000,000	87,412,000,000	80,605,000,000	70,795,000,000	61,375,000,000	51,789,000,000	48,681,000,000
Liabilities	117,413,000,000	111,506,000,000	100,629,000,000	91,554,000,000	84,965,000,000	77,997,000,000	67,818,000,000	58,615,000,000	49,148,000,000	46,282,000,000
Stockholders' equity	3,699,000,000	3,454,000,000	3,519,000,000	3,336,000,000	2,433,000,000	2,597,000,000	2,977,000,000	2,760,000,000	2,641,000,000	2,399,000,000
Cash and cash equivalents	1,253,000,000	1,518,000,000	1,286,000,000	1,233,000,000	1,183,000,000	905,000,000	1,535,000,000	839,000,000	722,000,000	637,000,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Net margin			8.05%	12.78%	12.49%	27.08%	20.01%	5.16%	3.44%	-2.57%
Return on equity	18.41%	8.45%	11.22%	17.90%	16.93%	27.61%	21.67%	8.26%	4.96%	-3.33%
Return on assets	0.56%	0.25%	0.38%	0.63%	0.47%	0.89%	0.91%	0.37%	0.25%	-0.16%
Liabilities / equity	31.74	32.28	28.60	27.44	34.92	30.03	22.78	21.24	18.61	19.29

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001593538.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarter	End Date	Revenue	Net Income	Diluted EPS	Method
2022-Q2	2022-06-30			1.22	reported discrete quarter
2022-Q3	2022-09-30			0.75	reported discrete quarter
2023-Q1	2023-03-31			0.86	reported discrete quarter
2023-Q2	2023-06-30	1,097,000,000	66,000,000	0.52	reported discrete quarter
2023-Q3	2023-09-30	1,170,000,000	79,000,000	0.65	reported discrete quarter
2023-Q4	2023-12-31	1,081,000,000	-28,000,000		derived Q4 = FY annual - nine-month YTD
2024-Q1	2024-03-31	1,027,000,000	73,000,000	0.64	reported discrete quarter
2024-Q2	2024-06-30	973,000,000	36,000,000	0.32	reported discrete quarter
2024-Q3	2024-09-30	948,000,000	-2,000,000	-0.02	reported discrete quarter
2024-Q4	2024-12-31	861,000,000	24,000,000		derived Q4 = FY annual - nine-month YTD
2025-Q1	2025-03-31	802,000,000	-2,000,000	-0.02	reported discrete quarter
2025-Q2	2025-06-30	778,000,000	14,000,000	0.13	reported discrete quarter
2025-Q3	2025-09-30	781,000,000	-86,000,000	-0.87	reported discrete quarter
2025-Q4	2025-12-31	747,000,000	-5,000,000		derived Q4 = FY annual - nine-month YTD
2026-Q1	2026-03-31	695,000,000	17,000,000	0.17	reported discrete quarter

Quarterly Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance
MSPUS - Median Sales Price of Houses Sold for the United States
HSN1F - New One Family Houses Sold: United States
RHORUSQ156N - Homeownership Rate in the United States
TTLCONS - Total Construction Spending: Total Construction in the United States
RRVRUSQ156N - Rental Vacancy Rate in the United States
TOTALSL - Total Consumer Credit Owned and Securitized
REVOLSL - Revolving Consumer Credit Owned and Securitized
DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
GDP - Gross Domestic Product
GPDI - Gross Private Domestic Investment
GCE - Government Consumption Expenditures and Gross Investment
PCEC - Personal Consumption Expenditures
NETEXP - Net Exports of Goods and Services
GFDEBTN - Federal Debt: Total Public Debt
GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
FYFSD - Federal Surplus or Deficit
FGRECPT - Federal Government Current Receipts
FGEXPND - Federal Government: Current Expenditures
MANEMP - All Employees, Manufacturing
USCONS - All Employees, Construction
USTRADE - All Employees, Retail Trade
USFIRE - All Employees, Financial Activities
USGOVT - All Employees, Government
AWHAETP - Average Weekly Hours of All Employees, Total Private
DGORDER - Manufacturers' New Orders: Durable Goods
NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
BUSINV - Total Business Inventories
EXPGS - Exports of Goods and Services
IMPGS - Imports of Goods and Services
IR - Import Price Index (End Use): All Commodities
PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-191605.

Extracted from a later financial-section MD&A body after Item 2 boundaries were low-confidence. Confidence: high. Filing date: 2026-04-29. Report date: 2026-03-31.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected Historical Financial Information and Ratios

	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	%			(.02	)%
Core Earnings Basis(1)
Net income(1)	$	19			$	26
Diluted earnings per common share(1)	$	.20			$	.25
Weighted average shares used to compute diluted earnings per share		96				103
Net interest margin, Consumer Lending segment		2.48	%			2.76	%
Net interest margin, Federal Education Loans segment		.65	%			.61	%
Return on assets		.17	%			.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

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

The Quarter in Review

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:

•
Net income of $35 million.

•
Net interest margin of 2.48%.

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

Federal Education Loans segment:

•
Net income of $22 million.

•
Net interest margin of 0.65%.

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

Capital, funding and liquidity:

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

•
Repurchased $23 million of common shares.

•
Paid $15 million in common stock dividends.

•
Issued $683 million of asset-backed securities.

Operating Expenses:

•
Incurred operating expenses of $89 million.

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

Results of Operations

GAAP Income Statements (Unaudited)

	Three Months Ended March 31,		Increase (Decrease)
(In millions, except per share data)	2026		2025			$		%
Interest income
Private Education Loans	$	277		$	289		$	(12	)	(4	)%
FFELP Loans		401			493			(92	)	(19	)
Cash and investments		17			20			(3	)	(15	)
Total interest income		695			802			(107	)	(13	)
Total interest expense		564			672			(108	)	(16	)
Net interest income		131			130			1		1
Less: provisions for loan losses		27			30			(3	)	(10	)
Net interest income after provisions for loan losses		104			100			4		4
Other income (loss):
Servicing revenue		11			13			(2	)	(15	)
Asset recovery and business processing revenue		—			23			(23	)	(100	)
Other income		5			15			(10	)	(67	)
Gains (losses) on derivative and hedging activities, net		5			(25	)		30		120
Total other income		21			26			(5	)	(19	)
Expenses:
Operating expenses		89			127			(38	)	(30	)
Goodwill and acquired intangible assets impairment and amortization expense		4			1			3		300
Restructuring/other reorganization expenses		—			3			(3	)	(100	)
Total expenses		93			131			(38	)	(29	)
Income (loss) before income tax expense (benefit)		32			(5	)		37		740
Income tax expense (benefit)		15			(3	)		18		600
Net income (loss)	$	17		$	(2	)	$	19		950	%
Basic earnings (loss) per common share	$	.18		$	(.02	)	$	.20		1000	%
Diluted earnings (loss) per common share	$	.17		$	(.02	)	$	.19		950	%
Dividends per common share	$	.16		$	.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.

Segment Results

Consumer Lending Segment

The following table presents Core Earnings results for our Consumer Lending segment.

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[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference. Confidence: high. Filing date: 2026-02-26. Report date: 2025-12-31.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking and Cautionary Statements” and “Risk Factors” in this Form 10-K.

The objective of this discussion and analysis is to allow investors to view the Company from management’s perspective. Accordingly, we provide the reader with 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. The discussion that follows is primarily focused on 2025 versus 2024 results. Discussion and analysis of 2024 results compared to 2023 is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025, which is incorporated herein by reference.

Selected Historical Financial Information and Ratios

	Years Ended December 31,
(In millions, except per share data)	2025			2024			2023
GAAP Basis
Net income (loss)	$	(80	)		$	131		$	228
Diluted earnings (loss) per common share	$	(.81	)		$	1.18		$	1.85
Weighted average shares used to compute diluted earnings per share		99				111			123
Return on assets		(.17	)%			.24	%		.36	%
Dividends per common share	$	.64			$	.64		$	.64
Return on common stockholders' equity		(3	)%			5	%		8	%
Dividend payout ratio		(80	)%			54	%		35	%
Average equity/average assets		5.05	%			4.82	%		4.43	%
Total assets	$	48,681			$	51,789		$	61,375
Total borrowings	$	45,706			$	48,318		$	57,628
Total Navient Corporation stockholders' equity	$	2,399			$	2,641		$	2,760
Book value per common share	$	25.12			$	25.63		$	24.32
Core Earnings Basis(1)
Net income (loss) (1)	$	(35	)		$	221		$	303
Diluted earnings (loss) per common share(1)	$	(.35	)		$	2.00		$	2.45
Weighted average shares used to compute diluted earnings per share		99				111			123
Net interest margin, Consumer Lending segment		2.49	%			2.87	%		3.04	%
Net interest margin, Federal Education Loans segment		.69	%			.45	%		1.12	%
Return on assets		(.07	)%			.41	%		.48	%
Education Loan Portfolios
Ending Private Education Loans, net	$	15,451			$	15,716		$	16,902
Ending FFELP Loans, net		28,141				30,852			37,925
Ending total education loans, net	$	43,592			$	46,568		$	54,827
Average Private Education Loans	$	15,987			$	16,809		$	18,463
Average FFELP Loans		29,945				33,946			41,191
Average total education loans	$	45,932			$	50,755		$	59,654

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

The Year in Review

2025 GAAP net loss was $80 million ($0.81 diluted loss per share), compared with net income of $131 million ($1.18 diluted earnings per share) in 2024. See “Results of Operations — GAAP Comparison of 2025 Results with 2024” for a discussion of the primary contributors to the change in GAAP earnings between periods.

2025 Core Earnings net loss was $35 million ($0.35 diluted Core Earnings loss per share), compared with Core Earnings net income of $221 million ($2.00 diluted Core Earnings per share) in 2024. See “Segment Results” for a discussion of the primary contributors to the change in Core Earnings between periods.

2025 GAAP and Core Earnings results included the following significant items:

•
$280 million provision for loan losses ($249 million for Consumer Lending and $31 million for FFELP). Of the $280 million, $41 million relates to originations with the remaining $239 million primarily associated with elevated delinquency balances, our forecasted macroeconomic outlook as well as the extension of the FFELP portfolio.

•
$11 million net benefit to net interest income from a decrease in prepayment rate assumptions ($18 million of additional net interest income from the FFELP Loan portfolio partially offset by a $7 million reduction in the Private Education Loan portfolio).

•
$25 million of regulatory and restructuring expenses.

Financial highlights of 2025 include:

Consumer Lending segment:

•
Net income of $20 million.

•
Net interest margin of 2.49%.

•
Originated $2.5 billion of Private Education Loans, a 77% increase compared to 2024.

Federal Education Loans segment:

•
Net income of $115 million.

•
Net interest margin of 0.69%.

•
FFELP Loan prepayments of $977 million compared to $5.4 billion in 2024.

Business Processing segment:

•
Navient ceased providing Business Processing segment services after the sale in February 2025 of its government services business.

Capital, funding and liquidity:

•
GAAP equity-to-asset ratio of 4.9% and adjusted tangible equity ratio(1) of 9.1%.

•
Repurchased $111 million of common shares.

•
Paid $63 million in common stock dividends.

•
Issued $2.2 billion of asset-backed securities.

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

Operating Expenses:

•
Incurred operating expenses of $421 million, of which $30 million was in connection with transition services we provided related to our various strategic initiatives. There was $33 million of revenue recognized in Other revenue related to these services.

The transition services related to the outsourcing of loan servicing and the sale of our healthcare services

business ended in May 2025 and as of October 2025 we had no further obligations to provide transition

services for our government services business.

Results of Operations

GAAP Income Statements

									Increase (Decrease)
	Years Ended December 31,			2025 vs. 2024			2024 vs. 2023
(Dollars in millions, except per share amounts)	2025			2024			2023		$		%			$		%
Interest income
Private Education Loans	$	1,122			$	1,259		$	1,369		$	(137	)		(11	)%	$	(110	)	(8	)%
FFELP Loans		1,903				2,396			2,897			(493	)		(21	)		(501	)	(17	)
Cash and investments		83				154			153			(71	)		(46	)		1		1
Total interest income		3,108				3,809			4,419			(701	)		(18	)		(610	)	(14	)
Total interest expense		2,589				3,273			3,557			(684	)		(21	)		(284	)	(8	)
Net interest income		519				536			862			(17	)		(3	)		(326	)	(38	)
Less: provisions for loan losses		280				113			123			167			148			(10	)	(8	)
Net interest income after provisions for loan losses		239				423			739			(184	)		(43	)		(316	)	(43	)
Other income (loss):
Servicing revenue		51				54			64			(3	)		(6	)		(10	)	(16	)
Asset recovery and business processing revenue		23				271			321			(248	)		(92	)		(50	)	(16	)
Other income		47				30			21			17			57			9		43
Gain on sale of subsidiaries, net		—				191			—			(191	)		(100	)		191		100
Losses on debt repurchases		—				—			(8	)		—			—			8		(100	)
Gains (losses) on derivative and hedging activities, net		(30	)			70			11			(100	)		(143	)		59		536
Total other income		91				616			409			(525	)		(85	)		207		51
Expenses:
Operating expenses		421				680			800			(259	)		(38	)		(120	)	(15	)
Goodwill and acquired intangible assets impairment and amortization expense		3				146			10			(143	)		(98	)		136		1,360
Restructuring/other reorganization expenses		17				39			25			(22	)		(56	)		14		56
Total expenses		441				865			835			(424	)		(49	)		30		4
Income (loss) before income tax expense		(111	)			174			313			(285	)		(164	)		(139	)	(44	)
Income tax expense (benefit)		(31	)			43			85			(74	)		(172	)		(42	)	(49	)
Net income (loss)	$	(80	)		$	131		$	228		$	(211	)		(161	)%	$	(97	)	(43	)%
Basic earnings (loss) per common share	$	(.81	)		$	1.20		$	1.87		$	(2.01	)		(168	)%	$	(.67	)	(36	)%
Diluted earnings (loss) per common share	$	(.81	)		$	1.18		$	1.85		$	(1.99	)		(169	)%	$	(.67	)	(36	)%
Dividends per common share	$	.64			$	.64		$	.64		$	—			—	%	$	—		—	%

GAAP Comparison of 2025 Results with 2024

For the year ended December 31, 2025, net loss was $80 million, or $0.81 diluted loss per common share, compared with net income of $131 million, or $1.18 diluted earnings per common share, for the year-ago period.

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

•
Net interest income decreased by $17 million primarily as a result of the paydown of the Private Education Loan and FFELP Loan portfolios, the changing product mix of the Private Education Loan portfolio (Refinance Loans increased as a percentage of the portfolio) and the net impact of decreasing interest rates on the different index resets for the Private Education Loan and FFELP Loan assets and debt. Additionally, there was a $12 million decrease in mark-to-market gains on fair value hedges recorded in interest expense. These decreases were partially offset by a $55 million decline in premium amortization on the FFELP Loan portfolio due to both a decrease in prepayment rate assumptions, mostly in response to the significant decline in actual FFELP Loan prepayments since the beginning of 2025, as well as the significant decline in actual FFELP Loan prepayments from $5.4 billion in the year-ago period to $977 million in the current period.

•
Provisions for loan losses increased $167 million, from $113 million to $280 million:

o
The provision for Private Education Loan losses increased $137 million from $112 million to $249 million.

o
The provision for FFELP Loan losses increased $30 million from $1 million to $31 million.

The provision for Private Education Loan losses of $249 million in the current period included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision of $112 million in the year-ago period included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million associated with loan originations and $41 million related to a general reserve build.

The provision for FFELP Loan losses of $31 million in the current period was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook, as well as the continued extension of the portfolio. The provision of $1 million in the year-ago period was primarily the result of relatively stable credit trends.

•
Asset recovery and business processing revenue decreased $248 million as a result of the sale of our healthcare services business in the third quarter of 2024 ($88 million of the decrease), and our government services business in February 2025 ($160 million of the decrease). With the sale of our government services business, Navient no longer provides business processing segment services.

•
Other income increased $17 million primarily related to the transition services we 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.

•
Gain (loss) on sale of subsidiaries was a $191 million net gain in the year-ago period which included a $219 million gain on sale of our healthcare services business in third-quarter 2024 and a $28 million loss in fourth-quarter 2024 resulting from reclassification of our government services businesses to held for sale commensurate with our entering into an agreement on December 19, 2024 to sell these businesses, resulting in adjustment of the basis of these businesses to the expected sales price.

•
Net gains on derivative and hedging activities decreased $100 million. The primary factor affecting the change was 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 $259 million, $240 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 and our healthcare services business in the third quarter of 2024 ($208 million of the reduction is in the Business Processing segment and $32 million of the reduction is in the Other segment). In addition, regulatory-related expenses decreased $35 million primarily due to $43 million of regulatory-related expenses recorded in the year-ago period in connection with the September 2024 Consumer Financial Protection Bureau (the CFPB) settlement agreement. Current period expense includes $30 million, an $18 million increase from the prior year, of expense in connection with providing transition services related to our various strategic initiatives. There is $33 million of revenue recognized in the Other segment related to these services.

•
Goodwill and acquired intangible asset impairment and amortization expense decreased by $143 million primarily due to a $138 million impairment recognized in the year-ago period related to our government services business which was sold in February 2025.

•
Restructuring and other reorganization expenses decreased $22 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.

We repurchased 8.5 million and 11.5 million shares of our common stock during 2025 and 2024, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 12 million common shares (or 11%) from the year-ago period.

Segment Results

Consumer Lending Segment

The following table presents Core Earnings results for our Consumer Lending segment.

	Years Ended December 31,		% Increase (Decrease)
(Dollars in millions)	2025		2024			2023		2025 vs. 2024	2024 vs. 2023
Interest income:
Private Education Loans	$	1,122		$	1,259		$	1,369		(11	)%	(8	)%
Cash and investments		20			25			27		(20	)	(7	)
Interest income		1,142			1,284			1,396		(11	)	(8	)
Interest expense		731			786			816		(7	)	(4	)
Net interest income		411			498			580		(17	)	(14	)
Less: provision for loan losses		249			112			67		122		67
Net interest income after provision for loan losses		162			386			513		(58	)	(25	)
Other income (loss):
Servicing revenue		11			10			12		10		(17	)
Other revenue		1			1			2		—		(50	)
Total other income		12			11			14		9		(21	)
Direct operating expenses		147			143			151		3		(5	)
Income before income tax expense		27			254			376		(89	)	(32	)
Income tax expense		7			58			89		(88	)	(35	)
Net income	$	20		$	196		$	287		(90	)%	(32	)%

Highlights of 2025 vs. 2024

•
Originated $2.5 billion of Private Education Loans compared to $1.4 billion, an increase of 77%.

o
Refinance Loan originations were $2.1 billion compared to $1.0 billion.

o
In-school loan originations were $401 million compared to $366 million.

•
Net income was $20 million compared to $196 million.

•
Net interest income decreased $87 million primarily due to the paydown and changing product mix of the loan portfolio (Refinance Loans increased as a percentage of the loan portfolio).

•
Provision for loan losses increased $137 million. The provision for loan losses of $249 million in the current period included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision for loan losses of $112 million in 2024 included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million in connection with loan originations and $41 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

o
Net charge-offs were unchanged at $335 million.

o
Private Education Loan delinquencies greater than 90 days: $434 million, up $15 million from $419 million.

o
Private Education Loan forbearances: $236 million, down $186 million from $422 million.

•
Expenses increased $4 million, or 3%, primarily as a result of higher marketing spend associated with 77% higher loan origination volume.

Key performance metrics are as follows:

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
Segment net interest margin		2.49	%			2.87	%		3.04	%
Private Education Loans (including Refinance Loans):
Private Education Loan spread		2.59	%			2.99	%		3.18	%
Provision for loan losses	$	249			$	112		$	67
Net charge-offs	$	335			$	335		$	298
Net charge-off rate		2.18	%			2.08	%		1.68	%
Greater than 30-days delinquency rate		6.3	%			6.1	%		5.1	%
Greater than 90-days delinquency rate		2.9	%			2.7	%		2.3	%
Forbearance rate		1.5	%			2.7	%		2.1	%
Average Private Education Loans	$	15,987			$	16,809		$	18,463
Ending Private Education Loans, net	$	15,451			$	15,716		$	16,902
Private Education Refinance Loans:
Net charge-offs	$	72			$	49		$	32
Greater than 90-day delinquency rate		.9	%			.7	%		.4	%
Average balance of Private Education Refinance Loans	$	8,622			$	8,623		$	9,206
Ending balance of Private Education Refinance Loans	$	8,755			$	8,341		$	8,752
Private Education Refinance Loan originations	$	2,076			$	1,034		$	647

Net Interest Margin

The following table details the net interest margin.

	Years Ended December 31,
	2025			2024		2023
Private Education Loan yield		7.02	%		7.49	%	7.42	%
Private Education Loan cost of funds		(4.43	)		(4.50	)	(4.24	)
Private Education Loan spread		2.59			2.99		3.18
Other interest-earning asset spread impact		(.10	)		(.12	)	(.14	)
Net interest margin(1)		2.49	%		2.87	%	3.04	%

(1)
The average balances of the interest-earning assets for the respective periods are:

	Years Ended December 31,
(Dollars in millions)	2025		2024			2023
Private Education Loans	$	15,987		$	16,809		$	18,463
Other interest-earning assets		488			519			593
Total Private Education Loan interest-earning assets	$	16,475		$	17,328		$	19,056

The 38 basis point decrease in the net interest margin in 2025 is primarily the result of a $19 million decrease (12 basis points) in loan discount amortization mostly related to a decrease in prepayment rate assumptions used to amortize loan discount. In addition, the continued shift of the Refinance Loan portfolio becoming a higher percentage of the overall Private Education Loan portfolio and the Refinance Loan portfolio earning a lower net interest margin compared to the legacy portfolio reduces the overall net interest margin.

As of December 31, 2025, our Private Education Loan portfolio totaled $15.5 billion, comprised of $8.8 billion of refinance loans and $6.7 billion of non-refinance loans. The weighted-average life of these portfolios as of December 31, 2025 was 5 years and 4 years, respectively, assuming a Constant Prepayment Rate (CPR) of 10% and 8%, respectively. As of December 31, 2024, the CPR assumption was 10% for both refinance and non-refinance loans.

Provision for Loan Losses

The provision for Private Education Loan losses increased $137 million. The provision for loan losses of $249 million in 2025 included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision for loan losses of $112 million in 2024 included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million in connection with loan originations and $41 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

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 as a result of higher marketing spend associated with higher loan origination volume.

Federal Education Loans Segment

The following table presents Core Earnings results for our Federal Education Loans segment.

	Years Ended December 31,			% Increase (Decrease)
(Dollars in millions)	2025			2024			2023		2025 vs. 2024	2024 vs. 2023
Interest income:
FFELP Loans	$	1,903			$	2,397		$	2,901		(21	)%	(17	)%
Cash and investments		39				88			76		(56	)	16
Total interest income		1,942				2,485			2,977		(22	)	(17	)
Total interest expense		1,730				2,323			2,497		(26	)	(7	)
Net interest income		212				162			480		31		(66	)
Less: provision for loan losses		31				1			56		3,000		(98	)
Net interest income after provision for loan losses		181				161			424		12		(62	)
Other income (loss):
Servicing revenue		40				44			52		(9	)	(15	)
Other revenue (loss)		(1	)			5			14		(120	)	(64	)
Total other income		39				49			66		(20	)	(26	)
Direct operating expenses		70				74			72		(5	)	3
Income before income tax expense		150				136			418		10		(67	)
Income tax expense		35				31			99		13		(69	)
Net income	$	115			$	105		$	319		10	%	(67	)%

Highlights of 2025 vs. 2024

•
Net income was $115 million compared to $105 million.

•
Net interest income increased $50 million primarily due to a $55 million decrease in premium amortization as a result of both a decrease in prepayment rate assumptions ($18 million benefit in 2025), in response to the significant decline in actual prepayments since the beginning of 2025, as well as the significant decline in actual prepayments from $5.4 billion in 2024 to $977 million in 2025. This was partially offset by the paydown of the loan portfolio.

•
Provision for loan losses increased $30 million. The $31 million of provision for loan losses in 2025 was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook as well as the continued extension of the portfolio. The $1 million of provision for loan losses in 2024 was

primarily the result of an increase in delinquency balances partially offset by elevated prepayment activity over the prior year.

o
Net charge-offs were $38 million compared to $36 million.

o
Delinquencies greater than 90 days were $2.4 billion compared to $2.2 billion.

o
Forbearances were $3.5 billion compared to $4.4 billion.

•
Expenses were $4 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.

Key performance metrics are as follows:

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
Segment net interest margin		.69	%			.45	%		1.12	%
FFELP Loans:
FFELP Loan spread		.73	%			.56	%		1.23	%
Provision for loan losses	$	31			$	1		$	56
Net charge-offs	$	38			$	36		$	63
Net charge-off rate		.15	%			.13	%		.19	%
Greater than 30-days delinquency rate		17.5	%			18.6	%		13.9	%
Greater than 90-days delinquency rate		10.0	%			8.7	%		7.5	%
Forbearance rate		13.0	%			14.7	%		16.8	%
Average FFELP Loans	$	29,945			$	33,946		$	41,191
Ending FFELP Loans, net	$	28,141			$	30,852		$	37,925

Net Interest Margin

The following table details the net interest margin.

	Years Ended December 31,
	2025			2024		2023
FFELP Loan yield		6.13	%		6.83	%	6.59	%
Floor Income		.22			.23		.45
FFELP Loan net yield		6.35			7.06		7.04
FFELP Loan cost of funds		(5.62	)		(6.50	)	(5.81	)
FFELP Loan spread		.73			.56		1.23
Other interest-earning asset spread impact		(.04	)		(.11	)	(.11	)
Net interest margin(1)		.69	%		.45	%	1.12	%

(1)
The average balances of the interest-earning assets for the respective periods are:

	Years Ended December 31,
(Dollars in millions)	2025		2024			2023
FFELP Loans	$	29,945		$	33,946		$	41,191
Other interest-earning assets		870			1,742			1,673
Total FFELP Loan interest-earning assets	$	30,815		$	35,688		$	42,864

The 24 basis point increase in the net interest margin is primarily the result of loan premium amortization being $55 million lower in the current period (18 basis points) due to both a decrease in prepayment rate assumptions used to amortize loan premium, in response to the significant decline in actual prepayments since the beginning of 2025, as well as the significant decline in actual prepayments from $5.4 billion in 2024 to $977 million in 2025. The significant decline in actual prepayments in 2025 is primarily the result of changes in public policy under the current Administration.

As of December 31, 2025, our FFELP Loan portfolio totaled $28.1 billion. The weighted-average life of this portfolio as of December 31, 2025 was 8 years assuming a CPR of 3% through 2028 and 5% thereafter. As of December 31, 2024, the CPR assumption was 5%.

Floor Income

The following table analyzes, on a Core Earnings basis, the ability of the FFELP Loans in our portfolio to earn Floor Income after December 31, 2025 and 2024, based on interest rates as of those dates.

(Dollars in billions)	December 31, 2025
Education loans eligible to earn Floor Income	$	28.0		$	30.7
Less: post-March 31, 2006 disbursed loans required to rebate Floor Income		(13.6	)		(14.7	)
Less: economically hedged Floor Income		(.6	)		(.8	)
Education loans eligible to earn Floor Income after rebates and economically hedged	$	13.8		$	15.2
Education loans earning Floor Income	$	5.3		$	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 from January 1, 2026 to December 31, 2028.

(Dollars in billions)		2026			2027			2028
Average balance of FFELP Consolidation Loans whose Floor Income is economically hedged		$	.6			$	.3			$	.2

Provision for Loan Losses

Provision for loan losses increased $30 million. The $31 million of provision for loan losses in 2025 was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook as well as the continued extension of the portfolio. The $1 million of provision for loan losses in 2024 was primarily the result of an increase in delinquency balances partially offset by elevated prepayment activity over the prior year.

Operating Expenses

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 $4 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.

Business Processing Segment

The following table presents Core Earnings results for our Business Processing segment.

	Years Ended December 31,		% Increase (Decrease)
(Dollars in millions)	2025		2024			2023		2025 vs. 2024	2024 vs. 2023
Other income (loss):
Business processing revenue	$	23		$	271		$	321		(92	)%	(16	)%
Gain on sale of subsidiaries, net		—			191			—		(100	)	100
Total other income		23			462			321		(95	)	44
Direct operating expenses		20			228			285		(91	)	(20	)
Income before income tax expense		3			234			36		(99	)	550
Income tax expense		1			54			8		(98	)	575
Net income	$	2		$	180		$	28		(99	)%	543	%

Highlights of 2025 vs. 2024

•
With the sale of our government services business in February 2025, Navient no longer provides business processing segment services. Navient provided certain transition services ($33 million of revenue and $30 million of expense in 2025, reflected in the Other segment) in connection with the sale of our business processing businesses. As of October 2025, we had no further obligations to provide these transition services.

Key performance metrics are as follows:

	As of December 31,
(Dollars in millions)	2025		2024			2023
Revenue from government services	$	23		$	183		$	200
Revenue from healthcare services		—			88			121
Total fee revenue		23			271			321
Gain on sale of subsidiaries, net		—			191			—
Total revenue	$	23		$	462		$	321

Other Segment

The following table presents Core Earnings results for our Other segment.

	Years Ended December 31,			% Increase (Decrease)
(Dollars in millions)	2025			2024			2023		2025 vs. 2024		2024 vs. 2023
Net interest loss after provision for loan losses	$	(72	)		$	(87	)	$	(114	)		(17	)%	(24	)%
Other income (loss):
Other revenue		47				24			5			96		380
Losses on debt repurchases		—				—			(8	)		—		(100	)
Total other income (loss)		47				24			(3	)		96		(900	)
Expenses:
Unallocated shared services operating expenses:
Unallocated information technology costs		77				84			80			(8	)	5
Unallocated corporate costs		107				151			212			(29	)	(29	)
Total unallocated shared services operating expenses		184				235			292			(22	)	(20	)
Restructuring/other reorganization expenses		17				39			25			(56	)	56
Total expenses		201				274			317			(27	)	(14	)
Loss before income tax benefit		(226	)			(337	)		(434	)		(33	)	(22	)
Income tax benefit		(54	)			(77	)		(103	)		(30	)	(25	)
Net loss	$	(172	)		$	(260	)	$	(331	)		(34	)%	(21	)%

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 increased $23 million, of which $20 million related to these transition services.

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 $51 million from 2024, primarily as a result of a $35 million decrease in regulatory-related expenses. Regulatory-related expenses were $8 million and $43 million in 2025 and 2024, respectively, with 2024 including a contingency loss accrual of $51 million related to the $120 million settlement agreement entered into with the CFPB in September 2024. The remaining $16 million decrease in expenses primarily related to 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.

See “Note 12 — 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 $22 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.

Financial Condition

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

	December 31, 2025
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Total education loan portfolio:
In-school(1)	$	108			$	7		$	—		$	7		$	115
Grace, repayment and other(2)		15,707				10,453			17,854			28,307			44,014
Total		15,815				10,460			17,854			28,314			44,129
Allowance for loan losses		(364	)			(144	)		(29	)		(173	)		(537	)
Total education loan portfolio	$	15,451			$	10,316		$	17,825		$	28,141		$	43,592
% of total		35	%			24	%		41	%		65	%		100	%
	December 31, 2024
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Total education loan portfolio:
In-school(1)	$	95			$	9		$	—		$	9		$	104
Grace, repayment and other(2)		16,062				11,233			19,790			31,023			47,085
Total		16,157				11,242			19,790			31,032			47,189
Allowance for loan losses		(441	)			(139	)		(41	)		(180	)		(621	)
Total education loan portfolio	$	15,716			$	11,103		$	19,749		$	30,852		$	46,568
% of total		34	%			24	%		42	%		66	%		100	%
	December 31, 2023
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Total education loan portfolio:
In-school(1)	$	70			$	12		$	—		$	12		$	82
Grace, repayment and other(2)		17,449				13,708			24,420			38,128			55,577
Total		17,519				13,720			24,420			38,140			55,659
Allowance for loan losses		(617	)			(156	)		(59	)		(215	)		(832	)
Total education loan portfolio	$	16,902			$	13,564		$	24,361		$	37,925		$	54,827
% of total		31	%			25	%		44	%		69	%		100	%

(1)
Loans for customers still attending school and are not yet required to make payments on the loan.

(2)
Includes loans in deferment or forbearance.

Education Loan Activity

	Year Ended December 31, 2025
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Beginning balance	$	15,716			$	11,103		$	19,749		$	30,852		$	46,568
Acquisitions (originations and purchases)(1)		2,482				—			—			—			2,482
Capitalized interest and premium/discount amortization		166				505			478			983			1,149
Refinancings and consolidations to third parties		(249	)			(400	)		(504	)		(904	)		(1,153	)
Repayments and other		(2,664	)			(892	)		(1,898	)		(2,790	)		(5,454	)
Ending balance	$	15,451			$	10,316		$	17,825		$	28,141		$	43,592
	Year Ended December 31, 2024
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Beginning balance	$	16,902			$	13,564		$	24,361		$	37,925		$	54,827
Acquisitions (originations and purchases)(1)		1,387				—			—			—			1,387
Capitalized interest and premium/discount amortization		191				507			507			1,014			1,205
Refinancings and consolidations to third parties		(219	)			(1,583	)		(3,146	)		(4,729	)		(4,948	)
Repayments and other		(2,545	)			(1,385	)		(1,973	)		(3,358	)		(5,903	)
Ending balance	$	15,716			$	11,103		$	19,749		$	30,852		$	46,568
	Year Ended December 31, 2023
(Dollars in millions)	Private Education Loans			FFELP Stafford and Other			FFELP Consolidation Loans		Total FFELP Loans		Total Portfolio
Beginning balance	$	18,725			$	15,691		$	27,834		$	43,525		$	62,250
Acquisitions (originations and purchases)(1)		970				—			—			—			970
Capitalized interest and premium/discount amortization		184				577			616			1,193			1,377
Refinancings and consolidations to third parties		(239	)			(859	)		(1,811	)		(2,670	)		(2,909	)
Repayments and other		(2,738	)			(1,845	)		(2,278	)		(4,123	)		(6,861	)
Ending balance	$	16,902			$	13,564		$	24,361		$	37,925		$	54,827

(1)
Includes the origination of $298 million, $201 million and $176 million of Private Education Refinance Loans in 2025, 2024 and 2023, respectively, that refinanced Private Education Loans and FFELP Loans that were on our balance sheet.

Private Education Loan Portfolio Performance

	December 31,
	2025			2024			2023
(Dollars in millions)	Balance			%			Balance			%		Balance			%
Loans in-school/grace/deferment(1)	$	395						$	372					$	360
Loans in forbearance(2)		236							422						363
Loans in repayment and percentage of each status:
Loans current		14,230				93.7	%			14,419			93.9	%			15,935			94.9	%
Loans delinquent 31-60 days(3)		326				2.1				319			2.1				308			1.8
Loans delinquent 61-90 days(3)		194				1.3				206			1.3				173			1.0
Loans delinquent greater than 90 days(3)		434				2.9				419			2.7				380			2.3
Total Private Education Loans in repayment		15,184				100	%			15,363			100	%			16,796			100	%
Total Private Education Loans		15,815							16,157						17,519
Private Education Loan allowance for losses		(364	)						(441	)					(617	)
Private Education Loans, net	$	15,451						$	15,716					$	16,902
Percentage of Private Education Loans in repayment					96.0	%					95.1	%						95.9	%
Delinquencies as a percentage of Private Education Loans in repayment					6.3	%					6.1	%						5.1	%
Loans in forbearance as a percentage of loans in repayment and forbearance					1.5	%					2.7	%						2.1	%
Percentage of Private Education Loans with a cosigner(4)					32	%					32	%						33	%

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

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

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

(4)
Excluding Private Education Refinance Loans, the cosigner rate was 67%, 66% and 65% for 2025, 2024 and 2023, respectively.

FFELP Loan Portfolio Performance

	December 31,
	2025			2024			2023
(Dollars in millions)	Balance			%			Balance			%		Balance			%
Loans in-school/grace/deferment(1)	$	1,210						$	1,262					$	1,557
Loans in forbearance(2)		3,532							4,365						6,147
Loans in repayment and percentage of each status:
Loans current		19,441				82.4	%			20,675			81.4	%			26,204			86.1	%
Loans delinquent 31-60 days(3)		1,075				4.6				1,479			5.8				1,193			3.9
Loans delinquent 61-90 days(3)		706				3.0				1,043			4.1				746			2.5
Loans delinquent greater than 90 days(3)		2,350				10.0				2,208			8.7				2,293			7.5
Total FFELP Loans in repayment		23,572				100	%			25,405			100	%			30,436			100	%
Total FFELP Loans		28,314							31,032						38,140
FFELP Loan allowance for losses		(173	)						(180	)					(215	)
FFELP Loans, net	$	28,141						$	30,852					$	37,925
Percentage of FFELP Loans in repayment					83.3	%					81.9	%						79.8	%
Delinquencies as a percentage of FFELP Loans in repayment					17.5	%					18.6	%						13.9	%
FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					13.0	%					14.7	%						16.8	%

(1)
Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.

(2)
Loans for customers who have used their allowable deferment time or do not qualify for deferment, who need additional time to obtain employment or who have temporarily ceased making payments due to hardship or other factors such as disaster relief.

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

Allowance for Loan Losses

	Year Ended December 31, 2025
(Dollars in millions)	Private Education Loans			FFELP Loans			Total
Allowance at beginning of period	$	441			$	180		$	621
Total provision		249				31			280
Charge-offs:
Gross charge-offs		(388	)			(38	)		(426	)
Expected future recoveries on current period gross charge-offs		53				—			53
Net charge-offs(1)		(335	)			(38	)		(373	)
Decrease in expected future recoveries on previously fully charged-off loans(2)		9				—			9
Allowance at end of period (GAAP)		364				173			537
Plus: expected future recoveries on previously fully charged-off loans(2)		170				—			170
Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(3)	$	534			$	173		$	707
Net charge-offs as a percentage of average loans in repayment		2.18	%			.15	%
Allowance coverage of charge-offs(3)		1.6				4.5		(Non-GAAP)
Allowance as a percentage of the ending total loan balance(3)		3.4	%			.6	%	(Non-GAAP)
Allowance as a percentage of the ending loans in repayment(3)		3.5	%			.7	%	(Non-GAAP)
Ending total loans	$	15,815			$	28,314
Average loans in repayment	$	15,343			$	24,777
Ending loans in repayment	$	15,184			$	23,572

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

(2)
At the end of each month, for Private Education Loans that are 212 or more days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

	Year Ended December 31,
(Dollars in millions)	2025
Beginning of period expected future recoveries on previously fully charged-off loans	$	179
Expected future recoveries of current period defaults		53
Recoveries (cash collected)		(41	)
Charge-offs (as a result of lower recovery expectations)		(21	)
End of period expected future recoveries on previously fully charged-off loans	$	170
Change in balance during period	$	(9	)

(3)
The allowance used for these metrics excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in the portfolio.

	Year Ended December 31, 2024
(Dollars in millions)	Private Education Loans			FFELP Loans			Total
Allowance at beginning of period	$	617			$	215		$	832
Total provision		112				1			113
Charge-offs:
Gross charge-offs		(378	)			(36	)		(414	)
Expected future recoveries on current period gross charge-offs		43				—			43
Net charge-offs(1)(2)		(335	)			(36	)		(371	)
Decrease in expected future recoveries on previously fully charged-off loans(3)		47				—			47
Allowance at end of period (GAAP)		441				180			621
Plus: expected future recoveries on previously fully charged-off loans(3)		179				—			179
Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(4)	$	620			$	180		$	800
Net charge-offs as a percentage of average loans in repayment		2.08	%			.13	%
Allowance coverage of charge-offs(4)		1.8				5.0		(Non-GAAP)
Allowance as a percentage of the ending total loan balance(4)		3.8	%			.6	%	(Non-GAAP)
Allowance as a percentage of the ending loans in repayment(4)		4.1	%			.7	%	(Non-GAAP)
Ending total loans	$	16,157			$	31,032
Average loans in repayment	$	16,078			$	27,190
Ending loans in repayment	$	15,363			$	25,405

(1)
$28 million of 2024 Private Education Loan net charge-offs is in connection with the resolution of certain private legacy loans in bankruptcy. This was previously reserved for in 2023.

(2)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” For FFELP Loans, the recovery is received at the time of charge-off.

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

	Year Ended December 31,
(Dollars in millions)	2024
Beginning of period expected future recoveries on previously fully charged-off loans	$	226
Expected future recoveries of current period defaults		43
Recoveries (cash collected)		(41	)
Charge-offs (as a result of lower recovery expectations)		(49	)
End of period expected future recoveries on previously fully charged-off loans	$	179
Change in balance during period	$	(47	)

(4)
The allowance used for these metrics excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in the portfolio.

	Year Ended December 31, 2023
(Dollars in millions)	Private Education Loans			FFELP Loans			Total
Allowance at beginning of period	$	800			$	222		$	1,022
Total provision		67				56			123
Charge-offs:
Gross charge-offs		(345	)			(63	)		(408	)
Expected future recoveries on current period gross charge-offs		47				—			47
Net charge-offs(1)		(298	)			(63	)		(361	)
Decrease in expected future recoveries on previously fully charged-off loans(2)		48				—			48
Allowance at end of period (GAAP)		617				215			832
Plus: expected future recoveries on previously fully charged-off loans(2)		226				—			226
Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)(3)	$	843			$	215		$	1,058
Net charge-offs as a percentage of average loans in repayment		1.68	%			.19	%
Allowance coverage of charge-offs(3)		2.8				3.4		(Non-GAAP)
Allowance as a percentage of the ending total loan balance(3)		4.8	%			.6	%	(Non-GAAP)
Allowance as a percentage of the ending loans in repayment(3)		5.0	%			.7	%	(Non-GAAP)
Ending total loans	$	17,519			$	38,140
Average loans in repayment	$	17,749			$	33,047
Ending loans in repayment	$	16,796			$	30,436

(2)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

	Year Ended December 31,
(Dollars in millions)	2023
Beginning of period expected future recoveries on previously fully charged-off loans	$	274
Expected future recoveries of current period defaults		47
Recoveries (cash collected)		(46	)
Charge-offs (as a result of lower recovery expectations)		(49	)
End of period expected future recoveries on previously fully charged-off loans	$	226
Change in balance during period	$	(48	)

(3)
The allowance used for these metrics excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in the portfolio.

Liquidity and Capital Resources

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 December 31, 2025. 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 $0.5 billion of senior unsecured notes that mature in the short term (i.e., over the next 12 months) and the remaining $4.8 billion of senior unsecured notes that mature in the long term (from 2027 to 2043 with 79% 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 repurchased 8.5 million shares of common stock for $111 million in 2025 and have $100 million of unused share repurchase authority as of December 31, 2025.

Sources of Primary Liquidity

	Ending Balances		Average Balances
	December 31,		Years Ended December 31,
(Dollars in millions)	2025		2024			2025		2024	2023
Unrestricted cash	$	637		$	722		$	627	$	937	$	1,024
Unencumbered Private Education Refinance Loans		529			242			578		331		105
Unencumbered FFELP Loans		83			232			92		190		89
Total	$	1,249		$	1,196		$	1,297	$	1,458	$	1,218

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 2027.

	Maximum Additional Capacity
	December 31,
(Dollars in millions)	2025		2024			2023
Ending Balances:
Private Education Loan ABCP facilities	$	1,689		$	1,490		$	1,719
FFELP Loan ABCP facilities		193			424			408
Total	$	1,882		$	1,914		$	2,127

	Average Maximum Additional Capacity
	Years Ended December 31,
(Dollars in millions)	2025		2024			2023
Average Balances:
Private Education Loan ABCP facilities	$	1,703		$	1,777		$	1,756
FFELP Loan ABCP facilities		234			415			103
Total	$	1,937		$	2,192		$	1,859

At December 31, 2025, we had a total of $2.9 billion of unencumbered tangible assets inclusive of those listed in the table above as sources of primary liquidity. Total unencumbered education loans comprised $1.4 billion of our unencumbered tangible assets of which $1.3 billion and $83 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of December 31, 2025, we had $4.7 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 December 31, 2025, $0.6 billion of repurchase facility borrowings were outstanding.

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

(Dollars in billions)	December 31, 2025
Net assets of consolidated variable interest entities (encumbered assets) — Private Education Loans	$	2.1		$	2.0
Net assets of consolidated variable interest entities (encumbered assets) — FFELP Loans		2.6			2.8
Tangible unencumbered assets(1)		2.9			2.9
Senior unsecured debt		(5.3	)		(5.4	)
Mark-to-market on unsecured hedged debt(2)		—			.2
Other liabilities, net		(.3	)		(.3	)
Total Tangible Equity(3)	$	2.0		$	2.2

(1)
Excludes goodwill and acquired intangible assets.

(2)
At December 31, 2025 and 2024, there were $(50) million and $(181) million, respectively, of net gains (losses) on derivatives hedging this debt in unencumbered assets, which partially offset these gains (losses).

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

Borrowings

Ending Balances

	December 31, 2025			December 31, 2024			December 31, 2023
(Dollars in millions)	Short Term			Long Term			Total		Short Term		Long Term			Total			Short Term		Long Term		Total
Unsecured borrowings:
Senior unsecured debt	$	525			$	4,782		$	5,307		$	553			$	4,806		$	5,359		$	506		$	5,351		$	5,857
Total unsecured borrowings		525				4,782			5,307			553				4,806			5,359			506			5,351			5,857
Secured borrowings:
Private Education Loan securitizations		469				10,250			10,719			631				10,338			10,969			435			11,754			12,189
FFELP Loan securitizations		109				25,302			25,411			41				28,268			28,309			59			35,626			35,685
Private Education Loan ABCP facilities		1,942				—			1,942			2,274				—			2,274			1,286			821			2,107
FFELP Loan ABCP facilities		1,869				299			2,168			1,586				74			1,660			1,854			89			1,943
Other		160				39			199			54				40			94			95			39			134
Total secured borrowings		4,549				35,890			40,439			4,586				38,720			43,306			3,729			48,329			52,058
Core Earnings basis borrowings(1)		5,074				40,672			45,746			5,139				43,526			48,665			4,235			53,680			57,915
Adjustment for GAAP accounting treatment		(1	)			(39	)		(40	)		(5	)			(342	)		(347	)		(9	)		(278	)		(287	)
GAAP basis borrowings	$	5,073			$	40,633		$	45,706		$	5,134			$	43,184		$	48,318		$	4,226		$	53,402		$	57,628

Average Balances

	Years Ended December 31,
	2025		2024		2023
(Dollars in millions)	Average Balance		Average Rate		Average Balance		Average Rate	Average Balance			Average Rate
Unsecured borrowings:
Senior unsecured debt	$	5,362		8.37	%	$	5,765		9.11	%		$	6,363	8.74	%
Total unsecured borrowings		5,362		8.37			5,765		9.11				6,363	8.74
Secured borrowings:
Private Education Loan securitizations		10,783		3.72			11,692		3.68				12,800	3.45
FFELP Loan securitizations		26,948		5.46			31,710		6.37				38,652	5.68
Private Education Loan ABCP facilities		1,998		6.28			2,030		7.26				2,448	6.87
FFELP Loan ABCP facilities		1,904		5.66			1,716		6.79				1,773	6.40
Other		127		2.55			108		—				106	1.91
Total secured borrowings		41,760		5.05			47,256		5.74				55,779	5.24
Core Earnings basis borrowings(1)		47,122		5.43			53,021		6.10				62,142	5.60
Adjustment for GAAP accounting treatment		—		.06			—		.07				—	.12
GAAP basis borrowings	$	47,122		5.49	%	$	53,021		6.17	%		$	62,142	5.72	%

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.” The differences in derivative accounting give rise to the difference above.

Critical Accounting Policies and Estimates

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). “Note 2 — Significant Accounting Policies” includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. Actual results may differ from these estimates under varying assumptions or conditions. On a quarterly basis, management evaluates its estimates, particularly those that include the most difficult, subjective or complex judgments and are often about matters that are inherently uncertain. Critical accounting estimates involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of our operations. Our critical accounting policies and estimates are the allowance for loan losses, goodwill impairment assessment, and loan premium and discount amortization.

Allowance for Loan Losses

We measure and recognize an allowance for loan losses that estimates the remaining current expected credit losses (CECL) for financial assets measured at amortized cost held at the reporting date. We have determined that, for modeling current expected credit losses, in general, we can reasonably estimate expected losses that incorporate current and forecasted economic conditions over a “reasonable and supportable” period. For Private Education Loans, we incorporate a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the loans. The development of the reasonable and supportable forecast incorporates an assumption that each macroeconomic variable will revert to a long-term expectation starting in years 2-4 of the forecast and largely completing within the first five years of the forecast. For FFELP Loans, after a three-year reasonable and supportable period, there is an immediate reversion to a long-term expectation.

The models used to project losses utilize key credit quality indicators of the loan portfolios and predict how those attributes are expected to perform in connection with the forecasted economic conditions. In connection with this methodology, our modeling of current expected credit losses utilizes historical loan repayment experience since 2008 identifying loan variables (key credit quality indicators) that are significantly predictive of loans that will default and predicts how loans will perform in connection with the forecasted economic conditions.

The key credit quality indicators used by the model for Private Education Loans are credit scores (FICO scores), loan status, loan seasoning, certain types of loan modifications, the existence of a cosigner and school type:

•
Credit scores are an indicator of the credit risk of a customer and generally the higher the credit score the more likely it is the customer will be able to make all of their contractual payments.

•
Loan status affects the credit risk because generally a past due loan is more likely to default than an up-to-date loan. Additionally, loans in a deferred payment status have different credit risk profiles compared with those in current payment status.

•
Of the portfolio in repayment, loan seasoning affects credit risk because a loan with a history of making payments generally has a lower incidence of default than a loan with a history of making infrequent or no payments.

•
Certain types of loan modifications are those that represent the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification, as a key credit quality indicator used for calculating the allowance for loan losses, for the life of the loan (including loans that met that definition subsequent to January 1, 2023). A TDR is where an economic concession (interest rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period) has been given to a borrower experiencing financial difficulties. This classification is not intended to reconcile in any way to the new modification disclosures required under ASU No. 2022-02.

•
The existence of a cosigner generally lowers the likelihood of default, thus lowering the credit risk.

•
The type of school customers attended can have an impact on their graduation rate and job prospects after graduation and therefore can affect their ability to make payments, which impacts the credit risk.

For FFELP Loans, the key credit quality indicators are loan status and loan type (Stafford, Consolidation and Rehab loans).

We project losses over the contractual term of our loans, including any extension options within the control of the borrower. Further, we make estimates regarding prepayments when determining our expected credit losses which are derived in the same manner discussed above.

The forecasted economic conditions used in our modeling of expected losses are provided by a third party. The primary economic metrics we generally use in the economic forecast are unemployment, GDP, interest rates, consumer loan delinquency rates and consumer income. Several forecast scenarios are provided which represent the baseline economic expectations as well as favorable and adverse scenarios. We analyze and evaluate the alternative scenarios for reasonableness and determine the appropriate weighting of these alternative scenarios based upon the current economic conditions and our view of the likelihood and risks of the alternative scenarios.

We use historical customer payment experience to estimate the amount of future recoveries (and the resulting net charge-off rate) on defaulted Private Education Loans. We use judgment in determining whether historical performance is representative of what we expect to collect in the future. The amount of expected future recoveries on defaulted FFELP Loans is based on the contractual government guarantee (which generally limits the maximum loss to 3% of the loan balance).

Once our loss model calculations are performed, we determine if qualitative adjustments are needed for factors not reflected in the quantitative model. These adjustments may include, but are not limited to, changes in lending, servicing and collection policies and practices as well as the effect of other external factors such as the economy and changes in legal or regulatory requirements that impact the amount of future credit losses.

The Private Education Loan provision for loan losses of $249 million in 2025 included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The FFELP Loan provision for loan losses of $31 million was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook, as well as the continued extension of the portfolio.

We evaluated and considered several forecasted economic scenarios when determining our allowance for loan losses and provision. We also considered the characteristics of our loan portfolio and its expected behavior in the forecasted economic scenarios. In general, there has been a decline in the forecasted economic conditions since December 31, 2024 which has been incorporated into our allowance for loan losses as of December 31, 2025. This decline in economic conditions is seen mostly in an increase in forecasted unemployment rates and consumer loan delinquency rates. We have seen an increase in the delinquency rates on our portfolio during 2025 and there remains uncertainty as to the ultimate impact to the economy from historically high inflation experienced during earlier years (primarily 2021 to 2024) and the significant increase in interest rates that began in 2022 and remain at the end of 2025. There is also uncertainty related to the potential negative impact on the portfolio from the end of various payment relief and stimulus benefits that previously occurred. These conclusions and adjustments were based on an evaluation of current and forecasted economic conditions. If future economic conditions are significantly worse than what was assumed as a part of this assessment, it could result in additional provision for loan loss being recorded in future periods.

The evaluation of the allowance for loan losses is inherently subjective, as it requires material estimates and assumptions that are used to project losses over the remaining life of the portfolio (in excess of 15 years). These assumptions and estimates are susceptible to significant changes. If actual future performance in delinquency, charge-offs and recoveries are significantly different than estimated, or management’s assumptions or practices were to change, this could materially affect our estimate of the allowance for loan losses and the related provision for loan losses on our income statement.

Goodwill Impairment Assessment

In determining annually (or more frequently if required) whether goodwill is impaired, we complete a goodwill impairment analysis which may be a qualitative or a quantitative analysis depending on the facts and circumstances associated with the reporting unit. Qualitative factors considered in conjunction with a qualitative analysis include: (1) the amount of cushion that existed the last time a quantitative test was completed which requires performing a valuation of the reporting unit, the resulting value of which is compared to the carrying value of the reporting unit, (2) macroeconomic factors (economy), (3) industry specific factors (growth or deterioration of the market; regulatory/political developments), (4) cost factors (margins), (5) financial performance of the reporting unit itself, (6) other specific items (litigation, change in management or key personnel) and (7) whether a sustained decrease in our share price is indicative of a decline in value of the specific reporting unit. There can be significant judgment involved in assessing these qualitative factors. If, based on a qualitative analysis, we determine it is “more-likely-than-not” that the fair value of a reporting unit is less than its carrying amount, we also complete a quantitative impairment analysis. In lieu of performing a qualitative assessment, we may proceed directly to a quantitative impairment analysis. A quantitative goodwill impairment analysis requires a comparison of the fair value of the reporting unit to its carrying value. If the carrying value of the reporting unit exceeds the reporting unit’s fair value (the amount we believe a third party would pay for such reporting unit), the goodwill associated with the reporting unit will be impaired in an amount equal to the difference between the reporting unit’s fair value and its carrying value, not to exceed the carrying value of goodwill attributed to the reporting unit. There are significant judgments involved in determining the fair value of a reporting unit, including determining the appropriate valuation approach or approaches to utilize and the assumptions to apply including estimates of projected future cash flows, which incorporate estimated future revenues, expenses, net income and capital expenditures from and related to existing and new business activities, and appropriate discount rates and growth rates as well as market multiples if a market approach is utilized. An appropriate resulting

control premium is also considered. The reporting units with goodwill for which we estimate fair value are not publicly traded and for some reporting units, directly comparable market data may not be available to aid in its valuation.

Navient tests goodwill as of October 1 each year or at interim dates if an event occurs or circumstances exist such that it is determined that it is "more-likely-than-not" that the fair value of the reporting unit is less than its carrying value (the qualitative test). Such an event or circumstance is a triggering event. If it is concluded that a triggering event has occurred at an interim date, a quantitative impairment test must be performed.

Interim Impairment Testing

Based on the current performance of and economic environment impacting the reporting units with goodwill, we determined that no triggering events occurred during 2025. Accordingly, an interim impairment test was not warranted to test goodwill associated with reporting units with goodwill at March 31, June 30 and September 30, 2025.

Annual Impairment Testing

We performed annual goodwill impairment testing as of October 1, 2025. In accordance with our policy to perform a quantitative test for all reporting units with goodwill every three years in conjunction with annual impairment testing, we elected to retain a third-party appraisal firm to assist in the valuations required to perform a quantitative impairment test for our Private Education Legacy In-School Loans, Private Education Refinance Loans, Private Education Recent In-School Loans, FFELP Loans, and Federal Education Loan Servicing reporting units as of October 1, 2025. Utilizing an income approach, no goodwill was deemed impaired in conjunction with these reporting units as a result of the quantitative impairment test as the fair values of the reporting units were greater than their respective carry values. Additionally, fair values resulting from sensitivity analyses factoring in more conservative discount rates and growth rates for each reporting unit also yielded fair values in excess of the carrying values of each reporting unit.

The income approach measures the value of each reporting unit’s future economic benefit determined by its discounted cash flows derived from our projections plus an assumed terminal growth rate consistent with what we believe a market participant would assume in an acquisition. These projections are generally five-year projections that reflect the anticipated cash flow fluctuations of the respective reporting units. If a component of a reporting unit is winding down or is assumed to wind down, the projections extend through the anticipated wind-down period, and no residual value is ascribed.

Under our guidance, the third-party appraisal firm developed the discount rate for each reporting unit incorporating such factors as the risk-free rate, a market rate of return, a measure of volatility (Beta), a capital markets risk premium, and a company-specific risk premium for each reporting unit, as appropriate, to adjust for volatility and uncertainty in the economy and to capture specific risk related to the respective reporting units. We considered whether an asset sale or an equity sale would be the most likely sale structure for each reporting unit and valued each reporting unit based on the more likely hypothetical scenario. The discount rates reflect market-based estimates of capital costs and are adjusted for our assessment of a market participant’s view with respect to execution and other risks associated with the projected cash flows of individual reporting units. We reviewed and approved the discount rates provided by the third-party appraiser, including the factors incorporated in developing the discount rates for each reporting unit.

Although the timing of impairment remains uncertain, for the FFELP Loans reporting unit, goodwill will be impaired at some point in the future due to the runoff nature of the portfolio. FFELP Loans goodwill was not deemed impaired as a result of the quantitative impairment test as the fair value of the reporting unit was greater than the reporting unit’s carry value. However, our current projections of future cash flows could result in partial impairment of FFELP goodwill in the next couple of years. The potential timing of impairment could be accelerated if prepayment rates are higher than anticipated or if there is significant change in economic and other factors impacting the discount rate used to determine the fair value of the projected cashflows and thus the reporting unit. Since our estimate of future portfolio cash flows may change, the estimated timing of partial future impairment may also change.

To derive the cash flows underlying the income approach for each reporting unit, we considered the regulatory and legislative environment, the economic environment, and our 2025 earnings and 2026 expected earnings as of October 1, 2025. We also considered our market capitalization in relation to our book equity and concluded that no goodwill associated with our reporting units was impaired as of October 1, 2025. Although our market capitalization was less than our book equity at October 1, 2025, we have concluded that our market capitalization is not indicative of the value of our reporting units with goodwill on a standalone basis.

We considered events subsequent to October 1, 2025, including the decrease in share price which occurred subsequent to December 31, 2025, noting no event which negatively impacted the fair values of our reporting units with goodwill through December 31, 2025. We will continue to monitor our market capitalization to determine if a triggering event occurs in 2026.

Loan Premium and Discount Amortization

The Company had a net unamortized premium balance of $185 million, or 0.42%, in connection with its $44 billion education loan portfolio as of December 31, 2025. The most judgmental estimate for premium and discount amortization on education loans is the Constant Prepayment Rate (CPR), which measures the rate at which loans in the portfolio pay down principal compared to their stated terms. In determining the CPR, we only consider payments made in excess of contractually required payments. This would include loans that are refinanced or consolidated and other early payoff activity. These activities are generally affected by changes in our business strategy, changes in our competitors’ business strategies, legislative changes including the ability to consolidate, interest rates and changes to the current economic and credit environment. When we determine the CPR, we begin with historical prepayment rates. We make judgments about which historical period to start with and then make further judgments about whether that historical experience is representative of future expectations and whether additional adjustment may be needed to those historical prepayment rates.

As a result of the passage of the Health Care and Education Reconciliation Act of 2010 (HCERA), there is no longer the ability to consolidate loans under the FFELP although there are other consolidation options with the Department of Education (ED) and private refinancing options with Navient and other lenders. At this time, we expect CPRs related to our FFELP Loans to remain relatively stable over time, unless there is a regulatory change by ED or legislative change by Congress to either (1) forgive loan balances (which would result in Navient receiving cash for the amounts forgiven resulting in a prepayment of principal) or (2) encourage or force consolidation. Some education loan companies, including Navient, offer Private Education Loans to refinance a borrower’s loan (both FFELP and Private Education Loans). These products and the related expectation of use are built into the CPR assumption we use for FFELP and Private Education Loans. However, it is difficult to accurately project the timing and level at which this activity will continue, and our assumption may need to be updated by a material amount in the future based on changes in the economy, marketplace and legislation.

In 2025, there was a net $11 million increase in net interest income due to cumulative adjustments related to changes in prepayment speed assumptions used to amortize loan premiums and discounts. This primarily relates to our FFELP Loan portfolio where we have experienced historically low prepayment activity (3% prepayment rate) in 2025. The FFELP Loan portfolio experienced a $4.4 billion decrease in prepayments ($977 million in 2025 compared with $5.4 billion in 2024), primarily as a result of federal education loan policy changes. The introduction of several student loan forgiveness and repayment programs and processes, including a repayment plan called Saving on a Valuable Education (SAVE Plan), under the prior administration triggered increased consolidation activity in 2024 as FFELP borrowers consolidated their loans into the Direct Loan Program in order to be eligible for these programs. In 2025, changes in administration resulted in shifts in federal education loan policy priorities, including the curtailment of many forgiveness initiatives and changes to the operations of ED. As a result of these changes and the impact to prepayment activity, the prepayment speed assumption was lowered from 5% to 3% over the next three years (through the end of the current administration’s current term in 2028) and then 5% (long-term historical prepayment rate experienced) thereafter. This results in the slowing down of the amortization of the premium on these loans which has the effect of increasing interest income in the period of the assumption change.

The passage of the Big Beautiful Bill in July 2025 marked a significant shift in the federal education loan system and policies. The Big Beautiful Bill mandates, among others, restructuring of the federal education loan repayment options, including the replacement of multiple existing income-driven repayment plans with a new repayment plan called Repayment Assistance Plan (RAP) to be implemented in July 2026. The Big Beautiful Bill also eliminates the GradPLUS loan program effective July 2026.

Although consolidation activity decreased significantly in 2025 from the prior year, consolidation activity in the future may fluctuate as federal student loan policies continue to evolve, which could have a material impact on the Company’s results.

Non-GAAP Financial Measures

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

1. Core Earnings

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

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

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

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

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

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 14 — Segment Reporting.”

	Year Ended December 31, 2025
				Adjustments					Reportable Segments
(Dollars in millions)	Total GAAP			Reclassi- fications			Additions/ (Subtractions)		Total Adjustments (1)		Total Core Earnings			Consumer Lending			Federal Education Loans		Business Processing		Other
Interest income:
Education loans	$	3,025													$	1,122		$	1,903		$	—		$	—
Cash and investments		83														20			39			—			24
Total interest income		3,108														1,142			1,942			—			24
Total interest expense		2,589														731			1,730			—			96
Net interest income (loss)		519			$	18		$	14		$	32			$	551			411			212			—			(72	)
Less: provisions for loan losses		280											280				249			31			—			—
Net interest income (loss) after provisions for loan losses		239														162			181			—			(72	)
Other income (loss):
Servicing revenue		51														11			40			—			—
Asset recovery and business processing revenue		23														—			—			23			—
Other revenue (loss)		17														1			(1	)		—			47
Total other income (loss)		91				(18	)		48			30				121			12			39			23			47
Expenses:
Direct operating expenses		237														147			70			20			—
Unallocated shared services expenses		184														—			—			—			184
Operating expenses		421				—			—			—				421			147			70			20			184
Goodwill and acquired intangible asset impairment and amortization		3				—			(3	)		(3	)			—			—			—			—			—
Restructuring/other reorganization expenses		17				—			—			—				17			—			—			—			17
Total expenses		441				—			(3	)		(3	)			438			147			70			20			201
Income (loss) before income tax expense (benefit)		(111	)			—			65			65				(46	)		27			150			3			(226	)
Income tax expense (benefit)(2)		(31	)			—			20			20				(11	)		7			35			1			(54	)
Net income (loss)	$	(80	)		$	—		$	45		$	45			$	(35	)	$	20		$	115		$	2		$	(172	)

(1)
Core Earnings adjustments to GAAP:

	Year Ended December 31, 2025
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	32		$	—			$	32
Total other income (loss)		30			—				30
Goodwill and acquired intangible asset impairment and amortization		—			(3	)			(3	)
Total Core Earnings adjustments to GAAP	$	62		$	3				65
Income tax expense (benefit)							20
Net income (loss)						$	45

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

	Year Ended December 31, 2024
			Adjustments					Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)		Total Adjustments (1)		Total Core Earnings			Consumer Lending			Federal Education Loans		Business Processing		Other
Interest income:
Education loans	$	3,655												$	1,259		$	2,397		$	—		$	—
Cash and investments		154													25			88			—			41
Total interest income		3,809													1,284			2,485			—			41
Total interest expense		3,273													786			2,323			—			128
Net interest income (loss)		536		$	35		$	2		$	37			$	573			498			162			—			(87	)
Less: provisions for loan losses		113										113				112			1			—			—
Net interest income (loss) after provisions for loan losses		423													386			161			—			(87	)
Other income (loss):
Servicing revenue		54													10			44			—			—
Asset recovery and business processing revenue		271													—			—			271			—
Other revenue		100													1			5			—			24
Gain on sale of subsidiaries, net		191			—			—			—				—			—			—			191			—
Total other income (loss)		616			(35	)		(35	)		(70	)			546			11			49			462			24
Expenses:
Direct operating expenses		445													143			74			228			—
Unallocated shared services expenses		235													—			—			—			235
Operating expenses		680			—			—			—				680			143			74			228			235
Goodwill and acquired intangible asset impairment and amortization		146			—			(146	)		(146	)			—			—			—			—			—
Restructuring/other reorganization expenses		39			—			—			—				39			—			—			—			39
Total expenses		865			—			(146	)		(146	)			719			143			74			228			274
Income (loss) before income tax expense (benefit)		174			—			113			113				287			254			136			234			(337	)
Income tax expense (benefit)(2)		43			—			23			23				66			58			31			54			(77	)
Net income (loss)	$	131		$	—		$	90		$	90			$	221		$	196		$	105		$	180		$	(260	)

(1)
Core Earnings adjustments to GAAP:

	Year Ended December 31, 2024
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	37			$	—			$	37
Total other income (loss)		(70	)			—				(70	)
Goodwill and acquired intangible asset impairment and amortization		—				(146	)			(146	)
Total Core Earnings adjustments to GAAP	$	(33	)		$	146				113
Income tax expense (benefit)								23
Net income (loss)							$	90

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

	Year Ended December 31, 2023
				Adjustments					Reportable Segments
(Dollars in millions)	Total GAAP			Reclassi- fications			Additions/ (Subtractions)		Total Adjustments (1)		Total Core Earnings			Consumer Lending			Federal Education Loans		Business Processing		Other
Interest income:
Education loans	$	4,266													$	1,369		$	2,901		$	—		$	—
Cash and investments		153														27			76			—			50
Total interest income		4,419														1,396			2,977			—			50
Total interest expense		3,557														816			2,497			—			164
Net interest income (loss)		862			$	32		$	52		$	84			$	946			580			480			—			(114	)
Less: provisions for loan losses		123											123				67			56			—			—
Net interest income (loss) after provisions for loan losses		739														513			424			—			(114	)
Other income (loss):
Servicing revenue		64														12			52			—			—
Asset recovery and business processing revenue		321														—			—			321			—
Other revenue		32														2			14			—			5
Losses on debt repurchases		(8	)			—			—			—				—			—			—			—			(8	)
Total other income (loss)		409				(32	)		21			(11	)			398			14			66			321			(3	)
Expenses:
Direct operating expenses		508														151			72			285			—
Unallocated shared services expenses		292														—			—			—			292
Operating expenses		800				—			—			—				800			151			72			285			292
Goodwill and acquired intangible asset impairment and amortization		10				—			(10	)		(10	)			—			—			—			—			—
Restructuring/other reorganization expenses		25				—			—			—				25			—			—			—			25
Total expenses		835				—			(10	)		(10	)			825			151			72			285			317
Income (loss) before income tax expense (benefit)		313				—			83			83				396			376			418			36			(434	)
Income tax expense (benefit)(2)		85				—			8			8				93			89			99			8			(103	)
Net income (loss)	$	228			$	—		$	75		$	75			$	303		$	287		$	319		$	28		$	(331	)

(1)
Core Earnings adjustments to GAAP:

	Year Ended December 31, 2023
(Dollars in millions)	Net Impact of Derivative Accounting			Net Impact of Acquired Intangibles			Total
Net interest income (loss) after provisions for loan losses	$	84			$	—			$	84
Total other income (loss)		(11	)			—				(11	)
Goodwill and acquired intangible asset impairment and amortization		—				(10	)			(10	)
Total Core Earnings adjustments to GAAP	$	73			$	10				83
Income tax expense (benefit)								8
Net income (loss)							$	75

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

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

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
GAAP net income (loss)	$	(80	)		$	131		$	228
Core Earnings adjustments to GAAP:
Net impact of derivative accounting		62				(33	)		73
Net impact of goodwill and acquired intangible assets		3				146			10
Net income tax effect		(20	)			(23	)		(8	)
Total Core Earnings adjustments to GAAP		45				90			75
Core Earnings net income (loss)	$	(35	)		$	221		$	303

(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.

	Years Ended December 31,
(Dollars in millions)	2025		2024			2023
Core Earnings derivative adjustments:
(Gains) losses on derivative and hedging activities, net, included in other income	$	30		$	(70	)	$	(11	)
Plus: (Gains) losses on fair value hedging activity included in interest expense		7			(5	)		46
Total (gains) losses in GAAP net income		37			(75	)		35
Plus: Reclassification of settlement income (expense) on derivative and hedging activities, net(1)		18			35			32
Mark-to-market (gains) losses on derivative and hedging activities, net(2)		55			(40	)		67
Amortization of net premiums on Floor Income Contracts in net interest income for Core Earnings		—			1			4
Other derivative accounting adjustments(3)		7			6			2
Total net impact of derivative accounting	$	62		$	(33	)	$	73

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

	Years Ended December 31,
(Dollars in millions)	2025		2024			2023
Reclassification of settlements on derivative and hedging activities:
Net settlement income (expense) on interest rate swaps reclassified to net interest income	$	18		$	35		$	32
Total reclassifications of settlement income (expense) on derivative and hedging activities	$	18		$	35		$	32

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

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
Fair value hedges	$	9			$	3		$	24
Foreign currency hedges		(2	)			(8	)		22
Basis swaps		—				—			(1	)
Other(a)		48				(35	)		22
Total mark-to-market (gains) losses on derivative and hedging activities, net	$	55			$	(40	)	$	67

(a) Primarily derivatives that are used to economically hedge the origination of fixed rate Private Education Loans that don't qualify for

hedge accounting. We believe that these derivatives are effective economic hedges, and as such, are a critical element of our

interest rate risk management strategy.

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

Cumulative Impact of Derivative Accounting under GAAP compared to Core Earnings

As of December 31, 2025, derivative accounting has decreased GAAP equity by approximately $39 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.

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
Beginning impact of derivative accounting on GAAP equity	$	8			$	(1	)	$	122
Net impact of net mark-to-market gains (losses) under derivative accounting(1)		(47	)			9			(123	)
Ending impact of derivative accounting on GAAP equity	$	(39	)		$	8		$	(1	)

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

	Years Ended December 31,
(Dollars in millions)	2025			2024			2023
Total pre-tax net impact of derivative accounting recognized in net income(2)	$	(62	)		$	33		$	(73	)
Tax and other impacts of derivative accounting adjustments		16				(8	)		18
Change in mark-to-market gains (losses) on derivatives, net of tax recognized in other comprehensive income		(1	)			(16	)		(68	)
Net impact of net mark-to-market gains (losses) under derivative accounting	$	(47	)		$	9		$	(123	)

(2)
See “Core Earnings derivative adjustments” table above.

Hedging Embedded Floor Income

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

		December 31,
(Dollars in millions)		2025			2024			2023
Total hedged Floor Income, net of tax(1)(2)		$	27			$	44			$	90

(1)
$36 million, $57 million and $118 million on a pre-tax basis as of December 31, 2025, 2024 and 2023, respectively.

(2)
Of the $27 million as of December 31, 2025, approximately $14 million, $7 million and $6 million will be recognized as part of Core Earnings net income in 2026, 2027 and 2028, respectively.

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

		Years Ended December 31,
(Dollars in millions)		2025			2024			2023
Core Earnings goodwill and acquired intangible asset adjustments		$	3			$	146			$	10

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:

(Dollars in billions)	December 31, 2025
Navient Corporation's stockholders' equity	$	2,399		$	2,641
Less: Goodwill and acquired intangible assets		434			437
Tangible Equity		1,965			2,204
Less: Equity held for FFELP Loans		141			154
Adjusted Tangible Equity	$	1,824		$	2,050
Divided by:
Total assets	$	48,681		$	51,789
Less:
Goodwill and acquired intangible assets		434			437
FFELP Loans		28,141			30,852
Adjusted tangible assets	$	20,106		$	20,500
Adjusted Tangible Equity Ratio		9.1	%		10.0	%

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. That is, as of December 31, 2025, the $534 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 $15,815 million Private Education Loan portfolio. The $170 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 $15,815 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

	For the Year Ended December 31,
	2025			2024			2023
(Dollars in millions)
Allowance at end of period (GAAP)	$	364			$	441		$	617
Plus: expected future recoveries on previously fully charged-off loans		170				179			226
Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)	$	534			$	620		$	843
Ending total loans	$	15,815			$	16,157		$	17,519
Ending loans in repayment	$	15,184			$	15,363		$	16,796
Net charge-offs	$	335			$	335		$	298
Allowance coverage of charge-offs (annualized):
GAAP		1.1				1.3			2.1
Adjustment(1)		.5				.5			.7
Non-GAAP Financial Measure(1)		1.6				1.8			2.8
Allowance as a percentage of the ending total loan balance:
GAAP		2.3	%			2.7	%		3.5	%
Adjustment(1)		1.1				1.1			1.3
Non-GAAP Financial Measure(1)		3.4	%			3.8	%		4.8	%
Allowance as a percentage of the ending loans in repayment:
GAAP		2.4	%			2.9	%		3.7	%
Adjustment(1)		1.1				1.2			1.3
Non-GAAP Financial Measure(1)		3.5	%			4.1	%		5.0	%

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

Risk Management

Our Approach

Navient’s identification, understanding and effective management of the risks inherent in our business are critical to our continued success. We assign risk oversight, management and assessment responsibilities at various levels within our organization and continuously coordinate these activities. We maintain comprehensive risk management practices to identify, measure, monitor, evaluate, control and report on our significant risks and we routinely evaluate these practices to determine whether they are functioning properly and can be improved.

Risk Management Philosophy

Navient’s risk management philosophy is to ensure all significant risks inherent in our business are identified, measured, monitored, evaluated, controlled and reported. In furtherance of these goals, Navient

•
maintains a comprehensive and uniform risk management framework;

•
follows a “Three Lines Model” structure based upon: (1) accountability and ownership at the business area level for risks inherent in their activities (first line); (2) supporting areas, such as Human Resources, Legal, Compliance, Finance and Accounting, Information Technology and Information Security, monitor, guide and advise the business areas in their respective areas of expertise (second line); and (3) Internal Audit independently reviews business and support areas to ensure compliance with applicable laws, regulations and internal policies and procedures (third line);

•
provides appropriate reporting to management and our Board of Directors and their respective committees; and

•
trains our employees on our risk management processes and philosophy.

Risk Oversight, Roles and Responsibilities

Responsibility for risk management is assigned at several different levels of our organization, including our Board of Directors and its committees. Each business area within our organization is primarily responsible for managing its specific risks. In addition, our second line support areas are responsible for providing our business areas with the training, systems and specialized expertise necessary to properly perform their risk management responsibilities.

Board of Directors. The Navient Board of Directors and its standing committees oversee our strategic direction, including setting our risk management philosophy, tolerance and parameters; and assessing the risks our businesses face as well as our risk management practices. It approves our annual business plan, periodically reviews our strategic approach and priorities and spends significant time considering our capital requirements and our dividend and share repurchase levels and activities. We escalate to our Board of Directors any significant departures from established tolerances and parameters and review new and emerging risks with them. Standing committees of our Board of Directors include Executive, Audit, Compensation and Human Resources, and Nominations and Governance. Charters for each committee providing its specific responsibilities and areas of risk oversight are published on our website together with the names of the directors serving on these committees.

Chief Executive Officer. Our Chief Executive Officer is responsible for establishing our risk management culture and ensuring business areas operate within risk parameters and in accordance with our annual business plan.

Chief Risk Officer and Chief Compliance Officer. Our Chief Risk Officer and Chief Compliance Officer are responsible for ensuring proper oversight, management and reporting to our Board of Directors and management regarding our risk management practices.

Enterprise Risk and Compliance Committee. Our Enterprise Risk and Compliance Committee is an executive management-level committee where senior management reviews our significant risks, receives reports on adherence to established risk parameters, provides direction on mitigation of our risks and closure of issues and supervises our enterprise risk management program. This committee also oversees regulatory compliance risk management activities including regulatory compliance training, regulatory compliance change management, compliance risk assessment, transactional testing and monitoring, customer complaint monitoring, policies and procedures, privacy and information sharing practices, compliance with the Sarbanes-Oxley Act of 2002, and our Code of Business Conduct.

Credit and Loan Loss Committee. Our Credit and Loan Loss Committee is an executive management-level committee that oversees our credit and portfolio management monitoring and strategies, the sufficiency of our loan loss reserves, and current or emerging issues affecting delinquency and default trends which may result in adjustments in our allowances for loan losses. This committee also evaluates risks associated with new or modified business and makes recommendations regarding proposed business initiatives based on their inherent risks and controls.

Disclosure Committee. Our Disclosure Committee reviews our periodic SEC reporting documents, earnings releases and related disclosure policies and procedures, and evaluates whether modified or additional disclosures are required.

Asset and Liability Committee. Our Asset and Liability Committee oversees our investment portfolio and strategy and our compliance with our investment policy.

Other Management-Level Committees. We have other management-level committees that oversee various other Navient business activities including critical accounting assumptions, human resources management, and incentive compensation governance.

Internal Audit Risk Assessment

Navient’s Internal Audit function monitors Navient’s various risk management and compliance efforts, identifies areas that may require increased focus and resources, and reports its findings and recommendations to executive management and the Audit Committee of our Board of Directors. Internal Audit performs an annual risk assessment evaluating the risk of all significant components of our company and uses the results to develop an annual risk-based internal audit plan as well as a multi-year rotational audit schedule.

Risk Appetite Framework

Navient’s Risk Appetite Framework establishes the level of risk we are willing to accept within each risk category in pursuit of our business strategy. The Audit Committee of our Board of Directors reviews our Risk Appetite Framework annually, helping to ensure consistency in our business decisions, monitoring and reporting. Our management-level Enterprise Risk and Compliance Committee monitors approved risk limits and thresholds to ensure our businesses are operating within approved risk limits. Through ongoing monitoring of risk exposures, management identifies potential risks and develops appropriate responses and mitigation strategies.

Risk Categories

Our Risk Appetite Framework segments Navient’s risks across nine domains: (1) credit; (2) market; (3) funding and liquidity; (4) operational; (5) compliance; (6) legal; (7) governance; (8) reputational/political; and (9) strategic.

Credit Risk. Credit risk is the risk to earnings or capital resulting from an obligor’s failure to meet the terms of any contract with us or otherwise fail to perform as agreed. Navient has credit or counterparty risk exposure with borrowers and cosigners of our Private Education Loans and Private Education Refinance Loans, counterparties with whom we have entered derivative or other similar contracts and entities with whom we make investments. Credit and counterparty risks are overseen by our Chief Risk Officer and our management-level Credit and Loan Loss Committee. The credit risk related to our Private Education Loans and Private Education Refinance Loans is managed within a credit risk infrastructure which includes: (i) a well-defined underwriting, asset quality and collection policy framework; (ii) an ongoing monitoring and review process of portfolio concentration and trends; (iii) assignment and management of credit and loss forecasting authorities and responsibilities; and (iv) establishment of an allowance for loan losses. Credit risk related to derivative contracts is managed by reviewing counterparties for credit strength on an ongoing basis and through our credit policies, which place limits on our exposure with any single counterparty and, in most cases, require collateral to secure the position. Our Chief Risk Officer reports regularly to the Audit Committee of our Board of Directors on credit risk management.

Market Risk. Market risk is the risk to earnings or capital resulting from changes in market conditions, such as interest rates, index mismatches, credit spreads, commodity prices or volatilities. Navient is exposed to various types of market risk, including mismatches between the maturity/duration of assets and liabilities, interest rate risk and other risks that arise through the management of our investment, debt and education loan portfolios. Market risk exposure is overseen by our Chief Financial Officer and our management-level Asset and Liability Committee, which are responsible for managing market risks associated with our assets and liabilities and recommending limits to be included in our risk appetite and investment structure. These activities are closely tied to those related to the management of our funding and liquidity risks. Our Board of Directors periodically reviews and approves the investment, asset and liability management policies, establishes and monitors various tolerances or other risk measurements, as well as contingency funding plans developed and administered by our Asset and Liability Committee. Our Chief Financial Officer reports to the Board of Directors on matters of market risk management.

Funding and Liquidity Risk. Funding and liquidity risk is the risk to earnings, capital or the conduct of our business arising from the inability to meet our obligations when they become due without incurring unacceptable losses, such as the ability to fund liability maturities or invest in future asset growth and business operations at reasonable market rates. Our primary liquidity risks are any mismatch between the maturity of our assets and liabilities and the servicing of our indebtedness. Navient’s Chief Financial Officer oversees our funding and liquidity management activities and is responsible for planning and executing our funding activities and strategies, analyzing and monitoring our liquidity risk, maintaining excess liquidity and accessing diverse funding sources depending on current market conditions. Funding and liquidity risks are overseen and recommendations approved primarily through our management-level Asset and Liability Committee. Our Board of Directors periodically reviews and approves our funding and liquidity

positions and the contingency funding plan developed and administered by our Asset and Liability Committee. The Board of Directors also receives regular reports on our performance against funding and liquidity plans at each of its meetings.

Operational Risk. Operational risk is the risk to earnings or the conduct of our business resulting from inadequate or failed internal processes, people or systems or from external events. Operational risk is pervasive, existing in all business areas, functional units, legal entities and geographic locations, and it includes information technology risk, cybersecurity risk, physical security risk on tangible assets, third-party vendor risk, legal risk, compliance risk and reputational risk. Operational risk exposures are managed by business area management and our second and third lines of defense, with oversight by our management-level committees. The Board of Directors receives operations reports at each regularly scheduled meeting. The Board of Directors also receives business development updates regarding our various business initiatives, receives periodic information security and cybersecurity updates and reviews operational and systems-related matters to ensure their implementation produces no significant internal control issues.

Compliance, Legal and Governance Risk. Compliance, legal and governance risks are subsets of operational risk but are recognized as a separate and complementary risk category given their importance in our business. Compliance risk is the risk to earnings, capital or reputation arising from violations of, or non-conformance with, laws, rules, regulations, prescribed practices, internal policies and procedures, or ethical standards. Legal risk is the risk to earnings, capital or reputation manifested by claims made through the legal system and may arise from a product or service, a transaction, a business relationship, property (real, personal or intellectual), conduct of an employee or change in law or regulation. Governance risk is the risk of not establishing and maintaining a control environment that aligns with stakeholder and regulatory expectations, including tone at the top and board performance. These risks are inherent in all of our businesses. The Audit Committee of our Board of Directors oversees our monitoring and control of legal and compliance risks. The Audit Committee annually reviews our Compliance Plan and significant breaches of our Code of Business Conduct and receives regular reports from executive management responsible for the regulatory and compliance risk management functions. The Board of Directors and the Audit Committee receive reports on significant litigation and regulatory matters at each regularly scheduled meeting.

Reputational/Political Risk. Reputational risk is the risk to earnings or capital arising from damage to our reputation in the view of, or loss of the trust of, customers and the general public. Political risk is the closely related risk to earnings or capital arising from damage to our relationships with governmental entities, regulators and political leaders and candidates. These risks can arise due to both our own acts and omissions (both real and perceived), and the acts and omissions of other industry participants or other third parties, and they are inherent in all of our businesses. Reputational risk and political risk are managed through a combination of business area management and our second and third lines of defense. The Nominations and Governance Committee of our Board of Directors oversees our reputational and political risk.

Strategic Risk. Strategic risk is the risk to earnings or capital arising from our potential inability to successfully carry out our strategy. This risk can arise due to both our own acts or omissions, and the acts or omissions of other industry participants or other third parties, and it is inherent in all of our businesses. Strategic risk is managed through a combination of business area management and our second and third lines of defense.

Supervision and Regulation

Regulatory Oversight

We operate in a highly regulated industry where many aspects of our businesses are subject to federal and state regulation and administrative oversight. The following is a summary of the material statutes and regulations currently applicable to us and our subsidiaries. We may become subject to additional laws, rules or regulations in the future. This summary is not a comprehensive analysis of all applicable laws and is qualified by reference to the full text of the statutes and regulations referenced below.

The Dodd-Frank Act was adopted to reform and strengthen regulation and supervision of the U.S. financial services industry. It contains comprehensive provisions that govern the practices and oversight of financial institutions and other participants in the financial markets. It imposes additional regulations, requirements and oversight on almost every aspect of the U.S. financial services industry, including increased capital and liquidity requirements, limits on leverage and enhanced supervisory authority. Some of these provisions apply to Navient and its various businesses and securitization vehicles.

The CFPB has authority to write regulations under federal consumer financial protection laws and to directly or indirectly enforce those laws and examine financial institutions for compliance. The CFPB is authorized to impose fines and provide consumer restitution in the event of violations, engage in consumer financial education, track consumer complaints, request data and promote the availability of financial services to underserved consumers and communities. It also has authority to prevent unfair, deceptive or abusive practices. The Dodd-Frank Act also authorizes state officials to enforce regulations issued by the CFPB and to enforce the Dodd-Frank Act’s general prohibition against unfair, deceptive and abusive practices.

Higher Education Act (HEA). The HEA is the primary law that authorizes and regulates federal student aid programs for higher education. Navient is subject to the HEA and its education loan operations are periodically reviewed by ED and Guarantors or entities acting on their behalf. As a master servicer of federal education loans, Navient, and its designated sub-servicer, are subject to ED regulations regarding financial responsibility and administrative capability that govern all third-party servicers of insured education loans. In connection with its servicing operations on behalf of Guarantor clients, Navient must comply with ED regulations that govern Guarantor activities as well as agreements for reimbursement between ED and our Guarantor clients. While the HEA is required to be reviewed and "reauthorized" by Congress every five years, Congress has not reauthorized the HEA since 2008, choosing to temporarily extend the Act each year since 2013. We cannot predict whether or when legislation will be passed or how it would impact us. While we cannot predict whether or when reauthorization will be passed or how it would impact us, Congress has continued to pass other legislation that amends the HEA. Most recently, the Big Beautiful Bill, enacted in 2025, significantly changes loan programs available, repayment plans, and loan limits.

Federal Financial Institutions Examination Council. As a service provider to financial institutions, Navient is subject to periodic examination by the Federal Financial Institutions Examination Council (FFIEC). FFIEC is a formal interagency body of the U.S. government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Federal Reserve Banks (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, the Office of the Comptroller of the Currency and the CFPB and to make recommendations to promote uniformity in the supervision of financial institutions.

Consumer Protection and Privacy. Navient’s Consumer Lending and Federal Education Loan segments are subject to federal and state consumer protection, privacy and related laws and regulations and are subject to supervision and examination by the CFPB and various state agencies. Some of the more significant federal laws and regulations include:

•
various laws governing unfair, deceptive or abusive acts or practices;

•
the Truth In Lending Act and Regulation Z, which govern disclosures of credit terms to consumer borrowers;

•
the Fair Credit Reporting Act and Regulation V, which govern the use and provision of information to consumer reporting agencies;

•
the Equal Credit Opportunity Act and Regulation B, which prohibit discrimination on the basis of race, creed or other prohibited factors in extending credit;

•
the Servicemembers Civil Relief Act (SCRA), which applies to all debts incurred prior to commencement of active military service (including education loans) and limits the amount of interest, including certain fees or charges that are related to the obligation or liability; and

•
the Telephone Consumer Protection Act (TCPA), which governs communication methods that may be used to contact customers.

Regulatory Outlook

In 2026, we expect the regulatory environment for the business in which we operate will continue to be challenging. We anticipate that regulators will continue to be focused on conducting regulatory audits and initiating enforcement actions.

We anticipate a number of prominent themes could continue:

•
The number and configuration of regulators, particularly the CFPB, State Attorneys General and various state agencies, are likely to change which may add to the complexity, cost and unpredictability of timing for resolution of particular regulatory issues.

•
The regulatory, compliance and risk control structures of financial institutions subject to enforcement actions by state and federal regulators are frequently cited, regardless of whether past practices have been changed, and enforcement orders have often included detailed demands for increased compliance, audit and board supervision, as well as the use of third-party consultants to recommend further changes or monitor remediation efforts.

•
Issues first identified with respect to one consumer product class or distribution channel are sometimes applied to other product classes or channels.

We expect that consumer protection regulations, standards, supervision, examination and enforcement practices will continue to evolve in both detail and scope as well as being more unpredictable than in previous periods. This evolution has added and may continue to significantly add to Navient’s compliance, servicing and operating costs.

We have invested in compliance through multiple steps including alignment of Navient’s compliance management system to a lending, servicing and collections business model; dedicated compliance resources for certain topics to

focus on consumer expectations; formation of business support operations to enhance risk, control and compliance functions in each business area; additional regulatory training for front-line employees to ensure obligations are understood and followed during interactions with customers, as well as additional regulatory training for our Board of Directors to enhance their ability to oversee the Company’s risk framework and compliance as it and the regulatory environment changes; and expanded oversight and analysis of complaint trends to identify and remediate, if necessary, areas of potential consumer harm. Despite these increased activities, our current operations and compliance processes may not satisfy evolving regulatory standards. Past practices or products may continue to be the focus of examinations, inquiries or lawsuits. As a result of our recent strategic announcements, we anticipate the need to further restructure and realign our compliance efforts and focus with our evolving footprint and businesses.

As described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management,” Navient has implemented a coordinated, formal enterprise risk management system aimed at reducing business and regulatory risks.

Listed below are some of the most significant recent and pending regulatory changes that have the potential to affect Navient.

Education Loan Servicing and Consumer Lending. The CFPB has been active in the education loan industry and undertook a number of initiatives in recent years relative to the private education loan market and education loan servicing. In addition, several states have enacted various state servicing and licensing requirements. It is possible that more states will propose or pass similar or different requirements on either holders of education loans or their servicers. Depending on the nature of these laws or rules, they may impose additional or different requirements than Navient faces at the federal level.

Debt Collection Supervision. The CFPB also maintains supervisory authority over larger consumer debt collectors and in late 2021 implemented changes to Regulation F governing the collection of third-party consumer debt. The CFPB’s rules do not preempt the various and varied levels of state consumer and collection regulations to which the activities of Navient’s subsidiaries are currently subject. Navient also utilizes third-party debt collectors to collect defaulted and charged-off education loans and will continue to be responsible for oversight of their procedures and controls.

Oversight of Derivatives. The Dodd-Frank Act created a comprehensive new regulatory framework for derivatives transactions under the Commodity Futures Trading Commission (CFTC), other prudential regulators and the SEC. This framework, among other things, subjects certain swap participants to new capital and margin requirements, recordkeeping and business conduct standards and imposes registration and regulation of swap dealers and major swap participants. Even where Navient or a securitization trust sponsored by Navient qualifies for an exemption, many of its derivatives counterparties are subject to capital, margin and business conduct requirements and therefore Navient’s business may be impacted. Where Navient or the securitization trusts it sponsors do not qualify for an exemption, Navient or an existing or future securitization trust sponsored by Navient may be unable to enter into new swaps to hedge interest rate or currency risk or the costs associated with such swaps may increase. With respect to existing securitization trusts, an inability to amend, novate or otherwise materially modify existing swap contracts could result in a downgrade of its outstanding asset-backed securities. As a result, Navient’s business, ability to access the capital markets for financing and costs may be impacted by these regulations.

Legal Proceedings

For a discussion of legal matters as of December 31, 2025, please refer to “Note 12 – Commitments, Contingencies and Guarantees” to our consolidated financial statements included in this report, which is incorporated into this item by reference.