Navient 8K posts third quarter 2024 financial results | NAVI 29 Oct 24

Exhibit 99.2

NAVIENT REPORTS THIRD-QUARTER

2024 FINANCIAL RESULTS

LOGO

HERNDON, Va., October 30, 2024 — Navient (Nasdaq: NAVI) today released its third-quarter 2024 financial results.

OVERALL RESULTS

• GAAP net loss of $2 million($0.02 diluted loss per share).⁽¹⁾

• Core Earnings⁽²⁾ of $160 million ($1.45 diluted earnings per share).

SIGNIFICANT ITEMS

• GAAP and Core Earnings results included a net increase to pre-tax income of $166 million ($1.17 diluted earnings per share) comprised of the following items:

^○ A gain of $219 million ($1.54 diluted earnings per share) from the sale of Xtend Healthcare, our healthcare services business.

^○ $21 million ($0.15 diluted loss per share) of provision for loan losses related to lowering the expected recovery rate on defaulted Private Education Loans.

^○ $18 million ($0.12 diluted loss per share) of restructuring expenses and $14 million ($0.10 diluted loss per share) of regulatory-related expenses, primarily related to the settlement agreement with the CFPB in September, eliminating the overhang of a contingent liability.

CEO COMMENTARY – “The third quarter was highly productive as we reached variable-cost economics on our loan servicing activities, completed the sale of our healthcare business, and continued to reduce our corporate expenses,” said David Yowan, president and CEO, Navient. “We saw healthy growth within our lending business, including a 31% year-over-year increase in loan originations. We are more than doubling our targeted share repurchases in the fourth quarter compared to the third quarter.”

THIRD-QUARTER HIGHLIGHTS


FEDERAL EDUCATION LOANS SEGMENT		• Net income of $27 million. • Net interest margin of 0.46%. • FFELP Loan prepayments of $1.0 billion compared to $2.5 billion, $1.6 billion, and $600 million in second-quarter 2024, first-quarter 2024 and third-quarter 2023, respectively.

CONSUMER LENDING SEGMENT		• Net income of $27 million. • Net interest margin of 2.84%. • Originated $500 million of Private Education Loans, up 31% from $382 million in the year-ago quarter.

BUSINESS PROCESSING SEGMENT		• Fee revenue of $70 million. • Completed the sale of our healthcare services business for $369 million cash on September 19, 2024, at a gain of $219 million. Continuing to explore divestiture options for the remaining government services businesses within the Business Processing division. • Net income of $178 million and EBITDA⁽²⁾of $233 million.

CAPITAL & FUNDING		• GAAP equity-to-asset ratio of 5.0% and adjusted tangible equity ratio⁽²⁾ of 9.8%. • Repurchased $33 million of common shares. $176 million common share repurchase authority remains outstanding. • Paid $17 million in common stock dividends.

OPERATING EXPENSES		• Operating expenses of $170 million, excluding $14 million of regulatory-related expenses.

⁽¹⁾	See page 10, “GAAP Comparison of 2024 Results with 2023,” for a discussion of the $138 million of goodwill impairment recognized related to our government services business. Core Earnings excludes goodwill and intangible asset impairment and amortization.

⁽²⁾	Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures” on pages 18 – 28.

SEGMENT RESULTS — CORE EARNINGS

FEDERAL EDUCATION LOANS

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

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS


(Dollars in millions)	3Q24		2Q24		3Q23

Net interest income	$	40	$	33	$	161
Provision for loan losses		(5)		(2)		36
Other revenue		11		17		15

Total revenue		56		52		140
Expenses		20		16		17

Pre-tax income		36		36		123

Net income	$	27	$	28	$	94


Segment net interest margin		.46%		.36%		1.52%
FFELP Loans:
FFELP Loan spread		.60%		.49%		1.63%
Provision for loan losses	$	(5)	$	(2)	$	36
Net charge-offs	$	9	$	10	$	16
Net charge-off rate		.14%		.14%		.19%
Greater than 30-days delinquency rate		13.4%		13.5%		16.8%
Greater than 90-days delinquency rate		7.3%		7.0%		9.2%
Forbearance rate		16.4%		16.8%		16.4%
Average FFELP Loans	$	32,373	$	34,741	$	40,554
Ending FFELP Loans, net	$	31,522	$	32,940	$	39,581

(Dollars in billions)
Total federal loans serviced	$	37	$	38	$	46

DISCUSSION OF RESULTS — 3Q24 vs. 3Q23

•

Net income was $27 million compared to $94 million.

•

Net interest income decreased $121 million primarily due to the year-ago quarter having a $48 million benefit related to a decrease in the speed of loan premium amortization in connection with the continued extension of a portion of the portfolio. There was also a decrease in net interest income due to the maturity of Floor Income hedges related to the portfolio, the impact of increasing interest rates on the different index resets for the segment’s assets and debt, and the paydown of the loan portfolio which included an increase in prepayments from $600 million in the year-ago quarter to $1.0 billion in the current quarter.

•

Provision for loan losses decreased $41 million. The $(5) million of provision for loan losses in the current period was the result of relatively stable credit trends and elevated prepayment activity over the prior year. The $36 million of provision in the year-ago quarter was primarily a result of the continued extension of the portfolio and the resulting increase in both the expected future defaults and the premium allocated to all expected future defaults.

^○

Net charge-offs were $9 million compared to $16 million.

^○

Delinquencies greater than 90 days were $1.9 billion compared to $2.9 billion.

^○

Forbearances were $5.0 billion compared to $6.2 billion.

•

Expenses were $3 million higher primarily as a result of transitioning servicing of our portfolio to a third party on July 1, 2024. Overall, for consolidated Navient (across the Federal Education Loans, Consumer Lending and Other segments), there was a $1 million increase in net servicing costs (net of transition services revenue earned) in the current quarter related to this transition, as expected. Over the remaining life of the portfolio, we expect a significant overall cost savings to be realized.

CONSUMER LENDING

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

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS


(Dollars in millions)	3Q24		2Q24		3Q23

Net interest income	$	122	$	126	$	150
Provision for loan losses		47		16		36
Other revenue		2		3		4

Total revenue		77		113		118
Expenses		44		34		44

Pre-tax income		33		79		74

Net income	$	27	$	60	$	56


Segment net interest margin		2.84%		2.89%		3.17%
Private Education Loans (including Refinance Loans):
Private Education Loan spread		2.94%		3.01%		3.29%
Provision for loan losses	$	47	$	16	$	36
Net charge-offs⁽¹⁾	$	74	$	67	$	73
Net charge-off rate⁽¹⁾		1.87%		1.65%		1.66%
Greater than 30-days delinquency rate		5.3%		5.2%		4.7%
Greater than 90-days delinquency rate		2.4%		2.2%		1.9%
Forbearance rate		2.8%		1.8%		2.0%
Average Private Education Loans	$	16,587	$	16,936	$	18,165
Ending Private Education Loans, net	$	16,005	$	16,238	$	17,333
Private Education Refinance Loans:
Net charge-offs	$	13	$	12	$	8
Greater than 90-days delinquency rate		.6%		.5%		.3%
Average Private Education Refinance Loans	$	8,552	$	8,662	$	9,091
Ending Private Education Refinance Loans, net	$	8,405	$	8,494	$	8,897
Private Education Refinance Loan originations	$	262	$	222	$	178

⁽¹⁾

Excluding the $21 million and $25 million of charge-offs on the expected future recoveries of previously fully charged-off loans in third-quarters 2024 and 2023, respectively, that occurred as a result of changing the net charge-off rate on defaulted loans from 82.3% to 82.7% in third-quarter 2024 and from 81.9% to 82.3% in third-quarter 2023.

DISCUSSION OF RESULTS — 3Q24 vs. 3Q23

•

Originated $500 million of Private Education Loans compared to $382 million.

^○

Refinance Loan originations were $262 million compared to $178 million.

^○

In-school loan originations were $238 million compared to $204 million.

•

Net income was $27 million compared to $56 million.

•

Net interest income decreased $28 million primarily due to the paydown of the loan portfolio.

•

Provision for loan losses increased $11 million. The provision for loan losses of $47 million in the current period included $21 million related to changes in the net charge-off rates on defaulted loans, $15 million in connection with loan originations and $11 million related to a general reserve build. The provision for loan losses of $36 million in the year-ago quarter included $29 million related to changes in the net charge-off rates on defaulted loans and $12 million in connection with loan originations, which was partially offset by a $5 million reserve release.

^○

Excluding the $21 million and $25 million, respectively, related to the change in the net charge-off rate on defaulted loans, net charge-offs were $74 million, up $1 million from $73 million.

^○

Private Education Loan delinquencies greater than 90 days: $377 million, up $43 million from $334 million.

^○

Private Education Loan forbearances: $445 million, up $101 million from $344 million.

•

Total expense was unchanged from the year-ago period. There was not a significant impact to servicing expense on the Private Education Loan portfolio related to the servicer transition on July 1, 2024.

BUSINESS PROCESSING

In this segment, Navient performs business processing services for non-education related government and healthcare clients.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS


(Dollars in millions)	3Q24		2Q24		3Q23
Revenue from government services	$	42	$	49	$	57
Revenue from healthcare services		28		32		28

Total fee revenue		70		81		85
Gain on sale of subsidiary		219		—		—

Total revenue		289		81		85
Expenses		57		62		73

Pre-tax income		232		19		12

Net income	$	178	$	15	$	9

EBITDA⁽¹⁾	$	233	$	20	$	13
EBITDA margin⁽¹⁾		81%		25%		15%

⁽¹⁾

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

DISCUSSION OF RESULTS — 3Q24 vs. 3Q23

•

Revenue was $289 million, $204 million higher, due to the $219 million gain on the sale of our healthcare services business.

•

Net income was $178 million compared to $9 million.

•

EBITDA was $233 million, up $220 million, as a result of the gain on the sale of our healthcare services business.

•

EBITDA margin was 81%, up from 15%, as a result of the gain on the sale of our healthcare services business.

Definitions for capitalized terms in this release can be found in Navient’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024 (the 2023 Form 10-K).

Navient will hold a live audio webcast today, October 30, 2024, at 8 a.m. ET, hosted by David Yowan, president and CEO, and Joe Fisher, CFO.

Analysts and investors who wish to ask questions are requested to pre-register at Navient.com/investors at least 15 minutes ahead of start time to receive their personal dial-in access details. Others who wish to join in listen-only mode do not need to pre-register and may simply visit Navient.com/investors to access the webcast.

Supplemental financial information and presentation slides used during the call will be available no later than start time. A replay of the webcast will be available approximately two hours after the event’s conclusion.

This news release contains “forward-looking statements,” within the meaning of the federal securities law, about our business and prospectus and other information that is based on management’s current expectations as of the date of this release. Statements that are not historical facts, including statements about our beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “could,” “should,” “goals,” or “target.” Such statements are based on management’s expectations as of the date of this release and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. For Navient, these factors include, among other things: general economic conditions, including the potential impact of inflation and interest rates on Navient and its clients and customers and on the creditworthiness of third parties; and increased defaults on education loans held by us. The company could also be affected by, among other things, unanticipated repayment trends on education loans including prepayments or deferrals resulting from new interpretations or the timing of the execution and implementation of current laws, rules or regulations or future laws, executive orders or other policy initiatives that operate to encourage or require consolidation, abolish existing or create additional income-based repayment or debt forgiveness programs or establish other policies and programs or

extensions of previously announced deadlines which may increase or decrease the prepayment rates on education loans and accelerate or slow down the repayment of the bonds in our securitization trusts; a reduction in our credit ratings; changes to applicable laws, rules, regulations and government policies and expanded regulatory and governmental oversight; changes in the general interest rate environment, including the availability of any relevant money-market index rate or the relationship between the relevant money-market index rate and the rate at which our assets are priced; the interest rate characteristics of our assets do not always match those of our funding arrangements; adverse market conditions or an inability to effectively manage our liquidity risk or access liquidity could negatively impact us; the cost and availability of funding in the capital markets; our ability to earn Floor Income and our ability to enter into hedges relative to that Floor Income are dependent on the future interest rate environment and therefore is variable; our use of derivatives exposes us to credit and market risk; our ability to continually and effectively align our cost structure with our business operations; a failure or breach of our operating systems, infrastructure or information technology systems; failure by any third party providing us material services or products or a breach or violation of law by one of these third parties; our work with government clients exposes us to additional risks inherent in the government contracting environment; acquisitions, strategic initiatives and investments or divestitures that we pursue; shareholder activism; reputational risk and social factors; and the other factors that are described in the “Risk Factors” section of Navient’s Annual Report on Form 10-K for the year ended December 31, 2023, and in our other reports filed with the Securities and Exchange Commission. The preparation of our consolidated financial statements also requires management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect and actual results could differ materially. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. The company does not undertake any obligation to update or revise these forward-looking statements except as required by law.

* * *

About Navient

Navient (Nasdaq: NAVI) provides technology-enabled education finance and business processing solutions that simplify complex programs and help millions of people achieve success. Our customer-focused, data-driven services deliver exceptional results for clients in education and government. Learn more at Navient.com.

Contact:


Media:		Paul Hartwick, 302-283-4026, paul.hartwick@navient.com

Investors:		Jen Earyes, 703-984-6801, jen.earyes@navient.com

# # #

LOGO

SELECTED HISTORICAL FINANCIAL INFORMATION AND RATIOS


	QUARTERS ENDED						NINE MONTHS ENDED
(In millions, except per share data)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
GAAP Basis
Net income (loss)	$	(2)	$	36	$	79	$	107	$	256
Diluted earnings (loss) per common share	$	(.02)	$	.32	$	.65	$	.95	$	2.04
Weighted average shares used to compute diluted earnings per share		108		112		121		112		125
Return on assets		(.02)%		.26%		.51%		.26%		.53%

Core Earnings Basis⁽¹⁾
Net income⁽¹⁾	$	160	$	33	$	57	$	246	$	278
Diluted earnings per common share⁽¹⁾	$	1.45	$	.29	$	.47	$	2.20	$	2.22
Weighted average shares used to compute diluted earnings per share		110		112		121		112		125
Net interest margin, Federal Education Loan segment		.46%		.36%		1.52%		.46%		1.20%
Net interest margin, Consumer Lending segment		2.84%		2.89%		3.17%		2.91%		3.09%
Return on assets		1.21%		.24%		.37%		.59%		.58%

Education Loan Portfolios
Ending FFELP Loans, net	$	31,522	$	32,940	$	39,581	$	31,522	$	39,581
Ending Private Education Loans, net		16,005		16,238		17,333		16,005		17,333

Ending total education loans, net	$	47,527	$	49,178	$	56,914	$	47,527	$	56,914

Average FFELP Loans	$	32,373	$	34,741	$	40,554	$	34,749	$	41,886
Average Private Education Loans		16,587		16,936		18,165		16,968		18,710

Average total education loans	$	48,960	$	51,677	$	58,719	$	51,717	$	60,596

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

RESULTS OF OPERATIONS

We present the results of operations below first in accordance with GAAP. Following our discussion of earnings results on a GAAP basis, we present our results on a segment basis. We have four reportable operating segments: Federal Education Loans, Consumer Lending, Business Processing and Other. These segments operate in distinct business environments and we manage and evaluate the financial performance of these segments using non-GAAP financial measures we call Core Earnings (see “Non-GAAP Financial Measures — Core Earnings” for further discussion).

GAAP INCOME STATEMENTS (UNAUDITED)


							September 30, 2024 vs. June 30, 2024				September 30, 2024 vs. September 30, 2023
	QUARTERS ENDED						Increase (Decrease)				Increase (Decrease)
(In millions, except per share data)	September 30, 2024		June 30, 2024		September 30, 2023		$		%		$		%
Interest income:
FFELP Loans	$	591	$	608	$	778	$	(17)		(3)%	$	(187)		(24)%
Private Education Loans		314		317		351		(3)		(1)		(37)		(11)
Cash and investments		43		48		41		(5)		(10)		2		5

Total interest income		948		973		1,170		(25)		(3)		(222)		(19)
Total interest expense		828		843		879		(15)		(2)		(51)		(6)

Net interest income		120		130		291		(10)		(8)		(171)		(59)
Less: provisions for loan losses		42		14		72		28		200		(30)		(42)

Net interest income after provisions for loan losses		78		116		219		(38)		(33)		(141)		(64)
Other income (loss):
Servicing revenue		13		18		15		(5)		(28)		(2)		(13)
Asset recovery and business processing revenue		70		81		85		(11)		(14)		(15)		(18)
Other income		10		4		5		6		150		5		100
Gain on sale of subsidiary		219		—		—		219		100		219		100
Gains (losses) on derivative and hedging activities, net		(36)		14		26		(50)		(357)		(62)		(238)

Total other income (loss)		276		117		131		159		136		145		111
Expenses:
Operating expenses		184		166		233		18		11		(49)		(21)
Goodwill and acquired intangible asset impairment and amortization expense		140		3		3		137		4,567		137		4,567
Restructuring/other reorganization expenses		18		16		4		2		13		14		350

Total expenses		342		185		240		157		85		102		43

Income before income tax expense		12		48		110		(36)		(75)		(98)		(89)
Income tax expense		14		12		31		2		17		(17)		(55)

Net income (loss)	$	(2)	$	36	$	79	$	(38)		(106)%	$	(81)		(103)%

Basic earnings (loss) per common share	$	(.02)	$	.32	$	.66	$	(.34)		(106)%	$	(.68)		(103)%

Diluted earnings (loss) per common share	$	(.02)	$	.32	$	.65	$	(.34)		(106)%	$	(.67)		(103)%

Dividends per common share	$	.16	$	.16	$	.16	$	—		—%	$	—		—%


	NINE MONTHS ENDED September 30,				Increase (Decrease)
(In millions, except per share data)	2024		2023		$		%
Interest income:
FFELP Loans	$	1,861	$	2,191	$	(330)		(15)%
Private Education Loans		958		1,036		(78)		(8)
Cash and investments		129		111		18		16

Total interest income		2,948		3,338		(390)		(12)
Total interest expense		2,547		2,636		(89)		(3)

Net interest income		401		702		(301)		(43)
Less: provisions for loan losses		68		68		—		—

Net interest income after provisions for loan losses		333		634		(301)		(47)
Other income (loss):
Servicing revenue		48		48		—		—
Asset recovery and business processing revenue		228		240		(12)		(5)
Other income		22		15		7		47
Gain on sale of subsidiary		219		—		219		100
Gains (losses) on derivative and hedging activities, net		11		44		(33)		(75)

Total other income (loss)		528		347		181		52
Expenses:
Operating expenses		533		601		(68)		(11)
Goodwill and acquired intangible asset impairment and amortization expense		145		8		137		1,713
Restructuring/other reorganization expenses		35		23		12		52

Total expenses		713		632		81		13

Income before income tax expense		148		349		(201)		(58)
Income tax expense		41		93		(52)		(56)

Net income	$	107	$	256	$	(149)		(58)%

Basic earnings per common share	$	.97	$	2.06	$	(1.09)		(53)%

Diluted earnings per common share	$	.95	$	2.04	$	(1.09)		(53)%

Dividends per common share	$	.48	$	.48	$	—		—%

GAAP BALANCE SHEETS (UNAUDITED)


(In millions, except share and per share data)	September 30, 2024		June 30, 2024		September 30, 2023
Assets
FFELP Loans (net of allowance for loan losses of $180, $194 and $220, respectively)	$	31,522	$	32,940	$	39,581
Private Education Loans (net of allowance for loan losses of $471, $493 and $625, respectively)		16,005		16,238		17,333
Investments		140		132		149
Cash and cash equivalents		1,143		1,088		977
Restricted cash and cash equivalents		1,650		2,918		1,824
Goodwill and acquired intangible assets, net		438		690		697
Other assets		2,542		2,616		2,853

Total assets	$	53,440	$	56,622	$	63,414

Liabilities
Short-term borrowings	$	5,305	$	5,326	$	4,662
Long-term borrowings		44,695		47,545		54,907
Other liabilities		746		1,003		947

Total liabilities		50,746		53,874		60,516

Commitments and contingencies

Equity
Series A Participating Preferred Stock, par value $0.20 per share; 2 million shares authorized at December 31, 2021; no shares issued or outstanding		—		—		—
Common stock, par value $0.01 per share; 1.125 billion shares authorized: 465 million, 465 million and 464 million shares, respectively, issued		4		4		4
Additional paid-in capital		3,374		3,367		3,349
Accumulated other comprehensive income (loss), net of tax		3		10		43
Retained earnings		4,690		4,710		4,685

Total stockholders’ equity before treasury stock		8,071		8,091		8,081
Less: Common stock held in treasury: 358 million, 356 million and 346 million shares, respectively		(5,377)		(5,343)		(5,183)

Total equity		2,694		2,748		2,898

Total liabilities and equity	$	53,440	$	56,622	$	63,414

GAAP COMPARISON OF 2024 RESULTS WITH 2023

Three Months Ended September 30, 2024 Compared with Three Months Ended September 30, 2023

For the three months ended September 30, 2024, net loss was $2 million, or $0.02 diluted loss per common share, compared with net income of $79 million, or $0.65 diluted earnings per common share, for the year-ago period.

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

•

Net interest income decreased by $171 million primarily as a result of the year-ago quarter having a $48 million benefit related to a decrease in the speed of loan premium amortization in connection with the continued extension of a portion of the FFELP Loan portfolio. In addition, the paydown of the FFELP and Private Education Loan portfolios, the maturity of Floor Income hedges related to the FFELP Loan portfolio, the impact of increasing interest rates on the different index resets for the FFELP Loan assets and debt, and a $29 million decrease in mark-to-market gains on fair value hedges recorded in interest expense contributed to the decrease in net interest income.

•

Provisions for loan losses decreased $30 million from $72 million to $42 million:

^○

The provision for FFELP Loan losses decreased $41 million from $36 million to $(5) million.

^○

The provision for Private Education Loan losses increased $11 million from $36 million to $47 million.

The provision for FFELP Loan losses of $(5) million in the current period was the result of relatively stable credit trends and elevated prepayment activity over the prior year. The $36 million of provision in the year-ago quarter was primarily a result of the continued extension of a portion of the FFELP Loan portfolio and the resulting increase in both the expected future defaults and the premium allocated to all expected future defaults.

The provision for Private Education Loan losses of $47 million in the current period included $21 million related to changes in the net charge-off rates on defaulted loans, $15 million in connection with loan originations and $11 million related to a general reserve build. The provision of $36 million in the year-ago quarter included $29 million related to changes in the net charge-off rates on defaulted loans and $12 million in connection with loan originations, partially offset by a $5 million reserve release.

•

A gain of $219 million was recognized in the current quarter from the sale of 100% of our equity interests for $369 million cash, on September 19, 2024, of Xtend Healthcare, our healthcare services business.

•

Asset recovery and business processing revenue decreased $15 million primarily as a result of a decrease in our government services revenue related to congressional funding not being approved to continue performing services under a particular contract.

•

Net gains on derivative and hedging activities decreased $62 million, primarily due 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 $49 million, primarily due to a $33 million decrease in regulatory expense. In the current period there was $18 million of regulatory-related expense recorded in connection with the $120 million settlement agreement entered into with the CFPB in September. The year-ago period had $45 million of regulatory expense related to the same matter. In addition, there was a decline in the business processing segment expenses as a result of the government services contract discussed above.

•

Goodwill and acquired intangible asset impairment and amortization expense increased by $137 million as a result of a $138 million impairment recognized in the current quarter related to our government services business. The impairment was recognized primarily as a result of being informed in September that a contract that represents a significant portion of Government Services net income ($6 million and $18 million of revenue in the three and nine months ended September 30, 2024, respectively) would not be renewed in 2025. In addition, a federal program which is a significant part of a Government Services contract remained unfunded during the third quarter. There has been increased uncertainty as to when or if there will be congressional approval to fund this program which would result in the resumption of services provided by Government Services under this contract.

•

Restructuring and other reorganization expenses increased $14 million primarily due to an increase in severance-related costs. The current quarter’s restructuring and other reorganization expenses of $18 million included $13 million of severance-related costs in connection with the various strategic initiatives being implemented to simplify the company, reduce our expense base and enhance our flexibility.

•

The effective income tax rates for the current and year-ago quarters were 120% and 28%, respectively. The movement in the effective income tax rate was primarily driven by the settlement with the CFPB in the current quarter of which a portion was not deductible for tax and the impact of a portion of the goodwill impairment recorded in the current quarter not being deductible.

We repurchased 2.1 million and 4.2 million shares of our common stock during the third quarters of 2024 and 2023, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 13 million common shares (or 11%) from the year-ago period.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024, net income was $107 million, or $0.95 diluted earnings per common share, compared with net income of $256 million, or $2.04 diluted earnings per common share, for the year-ago period.

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

•

Net interest income decreased by $301 million primarily as a result of the paydown of the FFELP and Private Education Loan portfolios. In particular, the FFELP Loan portfolio experienced a $3.1 billion increase in prepayments ($5.0 billion in the current period compared with $1.9 billion in the year-ago period), primarily as a result of the Department of Education’s proposed debt relief regulations. The current period’s increase in prepayments resulted in the write-off of an additional $35 million of loan premium compared to the year-ago period. Additionally, the year-ago period had a $48 million benefit related to a decrease in the speed of loan premium amortization in connection with the continued extension of a portion of the FFELP Loan portfolio. These two items resulted in premium amortization being $83 million higher in the current period compared to the prior period. There was also a decrease in net interest income due to the maturity of Floor Income hedges related to the FFELP Loan portfolio as well as the impact of increasing interest rates on the different index resets for the FFELP Loan assets and debt. These decreases were partially offset by an $18 million decrease in mark-to-market losses on fair value hedges recorded in interest expense.

•

Provisions for loan losses remained unchanged at $68 million:

^○

The provision for FFELP Loan losses decreased $57 million from $51 million to $(6) million.

^○

The provision for Private Education Loan losses increased $57 million from $17 million to $74 million.

The provision for FFELP Loan losses of $(6) million in the current period was the result of relatively stable credit trends and elevated prepayment activity over the prior year. See the three-month discussion of results above for the driver of the prior period’s provision being significantly higher than the current period.

The provision for Private Education Loan losses of $74 million in the current period included $21 million related to changes in the net charge-off rates on defaulted loans, $26 million in connection with loan originations and $27 million related to a general reserve build. The provision of $17 million in the year-ago period included $(63) million in connection with the adoption of ASU No. 2022-02, $21 million in connection with loan originations, $23 million in connection with the resolution of certain private legacy loans in bankruptcy, $29 million related to changes in the net charge-off rates on defaulted loans and $7 million related to a general reserve build. See our 2023 Form 10-K for further discussion on the adoption of ASU No. 2022-02 as well as the resolution of certain private legacy loans in bankruptcy.

•

A gain of $219 million was recognized in the current period from the sale of 100% of our equity interests for $369 million cash, on September 19, 2024, of Xtend Healthcare, our healthcare services business.

•

Asset recovery and business processing revenue decreased $12 million primarily as a result of a decrease in our government services revenue related to congressional funding not being approved to continue performing services under a particular contract.

•

Net gains on derivative and hedging activities decreased $33 million primarily due 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 $68 million primarily due to a decrease in the business processing segment expenses as a result of the government services contract discussed above, as well as several efficiency initiatives

recently implemented and the year-ago period having elevated upfront start-up costs on new contracts. In addition there was lower in-school loan marketing spend as a result of improved marketing efficiencies and a reduction in regulatory expenses.

•

Goodwill and acquired intangible asset impairment and amortization expense increased by $137 million as a result of a $138 million impairment recognized in the current period related to our government services business. See the three-month discussion of results above for further detail.

•

Restructuring and other reorganization expenses increased $12 million due to an increase in severance-related costs. The current period’s restructuring and other reorganization expenses of $35 million included $25 million of severance-related costs in connection with the various strategic initiatives being implemented to simplify the company, reduce our expense base and enhance our flexibility.

We repurchased 7.2 million and 13.9 million shares of our common stock during the nine months ended September 30, 2024 and 2023, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 13 million common shares (or 10%) from the year-ago period.

PRIVATE EDUCATION LOANS PORTFOLIO PERFORMANCE

Private Education Loan Delinquencies and Forbearance


	September 30, 2024				June 30, 2024				September 30, 2023
(Dollars in millions)	Balance		%		Balance		%		Balance		%
Loans in-school/grace/deferment⁽¹⁾	$	372			$	350			$	365
Loans in forbearance⁽²⁾		445				294				344
Loans in repayment and percentage of each status:
Loans current		14,827		94.7%		15,250		94.8%		16,435		95.3%
Loans delinquent 31-60 days⁽³⁾		282		1.8		311		1.9		304		1.8
Loans delinquent 61-90 days⁽³⁾		173		1.1		175		1.1		176		1.0
Loans delinquent greater than 90 days⁽³⁾		377		2.4		351		2.2		334		1.9

Total Private Education Loans in repayment		15,659		100%		16,087		100%		17,249		100%

Total Private Education Loans, gross		16,476				16,731				17,958
Private Education Loan allowance for losses		(471)				(493)				(625)

Private Education Loans, net	$	16,005			$	16,238			$	17,333

Percentage of Private Education Loans in repayment				95.0%				96.2%				96.1%

Delinquencies as a percentage of Private Education Loans in repayment				5.3%				5.2%				4.7%

Loans in forbearance as a percentage of loans in repayment and forbearance				2.8%				1.8%				2.0%

Cosigner rate⁽⁴⁾				33%				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., internship periods, as well as loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.

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

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

⁽⁴⁾	Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66%, 66% and 65% for third-quarter 2024, second-quarter 2024, and third-quarter 2023, respectively.

ALLOWANCE FOR LOAN LOSSES



	QUARTER ENDED
	September 30, 2024
(Dollars in millions)	FFELP Loans		Private Education Loans		Total
Allowance at beginning of period	$	194	$	493	$	687
Total provision		(5)		47		42
Charge-offs:
Gross charge-offs		(9)		(85)		(94)
Expected future recoveries on current period gross charge-offs		—		11		11

Total⁽¹⁾		(9)		(74)		(83)
Adjustment resulting from the change in charge-off rate⁽²⁾		—		(21)		(21)

Net charge-offs		(9)		(95)		(104)
Decrease in expected future recoveries on previously fully charged-off loans⁽³⁾		—		26		26

Allowance at end of period (GAAP)		180		471		651
Plus: expected future recoveries on previously fully charged-off loans⁽³⁾		—		185		185

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)⁽⁴⁾	$	180	$	656	$	836

Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽²⁾		.14%		1.87%
Net adjustment resulting from the change in the charge-off rate as a percentage of average loans in repayment (annualized)⁽²⁾		—%		.53%

Net charge-offs as a percentage of average loans in repayment (annualized)		.14%		2.40%
Allowance coverage of charge-offs (annualized)⁽⁴⁾		5.0		1.7		(Non-GAAP)
Allowance as a percentage of the ending total loan balance⁽⁴⁾		.6%		4.0%		(Non-GAAP)
Allowance as a percentage of ending loans in repayment⁽⁴⁾		.7%		4.2%		(Non-GAAP)
Ending total loans	$	31,702	$	16,476
Average loans in repayment	$	25,866	$	15,856
Ending loans in repayment	$	25,382	$	15,659



	QUARTER ENDED
	June 30, 2024
(Dollars in millions)	FFELP Loans		Private Education Loans		Total
Allowance at beginning of period	$	206	$	538	$	744
Total provision		(2)		16		14
Charge-offs:
Gross charge-offs		(10)		(77)		(87)
Expected future recoveries on current period gross charge-offs		—		10		10

Net charge-offs⁽¹⁾		(10)		(67)		(77)
Decrease in expected future recoveries on previously fully charged-off loans⁽³⁾		—		6		6

Allowance at end of period (GAAP)		194		493		687
Plus: expected future recoveries on previously fully charged-off loans⁽³⁾		—		211		211

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)⁽⁴⁾	$	194	$	704	$	898

Net charge-offs as a percentage of average loans in repayment (annualized)		.14%		1.65%
Allowance coverage of charge-offs (annualized)⁽⁴⁾		5.0		2.6		(Non-GAAP)
Allowance as a percentage of the ending total loan balance⁽⁴⁾		.6%		4.2%		(Non-GAAP)
Allowance as a percentage of ending loans in repayment⁽⁴⁾		.7%		4.4%		(Non-GAAP)
Ending total loans	$	33,134	$	16,731
Average loans in repayment	$	27,509	$	16,271
Ending loans in repayment	$	26,411	$	16,087



	QUARTER ENDED
	September 30, 2023
(Dollars in millions)	FFELP Loans		Private Education Loans		Total
Allowance at beginning of period	$	200	$	657	$	857
Total provision		36		36		72
Charge-offs:
Gross charge-offs		(16)		(85)		(101)
Expected future recoveries on current period gross charge-offs		—		12		12

Total⁽¹⁾		(16)		(73)		(89)
Adjustment resulting from the change in charge-off rate⁽²⁾		—		(25)		(25)

Net charge-offs		(16)		(98)		(114)
Decrease in expected future recoveries on previously fully charged-off loans⁽³⁾		—		30		30

Allowance at end of period (GAAP)		220		625		845
Plus: expected future recoveries on previously fully charged-off loans⁽³⁾		—		232		232

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)⁽⁴⁾	$	220	$	857	$	1,077

Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽²⁾		.19%		1.66%
Net adjustment resulting from the change in the charge-off rate as a percentage of average loans in repayment (annualized)⁽²⁾		—%		.56%

Net charge-offs as a percentage of average loans in repayment (annualized)		.19%		2.22%
Allowance coverage of charge-offs (annualized)⁽⁴⁾		3.5		2.2		(Non-GAAP)
Allowance as a percentage of the ending total loan balance⁽⁴⁾		.6%		4.8%		(Non-GAAP)
Allowance as a percentage of ending loans in repayment⁽⁴⁾		.7%		5.0%		(Non-GAAP)
Ending total loans	$	39,801	$	17,958
Average loans in repayment	$	32,696	$	17,470
Ending loans in repayment	$	31,917	$	17,249



	NINE MONTHS ENDED
	September 30, 2024
(Dollars in millions)	FFELP Loans		Private Education Loans		Total
Allowance at beginning of period	$	215	$	617	$	832
Total provision		(6)		74		68
Charge-offs:
Gross charge-offs		(29)		(272)		(301)
Expected future recoveries on current period gross charge-offs		—		32		32

Total⁽¹⁾		(29)		(240)		(269)
Adjustment resulting from the change in charge-off rate⁽²⁾		—		(21)		(21)

Net charge-offs		(29)		(261)		(290)
Decrease in expected future recoveries on previously fully charged-off loans⁽³⁾		—		41		41

Allowance at end of period (GAAP)		180		471		651
Plus: expected future recoveries on previously fully charged-off loans⁽³⁾		—		185		185

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)⁽⁴⁾	$	180	$	656	$	836

Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽²⁾		.14%		1.98%
Net adjustment resulting from the change in the charge-off rate as a percentage of average loans in repayment (annualized)⁽²⁾		—%		.17%

Net charge-offs as a percentage of average loans in repayment (annualized)		.14%		2.15%
Allowance coverage of charge-offs (annualized)⁽⁴⁾		4.7		1.8		(Non-GAAP)
Allowance as a percentage of the ending total loan balance⁽⁴⁾		.6%		4.0%		(Non-GAAP)
Allowance as a percentage of ending loans in repayment⁽⁴⁾		.7%		4.2%		(Non-GAAP)
Ending total loans	$	31,702	$	16,476
Average loans in repayment	$	27,697	$	16,265
Ending loans in repayment	$	25,382	$	15,659



	NINE MONTHS ENDED
	September 30, 2023
(Dollars in millions)	FFELP Loans		Private Education Loans		Total
Allowance at beginning of period	$	222	$	800	$	1,022
Total provision		51		17		68
Charge-offs:
Gross charge-offs		(53)		(245)		(298)
Expected future recoveries on current period gross charge-offs		—		36		36

Total⁽¹⁾		(53)		(209)		(262)
Adjustment resulting from the change in charge-off rate⁽²⁾		—		(25)		(25)

Net charge-offs		(53)		(234)		(287)
Decrease in expected future recoveries on previously fully charged-off loans⁽³⁾		—		42		42

Allowance at end of period (GAAP)		220		625		845
Plus: expected future recoveries on previously fully charged-off loans⁽³⁾		—		232		232

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)⁽⁴⁾	$	220	$	857	$	1,077

Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽²⁾		.21%		1.56%
Net adjustment resulting from the change in the charge-off rate as a percentage of average loans in repayment (annualized)⁽²⁾		—%		.18%

Net charge-offs as a percentage of average loans in repayment (annualized)		.21%		1.74%
Allowance coverage of charge-offs (annualized)⁽⁴⁾		3.1		2.7		(Non-GAAP)
Allowance as a percentage of the ending total loan balance⁽⁴⁾		.6%		4.8%		(Non-GAAP)
Allowance as a percentage of ending loans in repayment⁽⁴⁾		.7%		5.0%		(Non-GAAP)
Ending total loans	$	39,801	$	17,958
Average loans in repayment	$	33,591	$	18,000
Ending loans in repayment	$	31,917	$	17,249

⁽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⁾

In third-quarters 2024 and 2023, the net charge-off rate on defaulted Private Education Loans increased from 82.3% to 82.7% and from 81.9% to 82.3%, respectively. These charges resulted in a $21 million and $25 million reduction in the balance of expected future recoveries on previously fully charged-off loans in third-quarters 2024 and 2023, respectively.

⁽³⁾

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


	QUARTERS ENDED									NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Beginning of period expected future recoveries on previously fully charged-off loans	$	211		$	217		$	262		$	226		$	274
Expected future recoveries of current period defaults		11			10			12			32			36
Recoveries (cash collected)		(10	)		(10	)		(11	)		(31	)		(35	)
Charge-offs (as a result of lower recovery expectations)		(27	)		(6	)		(31	)		(42	)		(43	)

End of period expected future recoveries on previously fully charged-off loans	$	185		$	211		$	232		$	185		$	232

Change in balance during period	$	(26	)	$	(6	)	$	(30	)	$	(41	)	$	(42	)

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

⁽⁵⁾	$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.

LIQUIDITY AND CAPITAL RESOURCES

We expect to fund our ongoing liquidity needs, including the repayment of $1.1 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 2025 to 2043 with 56% maturing by 2029), through a number of sources. These sources include our cash on hand, unencumbered FFELP Loan and Private Education Refinance Loan portfolios (see “Sources of Primary Liquidity” below), the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and the distribution of overcollateralization from our securitization trusts. We may also, depending on market conditions and availability, draw down on our secured FFELP Loan and Private Education Loan asset-backed commercial paper (ABCP) facilities, issue term ABS, enter into additional Private Education Loan and FFELP Loan ABS repurchase facilities, or issue additional unsecured debt.

We originate Private Education Loans (a portion of which is obtained through a forward purchase agreement). We also have purchased and may purchase, in future periods, Private Education Loan portfolios from third parties. Those originations and purchases are part of our ongoing liquidity needs. We repurchased 2.1 million shares of common stock for $33 million in the third quarter of 2024 and have $176 million of unused share repurchase authority as of September 30, 2024.

SOURCES OF LIQUIDITY

Sources of Primary Liquidity


(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023
Ending balances:
Total unrestricted cash and liquid investments	$	1,143	$	1,088	$	977
Unencumbered FFELP Loans		199		160		88
Unencumbered Private Education Refinance Loans		395		326		49

Total	$	1,737	$	1,574	$	1,114


	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Average balances:
Total unrestricted cash and liquid investments	$	1,129	$	1,116	$	1,141	$	1,004	$	977
Unencumbered FFELP Loans		179		148		85		148		88
Unencumbered Private Education Refinance Loans		446		224		118		297		95

Total	$	1,754	$	1,488	$	1,344	$	1,449	$	1,160

Sources of Additional Liquidity

Liquidity may also be available under our secured credit facilities. Maximum borrowing capacity under the FFELP Loan and Private Education Loan ABCP facilities will vary and be subject to each agreement’s borrowing conditions, including, among others, facility size, current usage and availability of qualifying collateral from unencumbered loans. The following tables detail the additional borrowing capacity of these facilities with maturity dates ranging from November 2024 to April 2026.


(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023
Ending balances:
FFELP Loan ABCP facilities	$	422	$	416	$	28
Private Education Loan ABCP facilities		1,921		2,088		1,697

Total	$	2,343	$	2,504	$	1,725


	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Average balances:
FFELP Loan ABCP facilities	$	419	$	409	$	35	$	412	$	70
Private Education Loan ABCP facilities		2,079		1,664		1,966		1,770		1,777

Total	$	2,498	$	2,073	$	2,001	$	2,182	$	1,847

At September 30, 2024, we had a total of $3.5 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 $1.2 billion and $199 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of September 30, 2024, we had $4.9 billion of encumbered net assets (i.e., overcollateralization) in our various financing facilities (consolidated variable interest entities). We enter into repurchase facilities at times to borrow against the encumbered net assets of these financing vehicles. As of September 30, 2024, $0.8 billion of repurchase facility borrowings were outstanding.

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


(Dollars in billions)	September 30, 2024		June 30, 2024		September 30, 2023
Net assets of consolidated variable interest entities (encumbered assets) — FFELP Loans	$	3.0	$	3.2	$	3.5
Net assets of consolidated variable interest entities (encumbered assets) — Private Education Loans		1.9		1.7		2.0
Tangible unencumbered assets⁽¹⁾		3.5		3.4		3.1
Senior unsecured debt		(5.9)		(5.9)		(6.2)
Mark-to-market on unsecured hedged debt⁽²⁾		.1		.2		.3
Other liabilities, net		(.3)		(.5)		(.5)

Total Tangible Equity⁽³⁾	$	2.3	$	2.1	$	2.2

⁽¹⁾	Excludes goodwill and acquired intangible assets.

⁽²⁾	At September 30, 2024, June 30, 2024, and September 30, 2023, there were $(94) million, $(230) million and $(351) million, respectively, of net gains (losses) on derivatives hedging this debt in unencumbered assets, which partially offset these gains (losses).

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

NON-GAAP FINANCIAL MEASURES

In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. We present the following non-GAAP financial measures: (1) Core Earnings, (2) Tangible Equity (as well as the Adjusted Tangible Equity Ratio), (3) EBITDA for the Business Processing segment, and (4) 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.



	QUARTER ENDED SEPTEMBER 30, 2024
			Adjustments								Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications		Additions/ (Subtractions)		Total Adjustments⁽¹⁾		Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	905									$	591	$	314	$	—	$	—
Cash and investments		43										25		6		—		12

Total interest income		948										616		320		—		12
Total interest expense		828										576		198		—		34

Net interest income (loss)		120	$	8	$	12	$	20	$	140		40		122		—		(22)
Less: provisions for loan losses		42								42		(5)		47		—		—

Net interest income (loss) after provisions for loan losses		78										45		75		—		(22)
Other income (loss):
Servicing revenue		13										11		2		—		—
Asset recovery and business processing revenue		70										—		—		70		—
Other revenue		(26)										—		—		—		10
Gain on sale of subsidiary		219										—		—		219		—

Total other income (loss)		276		(8)		44		36		312		11		2		289		10
Expenses:
Direct operating expenses		121										20		44		57		—
Unallocated shared services expenses		63										—		—		—		63

Operating expenses		184								184		20		44		57		63
Goodwill and acquired intangible asset impairment and amortization		140		—		(140)		(140)		—		—		—		—		—
Restructuring/other reorganization expenses		18		—		—		—		18		—		—		—		18

Total expenses		342		—		(140)		(140)		202		20		44		57		81

Income (loss) before income tax expense (benefit)		12		—		196		196		208		36		33		232		(93)
Income tax expense (benefit)⁽²⁾		14		—		34		34		48		9		6		54		(21)

Net income (loss)	$	(2)	$	—	$	162	$	162	$	160	$	27	$	27	$	178	$	(72)

⁽¹⁾	Core Earnings adjustments to GAAP:


	QUARTER ENDED SEPTEMBER 30, 2024
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income after provisions for loan losses	$	20	$	—	$	20
Total other income (loss)		36		—		36
Goodwill and acquired intangible asset impairment and amortization		—		(140)		(140)

Total Core Earnings adjustments to GAAP	$	56	$	140		196

Income tax expense (benefit)						34

Net income (loss)					$	162

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



	QUARTER ENDED JUNE 30, 2024
			Adjustments								Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications		Additions/ (Subtractions)		Total Adjustments⁽¹⁾		Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	925									$	608	$	317	$	—	$	—
Cash and investments		48										28		7		—		13

Total interest income		973										636		324		—		13
Total interest expense		843										603		198		—		36

Net interest income (loss)		130	$	9	$	(3)	$	6	$	136		33		126		—		(23)
Less: provisions for loan losses		14								14		(2)		16		—		—

Net interest income (loss) after provisions for loan losses		116										35		110		—		(23)
Other income (loss):
Servicing revenue		18										15		3		—		—
Asset recovery and business processing revenue		81										—		—		81		—
Other revenue		18										2		—		—		2

Total other income (loss)		117		(9)		(5)		(14)		103		17		3		81		2
Expenses:
Direct operating expenses		112										16		34		62		—
Unallocated shared services expenses		54										—		—		—		54

Operating expenses		166								166		16		34		62		54
Goodwill and acquired intangible asset impairment and amortization		3		—		(3)		(3)		—		—		—		—		—
Restructuring/other reorganization expenses		16		—		—		—		16		—		—		—		16

Total expenses		185		—		(3)		(3)		182		16		34		62		70

Income (loss) before income tax expense (benefit)		48		—		(5)		(5)		43		36		79		19		(91)
Income tax expense (benefit)⁽²⁾		12		—		(2)		(2)		10		8		19		4		(21)

Net income (loss)	$	36	$	—	$	(3)	$	(3)	$	33	$	28	$	60	$	15	$	(70)

⁽¹⁾	Core Earnings adjustments to GAAP:



	QUARTER ENDED JUNE 30, 2024
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income after provisions for loan losses	$	6	$	—	$	6
Total other income (loss)		(14)		—		(14)
Goodwill and acquired intangible asset impairment and amortization		—		(3)		(3)

Total Core Earnings adjustments to GAAP	$	(8)	$	3		(5)

Income tax expense (benefit)						(2)

Net income (loss)					$	(3)

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



	QUARTER ENDED SEPTEMBER 30, 2023
			Adjustments								Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications		Additions/ (Subtractions)		Total Adjustments⁽¹⁾		Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	1,129									$	778	$	351	$	—	$	—
Cash and investments		41										19		7		—		15

Total interest income		1,170										797		358		—		15
Total interest expense		879										636		208		—		46

Net interest income (loss)		291	$	7	$	(18)	$	(11)	$	280		161		150		—		(31)
Less: provisions for loan losses		72								72		36		36		—		—

Net interest income (loss) after provisions for loan losses		219										125		114		—		(31)
Other income (loss):
Servicing revenue		15										12		3		—		—
Asset recovery and business processing revenue		85										—		—		85		—
Other revenue		31										3		1		—		1

Total other income (loss)		131		(7)		(19)		(26)		105		15		4		85		1
Expenses:
Direct operating expenses		134										17		44		73		—
Unallocated shared services expenses		99										—		—		—		99

Operating expenses		233								233		17		44		73		99
Goodwill and acquired intangible asset impairment and amortization		3		—		(3)		(3)		—		—		—		—		—
Restructuring/other reorganization expenses		4		—		—		—		4		—		—		—		4

Total expenses		240		—		(3)		(3)		237		17		44		73		103

Income (loss) before income tax expense (benefit)		110		—		(34)		(34)		76		123		74		12		(133)
Income tax expense (benefit)⁽²⁾		31		—		(12)		(12)		19		29		18		3		(31)

Net income (loss)	$	79	$	—	$	(22)	$	(22)	$	57	$	94	$	56	$	9	$	(102)

⁽¹⁾	Core Earnings adjustments to GAAP:


	QUARTER ENDED SEPTEMBER 30, 2023
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income after provisions for loan losses	$	(11)	$	—	$	(11)
Total other income (loss)		(26)		—		(26)
Goodwill and acquired intangible asset impairment and amortization		—		(3)		(3)

Total Core Earnings adjustments to GAAP	$	(37)	$	3		(34)

Income tax expense (benefit)						(12)

Net income (loss)					$	(22)

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



	NINE MONTHS ENDED SEPTEMBER 30, 2024
			Adjustments								Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications		Additions/ (Subtractions)		Total Adjust- ments⁽¹⁾		Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	2,819									$	1,861	$	958	$	—	$	—
Cash and investments		129										75		20		—		34

Total interest income		2,948										1,936		978		—		34
Total interest expense		2,547										1,810		597		—		102

Net interest income (loss)		401	$	28	$	10	$	38	$	439		126		381		—		(68)
Less: provisions for loan losses		68								68		(6)		74		—		—

Net interest income (loss) after provisions for loan losses		333										132		307		—		(68)
Other income (loss):
Servicing revenue		48										39		9		—		—
Asset recovery and business processing revenue		228										—		—		228		—
Other revenue		33										5		1		—		16
Gain on sale of subsidiary		219										—		—		219		—

Total other income (loss)		528		(28)		17		(11)		517		44		10		447		16
Expenses:
Direct operating expenses		351										53		110		188		—
Unallocated shared services expenses		182										—		—		—		182

Operating expenses		533								533		53		110		188		182
Goodwill and acquired intangible asset impairment and amortization		145		—		(145)		(145)		—		—		—		—		—
Restructuring/other reorganization expenses		35		—		—		—		35		—		—		—		35

Total expenses		713		—		(145)		(145)		568		53		110		188		217

Income (loss) before income tax expense (benefit)		148		—		172		172		320		123		207		259		(269)
Income tax expense (benefit)⁽²⁾		41		—		33		33		74		28		47		60		(61)

Net income (loss)	$	107	$	—	$	139	$	139	$	246	$	95	$	160	$	199	$	(208)

⁽¹⁾	Core Earnings adjustments to GAAP:


	NINE MONTHS ENDED SEPTEMBER 30, 2024
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income after provisions for loan losses	$	38	$	—	$	38
Total other income (loss)		(11)		—		(11)
Goodwill and acquired intangible asset impairment and amortization		—		(145)		(145)

Total Core Earnings adjustments to GAAP	$	27	$	145		172

Income tax expense (benefit)						33

Net income (loss)					$	139

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



	NINE MONTHS ENDED SEPTEMBER 30, 2023
			Adjustments								Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications		Additions/ (Subtractions)		Total Adjust- ments⁽¹⁾		Total Core Earnings		Federal Education Loans		Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	3,227									$	2,194	$	1,036	$	—	$	—
Cash and investments		111										56		20		—		35

Total interest income		3,338										2,250		1,056		—		35
Total interest expense		2,636										1,859		610		—		119

Net interest income (loss)		702	$	24	$	27	$	51	$	753		391		446		—		(84)
Less: provisions for loan losses		68								68		51		17		—		—

Net interest income (loss) after provisions for loan losses		634										340		429		—		(84)
Other income (loss):
Servicing revenue		48										39		9		—		—
Asset recovery and business processing revenue		240										—		—		240		—
Other revenue		59										10		2		—		3

Total other income (loss)		347		(24)		(20)		(44)		303		49		11		240		3
Expenses:
Direct operating expenses		394										55		124		215		—
Unallocated shared services expenses		207										—		—		—		207

Operating expenses		601								601		55		124		215		207
Goodwill and acquired intangible asset impairment and amortization		8		—		(8)		(8)		—		—		—		—		—
Restructuring/other reorganization expenses		23		—		—		—		23		—		—		—		23

Total expenses		632		—		(8)		(8)		624		55		124		215		230

Income (loss) before income tax expense (benefit)		349		—		15		15		364		334		316		25		(311)
Income tax expense (benefit)⁽²⁾		93		—		(7)		(7)		86		78		75		6		(73)

Net income (loss)	$	256	$	—	$	22	$	22	$	278	$	256	$	241	$	19	$	(238)

⁽¹⁾	Core Earnings adjustments to GAAP:


	NINE MONTHS ENDED SEPTEMBER 30, 2023
(Dollars in millions)	Net Impact of Derivative Accounting		Net Impact of Goodwill and Acquired Intangibles		Total
Net interest income after provisions for loan losses	$	51	$	—	$	51
Total other income (loss)		(44)		—		(44)
Goodwill and acquired intangible asset impairment and amortization		—		(8)		(8)

Total Core Earnings adjustments to GAAP	$	7	$	8		15

Income tax expense (benefit)						(7)

Net income (loss)					$	22

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

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



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
GAAP net income	$	(2)	$	36	$	79	$	107	$	256
Core Earnings adjustments to GAAP:
Net impact of derivative accounting		56		(8)		(37)		27		7
Net impact of goodwill and acquired intangible assets		140		3		3		145		8
Net tax effect		(34)		2		12		(33)		7

Total Core Earnings adjustments to GAAP		162		(3)		(22)		139		22

Core Earnings net income	$	160	$	33	$	57	$	246	$	278

(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 except for Floor Income Contracts, where the mark-to-market gain will equal the amount for which we originally sold the contract. 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 table below quantifies the adjustments for derivative accounting between GAAP and Core Earnings net income.



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Core Earnings derivative adjustments:
(Gains) losses on derivative and hedging activities, net, included in other income	$	36	$	(14)	$	(26)	$	(11)	$	(44)
Plus: (Gains) losses on fair value hedging activity included in interest expense		10		(5)		(19)		5		23

Total (gains) losses in GAAP net income		46		(19)		(45)		(6)		(21)
Plus: Reclassification of settlement income (expense) on derivative and hedging activities, net⁽¹⁾		8		9		7		28		24

Mark-to market (gains) losses on derivative and hedging activities, net⁽²⁾		54		(10)		(38)		22		3
Amortization of net premiums on Floor Income Contracts in net interest income for Core Earnings		—		—		—		—		3
Other derivative accounting adjustments⁽³⁾		2		2		1		5		1

Total net impact of derivative accounting	$	56	$	(8)	$	(37)	$	27	$	7

⁽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: (a) reclassifying the net settlement amounts related to our Floor Income Contracts to education loan interest income; and (b) reclassifying the net settlement amounts related to certain of our interest rate swaps to debt interest expense. The table below summarizes these net settlements on derivative and hedging activities and the associated reclassification on a Core Earnings basis.



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Reclassification of settlements on derivative and hedging activities:
Net settlement income (expense) on interest rate swaps reclassified to net interest income	$	8	$	9	$	7	$	28	$	24

Total reclassifications of settlement income (expense) on derivative and hedging activities	$	8	$	9	$	7	$	28	$	24

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


	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Fair Value Hedges	$	11	$	2	$	(3)	$	9	$	13
Foreign currency hedges		(1)		(7)		(16)		(4)		10
Other		44		(5)		(19)		17		(20)

Total mark-to-market (gains) losses on derivative and hedging activities, net	$	54	$	(10)	$	(38)	$	22	$	3

⁽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 September 30, 2024, derivative accounting has decreased GAAP equity by approximately $37 million as a result of cumulative net mark-to-market losses (after tax) recognized under GAAP, but not in Core Earnings. The following table rolls forward the cumulative impact to GAAP equity due to these after-tax mark-to-market net gains and losses related to derivative accounting.



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Beginning impact of derivative accounting on GAAP equity	$	12	$	11	$	67	$	(1)	$	122
Net impact of net mark-to-market gains (losses) under derivative accounting⁽¹⁾		(49)		1		6		(36)		(49)

Ending impact of derivative accounting on GAAP equity	$	(37)	$	12	$	73	$	(37)	$	73

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



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Total pre-tax net impact of derivative accounting recognized in net income⁽^a)	$	(56)	$	8	$	37	$	(27)	$	(7)
Tax and other impacts of derivative accounting adjustments		14		(2)		(9)		7		2
Change in mark-to-market gains (losses) on derivatives, net of tax recognized in other comprehensive income		(7)		(5)		(22)		(16)		(44)

Net impact of net mark-to-market gains (losses) under derivative accounting	$	(49)	$	1	$	6	$	(36)	$	(49)

^(a)

See “Core Earnings derivative adjustments” table above.

Hedging Embedded Floor Income

We use Floor Income Contracts, 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 Floor Income Contracts do not qualify for hedge accounting and 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.


(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023
Total hedged Floor Income, net of tax⁽¹⁾⁽²⁾	$	50	$	69	$	115

⁽¹⁾ $65 million, $90 million and $151 million on a pre-tax basis as of September 30, 2024, June 30, 2024, and September 30, 2023, respectively. ⁽²⁾ Of the $50 million as of September 30, 2024, approximately $6 million, $17 million, $14 million and $7 million will be recognized as part of Core Earnings net income in the remainder of 2024, 2025, 2026 and 2027, respectively.

(2)

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



	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Core Earnings goodwill and acquired intangible asset adjustments	$	140	$	3	$	3	$	145	$	8

2. Tangible Equity and Adjusted Tangible Equity Ratio

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


(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023
Navient Corporation’s stockholders’ equity	$	2,694	$	2,748	$	2,898
Less: Goodwill and acquired intangible assets		438		690		697

Tangible Equity		2,256		2,058		2,201
Less: Equity held for FFELP Loans		158		165		198

Adjusted Tangible Equity	$	2,098	$	1,893	$	2,003

Divided by:
Total assets	$	53,440	$	56,622	$	63,414
Less:
Goodwill and acquired intangible assets		438		690		697
FFELP Loans		31,522		32,940		39,581

Adjusted tangible assets	$	21,480	$	22,992	$	23,136

Adjusted Tangible Equity Ratio		9.8%		8.2%		8.7%

3. Earnings before Interest, Taxes, Depreciation and Amortization Expense (EBITDA)

This measures the operating performance of the Business Processing segment and is used by management and equity investors to monitor operating performance and determine the value of those businesses. EBITDA for the Business Processing segment is calculated as:


	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Core Earnings pre-tax income	$	232	$	19	$	12	$	259	$	25
Plus:
Depreciation and amortization expense⁽¹⁾		1		1		1		3		2

EBITDA	$	233	$	20	$	13	$	262	$	27

Divided by:
Total revenue	$	289	$	81	$	85	$	447	$	240

EBITDA margin		81%		25%		15%		59%		11%

⁽¹⁾	There is no interest expense in this segment.

4. 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 September 30, 2024, the $656 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 $16,476 million Private Education Loan portfolio. The $185 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 $16,476 million Private Education Loan portfolio on our balance sheet and, as a result, management excludes this impact to the allowance to better evaluate and assess our overall credit loss coverage on the Private Education Loan portfolio. We believe this provides a more meaningful and holistic view of the available credit loss coverage on our non-charged-off Private Education Loan portfolio. We believe this information is useful to our investors, lenders and rating agencies.

Allowance for Loan Losses Metrics – Private Education Loans


	QUARTERS ENDED						NINE MONTHS ENDED
(Dollars in millions)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Allowance at end of period (GAAP)	$	471	$	493	$	625	$	471	$	625
Plus: expected future recoveries on previously fully charged-off loans		185		211		232		185		232

Allowance at end of period excluding expected future recoveries on previously fully charged-off loans (Non-GAAP Financial Measure)	$	656	$	704	$	857	$	656	$	857

Ending total loans	$	16,476	$	16,731	$	17,958	$	16,476	$	17,958
Ending loans in repayment	$	15,659	$	16,087	$	17,249	$	15,659	$	17,249
Net charge-offs	$	95	$	67	$	98	$	261	$	234

Allowance coverage of charge-offs (annualized):
GAAP		1.2		1.8		1.6		1.3		2.0
Adjustment⁽¹⁾		.5		.8		.6		.5		.7

Non-GAAP Financial Measure⁽¹⁾		1.7		2.6		2.2		1.8		2.7

Allowance as a percentage of the ending total loan balance:
GAAP		2.9%		2.9%		3.5%		2.9%		3.5%
Adjustment⁽¹⁾		1.1		1.3		1.3		1.1		1.3

Non-GAAP Financial Measure⁽¹⁾		4.0%		4.2%		4.8%		4.0%		4.8%

Allowance as a percentage of the ending loans in repayment:
GAAP		3.0%		3.1%		3.6%		3.0%		3.6%
Adjustment⁽¹⁾		1.2		1.3		1.4		1.2		1.4

Non-GAAP Financial Measure⁽¹⁾		4.2%		4.4%		5.0%		4.2%		5.0%

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

Navient (NAVI) 8-KNavient posts third quarter 2024 financial results